●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Cutting the deficit is the government’s method for taking dollars from the middle class and giving them to the rich.
●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.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
The Florida Sun Sentinel is a nice little paper that periodically publishes some news. It’s editorials generally are of the safe “Crime is not a good thing” variety. But occasionally, the editors must feel the need to attack a big problem, and the result is the following mess:
Now, avert “fiscal abyss
Of all the reaction to Washington’s last-minute compromise for averting the “fiscal cliff,” the most clarifying message comes from China, our biggest foreign creditor.
The United States, said China’s Xingu news agency, must deal with a budget deficit that threatens not just a “fiscal cliff,” but a “fiscal abyss.”
“In a democracy like the United States, tax increases and spending cuts — the exact dose of medicine needed to cure its chronic debt disease — have long proved hugely unpopular among voters. So the politicians have chosen to kick the can down the road again and again. But as we all know, the can will never disappear. Sometime and somewhere, you might trip over it and fall hard on the ground, or in the U.S. case, into an abyss you can never come out of.”
How “clarifying.” Tax increases and spending cuts, to remove dollars from our economy (i.e. applying leeches to cure anemia), are just what our recession-wracked economy needs. How do we know? Our dear friends, the Chinese, say so. And, as we all know, they have our best interests at heart.
China’s reaction is important because it has become our major foreign banker, our dealer, and at some point, it could turn off the tap.
For those of you who have not yet become familiar with Monetary Sovereignty, “turn off the tap” is a meaningless, actually ludicrous, phrase when applied to the U.S. government. China is neither our banker nor our dealer.
China merely is a depositor in its T-security account at the Federal Reserve Bank. What would happen if China “turned off the tap,” i.e stopped depositing? Absolutely nothing.
The U.S., now being Monetarily Sovereign, would continue to create its sovereign currency exactly the same as it has since August 15, 1971, when it went off the gold standard. The U.S. never, ever can run short of the dollars it has the unlimited ability to create.
And what would happen if China wanted its dollars back? The Federal Reserve Bank would transfer China’s dollars from its T-security account to its checking account, also at the Federal Reserve Bank. Visualize you transferring dollars from your savings account to your checking account. Is this a problem?
Note to Sun Sentinal: Federal finances are not like personal finances. Learn the difference before you write further nonsense.
The ignorance continues:
And what will happen to the United States when the banks refuse to loan us any more money? Must we face an abyss to act?
How does one address the abject ignorance of the above comment? Banks do not lend the federal government anything. The federal government, having the infinite ability to create its sovereign currency, does not need to ask banks or China or anyone else for its sovereign currency.
Many of us took a measure of relief in Congress having passed a New Year’s Day compromise bill to avert dramatic spending cuts and tax hikes, a “fiscal cliff” combination that economists said would have shocked our tattered economy back into recession.
What Congress did was slightly raise taxes on the rich and dramatically raise taxes on the middle class (FICA), neither of which tax increases takes us further from the fiscal cliff. We, in fact, have moved much closer to economic disaster.
Most notably, the compromise will raise taxes on families that make more than $450,000 a year, which seems fair in this era of growing income inequality.
The Sun Sentinel editors conveniently omit the huge tax increase on the not-rich. That is the tax increase that will widen the gap (more like a gulf) between the .1% and the 99.9% – exactly what the .1% wants.
What happened to the promised two-for-one spending-cuts-to-tax-hikes once promised by the Democrats?
President Obama says there’s more to be done on spending cuts, but where are the specifics? If the cuts proposed for the Pentagon and other government programs were too severe, where, exactly, will we pare back?
Yes, spending cuts are exactly what our money-starved economy needs. — to completely collapse. And let’s not be so coy about “where, exactly will we pare back?” We all know where: Social Security and Medicare, that’s where. Those are the programs that support the middle class. Spending cuts will further widen the gap / gulf between the middle and the top.
In averting the cliff, it appears the Democrats won the battle, but lost the war for the hearts and minds of average Americans, who are keenly aware of the threat our national debt poses to our national security.
“. . . threat to our national security”? Huh? Deposits in T-security accounts at the Federal Reserve Bank constitute threats to our national security?
I’ll tell you what constitutes a threat to our national security: Misleading editorials in newspapers.
The budget war is not over. In February, the new Congress will convene to decide on spending cuts. And in March, it will decide whether to increase the federal borrowing limit.
Cut spending and limit deposits in T-security accounts – could it get any worse? Yes, it could. Read the next paragraph:
Let us vigorously address the spending choices we face now. Do we continue unemployment compensation indefinitely? Do we adjust cost-of-living raises for Social Security recipients? Do we change pension plans for government employees? Do we end certain tax credits? Do we raise the age of eligibility for Medicare? Do we pare back Pentagon spending?
With the possible (?) exception of ending “certain” tax credits, all of the above “solutions” involve cuts to middle- and lower-class net income. In short, the Sun Sentinel is acting as yet another paid shill for the rich.
My suggestion: Everyone write to the Sun Sentinel editors, explaining to them, the basic facts of Monetary Sovereignty. A little paper like the Sun Sentinel, that only receives a handful of letters each day, might be responsive.
If even one newspaper’s editors began to write the truth, who knows what wonderful things could happen.
Or we can just surrender, and let our economy be dragged down by the .1%
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
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 Imports