Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. 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.
France became the latest in the line of euro nations, whose voters tossed out their leader. Why has this been happening?
Francois Hollande wins French presidential vote over Sarkozy, exit polls show
By Edward Cody, Updated: Sunday, May 6,
PARIS — Francois Hollande, a moderate Socialist with an easy smile, was elected president of France on Sunday, exit polls showed, narrowly defeating the incumbent, Nicolas Sarkozy, a conservative whose five-year term was undermined by Europe’s economic crisis and his combative personality.
The outcome turned Sarkozy into the latest political leader to fall victim to the European economic implosion of the past four years.
Leaders of France, Portugal, Italy, Greece and Spain all have been voted out. According to European Union and International Monetary Fund philosophy, all these leaders did not create enough austerity for their economies, while the voters believed these leaders created too much austerity.
Who is right? Could it be that the problem lies not in the leaders nor in their nations, but in the euro itself? That the problem might be a fundamental weakness in the euro, never seems to occur to the EU.
Based on EU beliefs,all these nations, (and in fact, most nations of the world,) have been profligate. The vast majority are deeply in debt to everyone else. So “A” owes “B” and “B” owes “C” and “C” owes “A” – and they all are in trouble. See anything wrong with those mathematics?
Sarkozy was generally given high marks for statesmanship in dealing with the economic crisis in the European Union. But voter dissatisfaction swelled nevertheless, in part from an impression that working-class French people were not getting enough attention as Sarkozy dealt with the crisis.
The Socialist candidate, although making clear that hard times lie ahead, promised to apportion out austerity with a more even hand, including stimulus for economic growth alongside debt reduction. In one telling argument, he charged Sarkozy with protecting the rich by limiting upper-tier tax rates and said, if elected, he would impose a 75 percent rate on all earnings above $1.3 million a year to finance more help for the poor.
A man is elected because he will “apportion out austerity with a more even hand”? Think how desperate the people must be, if that’s their criterion — continuing economic disaster, but doled out more equally.
And then there’s “stimulus for economic growth alongside debt reduction.” Exactly how is that accomplished? There is no known mechanism by which a government can reduce its debt (i.e. increase taxes and/or reduce spending), while stimulating its economy (something the U.S. Tea/Republicans have not yet figured out).
[O.K., there is one method: Spend less on foreign soil. This means reduced foreign wars, foreign purchases (by the government) and foreign assistance. But to achieve an approved level of austerity, governments tend to reduce domestic spending, a sure road to recession or depression.]
The euro is a failed concept. Unless changes are made, look for every euro nation, not just the PIIGS, to tumble painfully down the dark hole of austerity and economic disaster.
As I have said repeatedly, there are two, and only two, long-term salvations for the euro nations:
1. Return to Monetary Sovereignty by re-adopting your own sovereign currencies
2. The EU to become a republic, similar to the U.S. federal government, with the euro nations similar to U.S. states, in which the EU provides euros to member nations as needed.
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