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Mitchell’s laws:
●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.
●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.
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Economics is a physical science and a social science. As a physical science it is heavily influenced by statistics. So we analyze of GDP, unemployment, money supplies, trends, per capita measures, deficits, debts, and on and on – all statistical measures.
However, statistical measures often fail in a social science, particularly with predictions and determinations of cause and effect. For example, while deficits generally are stimulative, they sometimes are not, and while increased income can increase spending, sometimes it can increase saving. People are not reliably statistical.
Economics devolves to motivation,, and this is where economists are particularly weak. While psychologists speculate on the motives for human actions, economists feel more comfortable with numbers.
Consider, for instance, confidence. Some economists claim that consumer and business confidence motivates stimulative actions. Most deride this as the “confidence fairy,” and say no statistical evidence supports the claim.
Yet, there is one motivation that does not receive sufficient attention: Government motivation. Though governments are powerful economic movers, and economists explore government actions, most economists do not explore government motivations.
Governments are people, and people act according to motivation. What then, motivates the U.S. government?
1. Bill Black, the brilliant banking expert at UMKC, continually criticizes the failure of the federal government to prosecute bank criminality, yet I cannot recall him mentioning the real motive for this failure. Why?
2. With all the evidence showing that austerity depresses economies worldwide, why do governments opt for austerity? What motivates them?
3. State and local taxes are massively regressive: (Institute on Taxation & Economic Policy)
“Virtually every state’s tax system is fundamentally unfair, taking a much greater share of income from middle- and low-income families than from wealthy families. The absence of a graduated personal income tax and the over reliance on consumption taxes exacerbate this problem in many states.”
Total State and Local Taxes Imposed on Non-Elderly Residents, as Shares of 2010 Income
–Lowest 20% income group: 11.1%
–Second 20% income group: 10.0%
–Middle 20% income group: 9.4%
–Fourth 20% income group: 8.7%
–Next 15% income group: 7.7%
–Next 4% income group: 7.2%
–Top 1% income group: 5.6%What motivates state governments to punish the poor more than the rich?
(And what motivates the anti-“Big Government” movement to prefer state governments, which are even more adverse to low income citizens than is the federal government?)
4. FICA, the most regressive tax in America, punishes lower salaried people, and does not affect the wealthy, who receive most of their income via investments. Why is FICA structured this way?
5. The income tax rates are higher for salaries than for investments. Why?
Unpunished bank criminality, damaging austerity, regressive state taxes, regressive FICA, highest tax rates on salaries – why do our national and local governments repeatedly favor the rich over the rest?
Are these just examples of economic ignorance? I suggest it is not ignorance; so it cannot be cured by teaching; it is informed and intentional, and there is a motive.
The motive is greed and Political Bribery by the rich – Political Bribery in the form of contributions, gifts and promises of lucrative employment later – Political Bribery that more economically influential than the statistical factors economists generally consider.
Yet few economists acknowledge the government motive for austerity and widening the gap between the rich and the rest is Political Bribery. Why? Bribery is not statistical and it is intentionally hidden — especially since the Supreme Court, in a particularly shameful act, legalized more Political Bribery than ever.
Educating a criminal that his crimes hurt his victims, is unlikely to prevent future crimes. Educating the President and Congress that austerity hurts America is unlikely to prevent future austerity. Yet, economists focus on education and generally ignore motivation. How often have you seen an economist point to Political Bribery as the primary source of laws that increase the gap between the rich and the rest?
Public understanding and anger, that crimes are being committed, is the necessary first step in combating the crimes. Because the public does not understand that the real motive for austerity is Political Bribery by the 1%, recessions are viewed as an inevitable part of the economic “cycle” and politicians are thought to be helpless to prevent economic chaos.
The motive is greed and Political Bribery. The solution is public anger. The first job for economists is to stoke public anger.
Change will come only from the public, not from the criminals. To motivate public, we first must disclose the bribery. Then, when the public is motivated, teach the economics.
Everything in economics devolves to motivation.
Rodger Malcolm Mitchell
Monetary Sovereignty
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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
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
1.) “Everything in economics devolves to motivation.”
This factor is central, yet it is the one factor that economics professors and media hacks ignore. Indeed, they intentionally conceal this factor, so they can have jobs.
2.) Q. What motivates state governments to punish the poor more than the rich?
A. Federal austerity.
When the U.S. government refuses to create money on its keyboards for the states (so-called “revenue sharing”) the austerity puts the cash-starved local governments at the mercy of rich private interests. To attract large companies, local governments do not charge taxes from the companies. Cities pay to construct Wal Mart stores. Corporations are allowed to deduct state taxes from employee paychecks, and keep that loot themselves. To get revenue, local governments sell bonds, thereby putting themselves in severe debt. The bond game itself is rife with corruption. The result is a debt spiral (i.e. death spiral).
It all starts with austerity at the federal level.
The rich are not solely to blame. Equally at fault is the average level of selfishness and self-righteousness among the public. Every smug sarcastic comment by idiot readers strengthens the austerity mania. Even the “war on terror” did not reach this level of hysteria.
Here is the level of intelligence out there…
An idiot reader commented, “What if we have another national crisis such as 911, or a natural disaster, or even a major war? These could cost trillions of dollars. If a family is over extended financially (no savings and a monumental debt) and tragedy strikes, the only alternative is bankruptcy. If at least we were investing in the future (infrastructure) then it could justify the risk. But we are borrowing to consume, and that is a receipt for disaster.”
A different reader responded: “The government is not a family. Families can’t print money. Government finance is not the same thing as family or corporate finance. Has anyone claimed that the US government can’t pay its debts? Republicans don’t WANT to pay the debts, but Republicans don’t claim we CAN’T pay the debts. What if your make-believe family could print money?”
The idiot came back with this: “If a make-believe family could print money, it would borrow money until its home-printed currency was worthless and its creditors were wiped out.”
Wow.
The moron rejects the obvious fact that if you can print money, then you have no need to borrow money. And if you do decide to borrow, you have no trouble paying back any loan.
Such stupid, stubborn, smugness shows why the 99% chooses to be slaves of the 1%.
It all seems hopeless, but Rodger once noted that over time, society tends to swing back and forth in pendulum fashion between selfishness and altruism. I hope it’s true.
3.) “Change will come only from the public, not from the criminals. To motivate to public, we first must disclose the bribery. Then, when the public is motivated, teach the economics.”
Agreed, and let us note that there is plenty of money for all. In modern society the problem is not shortages, but maldistribution.
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Somewhere in the “idiot’s” thinking is the perception that lots of money = worthlessness. Idiots do not know how to deal with plenitude. Only scarcity and its two cousins austerity and sacrifice make sense.
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1.) @ tetrahedron720: Excellent comment. I agree. Most people are not happy unless they are miserable. Freedom and plenty are scary. Slavery and scarcity are familiar.
Rich people have reason to say, “Give freedom to my slaves? Nonsense. What would they do with freedom?”
Indeed, one factor that sparks revolutions is when slaves decide that perhaps freedom and prosperity aren’t such bad things after all.
Currently the peasant-slaves dream of freedom (“I want to win the lottery”) but dread it at the same time. (“The government is broke. We must have austerity.”) Some of their stupidity is a product of envy and hate. (“Everyone but me is a welfare queen. We must punish the parasites with austerity.”)
2.) THE FEAR BUBBLE
Change of topic.
I’ll explain the term “fear bubble” below. It’s an attempt to explain the austerity mania that we see in most economics professors.
Just now I skimmed five different articles on five different web sites from five different professors.
All five condemn Keynesian economics.
All five demand austerity (i.e. a balanced federal budget).
All five refuse to define their terms (e.g. “national debt” and “unsustainable”).
All five indulge in lies, omissions, and distortions.
My first impression was amazement at the smugness of these creeps. Can you imagine being one of their students? Question austerity, and you will be punished with a failing grade.
One professor writes, “Unlike Krugman and the Keynesians, I would argue that it is impossible to create something from nothing.”
(I agree. You can’t create money without a computer keyboard and a bank account that you can credit. )
Paul Krugman says we should worry more about creating jobs than about reducing the deficit. In response, some of the pro-austerity maggots are changing their monikers. Instead of debt hawks and deficit hawks, some now call themselves inflation hawks, or monetary hawks (e.g. Peter Schiff). They claim that austerity is the only way to prevent hyperinflation.
This is a standard ruse of austerity cultists. When they are debunked on the facts, they always shift to hypotheticals, such as hyperinflation.
University of Chicago Finance Professor John H. Cochrane says that if Krugman were a scientist, he’d be akin to a “flat-earther,” an “AIDS-HIV disbeliever” or somebody who believes the continents don’t actually move.
(Economics professors are toadies for the rich, i.e. politicians, i.e. professional liars. Same with religious clergymen.
Despite the rising deficit hysteria, perhaps the public is very slowly catching on. The “inflation hawks” no longer mention buzzwords like “Zimbabwe” and “Weimar Germany.” Instead, they claim, for example, that the CPI is a flawed measure of inflation. They claim that as the federal deficit has expanded* it has caused inflation to be much worse than we realize.
(*The federal deficit has not expanded. It has been cut more in the last three years than any time since the 1930s – with the same results.)
Consider the popular web site Market Oracle, which is radically pro-austerity…
>>“For five years now Paul Krugman has argued that increasing U.S. government spending is vital to our nation’s recovery. And for five years he’s been dead wrong. Since this crisis began, the United States has spent trillions; more money than any nation in history. In the process, it’s gone from being the world’s biggest creditor to the biggest debtor of all time. In fact, our national debt is now so high that people literally can’t count the zeros. So most have thrown up their hands in exasperation and given up trying.”<<
As we see, austerity cultists stuff lies into every sentence. The more the facts prove them wrong, the more they claim that the facts prove them correct. Their message is simple and it never changes: the cure for the depression is austerity. If austerity causes problems, the cure is more austerity. Always more.
Some of this garbage is understandable when we consider the source. The Market Oracle web site champions the market in tulip bulbs (i.e. gold). All gold bugs push austerity, hoping that the more they can destroy the economy, the better their market in tulip bulbs will be.
But what about economics professors? Why are they austerity fanatics? Is it incestuous amplification? (The process by which people repeat the same things to each other, causing lies to become “truth,” fantasy to become “fact,” and stupidity to become “common sense.”)
No, I suggest that austerity mania involves a “fear bubble.”
To explain…
As the student loan bubble continues to expand horrendously, the tuition for college continues to rise horrendously. Eventually the debt / tuition bubble will burst, causing a crash that will rock the entire system of higher education. Many economics professors will lose their jobs.
This is inevitable, and it seems to frighten many professors. Hence they scream for austerity, hoping the rich will remember their loyalty when the bubble bursts, and will give jobs to those same professors.
Perhaps this explanation is silly, but how else to account for the austerity mania we see in most professors? It’s downright pathological.
In any case, proessors are obviously desperate. If you are an economics professor, and you were not given a Nobel Prize like Krugman, then you dare not question austerity if you want to keep your job. And during an economic depression, unemployment is terrifying.
Hence the professors scream for austerity, which makes their coming unemployment all the more certain.
That’s the “fear bubble.”
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Mark, this might interest you: http://www.facebook.com/groups/MMTDeficitOwlCommittee/permalink/440752305997926/
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Mark,
You’re right about the fear factor. Economics is supposed to be a science. You can’t in this case have fear and logic at the same time. As a science, economics is divided into macro and micro, sort of like physics with micro atomic and macro astronomic, two different worlds. But some econ profs seem to be stuck in the mud of one world…micro. Everything comes down to the household budget and living within your means, the nonsovereign outlook! It feels so good (and safe) to spout those stay-at-home familiar family concepts all their students, and we, grew up with.
Should they dare venture out of their “homey” nonsoveriegn world and into soveriegn macro-reality, they would be faced with the frightening prospect of having to tell their students and peers about affordability and then face loss of credibility. Oh to be shunned.
Econ profs really need to come out of the nonsoveriegn closet and admit there is another side to the monetary coin. Erica Jong said it best: Fear can’t fly.
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http://www.angrybearblog.com/2013/02/red-state-tax-and-growth.html
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Yes! this double standard should be put under the spotlight. It would be like turning over a log in the forest and watching cockroaches squirm in the sunlight.
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