–The depression cometh

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Historically, whenever dollars have been taken from our economy, or even when dollar growth has been reduced, the economy has gone into recession or depression. (See: Cause of recessions and depressions)

Congress and the President insist the federal deficit must be reduced. There are but two methods for reducing the deficit: Increase federal taxes and/or reduce federal spending. Both methods reduce the number of dollars in the U.S. economy.

7/29/11: Roya Wolverson, Time Magazine: “The bad news just keeps coming. The U.S. economy grew even less than expected in the second quarter, at a rate of 1.3%, down from what many economists predicted would be 1.8% or higher. The reasons for the continued lackluster performance haven’t changed. Consumers, squeezed by higher gas and other prices, are buying less of everything from electronics to meals out to new furniture.”

Recently, I posted, “Based on where Obama and the Tea/Republicans are headed, there will be a depression (not just a recession) next year. Only a miracle of realization, by both parties, can save us now. (See: Depression in 2012)

7/30/11: Alan Rappeport, Pharmaceuticals Magazine: “Merck, the US drug company, will cut as many as 13,000 jobs, or 13 per cent of its workforce, as it looks to slash costs and invest in emerging markets. The cuts, to be achieved by 2015, follow those announced last year when Merck said it would reduce its staff by 17 per cent. Merck has been looking to achieve the savings it promised when it acquired Schering Plough for $41bn in 2009.”

Congress and the President remain ignorant. They continue to call for increased taxes and/or spending cuts. The depression cometh.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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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.

MONETARY SOVEREIGNTY

3 thoughts on “–The depression cometh

  1. ‘…Historically, whenever dollars have been taken from our economy, or even when dollar growth has been reduced, the economy has gone into recession or depression….’

    I just ordered your book today (been looking for it in e-format). I believe the above statement does not apply to the Great Recession. From 2001 through 2008 the Federal deficit has increased dramatically (increase in dollars in circulation), yet we landed in the deepest recession since the 1930’s. All while the Federal (and state) deficits were increasing. And throughout today deficits are increasing, yet the economy is barely recovering.

    I fully agree that deficit spending is what so far has prevented us from entering a deep depression. However, it did not prevent the recession which according to you, it should have since it’s the non increase of deficits or surplusses that causes recessions. Please explain.

    I have a few more questions, but I will read ‘Free Money’ first.

    Like

    1. As long as the economy grows, and the deficit does not grow too much faster than the economy, then the deficit must grow in order to avoid a recession.

      However, there is a finite level of deficit spending that will prevent recessions. It is possible for the government deficit to exceed that required level, and if it does it would cause inflation, and should be reduced to the required level, and maintained at the required level as the economy grows. That would not cause a recession, but it would prevent inflation.

      All in nominal terms, of course. And all assuming no reversal of the current private savings and trade situation. If we were to have a negative savings rate again, and a trade surplus again, both at the same time, we would not need a deficit at all, there could be a government surplus and no recession. That situation is not sustainable, though, for the world would eventually run out of dollars to send us. On the other hand, we can never run out of dollars to send them.

      Like

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