●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.
Congress and the President have just discovered what every awake economist has preached for many years: The more budgets are cut and taxes increased, the weaker an economy becomes.
All the media and political lecturing that the federal government’s “deficit and debt are too high,” and the government should “live within its means,” is mere propaganda by the top 1% income group. The deficit is the federal government’s method for adding dollars to the economy, which stimulates the economy, and the federal government, being Monetarily Sovereign, has no “means” to live within. Unlike monetarily non-sovereign states, business and people, it can service any size debt, forever.
The purpose of this deception: To reduce benefits to the lower 99%, thereby increasing the income gap between 1% and 99%.
Now that Congress and the President have convinced everyone of this nonsense, they wish to take it back, for fear the peasants will rise up angrily.
(‘Taxmageddon’ could shock the nation’s pocketbook: Thanks to some new taxes, the expiration of other short-term tax laws and other changes, the country’s economy could be dealt a major blow in 2013.)
By Paul Kane, Published: July 19, 2012
Five and half months before the deadline for potential disaster, Congress broke into heated debate this week over a January fiscal meltdown that could lead to nearly $600 billion worth of tax hikes and automatic federal spending cuts next year.
Translation: “Those tax hikes and spending cuts will reduce the federal deficit and debt. We hope you don’t remember it was we who wanted it. Now we take it all back, because frankly, tax increases and/or spending cuts lead to recessions and depressions.”
Democrats accused the GOP of risking economic calamity to the middle class to protect lower taxes for the rich. Republicans accused Democrats of wanting to raise taxes and being soft on national security.
Translation: “The other party did exactly what we wanted, but we deny it’s what we wanted. Hey, if Romney can criticize Obamacare, when he invented Romneycare, why can’t we criticize the deficit reduction we demanded?”
“The president’s small-business tax hike will hit nearly the same time as our military’s being hit with arbitrary cuts that will endanger our security,” House Speaker John A. Boehner (R-Ohio) said 20 minutes earlier. “Now some of those same Democrats are threatening to drive us off the fiscal cliff and tank our economy, all in their quest for higher taxes.”
Translation: “I want lower taxes. I want more spending. I want a reduced deficit. Please don’t think too hard about how that works.”
The situation is driven by the failure last fall of a specially empowered congressional “supercommittee” that had been tasked with finding $1.2 trillion in budget savings as part of a broader deal cut last August. With the supercommittee’s failure, the law requires the first wave of 10 years’ worth of automatic spending cuts to kick in Jan. 1 — at the same time that the income tax cuts approved during the George W. Bush administration, along with a host of other tax benefits, are set to expire.
Translation: “Our supercommittee failed to cut the deficit, so now the deficit will be cut automatically, which will be a ‘fiscal cliff’ disaster. If only the supercommittee had done its job, we would have had the fiscal cliff, but we could have blamed them.”
The combined effect of those tax hikes and spending cuts would send the already limping economy back into a recession, according to the nonpartisan Congressional Budget Office.
Translation: “Tax hikes are bad. Spending cuts are bad. Deficit cuts are good. Keep repeating that until you actually believe it — unless you already do.”
Obama began last week by restating his support for extending the 2001 and 2003 tax cuts only for the first $250,000 in income, offering such an extension for an additional year to buy time for a broader effort to reform the entire tax code next year.
Translation: “All tax increases are bad, because they remove dollars from the economy, which causes recessions. Except tax increases on those making more than $250,000 are good, because they also remove dollars from the economy, which also causes recessions, but we know the public will agree to cut off their own noses to spite their faces.”
“The politics of taxes has changed, and for 30 years Republicans won the argument because they conflated middle-income taxes and wealthy taxes,” Sen. Charles E. Schumer, Dem. (N.Y.), said Thursday. ”And when middle-class incomes were going up, the middle class sort of shrugged their shoulders and said okay. With middle income going down, and with us being a lot smarter about this, we are separating the middle class from the wealthy and for the first time in 30 years winning the tax argument.”
Translation: “I don’t give a damn about the reality that Federal Deficits = Net Private Savings, so are necessary to grow and stimulate the economy. All I care about is blaming the other guy, when we fall over the fiscal cliff.”
In case you’re like Congress and the President, i.e. clueless, here is a brief summary:
1. The federal deficit and debt are too high.
2. Increased taxes and/or reduced spending cut the deficits and debt.
3. But increased taxes and/or reduced spending will send the economy off the “fiscal cliff.”
4. So we want to cut the deficit but do not want to increase taxes and/or reduce spending.
Sadly, most of America has no problem whatsoever believing points 1 through 4, and will argue to the death that Monetary Sovereignty and MMT (which say 1 through 4 make no sense) are wrong.
You just can’t make this stuff up.
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