Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================================================
This is the next speech President Obama will give — if he has courage:
My fellow Americans,
You have been told monstrous lies – by the media, by the Tea Party, by the Republicans, by the Democrats, and yes, I’m sorry to say, by me. And all these lies chipped away at our great nation. They led to the recession, to the non-recovery, to the unemployment – all unnecessary, all preventable and all curable. We, in Washington, have preached austerity, when we should have preached prosperity.
Well, the lies stop right here, right now. During the next 25 minutes, I’m going to tell you exactly how we’re going to get out of this mess and return to prosperity – and it all will happen within 12 months. No more austerity; from now on, think prosperity.
I am so confident in this plan, that if we adopt it, and do not return to prosperity within 12 months, I will tender my resignation. But more on that later.
First, we’ll rid ourselves of that ridiculous, deficit-reduction, super-committee. Forming this committee made as much sense as punting from your opponent’s ten-yard line. There simply is no way – I repeat, no way – to grow an economy by increasing taxes or with reduced federal spending. Cutting the federal deficit is the sure way to sink the economy. That is true today, tomorrow, and for all time in the future.
Our federal government is what’s called Monetarily Sovereign, meaning it has the unlimited ability to pay any debt of any size. There is not one reason – not one – to reduce the deficit or the debt, and plenty of reasons not to. Consider that deficit-reduction committee gone.
Second, we’ll get rid of FICA. No more lies. Here’s the truth: FICA does not pay for Social Security. FICA does not pay for Medicare. FICA does not pay for anything. It is nothing more than a useless – no, harmful – tax on the working class. Before 1971, when we still were on a gold standard, FICA was needed. But that need ended. Our government now has the unlimited ability to create dollars. FICA is an obsolete carbuncle on the neck of our economy.
Medicare and Social security are federal agencies. Like all of the thousand federal agencies – like the Department of Defense, like the Supreme Court, like the White House, like Congress itself – all federal agencies are supported in exactly the same way – by federal spending.
There is no FICA for the military, there is no FICA for Congress or for the courts or for the White House. There is no FICA for the CIA or the FBI. And starting now, there will be no FICA for Social Security or for Medicare. Like every other federal agency, they simply will be supported by the federal government.
What will this accomplish? Not having to pay FICA will put money in your pockets, so you’ll be able to save more and spend more. Not having to pay FICA will put money in the pockets of businesses, large and small, so they’ll be able to invest more and hire more. And when you spend more, that will stimulate business to hire even more. And all those new hires, will spend even more – and the economy will grow toward prosperity. Consider FICA gone – one less burden on your shoulders.
Not only will FICA end, but Medicare and Social Security will expand. Every year, the qualifying age for Medicare will be reduced by one year, until in the future, every man, woman and child in America will covered by Medicare – and not just today’s Medicare, but an expanded Medicare, with fewer holes and better payments do doctors, nurses and hospitals. That not only will save you money, but increase the number and quality of doctors, nurses and hospitals. Millions of American lives will be saved, extended and improved. You’ll live longer and healthier lives, as will your children and your grandchildren. Isn’t this what we all want?
And Social Security – it once again will begin at 65, and we’ll raise those pathetic benefits so that our older citizens actually could live on them.
Third, we’ll begin to increase the standard deduction on income tax, by $10,000 each year. This means, fewer and fewer people, in the lower income groups, will have money taken from their pockets. Today the standard deduction is about $5,000. Next year it will be $15,000. The following year, $25,000. Within ten years, no one earning less than $100,000 will pay any federal income tax at all. You’ll keep all the money you earn. The federal government doesn’t need your tax money, so it won’t take your money. Remember, since 1971, the federal government has had the unlimited ability to create dollars. So, why would it need your tax dollars? It doesn’t.
I know what you’re thinking: Inflation. Don’t worry about inflation. I’ll address that in the next couple of minutes. Think only about the money you’ll save and how that will grow our economy – and what prosperity will mean to you and to your loved ones.
Fourth, the federal government will send every man, woman and child – every American citizen – a check for $5,000, to do with as you choose. Pay your rent or your mortgage. Buy food. Make a down payment on a car. Pay a college tuition. Buy some clothes. Take a vacation. It’s your money. This will give the economy the powerful kick in the butt it needs.
And don’t worry; the government can afford it. So, consider your $5,000 check a down payment on your prosperity – your reward for putting up with all the lies, the compromises, the politics the recessions, the unemployment your government has foisted on you.
There will be other parts to the plan, the details of which I don’t have time to discuss, now. The federal government will help the states – which by the way, do not have the unlimited ability to pay bills –get out of their financial problems. And the government will increase support for road and bridge repair and building, transportation, research & development, education, policing, food and drug inspection, and many other important functions on our march to prosperity.
What will all of this cost? I estimate about $4 trillion the first year, and even more in succeeding years. Can the government afford it? Yes, the government could afford ten times that amount. There is no limit to what the federal government can afford.
And that brings us back to the subject of inflation. Visualize this: Say a fire has started in your house. You worry that if you call the fire department, and they pour water on the fire, the water could get into the carpets, and at some time in the future, mold could grow, and if it does, you might be allergic to that particular strain of mold. So what do you do? Do you call the fire department to put out the fire, or do you wait for fear of a possible mold you possibly could be allergic to, some day in the future?
Well America, our house is on fire, and that fire – that recession and unemployment — needs to be dealt with now. Not tomorrow, not next week, but now. We’ll take care of this immediate problem first, and if – big IF – if we have mold, that is if we have inflation, we’ll deal with that too, and here is how:
Tomorrow, I’m going to call Mr. Ben Bernanke, Chairman of the Fed, into my office and say to him, “Ben, you have one assignment. It’s not to regulate the economy; it’s not to stimulate bank lending; it’s not to cure the recession. Those are my jobs. Your one assignment is very simple: Do exactly what you’re best at: Control inflation. That will be your sole focus.
“If you see inflation going above your target, do what you do – raise interest rates, buy T-bills — do what you always have done to prevent and cure inflation. And if – another big IF – if despite all your best efforts, you still can’t control inflation, we simply will cut back on spending. But we’ll keep that in card our back pocket, to be used only if – big IF –if all the other methods you successfully have employed over the years, somehow stop working this time.”
So that’s a brief outline of my plan for prosperity. Within two weeks, I will present to Congress, the details of the plan, along with a simple choice: Accept it or reject it. Vote for prosperity or vote for austerity.
There will be no more compromises. No more chipping away at this corner or that. No more delays, no more lies, no more politics. Take it as is, or leave it. If Congress takes it, I guarantee we will have prosperity within 12 months. If I am wrong I will tender my resignation, so sure am I of its success.
If Congress rejects the plan as is, I also will tender my resignation, because I refuse to be a lame President, trying to work with one hand tied and with plans I know will not work. The focus has changed. I don’t care about re-election. I care about you; I care about America. And I expect every member of Congress to feel the same way.
I’d much rather leave the Presidency, and write books, and travel the world with my beautiful family, and give hundred-thousand dollar speeches, and live the life all former Presidents live, than to sit quietly in the Oval Office, suffering in frustration over a failing economy I know I could cure, if only I were allowed to.
So there are the broad strokes, and soon you will see the details. Congress can accept the plan, and we will have prosperity, or Congress can reject the plan and we will have austerity. No more lies. No more compromises. No more politics. The choice is theirs, and the choice is yours, America, because ultimately you tell Congress what to do.
Contact your Congressperson and tell him or her what you want. Prosperity or austerity. Prosperity or austerity. That is your choice for yourself, your children and your grandchildren. Prosperity or austerity.
God bless you and watch over you as you and Congress decide.
That is the speech a courageous, dedicated, honest, sincere President Obama will give.
Rodger Malcolm Mitchell
http://www.rodgermitchell.com
==========================================================================================================================================
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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Not too bad. Probably not optimum though since you don’t allow private currencies.
I would abolish the government backed counterfeiting cartel myself but high “deficit” spending plus a strict mandate on the Fed to control price inflation might do.
Also, I would abolish all government borrowing. The government should not be the collection agency for the usury class. It should just create, spend and tax its own inexpensive fiat.
LikeLike
F.Beard,
Agree re. government borrowing. Also eliminate taxing (over time) as taxing has no function for a nation with the unlimited ability to pay bills.
However, I’m all for private currencies if you promise to accept my Mitchell-bucks. 🙂
Rodger Malcolm Mitchell
LikeLike
However, I’m all for private currencies if you promise to accept my Mitchell-bucks. RMM
I might if they were common stock backed by unencumbered real assets.
LikeLike
No problem. I’ll just mortgage or sell the assets after I foist the Mitchell-bucks on you, and leave it to you to perform due diligence every second of every minute of every day.
Then you can chase me if you can find me.
Also, you and your local retailer will have to track the changing values of Mitchell-bucks each time you shop, assuming that store will accept Mitchell-bucks as opposed to Beard-bucks or any of the other 300 million “x-bucks” (a type for each person) in America.
And don’t go overseas. It gets even trickier, there.
Hey, remind me again. How is this better than dollars?
Rodger Malcolm Mitchell
LikeLike
Hey, remind me again. How is this better than dollars? RMM
It would be your business to convince me that they were better than dollars. Most people would probably choose to use dollars for all debts not just government ones IF the dollar was properly managed. And the existence of private money alternatives would help insure that the dollar WAS properly managed. In other words, the dollar would keep private currencies honest and vice versa. What honest person could object to that?
LikeLike
F.,
Properly managed??
Let me know if you find people who would rather use Mitchell-bucks as money, rather than dollars. I have some costume jewelry I’d like to sell them.
Rodger Malcolm Mitchell
LikeLike
At a certain point you have to begin admitting that what is happening (whether stupid or evil) is not going to reverse itself. Like a machine, it just keeps churning. Our interest bearing debt monetary system dictates that we have a growth imperative. Quite simply, this requires infinite growth on a finite planet. Or, more easily understood, monetizing everything in living sight in order to prop up a house of cards and create an illusion of a puffy clouded, heavenly future built on a suicidal pyramid scheme lie.
I watched a documentary called “Flow” this evening about how the world’s water supply has been claimed as property by a few contolling interests. Imagine, someone or some alien corporate entity claiming some divine right for controlling water distribution. Water! Millions of people are either dying or suffering daily because of this. Wake up out of the money slumber and realize people cant live off of little pieces of paper.
If you can watch this film and- in good conscience- and come back here and omit what money is doing to the only place we have to inhabit then we’ll all know where you really stand.
http://www.flowthefilm.com/
Good night and good luck ~ Pete
LikeLike
I see Harold Camping has returned from the dead.
LikeLike
But, really, Rev. Camping, don’t you get tired of predicting the end of the world, and never seeing it happen? RMM
I agree but please don’t imply Mr. Camping’s view is Christian; it isn’t. This world will end but it won’t be because of resource depletion. However, a government backed/enforced banking cartel is a likely candidate. It has already killed 50-86 million in WWII alone.
Also, it is compound interest that requires exponential growth which is why it is essential that all government privilege for usury be abolished and that non-usury forms of money such as common stock be allowed to compete equally with all other forms of private money.
LikeLike
Compound interest requires growth, but Monetarily Sovereign money is capable of faster growth. Example: $1 trillion, growing annually at 5% is (if my math is correct) $12 trillion after 50 years.
So? Big deal. The government could create $50 trillion tomorrow, at the press of a key.
Common stock is not “money” by any definition. It is proof of ownership of a company, like a title is proof of ownership of a house. So is a business money, or is just the proof of ownership money? Is a house money, or is a house title money. Is a car title money? Is my desk money? i have a sales receipt that says I own it, so is the sales receipt money?
By the way, are you related to Pete?
LikeLike
You failed to have Obama explain exactly how raising interest rates prevents inflation. I think it absolutely necessary to explain this in order to gain acceptance of your proposal. Obviously we can create money without inflation because we have in fact done so but exactly how is this being done?I don’t think you have adaquatly explained this in your book or on your blog. Even the MMTers don’t accept you on this point. Don’t just keep saying that inflation occurs when the money supply grows faster than money demand compared with the supply and demand for goods and services or some such statement. Give concrete examples of how this can occur in the real world. Trace the effects of an interest rate hike through the economy illustrating how it can prevent or lower inflation.(Remember that many people think that the high interest rates reduce inflation by inducing a recession. This is not your view but people are likely to take it to be your view in the above Obama speech)
LikeLike
“Obviously we can create money without inflation because we have in fact done so but exactly how is this being done?”
Whenever the Fed senses inflation, it raises interest rates.
Even the MMTers don’t accept you on this point.
Yes, that is the fundamental difference between MMT and MS.
Don’t just keep saying that inflation occurs when the money supply grows faster than money demand compared with the supply and demand for goods and services . . .
I shouldn’t quote the basic laws of supply and demand? Why not?
Trace the effects of an interest rate hike through the economy illustrating how it can prevent or lower inflation.
Would that I could. However,interest rates are not the most important factor. Oil prices are. The price of oil drowns out the effects of interest rates. Nevertheless, the highest inflation in recent years clearly was cured with high interest rates. See: http://research.stlouisfed.org/fredgraph.png?g=28P
many people think that the high interest rates reduce inflation by inducing a recession.
Here, we do have strong counter evidence: See: https://rodgermmitchell.wordpress.com/2009/09/09/low-interest-rates-do-not-help-the-economy/
Rodger Malcolm Mitchell
LikeLike
President Obama:“”Do we keep tax loopholes for oil companies, or do we put teachers back to work? Should we keep tax breaks for millionaires and billionaires — or should we invest in education and technology and infrastructure, all the things that are going to help us out-innovate and out-educate and out-build other countries in the future?”
He still doesn’t get it. Taxes don’t pay for federal spending. The federal government is not limited by taxes. Whether taxes fall to $0 or rise to $100 trillion, neither event will affect the ability of the government to spend.
Is this true ignorance by the President, or is it fake ignorance for political purposes?
Rodger Malcolm Mitchelll
LikeLike
I would have to lean towards fake ignorance. This is the saddest part to me, the fact that I cant find a single politician who isn’t spouting this same junk about our economy. It’s just to risky for any politician to speak the truth cause Americans are so uninformed they would just think he is a nut case.
We need bravery right now from our politicians, do what is right for the country and not what is right for your next election.
LikeLike
Agreed, Mark
So how will truth see the light? Will there emerge a “Coffee Party” to wake up America to the facts of Monetary Sovereignty?
Will there be a brave, informed and powerful President, who on the very first day of his Presidency (thus giving him four years to spread the word) announce his intention to cut taxes and increase spending, and grow our economy?
Will a group of economists announce the facts on major TV?
Hope so.
Rodger Malcolm Mitchell
LikeLike
I saw Alan Greenspan on Meet the press saying “We can pay any debt at any time because we can always print money to pay it, and there is zero risk of default”. You can clearly see everyone else on the panel making faces like he is crazy. That is the problem, every time someone says that people quickly sweep it under the rug and laugh to each other. The video of Greenspan saying that is on youtube and can be easily found.
LikeLike
http://www.cnn.com/2011/09/14/opinion/carville-white-house-advice/index.html?hpt=hp_t2
“3. Make a case like a Democrat. While we are going along with the Republican austerity garbage, who is making the case against it? It’s not the Democrats!
We are allowing the over-educated, over-explanatory bureaucrat by the name of (Congresssional Budget Office director Douglas) Elmendorf do all the talking. Do not let him make your case. Let us make your case. Is it any wonder that we were doing better in the middle of the stimulus-spending period than we are doing with the austerity program?”
Sounds Familiar to me, Go get em Mr. Carville
LikeLike
http://money.cnn.com/2011/09/12/news/economy/national_debt_super_committee/index.htm?hpt=hp_t2
“NEW YORK (CNNMoney) — When it comes to cutting deficits, don’t play small ball.
That was the message Monday in a letter to Congress’ national debt super committee from a group of more than 60 leading economists, budget experts, former Treasury secretaries and former lawmakers.
“We urge you to ‘go big’ and develop a large-scale debt reduction package sufficient to stabilize the debt as a share of the economy,” the letter to the super committee said.” ”
——————————————————————————————–
Who are these leading economists saying this? If economists cant even figure it out we are never getting out of this. When we made the switch off the gold standard did they forget to tell these people? This is really disheartening. How can the experts be so wrong about something. I am going to change my opinion about Obama, I think he is just being fed bad info from people who are supposed to know.
LikeLike
Mark,
You have just experienced one of the great mysteries of science — how slowly scientists can be to recognize the bankruptcies of earlier hypotheses.
Clearly, those “60 leading economists” were hand picked for post-1971 ignorance.
Rodger Malcolm Mitchell
LikeLike
What about articles like this that go into great detail about where our Federal Tax Dollars go. I thought it was all destroyed?
http://articles.moneycentral.msn.com/Taxes/Advice/HowUncleSamSpendsYourTaxDollar.aspx
LikeLike
Mark, I too remember that statement from Greenspan and saw that edition of Meet the Press. It really is a big problem, like telling people 500 years ago the sun is the center of the solar system when it was so obvious the sun was going around the flat earth! HA. Well that’s kinda where we’re at know. Stymied by ill-usion & false info.
LikeLike
Mark,
The author of the article makes the common mistake of using “tax dollars” as a synonym for “budget dollars.” Federal taxes do not pay for federal spending. If taxes fell to $0 or rose to $100 trillion, neither event would affect the federal government’s ability to spend.
Yes, federal taxes are destroyed upon receipt.
LikeLike
If Only we lived in a society where “HONESTY” and “TRUTH” were the primary focus of ALL Presidents. I would not only respect this person, but would consider voting for him aswell. However, We live in society where being politically correct in more important than home grown values. I’d welcome any president whether male or female to walk worthy of the office to which they have been elected to.
I’d love to shake the hands of the author who wrote this speech, because this person makes sense, really good sense.
Even though we may never hear these words come from this Presidential Administration, one can Only pray that we would stand a chance with the next Presidential candidate.
LikeLike