I don’t blame Trump Sunday, Nov 29 2015 

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between rich and poor.
•Austerity is the government’s method for widening
the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

============================================================================================================================================================================================================================================================

I don’t blame Trump.

He is what he is: A bigot, a megalomaniac, a tyrant and the would-be fuehrer of the United States of America. (“Fuehrer” means “leader,” but in Trump’s case “fuehrer” is more appropriate.)

All Hail Der Donald!
By Roger Simon

Do not say you were not warned. Der Donald has warned you.

Security is going to rule in America. And unthinkable things will be done.  Don’t believe me? Ask him.

“We’re going to have to do things that we never did before. And some people are going to be upset about it, but I think that now everybody is feeling that security is going to rule. … So we’re going to have to do certain things that were frankly unthinkable a year ago.”

On Saturday, a black man began shouting at a Trump speech in Birmingham, Alabama. People shout at Trump speeches all the time. But there are things you are allowed to shout, such as “We love you, Donald!”

And there are certain things you are not allowed to shout, such as “Trump is a racist!”

The black man was kicked and punched. Trump looked down upon him with lofty disdain. “Get him the hell out of here!” Trump said. “Throw him out.” The man was led away.

Trump would protect us from such people as president.

But I don’t blame Trump.  He is what he is:   A bigot, a megalomaniac, a tyrant and the would-be fuehrer of the United States of America.

I blame the people who support him.  I blame the good Republicans who are too cowardly to call him out.  I blame the “religious” (irony) right wing.

The price we would pay would be tiny. We would give up a civil liberty here, a freedom there.

Certain people would be registered. Their houses of worship would be spied upon. Names would be taken down.

But as long as these people are not Christians, do you really care? Trump is betting you do not.

We didn’t care when blacks were turned into slaves then hung from trees. We didn’t care when Jews were thrown into ovens and mass graves.  We didn’t care when native-born Americans lost their homes, because  their grandparents came from Japan or when native Americans were sent to reservations.

We don’t care when unarmed black men are murdered by police.

And now we don’t care again.

“I want surveillance of these people,” Trump has said. “I want surveillance if we have to, and I don’t care. … I want surveillance of certain mosques, OK?”

Martin Niemoller, a Lutheran pastor who first supported and then opposed Adolf Hitler, was imprisoned in concentration camps,  but felt he never did enough to speak out against fascism, especially when Hitler still could have been stopped.

Today he might have written:

“First they came for the black people, and I did not speak out — because I was not black.

“Then they came for the Muslims, and I did not speak out — because I was not a Muslim.

“When they come for you and me, who will be left to speak out?”

“Too many people have suffered and too many people have died for us to continue to hear racist words coming from major political leaders,” Bernie Sanders says.

“Turning away orphans, applying a religious test, discriminating against Muslims, slamming the door on every Syrian refugee — that is just not who we are. We are better than that,” Hillary Clinton says.

And what of Trump’s opponents for the Republican nomination? Most grovel and fawn.

They really don’t care that Trump wants to register Muslims, just as long as he doesn’t want to register guns.

I don’t blame Trump.  He is what he is:   A bigot, a megalomaniac, a tyrant and the would-be fuehrer of the United States of America.

I blame the good people who are only too glad to see other people’s lives destroyed, so long as their own lives are safe — safe temporarily, until he comes for them.

All that is necessary for the triumph of evil is for good men to do nothing.

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 Click here
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 and here)

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

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Vertical gray bars mark recessions. Recessions come after the blue line drops below zero and when deficit growth declines.

As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.

Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

Why a finance professor should not teach economics Saturday, Nov 28 2015 

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between rich and poor.
•Austerity is the government’s method for widening
the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

============================================================================================================================================================================================================================================================

Noah Smith is an assistant professor of finance at Stony Brook University and a freelance writer for a number of finance and business publications.

Professor Smith wrote an article titled,  Japan’s Debt Trap Won’t Fix Itself in which he demonstrates his not understanding the differences between a Monetarily Sovereign government (Japan, the U.S., Canada et al) and a monetarily non-sovereign entity (Illinois, Chicago, businesses, people).

Perhaps because he teaches finance, he may think all finance is the same, so he seems to apply monetarily non-sovereign restrictions to Monetarily Sovereign governments.

Here are some examples:

With low unemployment and high labor force participation, Japan has essentially no idle resources. The scope for boosting the economy with fiscal stimulus or easy money is almost nil.

Its available resource is the yen. Japan, being Monetarily Sovereign, has the unlimited ability to create yen, with which it can buy unlimited resources.

The “scope for boosting the economy” via monetary stimulus is unlimited.

Japan continues to run an enormous budget deficit every year. Things are looking somewhat better for 2015. A hike in the consumption tax in 2014 has swelled revenues.

Here, Professor Smith demonstrates complete misunderstanding of national finances. He thinks “swelled revenues” (i.e. reduced revenues coming into the economy) in some unknown way, will benefit the economy.

No, Professor Smith, sending fewer yen into the Japanese economy, will not help grow the Japanese economy.

Government coffers have also been boosted by increased profits at Japanese companies — which is then subject to the country’s high corporate tax rate. As a result, the primary deficit is projected to be only about 3.3 percent in 2015.

A Monetarily Sovereign government, unlike a monetarily non-sovereign entity, has no “coffers.” It creates its own sovereign money ad hoc, by spending.

And that “high corporate tax rate” and low deficit is guaranteed to depress the economy.

In the long run, any deficit that stays higher than the rate of nominal GDP growth is unsustainable.

Why is it “unsustainable”? No one knows. Professor Smith doesn’t say. I only can surmise that he thinks the formula for GDP (GDP = Federal Spending + Non-federal Spending + Net Exports) is wrong.

Bank of Japan has not managed to increase core inflation to the 2 percent target despite Herculean efforts.

Even if interest rates stay at zero forever, borrowing 3.3 percent of GDP every year is just too much. And if interest rates rise, deficits would explode.

The government, of course, knows this, and has pledged to cut the primary deficit to 1 percent by 2018 and to zero by 2020.

Inflation follows this formula: Value = Demand/Supply.  Inflation is a reduction in Value.

The Bank of Japan’s “Herculean efforts” consist of cutting interest rates, which only reduce Demand.  But the reason inflation is too low (according to the BOJ) is that Supply is too low.

So what is the government’s “solution” to low Supply? Cut the deficit, which will cut Supply, further.  Is it any wonder Japan is in trouble?

The Ministry of Finance, full of sober-minded bureaucrats, projects that under more realistic growth assumptions, the primary deficit will shrink only to 2.2 percent. Even that improvement would require tax hikes, spending cuts or some combination of the two.

So the Japanese government will try to stimulate inflation by cutting the Supply of yen.  Hmmm . . . What next? Stimulate obesity by cutting the supply of food? Warm the house by turning down the heat?

A primary deficit of 2.2 percent would be at the very edge of long-term sustainability. If we assume a 1 percent real potential growth rate and 1.5 percent inflation, then a 2.2 percent deficit will be just barely under the maximum sustainable level of 2.5 percent.

If you understand his “sustainability” formula, please explain it to me. And while you’re at it, please explain why a deficit of 2.5% is the maximum sustainable level. Will the Japanese government run short of its own sovereign currency?

The article continues on and on, explaining the unexplainable: Why tax increases benefit the economy while deficits are “unsustainable.” It’s utter nonsense, of course, and unfortunately, a rather common nonsense.

Professor Smith can be forgiven his ignorance about economics. We all are ignorant about many things, and he probably should not be expected to understand Monetary Sovereignty if, as a finance professor, he teaches monetarily non-sovereign finance every day.

But the notion that leaders of major countries don’t understand Monetary Sovereignty is beyond belief, and in fact, I don’t believe it.

Increased deficit spending, especially on benefits for the middle and lower classes, narrows the Gap between the rich and the rest of us. The Gap is what makes them rich; without the Gap, no one would be rich, and the wider the Gap, the richer they are.

It is a fact of life, that the rich run every nation and always have. Because most of the rich want the Gap to widen, they pay the opinion leaders — the politicians, the university professors and the media — to teach the public that federal finances are like personal finances, where deficit spending causes debt and large debt is “unsustainable.”

Whether Finance Professor Smith really believes these things, or whether he has been paid to disseminate the “Big Lie,” is impossible to say.

But add him to the list of those spreading the rich .1%’s false narratives about federal financing.

If you wish to drop him a note to tell him so, his Email is: Noah.Smith@stonybrook.edu

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 Click here
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 and here)

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

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Vertical gray bars mark recessions. Recessions come after the blue line drops below zero and when deficit growth declines.

As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.

Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

What science does economics most closely resemble? Thursday, Nov 26 2015 

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between rich and poor.
•Austerity is the government’s method for widening
the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

============================================================================================================================================================================================================================================================

In your opinion, which scientist is best equipped to understand economics:

  1. A physicist?
  2. A mathematician?
  3. A psychologist?
  4. A chemist?

Choose one.

Personally, I would choose the psychologist, because economics essentially is psychology.

While physics, mathematics and chemistry rely on specific, proven, reproducible relationships, economics almost wholly is arbitrary and subjective.

I’ll give you a painful example.

Commodity pricing is a function of economics. Years ago, I owned a commodity brokerage, where we employed a prize-winning chartist. (I can’t recall the name of the contest he won, but he and all the other entrants had to use charting techniques to predict various commodity prices.)

When we discussed his system, he spoke very authoritatively of “support levels,” “trend lines,” “resistance,” etc., all under the name, “technical analysis,” and it all sounded quite scientific.

Here is what stockcharts.com says:

Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. The logic dictates that as the price declines towards support and gets cheaper, buyers become more inclined to buy and sellers become less inclined to sell. By the time the price reaches the support level, it is believed that demand will overcome supply and prevent the price from falling below support.

Amazon.com, Inc. (AMZN) Support and Resistance example chart from StockCharts.com

Support does not always hold and a break below support signals that the bears have won out over the bulls.

A decline below support indicates a new willingness to sell and/or a lack of incentive to buy.

Support breaks and new lows signal that sellers have reduced their expectations and are willing sell at even lower prices.

In addition, buyers could not be coerced into buying until prices declined below support or below the previous low. Once support is broken, another support level will have to be established at a lower level.

If you detect the faint aroma of bovine excrement, I don’t blame you. In essence “support” is an arbitrary line, meaning nothing.

Charting, as a means to predict commodity prices, works sometimes and doesn’t work sometimes. In other words: It doesn’t work.

So sadly, our prize-winning chartist later proved spectacularly unsuccessful in predicting prices in the real world, and those of our customers who relied on his prognostications lost money.

Charting still is widely used as a predictive commodity pricing tool.

The use of charts to predict economic events is typical of economics as a science, because we economists have the compulsive urge to prove we are “real scientists,” and as “everyone knows,” real scientists base their hypotheses on mathematics, especially graphs.

I do it. We all do it. But that doesn’t make it smell any better.

The problem, of course, is that economics is a reflection of human psychology. Even worse (i.e. more deceiving) is the fact that economics also is a reflection of real physical processes. It’s a blend.

Consider what might be the most basic equation in all of economics: Value = Demand / Supply.

It says that increased Demand and/or decreased Supply (scarcity) increases Value (as measured by price). Intuitively logical.

Value, though, is complex. What is the price of a TV set? The answer depends on many variables: Size, model, manufacturer, retailer, location, date.

And Supply is equally complex. It too depends on those variables.

But ultimately, one can measure Supply and Price. They are finite. You can walk into a store and see that the store has three of a specific item at a specific price.

But how does one measure Demand?

While Value (price) and Supply can be set arbitrarily, Demand cannot.

Demand is related to motivation, which is buried in the human psyche. How do you measure a population’s motivation to buy a Porche, a pansy or a pickle? You only can do it derivatively and approximately.

That is, when economists know the Price and the Supply, they can derive the approximate Demand. But, if they don’t know both the Price and the Supply, they cannot know or determine the Demand.

The inherent weakness of the equation Value = Demand/Supply, applies to most equations in economics. They are ruled by the variables of human psychology.

At the bottom of this post is a graph indicating that reductions in federal deficit spending lead to recessions.

It is not like a graph that shows, for instance, the relationships among distance, time and speed (Distance = Time x Speed). They are not functions of psychology. Each can be stated with exact precision.

The graph at the bottom of this page encompasses thousands, no trillions, of human actions and decisions, which unless you believe in determinism and not in free will, are beyond measure and prediction.

Thus, my chartist employee’s efforts to predict commodity prices were doomed from the beginning. Unpredictable and unmeasurable factors affected the outcome.

In most nations, and surely in America, the single biggest unpredictable economics factor is actions by the central government.

Will it create a war? Change interest rates? Deficit spend? Allow or reject immigrants? Allow or prevent the use of resources? Almost anything the central government does affects the economy.

The government is composed of human beings, each of whom is affected by other human beings, as well as being affected by health, weather, threats, anticipated and unanticipated events, fear, hope, greed — the list goes on and on.

The graph (below) indicates we have come dangerously (and unnecessarily) close to recession. But when people ask me, “When will we have the next recession?” my answer always is, “Tell me what the federal government will do, and I’ll tell you when we’ll have the next recession.”

Compare that vague answer with the specific answer a physicist will give you if you ask him how long it will take a photon to travel a mile, or a mathematician will give you if you ask a question about set theory.

I suspect a physicist, a mathematician or a chemist would become exasperated with the pretensions of economists.

Look in any economics textbook and you will see it is loaded with graphs and formulas, almost none of which are more than approximations, and usually less, but appearing to be much more.

If I tell you reductions in federal deficit spending lead to recessions and depressions, that statement is about as accurate as economics can be. There is no formula, no proof, that can improve on that statement for accuracy.

I can show you the many times when reductions in federal deficit spending did, in fact, lead to recessions and depressions. But repetition is not scientific proof. Physicists know that.

I have awakened 30,000 consecutive mornings, but even that massive repetition does not prove I always will awaken.

And if someone presents exceptions showing how at certain times, reductions in federal deficit spending did not lead to recessions and depressions, they merely are expressing the variables of human psychology. They neither have proved nor disproved anything.

That is the point of this blog. Economics tries to be — pretends to be — something it is not, and probably never will be: An exact science.

At best, economics is equal to psychology in its accuracy of prediction.

So where does that leave us? Is all useless? Is it fruitless to predict that A –> B? Are we lost in randomness?

Not at all. We still can learn from facts, logic and experience.

Consider federal debt. The politicians, media and economists stress about it, and claim it is similar to personal debt, and is “unsustainable.” But what are the facts?

Federal debt is the total of T-securities outstanding. That is a fact.

Federal agencies own some T-securities. But most are owned by people, businesses or governments other than U.S. federal government.

To acquire a T-security, one must debit a bank checking account and credit a T-security account at the Federal Reserve Bank. T-securities are bank deposits — deposits in accounts in the FRB.

To “pay off” ​a T-security, the Federal Reserve Bank debits the appropriate T-security account and credits a checking account. This is identical to what any bank does to pay off any savings account.

Those all are facts.

Logically then, since the Federal Reserve Bank pays off federal debt with dollars that already exist in T-security accounts, the federal debt never can be “unsustainable.”

And, our experience is that the U.S. government never has defaulted (i.e. not “sustained”) on its debts — not through recessions, depressions, wars, inflations, deflations or natural disasters.

Does any of this scientifically prove the federal debt always is and will be sustainable? No.

I can visualize scenarios in which the government might default — for instance, Sen. Ted Cruz becoming President.

Because economics is akin to psychology, strict proof of anything is rare. But using our prime tools — facts, logic and experience — we can approach predictability, the goal of any science.

Unfortunately, economists have shunned facts, logic and experience, in favor of abstruse mathematical formulas, to “prove” the unprovable.

Economics and psychology may never have the accuracy of physics, mathematics or chemistry. In striving for that exactitude, economists peer deeper and deeper into minutia, while losing the big picture and the fundamental facts, logic and experience.

(How else can one explain the widespread misunderstanding, within the economics community, of federal debt, deficits and money creation?)

Economics essentially is a “soft” science, like psychology or philosophy. In trying to be part of a “hard” science, economists have gone astray, and done a great disservice to the public, the nation and themselves.

It’s time to get real, economists.

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 Click here
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 and here)

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

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Vertical gray bars mark recessions. Recessions come after the blue line drops below zero and when deficit growth declines.

As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.

Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

How to cut the crime rates in America Sunday, Nov 22 2015 

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes..

Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.

•The single most important problem in economics is the Gap between rich and poor.
•Austerity is the government’s method for widening
the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

============================================================================================================================================================================================================================================================

I belong to a country club north of Chicago. The staff, meaning the waiters, cooks, greenskeepers, valets and office personnel, are the sweetest, kindest, friendliest people you can imagine.

And, it isn’t easy.

It isn’t easy meeting the demands of members who are accustomed to having their desires met instantly — members who might complain if the steak is not cooked exactly right, or the car is not delivered within a few seconds or the tee box has too many divots — important stuff like that.

It isn’t easy meeting those demands with a friendly smile, and never objecting to any unreasonable demands.

And it isn’t easy maintaining that sweet, kind, friendly demeanor when your salary is — oh, I don’t know. I never asked. It wasn’t important to me. But I suspect it was well south of $20K per year, far less than 1/10th the typical member’s income.

And it isn’t easy supporting yourself on that income, much less supporting a wife and children.

One day last year, our club was purchased by a large corporation whose business it is to own clubs — more than 200 of them at last count.

And immediately thereafter, all these sweet, kind, friendly, low-paid employees – many of whom had worked for us for many years — were fired.

You see, they were undocumented immigrants, mostly from Central America. And a big corporation cannot afford to risk bending the law by employing undocumented immigrants.

I don’t know what these wonderful former employees now are doing to sustain themselves. Surely, they could not have had money set aside for emergencies.

Are they and their children starving?  Homeless? I don’t know.

Of all those lovely people, there was one who stood out — the sweetest, kindest, friendliest of all, who had worked at the club for many years. He worked hard; he worked well; he was loved by all.

I just heard he was arrested for dealing meth to supplement his income. My heart is broken. This kind, gentle family man will go to jail.

What will become of his family? How will they survive?

I don’t know whether his children are smart or talented, but they probably will not see college, and thereby may be doomed to low level jobs their entire lives — perhaps doomed to crime, themselves.

Poor neighborhoods have more crime, more gangs, more robberies and shootings, than do rich neighborhoods. And we tend to look down on those people. We tend to think of the poor as natural criminals.

We sneer at those receiving welfare benefits, as being lazy. We claim that if we give them assistance, that merely encourages their laziness. We feel superior to them.

But in reality, we do not understand what being poor means —  the minute-by-minute grind of trying to feed your children, pay your rent, fend off creditors and live amid crime —  always, always being short of money and short of pride.

We help cause that crime. When we cut social benefit payments because “they are socialism” or “they encourage laziness” or “they will cause inflation” or “it isn’t fair that they get money for not working,” we push desperate people into crime.

Yes, I know that not all poor people resort to crime.  I get that. But we humans are programmed to survive in the best way we can. And part of our survival involves yielding to temptation. We all do it.

The poor, like everyone else, want their children to live better lives. But as the days and months and years go by, and your children must leave high school for work, and never will go to college, and you know their lives will be hardscrabble — all for lack of money — what do you do?

What would you do?

And when the politicians want you to wait ten years to become a citizen, and meanwhile want to deport you, and they cut your meager benefits, and they don’t want you to have a legal job, and your life has no future — what would you do?

Crime. It isn’t a long-term answer to your poverty, but it can be an immediate solution to your immediate problems. (When you’re poor, virtually all your problems are immediate.)

We dramatically could reduce crime, but not by enacting stricter laws nor by harsher sentences, nor by increasing the size of our police forces.

We  dramatically could reduce gang violence, but not by building basketball courts to “give them something to do” nor by sending them to church to “learn right from wrong.”

We dramatically could reduce crime and gang violence simply by helping the poor financially.

The rich neighborhoods have less crime and violence than do the poor neighborhoods, because the rich have more money.  Period.

The rich are not fundamentally different human beings. It’s just that they can buy the present and they can buy the future, and the poor can do neither. So the poor steal to survive.

Institute the Ten Steps to Prosperity (below) and the crime rate in America, especially street crime, would go down.

Stop claiming that financial aid to the poor makes the poor lazy — and the crime rate would go down.

Stop claiming that the federal government will run out of dollars, or that federal benefits and federal debt are “unsustainable” — and the crime rate would go down.

Stop claiming that federal benefit spending causes inflation — and the crime rate would go down.

We can protect ourselves from crimes after they occur, by adding police and being “tough on crime” and by carrying guns wherever we go.

Or we can prevent crimes before they occur, simply by lifting the poor.

Which do you prefer?

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 Click here
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 and here)

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

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Vertical gray bars mark recessions. Recessions come after the blue line drops below zero and when deficit growth declines.

As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.

Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

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