●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●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.
You cattle can moo all you want. You don’t understand what’s going to happen to you, and no one is listening, anyway.
A plan that offers Obama a fighting chance
By Jonathan Rauch, Published: July 5, 2012
Obama should draw a map and send it to Capitol Hill in the form of a bill — a president’s strongest statement that he intends action. A big legislative proposal can frame the issue and paint Obama’s intentions in bold colors. It should include three elements:
1) Long-term fiscal retrenchment. The easiest and best way is to adopt the Simpson-Bowles deficit plan.
2) Short-term economic stimulus. Republicans will howl about more spending. Let them. Stimulus measures make sense when unemployment is high and the world is teetering on the edge of a second recession.
3) A two-year debt-limit extension. Declare that another debt-limit fiasco is unacceptable and demand that the issue be taken off the table. Let Republicans explain why they want to hold a gun to the economy’s head.
For those who may have tried to forget that ill-fated, ill-considered Simpson-Bowles plan, here is a summary from the New York Times:
—Deep cuts in domestic and military spending starting in 2012.
–Overhaul the tax code, eliminating or reducing the $1 trillion a year in popular tax breaks for individuals and corporations and using the revenues mostly to slash income tax rates but also to reduce deficits.
–To make Social Security solvent for 75 years, raise payroll taxes for the affluent and reduce future benefits, including by slowly raising the retirement age for full benefits to 69 from 67 by 2075.
—Reduce deficit spending by about $4 trillion over the coming decade.
So let’s add it all up. Mr. Rauch would adopt a plan that cuts federal spending, increases federal taxes and thereby, reduces federal deficits. It would take money out of the pockets of the poor and middle classes, not only by increasing FICA, but by reducing Social Security benefits.
But, Rauch also says (his words), “Stimulus measures make sense when unemployment is high and the world is teetering on the edge of a second recession.” Huh? Is this man daft?
How (and for that matter, why) does a nation simultaneously cut spending and increase taxes, while instituting economic stimulus? Shall we also give a left-arm transfusion to someone who has lost blood, while we drain blood from his right arm? Is this what passes for intelligence in today’s media?
Bottom line: Money is the lifeblood of our economy. GDP is a common measure of the economy. And:
GDP = Federal Spending + Private Consumption and Investment + Net Exports
So, for you media writers who do not understand algebra, to grow GDP, it’s necessary to increase Federal Spending and/or Private Consumption and Investment, or Net Exports.
But a tax increase reduces Private Consumption and Investment. And a spending cut reduces Federal Spending (as well as Private Consumption and Investment). And there is nothing mentioned about Net Exports.
Everything in Simpson-Bowles is designed to reduce GDP. That plan is just another name for “austerity,” which has destroyed the economies of Europe, and which presumably makes it attractive to American media.
Finally, as for the two-year debt-limit extension, any economist worth his salt will tell you the debt limit is obsolete, nonsensical, unnecessary and overall stupid. It effectively limits yesterday’s budgets (Think about that), and is meaningless for a government that became Monetarily Sovereign on August 15, 1971.
Sadly, the Jonathan Rauch’s of America (prime candidates for the flat-earth society) have the public’s ear. Voters do not realize what the media/political establishment is doing to them, in the name of the upper income 1%, and nobody with a voice is talking.
We voters are cows being pushed into the slaughter house. We go where we are prodded, mooing loudly and ignorantly, not understanding what awaits us, while the upper 1% just laughs.
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