Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
President Obama continues to promise he will reduce the federal debt, or at worst, not let it grow. During the next nine months, leading to the election, we probably will hear repeated assurances, not only from him, but from whomever the Republicans nominate, that the debt will be “controlled,” we will “live within our means” and that we will be “fiscally prudent” – all nonsense, worse than nonsense – harmful – for a Monetarily Sovereign nation..
I don’t know whether the President truly is ignorant of economics or merely says what people want to hear. In either case, he should be ashamed. A real leader learns the truth, does not fear the truth, and will speak the truth. One day the world will judge Barack Obama. It will find him brave or cowardly, honest or deceitful, knowledgeable or ignorant, strong or weak.
Most presidents care deeply about their legacy. I hope President Obama does. Perhaps he will see this letter or others expressing similar facts.
Every form of money is a form of debt. The money measure called “M1″ includes: Currency (debt of the federal government), traveler’s checks (debt of the issuer) and demand deposits (bank debt). The measure called “M2″ also includes savings deposits and CDs (bank debts). The measure called “M3″ also includes larger liquid assets (debts of the issuer).
All the “Ms” are money and debt. The broadest money measure, which includes all the Ms, plus additional forms of money, is what the government calls: Debt Outstanding Domestic Nonfinancial Sectors – DODNS. People owning a great deal of DODNS are wealthy.
Money/debt is what nourishes every economy. Money/debt is the sustenance, the support, the driving force behind every economy. Think of money/debt as the economy’s food, without which the economy cannot survive. When the food supply, i.e. the money/debt supply, grows, the economy grows, as this graph demonstrates. Note the parallels between Debt growth and GDP growth:
Today, our economy is starved of its food, so it grows slowly or not at all. Remarkably, to cure the starvation problem, you have have set the fool’s goal of trying to grow the economy while withholding the economy’s food. You may not recognize the equality between debt and money, and think that while money is good, debt is bad. If so, it is like believing cars are good, but autos are bad.
The U.S. became Monetarily Sovereign on August 15, 1971, which put us in the enviable position of being able to create money at will (unlike the euro nations, which are monetarily non-sovereign).
The government creates money by deficit spending. To pay a bill, it simply instructs a creditor’s bank to mark up the creditor’s account. The government can send those instructions endlessly. It never can run short of instructions. It needs neither to borrow nor to tax. That is the definition of Monetary Sovereignty.
The single biggest economic problem facing America and the world is the widespread ignorance regarding Monetary Sovereignty – the belief federal finances are like personal finances. This ignorance has led and will continue to lead, to an endless series of recessions – so far, on average, one every five years — along with their resultant human misery.
We citizens only can pray that one day we will have a leader, whose knowledge and courage will allow him to reveal the truth, and put us on a path to economic growth. He will use our Monetary Sovereignty to feed our economic growth.
If you prove to be that leader, your name will be added to the list of great American Presidents: Washington, Lincoln, Roosevelt et al. If not, your name will be listed alongside Hoover. You hold your legacy in your own hands.
Good luck to you – and to all of us.
Rodger Malcolm Mitchell
Rodger Malcolm Mitchell
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports