Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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President Obama, the leader of the free world, elected to be the most powerful man in the universe, controlling both the presidency and one house of Congress, has just stabbed America in the back, caved to the Tea Party, and ceded leadership to the extremists and to yet another “bipartisan commission.”
You know a president has failed, when given all the power of the presidency, he steps back and asks the other party to make all the tough decisions, in the name of “compromise.” Why “bipartisan” when you control the Executive branch and half the Legislative Branch? As I asked in an earlier post, Coward, fool or traitor to America?
I think we now have our answer: All three.
We didn’t elect him to be our compromiser. We elected him to be our leader. He had options. Plenty of ways he could have led us.
He could have used the “platinum coin option,” in which the Treasury mints a multi-trillion dollar coin, deposits it with the Federal Reserve, and writes checks against that deposit. It’s a work-around the debt ceiling. The law reads:
”The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”
He failed to use that option.
He could have used the “14th Amendment option” which requires the U.S. to honor its debts. The law reads:
”The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
He failed to use that option
He could courageously have told America the truth: The debt ceiling is a ridiculous, harmful, possibly unconstitutional piece of legislation that has no current function, and is being used by demagogs to threaten America, and it should be eliminated. America is the only nation in the world that hamstrings itself in this way. He could have fought against that foolish law.
He failed to use that option.
He even could have told the full truth that Federal Deficits = Net Private Savings, and reducing deficits will reduce our savings, injure business, exacerbate unemployment and doom America to further recession and probably depression.
He failed to use that option.
Yes, Obama had options. Plenty of them. Instead, he stood back and allowed the Tea Party to create a de facto Balanced Budget Amendment, the amendment he himself so publicly had denounced. But (whew!), he has eliminated the worries, the stress and the obligation of leadership. It’s all automatic now. He, in effect, has given the Presidency to the Tea Party.
He is the first president in American history who cannot increase our money supply, as federal deficits are the method by which the government increases our money supply. Money growth is the only method by which the economy can grow, so a recession, then a depression loom on the near horizon. Medicare is in serious trouble, just as Obama was boasting about his new medical plan.
But, he will not have to concern himself with economic stimuli. There will be none. He will not have to worry about help for the poor, the middle class or the unemployed. There will be none. He has been relieved of all those inconvenient concerns.
If you are unemployed, do not look to Obama for help. More will join you in the unemployment line. Lower class? You’re out of luck. Middle class? Obama cares nothing for you, either. Elderly? No help for you. Sick? You’re on your own. Uneducated? Not Obama’s worry. Government employee? Obama will fire you. Military? Who needs you? The governor of a state, the president of a county board, the mayor of a city? Go bankrupt for all Obama cares.
Wealthy? Ah yes, Obama will help you if you help him with nice, fat contribution. He now can focus on what he considers to be the important problem in America. He spread his legs and said to the right-wing extremists, “Take me,” just so he could concentrate on the 2012 election.
He came into this job carrying the hopes and dreams of the unfortunate. Then, he stabbed the working people, the poor, and indeed, the entire economy in the back. The lower classes elected him because they were fooled into thinking he was their champion. Some champion!
The only question that remains for Obama: In the midst of the 2012 recession (or depression): Will Americans again vote for the guy who lied to them about protecting them from the rich, or will they vote for someone from the right wing, who unashamedly won’t lie to them about protecting them from the rich?
Neither the President, nor any person in Congress, has told Americans the truth about our economy. Why, in this great nation of 300+ million, do we have such difficulty finding one honest, courageous, compassionate leader?
Obama had so many choices, so many opportunities. He rode in triumphantly, one sunny day, in the golden chariot of hope, and now, at night, he sneaks out, stealing our dreams and futures, taking the road most traveled – by a Chicago politician. That will be his legacy.
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
#Monetary Sovereignty - Mitchell 
Seems to me you missed the most obvious and easy solution. They should have done this when they had ALL of the government under control. During the lame duck session. Why didn’t they do it? Because they wanted this nasty BS to tar the GOP. They were afraid of the vote even though it is the majority’s job to get this done. Same reason they haven’t done a budget in 800 days or something. Why they get a pass for not actually governing I do not know but it drives me crazy.
http://www.washingtonpost.com/blogs/ezra-klein/post/what-democrats-did-wrong-on-the-debt-ceiling-in-2010/2011/07/11/gIQA3uWFbI_blog.html
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“He even could have told the full truth that federal deficits = private savings, and reducing deficits will reduce our savings, injure business, exacerbate unemployment and doom America to further recession and probably depression.”
It seems to me that if federal deficits = private savings (and I agree that it is true) then all of the money ever created is represented by the National Debt because until the instant money is spent all money is savings.
It remains savings after the transaction.
Thus the economy is defined solely through transactions.
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paulj,
Actually, federal deficits = net private savings. Bank lending, which creates vast amounts of money, is not included in net savings, because the dollars owned are offset by dollars owed. If you have $10, but owe $10, your net savings is $0. I should have been clearer on that point.
But your point about transactions is valid. GDP is transactions.
Rodger Malcolm Mitchell
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I agree fully, I left out bank lending for that reason. Lending creates no change in net financial assets. Thus I don’t see money created by bank transactions as money created but “credit” created. That money gets paid back eventually, but the National Debt will never get paid back unless our economy starts shrinking, in which case with wealth inequality being what it is we are doomed.
Paul
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“the National Debt will never get paid back unless our economy starts shrinking”
Wrong. The national “debt” could be paid back tomorrow at the strike of a few keystrokes.
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Well, of course, but that’s harder to explain
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Money is temporarily created by bank lending. Often, “temporarily” can last a long time, as witness a 30-year mortgage.
I pray to heaven the national debt never will be paid back, because the instant all national debt is gone, there will be zero dollars in the world. Then we really will be doomed.
Rodger Malcolm Mitchell
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“The Congressional Budget Office confirmed Monday that the debt-reduction deal struck by the White House and congressional leaders would cut deficits by at least $2.1 trillion over the next 10 years, if lawmakers approve the plan later Monday.”
Translation: “The Congressional Budget Office confirmed Monday that the debt-reduction deal struck by the White House and congressional leaders would cut net private savings by at least $2.1 trillion over the next 10 years, if lawmakers approve the plan later Monday.”
Federal Deficits = Net Private Savings
Rodger Malcolm Mitchell
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The debt ceiling—includes the “Intergovernmental debt”—which should not be included in the overall federal
Debt—I think the government could mint enough coinage to pay off all of the debt that government owes itself.
This $coinage would never enter the economy and there would be no fear of inflation, but would provided
mechanism to straighten the internal books. And the government could show only the “Net Debt” and not
The Gross Net—(what is your opinion on this!!!)
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I agree.
Actually, federal debt is unnecessary for a Monetarily Sovereign nation, as is the debt ceiling. The government could pay all debt simply by exchanging dollars for T-securities. It would be a simple asset exchange with no inflation implications.
Rodger Malcolm Mitchell
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I think you need to get the small and medium sized businesses on your side with this (businesses that deliver real goods and services that is). If they can be made to realise that their prosperity is dependant on sufficient federal spending I think you could see some real change.
At the moment I’d bet that most of them believe in the defict reduction = good paradigm, and thus are turkeys who have been convinced to vote for thanksgiving.
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Good one! I like your analogy. I may use it.
Rodger Malcolm Mitchell
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Rodger,
Look at it this way: At least the major spending reductions don’t occur until 2014, so we have about 2.5-3 years before the double dip! The only thing we have to deal with until then is a stagnant economy and whether to choose another dumb lawyer to fix our economy or keep the dumb lawyer we have!
I say we start a write in campaign for Charlie Sheen. What I wouldn’t give to have someone in the Oval Office that was willing to “spend away the future of our children and our grandchildren.” Sadly, I don’t think he could do much worse than anybody else gunning for the job right now.
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For one perspective of Obama as a traitor to the liberal cause and to America, read this: http://www.salon.com/news/opinion/glenn_greenwald/2011/08/01/debt_ceiling
and this:
http://www.blackagendareport.com/obama-fake-debt-ceiling-crisis_smarter-than-you
Rodger Malcolm Mitchell
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Rather than being evil, I think President Obama just does not understand economics. He looks at the balanced budgets of the latter Clinton years and thinks that was a good thing.
He’s way better than John McCain would have been.
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