●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.
Here is yet another example of how the government, with the unquestioning approval of the voters, steals dollars out of the economy
Treasury says to raise $5 billion from AIG stock sale
WASHINGTON (Reuters) – The U.S. Treasury Department said on Friday it expects to raise $5 billion from its sale of American International Group (AIG) stock, cutting the government’s stake in the bailed-out insurer to 55 percent.
Translation: The U.S. Treasury, which creates dollars, and so, does not need to receive dollars from anyone, expects to drain $5 billion from the U.S. economy.
The sale, which would bring a profit of about $300 million to the U.S. Treasury, comes as President Barack Obama campaigns for a second term and has been forced to defend his administration’s decision to use taxpayer money to prop up companies during the crisis.
Translation: $300 million of those dollars are in addition to the dollars the Treasury previously had pumped into the economy as a stimulus. So our struggling economy has now been “unstimulated” by the previous stimulus plus an extra $300 million drained out.
The Treasury Department priced the offering at $30.50 a share, six percent above the $28.72 price needed for the U.S. government to break even on its investment in the insurer.
Translation: The Treasury hopes to drain as many stimulus dollars out of the economy as possible.
AIG intends to buy up to $3 billion of the offering.
Translation: Although taxes weaken the economy, AIG intends to pay $3 billion in extra taxes.
The sale of 163.9 million shares of AIG stock will reduce the government’s holding in the insurer to 55 percent from 61 percent. The offering is expected to close next week.
Translation: The Treasury will continue to drain many billions of dollars from the economy.
The insurer received multiple bailouts under both the Obama and Bush administrations, with the government pledging as much as $182 billion in aid. After the latest sale, the Treasury’s investment in AIG will be about $25 billion.
Translation: The economy received multiple stimuli under both the Obama and Bush administrations. Since then, the Treasury has drained all but $25 billion of that stimulus. The Treasury still intends to drain $25 billion more out of the economy.
The Obama administration has been unwinding its position in the politically unpopular financial crisis bailout programs. More than 300 small banks have yet to repay taxpayers. The administration could sell its remaining stake in AIG this year but has been adamant in saying it will not act for political reasons.
Translation: “Politically unpopular” means the voters have not been told the truth: The economy needs the dollars and the federal government does not. When 300 small banks pay extra tax to the government, the economy will suffer even more. The administration’s political reasons for not acting are simple: It knows the economy would suffer, and that would help sink President Obama’s reelection chances.
Summary: The upper income 1% wants the economy to tank, because that opens the gap between the 1% and the 99%. As we have explained previously, absolute income is less important than comparative income. The 1% prefers the income gap to open, even if that means they themselves lose a bit of income.
The administrate, being beholden to the 1%, also wants the gap to open, but realizes the resultant economic decline would mitigate against reelection, so will hold off on further austerity measures until after November.
And the 99%, having been brainwashed by the 1%, not only approves of anti-stimulus, money draining, they insist on it.
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