●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 debt-nuts get crazier and crazier. They must believe that acting crazy is the way to get attention. They probably are right — except it may not be an act.
Anyway, here is yet another warning about the phony “federal debt.”
America Should Declare Bankruptcy: Doug Casey
By Lauren Lyster | Daily Ticker 1/18/13
This week started with President Obama Monday demanding lawmakers raise the U.S.’s $16.4 trillion debt ceiling, warning Republicans not to insist on spending cuts in return. The same day, Federal Reserve Chairman Ben Bernanke advocated getting rid of the debt limit altogether.
There are two parts to the debt limit that are ridiculous: The debt and the limit.
The so-called “debt” is ridiculous, because it is not what you think of as debt. It actually is the total of deposits in T-securities accounts at the Federal Reserve Bank. A T-security account is very much like your savings account at your local bank.
To “lend” to the government, you instruct your bank to transfer dollars from your checking account to your T-security account.
To “pay off” your T-security account (i.e. federal “debt”), the government does exactly what your bank does, when it “pays off” your savings account. The government transfers dollars from your T-security account to your checking account.
This is no burden on the government. The entire federal debt could be paid off tomorrow, simply by transferring dollars from one account to another. No new dollars would need to be created. Someone simply would type $16.4 trillion into a computer, and the transfers would be made. Done.
The debt limit is ridiculous, because it doesn’t limit federal spending. It limits federal paying of bills to which it already has committed. Visualize spending $100 on your credit card, then refusing to pay the credit card bill, because you have exceeded your debt limit.
Congress already has spent the money, and now the debt-nuts in Congress claim they are being fiscally prudent by refusing to pay their bills. This is classic Orwellian language, in which words mean the opposite of their true meaning. To Congress, being a deadbeat is prudent.
And the week ends with lawmakers still careening towards a deadline somewhere between mid-February and late March, when the U.S. will run out of funding for most government programs and risk default. They have no plan to raise the ceiling or abolish it.
Doug Casey, chairman of Casey Research, professional investor, and author of Totally Incorrect: Conversations with Doug Casey tells The Daily Ticker. “The problem is the amount of debt itself. The problem is so big at this point, I think it’s very questionable whether this can be solved at all.”
He is saying there is so much money in T-security accounts, the government will be unable to transfer it to checking accounts. Why? Are all those dollars too bulky to move? Is it too hard to type $16.4 trillion into a computer?
This is what passes for wisdom in today’s debt-nut world.
Casey points to the money America owes above and beyond the official $16 trillion in national debt, as the real issue. This includes the so-called unfunded liabilities from entitlements like Social Security and Medicare.
Two former U.S. government officials put the federal government’s actual liabilities in excess of $86.8 trillion, or 550% of GDP, in a Wall Street Journal Op-Ed. Casey argues we’re talking of upwards of $100 trillion when you also factor in the liability of promises such as FDIC deposit insurance.
“This is far more than can conceivably be repaid, so the debt is going to be defaulted on, it’s simply a question of how,” he says.
To quote Casey, “Totally Incorrect”:
Consider Social Security. For you to receive a benefit, the federal government sends instructions to your bank, to increase the number in your checking account. The instructions can be in the form of a check or a wire.
Either way, the government can send instructions endlessly. It could, if it wished, instruct your bank to increase the number in your checking account by 100 trillion. Instantly, you would be $100 trillion richer.
A Monetarily Sovereign government does not need a source of income to do this. Even if federal taxes were zero, the government could continue sending those instructions. That is what Monetarily Sovereign means.
So when Casey says $100 trillion is “far more than can conceivably be repaid,” he is demonstrating incredible ignorance of federal financing and Monetary Sovereignty. There simply is no limit to what the government can pay, especially when the so-called “debt” can be repaid by transferring existing dollars from one account to another.
For new spending, new dollars would be needed, and here the only — ONLY — limit is inflation. The government can, and should, keep creating money up to the point of inflation. Though inflation is unlikely (for reasons described at Federal deficit spending doesn’t cause inflation; oil does), it always is on the minds of debt-nuts, which is why the next paragraph either is humorous, sad or frightening, depending on your mood:
Casey takes it one step further. “I think the U.S. government should default on the national debt,” he says, pre-empting his statement with the admission that it may sound outrageous and too radical. “I say that for several reasons. The most important of them is if they don’t default on it, it’s going to make the next several generations of Americans into effect indentured servants, serfs, to pay off the debt that their parents and grandparents have incurred.”
If anything is guaranteed to cause inflation (i.e. the loss in value of the American dollar) it’s default on our debts. Would you accept dollars if you thought the government would default on its own currency? It’s madness to the extreme.
Also, as we have seen, the next several generations of Americans will not pay even one dollar of the federal debt. Nobody does.
If you wonder how someone like Doug Casey gets media space, understand that the media are owned by the rich, and debt cutting benefits the rich by widening the gap between the rich and the rest.
Nearly all the “fiscally prudent” suggestions – the FICA increase, the cuts to Social Security and Medicare, and the cuts to myriad other federal initiatives – take money from the lower 99% income group, which widens the gap.
The gap is the main concern of the rich, for without the gap, there would be no rich.
Defaulting on American debt is crazy and reckless, but perhaps no crazier nor more reckless than the many other austerity ideas being promulgated by the stooges for the upper 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