Finally, a faint ray of hope about the federal deficit Friday, Dec 7 2018 

In what may seem to be a strange result, we may be seeing a faint ray of hope about the U.S. federal deficit. Read the following excerpt:

Caring about the budget deficit cost George H.W. Bush the presidency; his successors took note
By DAVID LAUTER, DEC 07, 2018 | 5:10 AM

At the funeral for President George H.W. Bush, former Sen. Alan Simpson recalled his friend’s reaction when Simpson and other allies urged him to go along with a tax increase to shrink the budget deficit.

“OK, go for it, but it will be a real punch in the gut,” Bush said, knowing the political heat he would take.

“When the really tough choices come, it’s the country, not me,” Bush said, according to Simpson. “It’s not about Democrats or Republicans, it’s for our country that I fought for.”

We venerate that “country first” attitude in theory, but in practice, it likely cost Bush the presidency: The tax increase, as Simpson said, sparked a revolt within the Republican party that was “one of the main factors assuring his return to private life.”

SILENCE OF THE DEFICIT HAWKS
A generation later, Bush’s successors, especially his Republican successors, have learned that lesson: Voters say they care about reducing the national debt, but more often than not, they punish politicians who do it.

Bush’s immediate successor, President Clinton, built on the budget he inherited, adding an upper-income tax increase of his own. By the end of Clinton’s term, with the help of an economic boom, the federal budget was in surplus.

And that budget surplus helped cause the recession of 2001. In fact, virtually all recessions are caused by reductions in federal debt growth, while actual reductions in federal debt most often cause depressions.

Recessions (vertical gray bars) come on the heels of federal deficit reductions and are cured by federal deficit increases.

U.S. depressions tend to come on the heels of federal debt reductions.
1804-1812: U. S. Federal Debt reduced 48%. Depression began 1807.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
1997-2001: U. S. Federal Debt reduced 15%. Recession began 2001.

Bush’s son, President George W. Bush, promptly pushed the government back into deficit with two large tax cuts. The financial crisis at the end of Bush’s presidency caused the deficit to rocket upward.

Republicans objected loudly to the deficit while President Obama was in office, even as he steadily brought it under control in his second term. But the deficit hawks have been mostly silent under President Trump as the red ink has once again spread.

And that is our ray of hope:. The deficit hawks, who tend to be right-wingers, being silent about debt.

No, it isn’t that they have learned why federal deficit spending is necessary for economic growth.

And no, they may not understand that the federal government is Monetarily Sovereign and never can run short of dollars to pay its financial obligations.

But, at least they are keeping their mouths closed for political reasons, and that will make it at least a bit more difficult for them to object to future federal deficits. Maybe.

This past year, the annual deficit hit $779 billion, despite a healthy economy. A big tax cut, combined with spending increases on the military and some domestic programs have pushed it higher.

By the time Trump’s current term ends, the deficit will likely have hit $1 trillion a year.

No one in either party claims that big deficits in healthy economic times are a good idea. But Republicans resist any tax increases, and neither side has much interest in cutting the biggest categories of federal spending — social security, the military, Medicare.

Perhaps “no one in either party claims that big deficits in healthy economic times are a good idea,” but the people who understand economic reality know that deficits grow the economy.

And no, deficits don’t cause Zimbabwe hyperinflations. (All hyperinflations in history have been caused by shortages, most often shortages of food.)

As Sarah Wire reported, Congress and the administration have a budget deadline right before Christmas that could cause a partial government shutdown.

But it’s not the rising deficit that’s at issue but, instead, whether to provide money for Trump’s wall along the Mexican border.

As much as anything else, Bush’s willingness to take political heat for a balanced budget marks him as a political figure from a bygone era.

We can hope Bush’s loss also set the stage for the realization that deficits are necessary for economic growth, and the federal debt is no burden on the federal government or on future taxpayers. (While state and local taxes fund state and local debt, federal taxes do not fund federal debt. That is the meaning of federal Monetary Sovereignty.)

Image result for bernanke and greenspan

It’s our little secret. Don’t tell the people we don’t use their tax dollars.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Alan Greenspan: “Central banks can issue currency, a non-interest-bearing claim on the government, effectively without limit. A government cannot become insolvent with respect to obligations in its own currency.”

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e.,unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Climate change: Two articles. Friday, Dec 7 2018 

Here are excerpts from two recent articles about climate change, presented without comment, as no comment is necessary:

‘It’s happening, it’s now,’ says U.S. government report on climate change
Nov 23, 2018 6:50 PM EST

On Friday, the federal government released its most dramatic report yet on the effects of climate change.

According to scientists, the country is already experiencing serious consequences from rising global temperatures, including more frequent and severe storms, fires and flooding. John Yang talks to Michael Oppenheimer, professor of geosciences and international affairs at Princeton University.

The government issued its most dramatic report yet about climate change today, and it came with a dire warning.

Scientists said the country is already reeling — feeling major effects of climate change and it has already cost the United States hundreds of billions of dollars.

The report, which was issued by 13 federal agencies, also highlights how climate change is expected to have a significant impact on the future of the economy.

The report links extreme events like Hurricanes Maria and Harvey and longer, more intense, more frequent wildfire seasons.

And scientists say there’s more to come. The continental United States is already 1.8 degrees warmer than it was a century ago, and the temperature may rise by another 2.3 degrees by 2050.

Unless more is done, the risks and impact of climate change are expected to shrink the U.S. economy 10 percent by century’s end.

And then came this:

Trump’s EPA Plans To Ease Carbon Emissions Rule For New Coal Plants
December 6, 20184:22 PM ET

President Trump’s Environmental Protection Agency plans to reverse a 2015 Obama administration requirement that new coal-fired power plants have expensive technology to capture carbon dioxide emissions, EPA Acting Administrator Andrew Wheeler, a former coal industry lobbyist, announced Thursday.

Wheeler said the Trump administration was removing “unfair burdens” on energy providers to “keep energy prices affordable and encourage new investments in cutting-edge technology that can then be exported around the world.”

Environmentalists criticized the move, which came as leaders from 200 countries meet in Poland to discuss reducing greenhouse gas emissions.

Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign, said the administration was trying to push its “backwards and false narrative about reviving coal at the expense of science, public safety, and reality.”

Note to Trump followers:  The rich want profits today. They don’t give a damn about your children’s and grandchildren’s lives.

So just keep on voting for stupid. Why worry about tomorrow.

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

The tariff nose-cutting, pissing contest Wednesday, Dec 5 2018 

From THE WEEK Magazine:

“President Trump on Tuesday tweeted that trade negotiations with China are “ongoing.”

“Trump said he wants countries who “come in to raid the great wealth of our Nation” to “pay for the privilege of doing so,” arguing that tariffs will “always be the best way to max out our economic power.”

“Dubbing himself ‘a Tariff Man,’ the president threatened to impose tariffs once again if the two nations can’t reach a “fair” agreement in the next 90 days.”

The above, in typical Trumpian style, demonstrates either abject ignorance or intentional perfidy. Tariffs never have been even a good way, never mind “the best way,” to “max out economic power.”

And by calling himself “a Tariff Man,” Trump merely is saying, “I am willing to punish Americans so I can fool them into thinking they are winning.”

Let’s examine tariff reality.  The idea behind tariffs can be visualized by this invented example:

China, because of low local wages or material costs, and/or superior manufacturing skills, is able to produce a pot that is significantly cheaper than, or superior to, similar pots produced in the U.S.

So to protect the U.S. pot industry, and the jobs therein, the U.S. levies a tariff on pots imported from China.

The President then boasts that he has saved the U.S. pot industry and prevented China from “taking advantage of us.”

What really has happened?

  1. The U.S. government has levied a tax on Americans, punishing people who buy Chinese pots.
  2. The U.S. consumers’ cost of all pots has been increased, which is inflationary.
  3. Dollars have flowed from the U.S. private sector to the U.S. government. Taking dollars from the private sector is recessionary.
  4. The U.S. pot industry, being protected from foreign competition, does not need to strive for efficiency, and thereby stagnates, while other nations improve their pot-making efficiency.
  5. China retaliates by levying an import tariff on American pans, which hurts the U.S. pan industry, thereby costing jobs in the U.S. pan industry.

    Image result for water fight

    Trump says we’re winning.

Bottom line results for the trade war: Taxes on Americans have increased; inflation has been stimulated; the pot industry has been protected, but the pan industry has been hurt; and no net jobs are produced.

Trump, and most Americans, do not understand, that punishing Americans with higher taxes, is not a good way to protect Americans. The irony is that Trump boasts about cutting taxes, while his tariffs increase taxes.

If Americans’ income and jobs, and/or a particular American industry, need to be protected, there are far better ways than the self-destructive, pissing contest that Trump and his predecessors have initiated over the years. To:

I. Increase and Protect Americans’ Income: Initiate the Ten Steps to Prosperity (below). Step #1 alone (Eliminate the FICA tax) would increase the incomes of all salaried people. The other Steps would protect the incomes of Americans’

II. Protect Americans’ jobs: The elimination of FICA would cut employment costs, thereby encouraging employment in all industries, not just specific industries.

III Protect American Industries: Step 6. (Eliminate federal taxes on business) would benefit American businesses at no cost to anyone. The U.S. government, being Monetarily Sovereign, neither needs nor uses tax dollars. It creates new dollars, ad hoc, every time it pays a creditor.

Additionally, the federal government could assist vital industries via direct subsidy.

In summary, all tariffs, whether import or export, hurt all nations involved. They are inflationary and recessionary, and being protectionist, they inhibit innovation.

Our Monetarily Sovereign federal government has the unlimited power to protect its citizens, not by punishing them, but by rewarding them. This is a lesson yet to be learned by politicians and the American people.

Tariffs never, never, ever are a good solution to any Monetarily Sovereign government’s trade problem. Tariffs always are harmful to the  people. They are the ultimate nose-cutting, pissing contest.

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

…………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. Eliminate FICA

2. Federally funded medicare — parts a, b & d, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Who are these men? Friday, Nov 30 2018 

 

 

 

Uncanny.

Even more uncanny.

 

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