Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

Shadow Government Statistics (SGS) is a popular site for those who correctly recognize that many government data are politically spun. It’s a good data resource, but when it comes to economics . . . well you be the judge. Here is a quote from the site:

The U.S. government effectively is bankrupt and remains extremely likely to resolve this ultimate sovereign insolvency by printing money to meet its obligations. As global pressures force the Fed into further Treasury debt monetization, as global confidence in the world’s reserve currency evaporates, risks remain particularly high of a U.S. hyperinflation beginning to unfold in the first-half of 2011, along with severe economic, social and political consequences that will follow. The outside timing for this manmade financial catastrophe remains 2014.

Let’s analyze this:

“The U.S.governemtn effectively is bankrupt . . . “ What does that mean? A bankrupt entity cannot pay its bills; the U.S. can. . . endlessly.

“. . . and remains extremely likely to resolve this ultimate sovereign insolvency by printing money to meet its obligations.” If by “printing money” SGS means crediting the bank accounts of its creditors, yes, that’s the way a Monetarily Sovereign government pays its bills. Always has; always will. If the government didn’t “print” dollars, there would be no dollars.

Then we get into hyperinflation, scheduled by SGS to begin the first half of this year and no later than 2014. Let’s call this the Harold Camping syndrome – the foolish attempt to date a catastrophy prediction without giving yourself a “out.” At least when I recently predicted a “full blown depression for 2012, I included the caveat, “Based on where Obama and the Tea/Republicans are headed. . . “ which at the time was toward a $4 trillion deficit reduction, which unquestionably would cause a depression. Clever me. I gave myself an “out.”

But John Williams, the author of SGS offers no caveat. He just flat-out predicts hyperinflation, which the U.S. never has had, through wars, depressions, recessions, stagflations and every other economic crisis. Hyperinflations always are caused by specific and unique circumstances, and are not merely inflations on steroids. Today, we are worried about deflation, while having the absolute power to prevent even inflation, via interest rate control.

No, hyperinflation is the least of our worries — somewhere at the danger level of being destroyed by a huge meteor. The “most” of our worries: Recession and depression, which either are existent or imminent, depending on how you define them. Oddly, debt hawks continue to fret about the least of our worries, while ignoring the “most” of our worries. Just can’t figure those strange people.

So add Shadow Government Statistics and John Williams to the long list of people and institutions that display zero understanding of Monetary Sovereignty.

Rodger Malcolm Mitchell

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.