–The AFL-CIO puzzle adds a new piece: The Alliance for Retired Americans Tuesday, Jul 29 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.
======================================================================================================================================================================================

Once, I’d been puzzled by the AFL-CIO, and lately this puzzle had become more — puzzling. Here are excerpts from an article in the AFL-CIO blog:

Good News for All Americans in Social Security, Medicare Reports

Said AFL-CIO President Richard Trumka: “Social Security and Medicare will be there for us and our families if elected leaders listen to the American people and reject calls to cut benefits. Instead of undermining these crucial programs, we must build on their success and adopt measures to strengthen and expand them.

O.K., good enough. But . . .

Richard Fiesta, executive director of the Alliance for Retired Americans, said the most important lesson from the Social Security report “is that Social Security has a large and growing surplus.

Uh oh. A large and growing “surplus”? Social Security is a federal agency. The federal government is Monetarily Sovereign.

A Monetarily Sovereign government doesn’t need a surplus. In fact, because a federal surplus = a deficit for the economy, a federal surplus always is harmful to the economy.

It gets worse:

The Medicare report, Fiesta said, “reminds us once again that the Affordable Care Act is controlling health care costs.” He said: It is great news that the life of the Medicare Trust Fund has been extended by another four years to 2030.

Yikes! does he actually believe there is a “Medicare Trust Fund” — a fund that pays for Medicare? Is he not aware that all federal “trust funds” — ALL — are accounting fictions that don’t pay for anything?

The U.S. money supply consists only of balances in the private sector. Since the federal government has no money, it pays its bills by sending instructions (not dollars) to creditors’ banks, instructing the banks to increase the balances in the creditors’ checking accounts. These instructions are in the form of checks or wire transfers.

Only at the time the banks obey the instructions, and increase the checking account balances, are dollars created.

Imagine an economy having a total of $1 trillion. On Monday, the federal government mails you a $100 check. On Tuesday, the check has not yet arrived at your bank. The economy still has $1 trillion.

Mail is a bit slow this week, so on Wednesday, the check still has not yet arrived. The economy still has $1 trillion.

By Thursday, the check arrives at your bank, but the bank is closing, so a clerk puts the check in a pile for tomorrow’s processing. The economy still has $1trillion.

On Friday, the clerk opens the mail, sees the check (the instructions) and pushes a computer key, which raises your checking account balance by $100. At that instant, and not before, the total money supply in the economy rises to $1 trillion, one hundred dollars. And this is how the federal government creates dollars.

The fictional “Trust Fund” is not part of this process. No matter what the balance in that trust fund may be, your bank’s clerk will push the button that adds $100 to the nation’s money supply.

That is why there need be no Army “trust fund” to pay for Army expenses, no Congress “trust fund,” no Supreme Court “trust fund,” no CIA, FBI or NSI “trust funds.” For a Monetarily Sovereign nation, a “trust fund” is a non-functional fiction, serving only to deceive.

Clearly the deception is working:

The Social Security Trustees reported once again that the Disability Trust Fund can pay full benefits until 2016, with enough revenue after that time to cover about 80% of promised benefits.

Trumka said: Congress should act soon to ensure disabled workers and their families will continue to receive the benefits they have earned. This can be done by allocating a larger share of current payroll tax contributions to the Disability program.

No, Mr. Trumka, federal taxes do not pay for federal spending. If federal taxes rose to $999 trillion, or fell to $0, neither event would affect by even one penny, the federal government’s ability to pay its bills.

That clerk at the bank doesn’t care about tax collections. He just follows instructions. And the federal government has the unlimited ability to send instructions.

Oh yes, there is a limit, and that limit is inflation. At some level of money creation (deficit spending), it’s possible for there to be an inflation the Federal Reserve can’t control. At that time, but not before, deficit spending would have to end.

Fortunately, such an inflation is quite rare. In fact, in the almost 240 year history of America, through wars, recessions, depressions, stagflations and even “normal” inflations, we never have had an uncontrollable inflation.

So the puzzle is: Why don’t Trumka and Fiesta seem to understand this? Is it ignorance, or is there a motive?

I suspect that in Truma’s case there is a motive: Increased Social Security and Medicare benefits may benefit the union’s members, but they don’t benefit the union’s leaders. So why waste much time, effort and political capital? A few perfunctory statements should be enough to show workers that the union stands behind them.

Far better to press for increased membership and higher salaries. That’s where the union leaders make their money.

As for the Alliance for Retired Americans, it’s mission statement claims:

“A primary objective of the Alliance is to enroll and mobilize retired union members and other senior and community activists into a nationwide grassroots movement advocating a progressive political and social agenda.”

So, they are going after “retired union members” — those people who no longer pay union dues — and ask them for $10 or more membership.

And what are the membership benefits? Apparently, they are the AARP for union people, with the same kinds of insurance business and discounts.

Given its business model, what would be the benefit to its leaders of higher Social Security benefits or reduced FICA?

None.

So, I guess the puzzle isn’t much of a puzzle. The AFL-CIO leaders and the Alliance for Retired Americans leaders and AARP’s leaders, have no real motivation to tell Americans the truth about the federal government’s ability to spend.

In fact, because the Alliance and AARP sell health insurance, they sure as heck are not going to tell anyone how Medicare for every man, woman and child in America, and a more generous Social Security with no FICA, easily are affordable for our government — just as AARP won’t tell.

O.K., puzzle solved. Those three organizations benefit from the ignorance of their members, and no one is going to kill that goose while it’s laying those golden eggs. The members will have to figure things out for themselves.

Lots of luck with that.

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 human cost of lies and ignorance, and what you should do Monday, Jul 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.
======================================================================================================================================================================================

The Big Lie not only costs you money; it can cost you your life.

Here are some excerpts from an editorial in today’s Chicago Tribune, one of the many newspapers spreading the Big Lie:

Patients pay steep price for Hepatitis C cure

There’s a new breakthrough hepatitis C drug treatment that cures — yes, cures — almost everyone who takes it. Unlike previous, far less effective treatments, patients suffer few if any side effects. The entire regimen takes only 12 weeks, much shorter than previous regimens.

The drug, Sovaldi, could save the lives of many of the estimated 80,000 people a year who die from the blood-borne liver disease. Eventually, Sovaldi could save the nation’s health system billions of dollars by preventing liver failure and liver cancer, not to mention curbing the huge costs of liver transplants.

The miracle pill costs $84,000 for a typical 12-week course of treatment.

Sens. Ron Wyden, of Oregon, and Charles Grassley, of Iowa cite a study that says Sovaldi could cost Medicare $6.5 billion over the next year or so, boosting drug premiums by 8 percent.

Wyden is a Democrat and Grassley is a Republican, demonstrating that the Big Lie is neither blue nor red, neither left nor right.

Readers of this blog know that federal taxes do not pay for federal spending. Unlike state and local governments, and unlike you and me, the federal government is Monetarily Sovereign. It neither needs nor uses tax dollars for anything.

Even if FICA were $0, the federal government could (and should) provide free, comprehensive Medicare to every man, woman and child in America.

Some states are planning or starting to restrict access to the drug to mainly the sickest patients. Some private insurers also are imposing treatment limits, urging physicians to treat only patients who absolutely need the therapy now.

See, it’s like this. Treat the sickest patients, but withhold Sovaldi from the others, until they get sicker. This insures that everyone gets really sick.

There’s mounting pressure on Gilead Sciences, the maker of Sovaldi, to cut its price. But if $1,000 a pill is too much, what is the “correct” price?

No, we do not defend price gouging by prescription drug companies. But we strongly defend American pharmaceutical innovation and the wondrous results it yields.

Sovaldi is a prime example of why America’s drug industry is the world’s powerhouse. A company spends years and hundreds of millions of dollars developing a drug, knowing most fail in trial.

The company discovers a blockbuster drug. Company execs price it accordingly, to reward shareholders and investors for the risks taken and for all the money spent chasing miracle drugs that never panned out.

The Tribune’s editors are right — and wrong. They are right that drug development is an extremely costly, extremely dangerous procedure. The vast majority of new drugs prove worthless.

Even those that finally, after years of expensive testing, reach the market, may be found to have serious side effects that can lead to multi-million dollar law suits.

So why do drug companies spend billions trying to develop drugs that usually don’t work, and may cause liability. Why take such huge risks? Only because the rewards can be great.

If not for that risk-taking, no new drugs would enter the market, and we all would suffer and die years earlier.

But the Tribune editors are wrong in spreading the Big Lie that federal taxes pay for federal spending. In fact, federal taxes pay for nothing — NOTHING — and federal deficit spending is necessary for economic growth.

If Sovaldi costs Medicare $6.5 billion a year, and the federal government were to pay for Medicare, that would mean $6.5 billion in growth money added to the economy.

And why all the lies? The richest .1% income/wealth/power group bribes politicians bribes politicians via campaign contributions and promises of lucrative employment later; the newspapers are owned by the rich and the universities are supported by the rich — all to widen the gap between the rich and the rest.

Because every source of information repeats the Big Lie, the populace remains ignorant of the truth, and that ignorance is killing them.

What should you do? Spread the truth.

The ignorant will denounce you and insult you and resist you. But if you keep at it, eventually the truth will out, the gap will narrow, and our lives will be longer and better.

Never surrender.

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 oldest war that cannot end. Sunday, Jul 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.
======================================================================================================================================================================================

I’m sailing into dangerous waters, here, so please bear with me.

In religion, there are no facts; only stories. These are mine.

BACKGROUND

The earliest religions were multitheistic, with gods ruling over every conceivable thing — sun gods, moon gods, rain gods, ocean gods, mountain gods – an endless procession of gods, often at odds with one another.

Judaism was one of the first monotheisic religions, with 3,000 year old roots. Its one God has no physical presence, but rather is an all encompassing, eternal, all-knowing, omnipresent power.

Jews (originally “Children of Israel”) have a personal relationship with their god. All prayers are directed to, and all responses come from, this one god. There are no intermediaries.

Rabbis are not holy figures. They merely are teachers. No one prays to a rabbi.

This god gave the Jews their 10 commandments, the first three of which are:

1. I am the Lord thy God, who brought thee out of the land of Egypt . . .
2. Thou shalt have no other gods before Me. Thou shalt not make unto the a graven image, nor any manner of likeness, of anything that is in heaven above . . . (nor) bow down to them, nor serve them . . .
3. Thou shalt not take the name of the Lord thy God in vain . . .

Over time, people became uneasy with the concept of direct personal communication with God, perhaps believing they were unworthy of such communication, or perhaps needing a human presence to which to pray.

Jesus of Nazareth was a rabbi, born, lived and died a Jew, as were his disciples, including Peter, the first pope. Some Jews (Jewish Christians) accepted Jesus as their messiah, and so became the beginnings of Christianity.

Most Jews rejected the notion that Jesus is God or the son of God as a violation of the 2nd commandment, though this “problem” was addressed with the teaching of the Trinity and the revised commandments:

1. I am the Lord thy God. Thou shalt not have strange gods before me.
2. Thou shalt not take the name of the Lord thy God in vain.
3. Keep the Sabath day

In denying the legitimacy of Jesus as God, and in refusing to worship Jesus, Mary or any other saints, Jews essentially denied the legitimacy of Christianity.

Thus they were seen as a threat to Christian leaders, who ironically made Judaism, the religion of Christ, a target of Christian hatred, passed down from leaders to followers, through 2,000 years.

In the 7th century, common era, Islam was created by Muhammad, although Muslims believe that Adam, Noah, Abraham, Moses and Jesus all were Islamic prophets. Though Islam has its roots in Judaism and Christianity, Muslims and Christians repeatedly have warred, and both repeatedly persecuted the Jews.

As is common among religions, schisms occur among the less devout and the most orthodox. Christianity split into Orthodox and many Protestant denominations. Judaism is divided into Orthodox, Conservative and Reformed movements, while Islam divided into many schools, the primary of which are Sunni and Shia.

While early on, these divisions resulted in acrimony and even wars and murder in the name of God, the various divisions of Christianity and Judaism no longer engage in internecine combat.

Islam however, perhaps because it is younger, still is in civil war, particularly among Sunni, Shia and Wahhabi.

All of the above is to put into context, the current Mideast wars, especially those involving Hamas, a Sunni Muslim group, al Qaeda and the Taliban (radical Wahhabi Muslim movements), Hezbollah (a Shia Muslim group) and other Islamic groups often labeled as terrorist.

Ostensibly, the current Mideast war, involving Israel and Gaza, is a land dispute, with ownership claims dating back at least 3,000 years.

But, the amount of land involved including the disputed land (total about the size of the island of Sardinia), is minuscule (blue is Israel).

monetary sovereignty

Considering that the borders of almost every nation have been determined in wars, one wonders why, among all nations, the borders of, and even the existence of, Israel continues to be the subject of endless fighting.

I suggest that the current war between Israel and Gaza merely is a manifestation of ongoing religious wars between Christianity and Islam, and Islamic civil wars, that have gone on for the past 1500 years.

Religious wars are unlike political wars. While all wars are fought for political power, political wars have sub-motives: oil, water, forests, cattle or merely the increased military power that comes with increased population and extended borders. The purpose of political wars usually is to gain or protect some asset.

Religious wars are different. They always are passionate, and seldom are based on any real desire for asset gain. Instead, they are meant to rid the world of “infidels,” i.e. other religions.

When Israel gave Gaza to the Muslims, the act relied on the false Western narrative that Islam wanted land, freedom self-determination for its people. Based on that Judeo-Christian logic, the Israelis left in Gaza thousand of greenhouses, used to grow crops for internal consumption and export. Israel expected gratitude for doing what perhaps no other nation ever has done.

But the Muslims destroyed the greenhouses, which shocked the Israelis. It shouldn’t have, for the Gazan leadership wanted neither land, nor freedom nor self-determination for its citizens. It wanted, and continues to want, the destruction of Israel and of Judaism, and later, the destruction of Christianity– all of whom are considered infidels.

(Right wing Christians understand this, which is why many are strong supporters of Israeli Jews, while ironically having been long time intolerants of American Jews. To Jews this is puzzling, though it makes perfect sense in the war between Christianity and Islam. “The enemy of my enemy is my friend.”)

The killing of Gazan civilians in the current hostilities, is widely decried, though civilian deaths are common in war. America and its allies killed 140,000 in Hiroshima and 80,000 in Nagasaki. Around 600,000 German civilians died during the allies’ wartime raids on Germany, including 76,000 German children. In July, 1943, during a single night in Hamburg, 45,000 people perished in a vast firestorm.

And these civilians were targeted, while Israel claims it tries to avoid civilians. But Hamas places its rocket launchers in or near hospitals, houses and schools, and urges its civilians to martyr themselves in front of bombs. That is a religious war, where martyrdom is welcomed as a weapon.

Another difference between political and religious wars is leadership. Political wars are led by agreed-upon leaders, who can evaluate real situations, and can, if necessary negotiate peace.

Religious wars are led by emissaries of God, who lead only a fraction of their religion, and who do not have the power nor the desire to negotiate peace, lest they be deposed by other, more radical religious leaders.

Hamas does not wish to negotiate peace with infidels. It wishes to destroy infidels. Nor does it have the power to speak for Islam, all of which considers Jews, Christians and opposing Islamic sects to be infidels.

When America, Russia and England defeated Germany, Italy and Japan, America instituted the Marshall plan that helped revive its former enemies. Today, short of a non-combatant “cold war,” we have reasonably peaceful relations with “the Axis.”

Despite massive killings on both sides, our people do not hate the people of these nations.

But, short of committing mass suicide, there never can be peace for Israel. There can be a cessation of active hostilities in a religious war, but there always will be hatred, that can boil over with the next perceived insult or the next vocal religious leader.

Those who criticize Israel for not giving Palestinians more land, or for killing civilians, are thinking with their logical, secular brains, but this is not a logical, secular battle. It is an illogical, religious fight between Christianity and Islam, with Israel being the point of Christianity’s spear.

In religion, there are no facts; only stories. These are mine.

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

–Let’s play “Smart, Stupid or Liar?” Saturday, Jul 26 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.
======================================================================================================================================================================================

Background: The U.S. governement, being Monetarily Sovereign, never can run short of its own sovereign currency, the dollar. Even if all federal taxes fell to $0, the federal government could continue spending as always.

In fact, deficit spending grows the economy (Federal deficit = economy surplus).

And this is unlike the situation with monetarily non-sovereign entities (states, counties, cities, businesses, individuals), which have no sovereign currency and can run short of dollars.

Given that, let’s play: Smart, Stupid or Liar?

Aon sees payoff from tax inversion

The commercial insurance brokerage now based in London shaved its tax rate to 17.5 percent in the second quarter. Its rate the last time it was a U.S. corporation in the same period: 24.7 percent.

Save 7.2% on taxes: Smart, Stupid or Liar?

The potential savings highlight the allure for North Chicago-based AbbVie to strike a nearly $55 billion deal to buy drugmaker Shire last week, a transaction that will allow it to cut its tax bill by shifting its legal address to the United Kingdom.

Smart, Stupid or Liar?

Administration officials estimate the deals, if allowed to continue, will cost the U.S. Treasury $17 billion in lost revenue over the next decade.

(Translation: Add $17 billion to the economy) Smart, Stupid or Liar?

President Barack Obama has asked Congress to pass a bill aimed at ending the practice. He asked for tax reform that lowers the corporate tax rate. But he says the problem can’t wait. He’s urging lawmakers to join the effort to close the loophole.

So, to prevent “costing” the U.S. Treasury billions, Obama wants to lower the corporate tax rates which will — “cost” the Treasury billions.

“If companies continue to change their domicile, we’re going to lose receipts, we’re going to lose jobs,” Rep. Ed Royce, R-Calif., said.

Royce says the changing the address (not the location) of a company’s headquarters (not its office or plants) costs the U.S. jobs.

Smart, Stupid or Liar?

The Council of Economic Advisors to the President (CEA) consists of 3 economists plus a professional staff of 15-25. The heads of the CEA, the Treasury Department and the Office of Management and Budget (OMB) form a group known as the Troika, which analyzes economic conditions and makes recommendations.

So all these economists advise the president on economic conditions, and apparently not one of them has told the President that:

1. Federal taxes do not finance federal spending
2. Federal deficit spending is necessary for economic growth
3. Federal taxes are recessionary in that they remove dollars from the economy
4. Taxes take income and profits from business, reducing business sales investment and employment.

Stupid, Smart or Liars?

Obama: Offshore ‘tax inversions’ are unpatriotic.

Obama says Americans don’t get to pick which rules they follow and neither should companies.

The President says being patriotic requires paying more taxes than the law specifies. He also says that if people move their investments offshore, they don’t receive tax breaks. (It would be rude to ask the President whether he pays more taxes than he needs to.)

Smart, Stupid or Liar?

Republicans in Congress,have supported broad tax reform that would eliminate loopholes and lower corporate tax rates in an effort to reduce the incentive for companies to relocate in countries with lower tax rates than the U.S.

The Tax Reform Act of 1986, with its basic structure of “broadening the tax base and lowering rates,” has become the lodestar for bipartisan tax reform. The Moment of Truth report by National Commission on Fiscal Responsibility and Reform Co-Chairs Erskine Bowles and Alan Simpson, the report of the Bipartisan Policy Center’s Debt Reduction Task Force led by Alice Rivlin and Pete Domenici, and the U.S. Senate “Gang of Six” budget blueprint have all proposed variations of the “broadening the tax base and lowering rates” reform framework.

Translation: “Broadening the tax base” means: Charge the poor and middle-incomes more. Lowering rates means: Charge the rich less. President Obama hired Bowles and Simpson, and their recommendations led to the sequester, which slowed economic recovery.

Smart, Stupid or Liars?

Bottom line: Both parties are bribed by the rich (via campaign contributions and promises of lucrative employment later). Economists are bribed via employment. So both parties are incented to do what the rich want, i.e widen the income / wealth / power gap between the rich and the rest.

There probably are some in Congress who are stupid enough to believe the Big Lie that the federal government needs tax dollars to “live within its means.” The President is not stupid, but he needs to opt for lower deficits, because deficit spending benefits the lower income groups, thus narrowing the gap.

So he raised FICA, cut Social Security benefits, hired Bowles/Simpson, tried to implement his “grand bargain,” which would have punished the less affluent, and said the government is like you and me in that it “needs to live within its means”.

President Obama: Smart, Stupid or Liar?

The most effective gap widening strategy would be to cut corporate taxes while “making up for the loss” by broadening the tax base. That is what I expect Congress and the President to do.

What should Congress do? The Ten Steps to Prosperity:

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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