–The “inversion” myth: Why 80,000+ people demand poverty. Thursday, Aug 28 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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 ultimately 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.
●Everything in economics devolves to motive,
and the motive is the gap.
===================================================================================

Readers of this blog know that federal taxes do not fund federal spending.

Although state and local taxes do support the spending of the monetarily non-sovereign state and local governments, federal taxes have no effect on the spending ability of our Monetarily Sovereign federal government.

If federal taxes fell to $0 or rose to $999 trillion, neither event would affect the federal government’s ability to spend. But because the populace has been brainwashed into believing federal finance is the same as state and local government and personal finance, we are treated to such lies as:

“Washington has to live within its means . . . Both parties agree that we need to reduce the deficit by the same amount — by $4 trillion. Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.” Barach Obama

And:

“Let’s be honest. We’re broke.” John Boehner

Honest?? The belief that federal taxes are necessary to support government spending (aka the Big Lie), now is being expressed regarding that “unpatriotic” tax move known as “inversion.”

Inversion means changing the address of a corporation’s headquarters to a lower-tax location, so as to reduce taxes.

It doesn’t require changing the physical location (though it could), doesn’t require firing American employees, doesn’t really require much except perhaps changing some of the company’s letterheads.

But this simple tax-saving procedure, not much different from the steps every taxpayer takes every tax season, has resulted in the most ridiculous commentary seen since Sarah Palin.

Burger King Dares Obama To Stop It From Fleeing To Canada

“My sense is this is Burger King trying to dodge paying its taxes,” Frank Clemente, executive director of the nonprofit Americans for Tax Fairness, told The Huffington Post. “I can’t say what’s on the company’s mind here, whether they’re trying to beat the clock on this and do something before Congress passes legislation or do something before Obama signs an executive order.”

One company, the drugstore giant Walgreen, considered and then abandoned a planned inversion earlier this month, after it faced significant public backlash. The Walgreen inversion could have allowed the company to slash its tax rate by as much as 15 percent, equating to savings of billions of dollars.

Oh, no! Allowing an American corporation to pay billions of dollars less in wholly unnecessary taxes? Unthinkable! And what would that company do with all those billions? Hire more people? Invest in infrastructure? Buy more goods and services, thereby increasing Gross Domestic Product, and enriching us all?

How awful!

And then, here come the politicians:

Durbin urges Hospira not to flee U.S.

Sen. Dick Durbin has a new target as he tries to halt American firms from moving corporate headquarters overseas to cut their tax bills: Hospira, a Lake Forest-based company that makes injectable drugs and infusion products.

The Democrat from Illinois on Thursday wrote a letter to the CEO of Hospira urging him not to take the firm’s tax dollars overseas.

“I strongly urge you and the Board of Directors not to duck your corporate responsibility by moving overseas to dodge paying U.S. taxes,” he wrote in the letter to F. Michael Ball. The deal, reportedly valued at about $5 billion, would allow Hospira to move its corporate tax base to France, which has a lower tax rate than the United States.

Durbin also noted that Hospira’s products are bought by the taxpayer-supported Veterans Health Administration and Medicare. Further, he said, Hospira relies on the Food and Drug Administration to “ensure its products are safe for consumers.”

The Durbin article tells every lie about inversion:

Hospira is not planning to “flee” the U.S. It merely is changing the mailing address of its headquarters. No one will move. Nothing will change — except the company will pay less taxes.

The Board of Directors would “duck its corporate responsibility” if it paid more taxes than necessary.

The VHA, Medicare and FDA are not “taxpayer supported.” Federal taxes don’t support anything.

Then, I received this petition:

Burger King: Don’t Try This Whopper of a Tax Dodge

Burger King benefits enormously from being an American company and should pay its fair share of taxes here in America. Don’t even attempt this whopper tax dodge or we will boycott Burger King.

There are currently 80,836 signatures.

How very clever: “Whopper” tax dodge. Sadly, more than 80 thousand people have no clue about federal financing. They actually believe they will benefit if companies pay more taxes. Ask them how they will benefit, and they will look at you like addled, drooling cows.

And finally, there is Gregory (famous economist) Mankiw’s article, which includes these lies:

“Tax inversions mean less money for the United States Treasury.”

“If tax inversions are a problem, as arguably they are . . . “

Wrong and wrong. The United States Treasury has the infinite ability to create money, and tax inversions most assuredly are not a problem. If anything, they are a solution to the corporate tax problem.

Then, when you think that maybe Mankiw is beginning to see the light:

” . . . corporations are more like tax collectors than taxpayers. The burden of the corporate tax is ultimately borne by people . . .”

“Let’s repeal the corporate income tax entirely, and scale back the personal income tax as well.”

Absolutely correct. I think he’s got it. I think he’s got it. The corporate tax, by removing dollars from the U.S. economy, impoverishes us all, especially the middle and lower classes.

But no. He doesn’t have it:

“We can replace (corporate and personal income taxes) with a broad-based tax on consumption.

“Some may worry that a flat consumption tax is too easy on the rich or too hard on the poor. But, one possibility is to maintain a personal income tax for those with especially high incomes. Another is to use some revenue from the consumption tax to fund universal fixed rebates — sometimes called demogrants.”

Sorry Greg, but federal taxes do not fund federal spending. So yes, a flat tax would be a big problem, because by impacting the poor more than the rich, it widens the Gap between the rich and the rest.

Bottom line, inversions are a partial solution (not a problem) to the real problem: Corporate taxes. They are paid by corporate employees and customers, not by the corporations themselves, though these taxes do make our corporations less competitive, internationally.

Why do the politicians hate inversions? Because massive inversions would demonstrate that the federal government doesn’t need taxes, and once the public understands that, all the excuses for federal austerity disappear.

(This was demonstrated before, when FICA was reduced, and SS payments were continued out of the government’s general fund. But Obama raised FICA soon enough that the public didn’t catch on. It also was demonstrated when the federal government, in an effort to stimulate the economy, sent checks to taxpayers — checks that were not backed by FICA or any other tax. But again the public didn’t get it.)

The rich political contributors love austerity. Austerity is what pushes the poor down and the rich up.

And the sound of 80,000+ mooing people demanding poverty, is heard in our land.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

The euro cancer grows; the dunce cap award returns Wednesday, Aug 27 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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 ultimately 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.
●Everything in economics devolves to motive,
and the motive is the gap.
===================================================================================

Way back on June 5, 2005, in a talk at the University of Missouri, Kansas City, I said, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.”

On Thursday, Nov 3 2011, this blog published, “There are two, and only two, long-term solutions for Greece and the other euro nations.” The two solutions were then, and remain today:

For Greece and the other euro nations, long term survival requires one of two, and only two, events:

1. Adopt some form of a sovereign currency, and become Monetarily Sovereign
or
2. The EU give (not lend) euros to its member nations as needed.

There are no other solutions. None. All the running in circles by the European financial geniuses will be to no avail. Each day they come up with some new lending plan, and the next day abandon it in favor of some other lending plan.

But none of these plans has any long-term benefit. The euro nations are like rats in a cage, scurrying in all directions, with no hope of freedom. But still they scurry, at top speed.

If you read about any plan that does not include #1 or #2 above, know that it will fail.

One version of solution #2 is a financial merger, a sort of United States of Europe.

In 2011, this blog was awarding dunce caps for economic ignorance. The above-mentioned post went further:

I have been awarding one to five dunce caps for economic ignorance, but now the ignorance has grown so pervasive, with the euro nation leaders and our own Tea/Republican, Democrats, and the media and the columnists and the old-line economists –none of whom admit that what happened in August 1971 completely changed economics — I feel even five dunce caps does not do justice to the universal economic ignorance.

So today, I award 1000 dunce caps to all the self-styled experts, who blather on and on, spouting intuitive economics, but know nothing of the facts Monetary Sovereignty exposes.

The award had a further benefit:

There is a second reason I award 1000 dunce caps: To demonstrate what sovereignty can do. I can create all I wish. I never will run short. I cannot be forced into dunce cap bankruptcy. I don’t have to “live within my means.” I don’t need a balanced budget. I don’t need to tax or borrow dunce caps. I don’t need to be dunce cap prudent. I am dunce cap sovereign.

In that sense I am identical with the United States government which is dollar sovereign. It too can create all the dollars it wishes, never will run short, cannot be forced into bankruptcy, doesn’t have to “live within its means,” doesn’t need a balanced budget, doesn’t need to tax or borrow and doesn’t need to be dollar prudent.

All of this is a prelude to an article I read just today:

Is the End Near for the EU?
Existential Threats And Decisions Approach
by Cliff Wachtel, FX Empire, August 26th, 2014

Summary
Existential Threat #1: Unsustainable Debt Loads That Could Destroy The EU Require A Fully Empowered ECB
Existential Threat #2: Undercapitalized Banks Present Systemic Risk To EU, Global Banking. This too requires a fully empowered central bank that can act fast with needed cash
Implications: A United States of Europe is the solution, but apparent lack of political will and popular support for implied loss of member state sovereignty may doom the EU.

Yes, a United States of Europe is one of the two basic solutions, if keeping the euro as a common currency is important. And I suppose it is, because admitting that the euro is a failure would simply be too humiliating for Europe’s leaders and economists.

One can only laugh at the “implied loss of member state sovereignty line.” Loss of member state sovereignty? Really? Perhaps they should have considered that before they began the euro experiment, which by its nature, demands the loss of member state sovereignty.

The article continued:

(Mario Draghi, an Italian banker and economist) mistakenly believed austerity programs imposed on GIIPS nations were necessary and correct . . . they were mistakes.

To avoid a repeat of prior EU sovereign and bank debt crises that would follow from a collapse in confidence in peripheral bonds, the ECB needs to have the power to print money needed to buy all the sovereign bonds necessary to keep market confidence up and rates down, inflation risks be damned.

The key idea is that a common currency means a common supreme legislature and central bank with authority over member state budgets. In other words, a United States of Europe, with member states ceding most of their control over their budgets, and thus, their full sovereignty. This is really the choice behind all the others.

Austerity (i.e. deficit reduction) doesn’t work? Euro creation and financial merger are needed? Well, well. Who’da thunk?

It only took many years of suffering by the not-rich populace, for these revolutionary ideas to begin bubbling to the surface. Of course, the rich love cuts to government spending, because these cuts punish the poor more, and so, widen the Gap between the rich and the rest. And it is the Gap that makes the rich rich and the poor poor.

Anyway, being dunce cap sovereign, I now award 1,000 dunce caps to the European Union, for continuing this charade and punishing your citizenry, all these years:

———-1000———-

Don’t worry folks. I won’t run short of dunce caps, and you won’t have to pay me any dunce caps as taxes. And if you did pay me any dunce caps, I’d simply destroy them. Why would I keep them? I’ll simply create new ones whenever I need them. I’m dunce cap sovereign.

Just like the Monetarily Sovereign U.S. government is dollar sovereign.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Bribery, secrecy and the Big Lie. How each day we lose more of our freedom. Sunday, Aug 24 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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 ultimately 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.
●Everything in economics devolves to motive,
and the motive is the gap.
===================================================================================

We repeatedly are told our government keeps secrets from us to protect us from our enemies.

Nothing could be further from the truth. For the most part, our enemies either already know these secrets, and/or the secrets are not important to our security.

The universal purpose of government secrets is to protect the government from us. Few politicians would keep their jobs if we knew what they really were doing.

OpEdNews Op Eds 8/22/2014
The U.S. government’s creeping war on journalists
By David Sirota

As states move to hide details of government deals with Wall Street, and as politicians come up with new arguments to defend secrecy, a study released earlier this month revealed that many government information officers block specific journalists they don’t like from accessing information.

The news comes as 47 federal inspectors general sent a letter to lawmakers criticizing “serious limitations on access to records” that they say have “impeded” their oversight work.

Reason Magazine has reported a 114 percent increase in Freedom of Information Act rejections by the Drug Enforcement Agency since President Obama took office.

The National Security Agency has also issued blanket rejections of FOIA requests about its metadata program.

And the Associated Press reported earlier this year that in 2013, “the government cited national security to withhold information a record 8,496 times — a 57 percent increase over a year earlier and more than double Obama’s first year.

(Even at the city level),in Chicago, for example, officials in Mayor Rahm Emanuel’s administration rejected a request for documents about an opaque $1.7 billion fund, some of which has flowed to the mayor’s political donors. Officials said it would take too much staff time to compile the data and that therefore the request was “unduly burdensome.

Remember Rahm Emanuel? He honed his secrecy skills in the Obama administration. I urge you to read the entire article.

Then, consider Edward Snowden:

NSA leaker Edward Snowden asks to extend Russia asylum
By Greg Botelho, CNN

He leaked secret information about U.S. spying programs. You didn’t know the NSA was spying on you and your family in violation of the Constitution, taking incredible amounts of information about you, your friends, those with whom you make contact every day of your life.

Had the government asked, you would have denied permission for that intrusion into your privacy. It didn’t ask. It just took. And you only now are aware of it, thanks to Snowden, which makes him an enemy, not of America, but of the politicians.

According to Presidential hopeful, Hillary Clinton:

“I think he is a poor messenger for the message that he’s trying to take credit for. I think he could have provoked the debate in our country without stealing and distributing material that was government property and was of some consequence.”

“Stealing government property”? That’s the “grave” offense for which he is being hounded worldwide by government agencies? Exactly what “government property” did he steal? Your personal information, which Mrs. Clinton now considers “government property.”

And of what “consequence”? We never have been told exactly what harm Mr. Snowden is supposed to have caused. The only “harm” that has been documented is: He lifted a rock and many embarrassing secrets about illegal government activity slithered out.

Mrs. Clinton’s comment tells us much about what kind of President she hopes to be. Following President Obama’s false claims of “transparency,” she will be our next secrecy President.

Read this article about government secrets:

Constitutional Black Out
13 Things the Government is Trying to Keep Secret From You
by BILL QUIGLEY

“We believe most Americans would be stunned to learn the details of how these secret court opinions have interpreted…the Patriot Act. As we see it, there is now a significant gap between what most Americans think the law allows and what the government secretly claims the law allows.

This is a problem, because it is impossible to have an informed public debate about what the law should say when the public doesn’t know what its government thinks the law says.”

The Government falsely assured the US public in writing that privacy protections are significantly stronger than they actually are, and Senators who knew better were not allowed to disclose the truth

The paranoia about secrecy of surveillance is so bad in the House of Representatives that an elected member of Congress was threatened for passing around copies of the Snowden disclosures which had been already printed in newspapers worldwide

For secrecy to be effective, there must be false dangers from which we are told we must be protected by secret means. And of course, this secrecy requires giving up our liberties. Today’s false “dangers” include:

1. Criminal and contagiously diseased foreigners massively flooding across our borders. We need more police, “stopping and frisking,” not only at our borders, but throughout America.
2. Black and brown domestic criminals steal our jobs and can be controlled only by our privately owned guns, aggressive police and harsh punishments
3. Muslim terrorists lurking in every neighborhood, who wish to behead us, and whom only our secret police can control.
4. Russians who wish to conquer us and who can be controlled only by our powerful military and spy organizations.
5. Federal social spending on the criminal poor, which causes inflation, rampant unemployment and future poverty for our children. It must be cut.

Create enough fear and loathing, and the populace will do anything and question nothing. The politicians want frightened, docile voters.

And that brings us to the Big Lie. As readers of this blog know, the Big Lie is a composite lie, composed of several lies, including:

1. Federal finances are the same as personal finances (per President Obama)
2. Taxes and taxpayers pay for federal spending.
3. The federal government, Social Security, Medicare, SNAP (food stamps) and other agencies all are “broke” (to quote John Boehner), so taxes must be increased and/or benefits reduced.

[See a more complete list at: Which of these myths do you believe? A test of your knowledge.]

The purpose of the Big Lie is to widen the income/wealth/power Gap between the rich and the rest.

Federal deficit spending benefits the not-rich far more than it benefits the rich. The Big Lie is an attempt to convince you that federal deficit spending is harmful, and that austerity (i.e. deficit cutting) somehow protects you and your children from some awful, future consequences.

In summary, the rich control the politicians, the media and the university economists. The politicians are controlled via bribery in the form of campaign contributions and promises of lucrative employment later. The media are controlled via ownership. The university economists are controlled via contributions to their universities from those like the Koch brothers et al, who influence course content and teaching.

And the politicians control the populace via secrecy and the Big Lie.

So long as we continue to believe and vote for politicians who promote secrecy and the Big Lie, the income/wealth/power Gap will widen and we will be slaves to the rich.

Bribery, secrecy and the Big Lie: This is how each day, we and our children lose more of our freedom, our power and our American dream.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–The Fed continues to cure our anemia by bleeding us with leeches Friday, Aug 22 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

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 ultimately 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.
●Everything in economics devolves to motive, and the motive is the gap.
===================================================================================

The U.S. dollar is both the lifeblood and the measure of our economy. Gross Domestic Product (GDP) is a dollar measure. The equation, GDP = Federal Spending + Non-federal Spending + Net Exports is a dollar measure.

Federal government deficit spending (Spending – Taxing) adds dollars to the economy, which helps grow the economy. The euro nations have had difficulty recovering from the Great Recession, because they practice a more extreme form of austerity (reduced deficits) than does the U.S.

Five years ago, this blog published “The low interest rate/GDP growth fallacy.” Here are a few excerpts:

The Fed raises interest rates to fight inflation. To fight recession, the Fed does the opposite. It cuts interest rates.

This may sound logical except for one, very small detail. The opposite of inflation is not recession. The opposite of inflation is deflation. So doing the opposite of what you would do to counter inflation makes no sense when trying to counter a recession.

We could have a recession with deflation. We could have a recession with inflation, which is called “stagflation.” The history of Fed rate cuts, as a way to stimulate the economy, is not a good one.

monetary sovereignty
Declining interest rates correspond with declining GDP.

Why does popular faith hold that cutting interest rates stimulates the economy? Because popular faith views only one side of the equation. But, for each dollar borrowed a dollar is lent. $B = $L.

Cutting interest rates does cost borrowers less. A business might be more likely to borrow if interest rates are low than when they are high. Further, consumers buying on terms are more likely to buy when borrowing is less costly.

But, when interest rates are low, lenders receive less money. And who are the lenders? Businesses and consumers.

You are a lender when you buy a CD or a T-bond, or put money into your savings account. When interest rates are low, you receive less money, which means you have less money to spend on goods and service — which means less stimulus for the economy.

The Fed has not learned from experience, but stubbornly adheres to the popular faith that interest rate cuts stimulate the economy.

I urge you to read that 2009 post before continuing. It serves as background for the article I saw today:

Yellen: Job-Market Shifts Complicate Interest Rate Decision
The Associated Press

Federal Reserve Chair Janet Yellen’s remarks to an annual Fed conference in Jackson Hole, Wyoming, offered no signal that she’s altered her view that the economy still needs Fed support from ultra-low interest rates.

Yellen repeated language the Fed has used at its last meeting that record-low short-term rates will likely remain appropriate for a “considerable time” after the Fed stops buying bonds to keep long-term rates down. The Fed’s bond buying is set to end this fall.

The Fed chair noted that while the unemployment rate has steadily declined, other gauges of the job market have been harder to evaluate and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months, many people working part time who would like full-time jobs and weak pay growth.

Translation: The patient has been suffering from anemia since 2008. We’ve been drawing his blood and applying leaches, but still he has anemia. The only solution is to keep bleeding the patient with leeches.

This false belief about low interest rates, along with Congress’s ongoing campaign to reduce federal deficit spending (aka “austerity,”) which also limits money supply growth) has been responsible for our current economic troubles.

The moral of the story, according to the Fed, is: If something does not work, never has worked and never can work, keep doing it, again and again and again. Never admit you were wrong in the first place.

Just keep drawing blood out of the economy, and hoping that in some unknown way, its current anemia magically will cure.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

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10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

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