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.
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Have you read about it?
Huff Post Politics, 9/17/11, By Mary Bottari: Janesville, WI — As President Obama gets ready for his big jobs speech Thursday, America’s nurses have a message for him. “Heal America, Tax Wall Street!” the signs read as nurses rallied in front of 61 Congressional offices this week.
[…]
“It’s time for the Wall Street financiers who created this crisis and continue to hold much of the nation’s wealth to start contributing to rebuild this country and for the American people to regain their future,” explained Rosanne DeMoro, Executive Director of National Nurses United, in a press release.The nurses are joining groups across the nation and around the world calling for a financial transaction fee on high-volume, high-speed Wall Street trades, to tamp down dangerous gambling and to raise revenue for heath care, jobs and other critical needs.
-to-1.
Popular misunderstanding #1: Federal taxes pay for federal spending. Wrong. “Rebuilding this country for the American people” does not require any federal taxes to be increased. Money is the lifeblood of an economy, and a financial transaction fee will reduce the money supply, leaving less available for rebuilding this country.
They found that CEOs are hording their wealth; the gap between what workers are paid and what their CEOs are paid is rising fast. In 2009, it was 263-to-1. In 2010, it was 325.
Popular misunderstanding #2: Taxing the rich helps the poor. Wrong. The only thing that helps the poor is increasing the incomes of the poor. Reducing the incomes of the rich doesn’t do that. It does the opposite, by reducing the money supply.
. . . at 25 of these firms, CEO compensation was greater than the company’s entire federal corporate income tax bill. Corporate free-loader, Prudential CEO John Strangfeld, made $16.2 million in 2010, but his entire company got a $722 million refund from the federal government.
Popular misunderstanding #3: A business’s taxes should to exceed the pay of any one employee. Wrong. There is no connection between the two. In fact, business taxes should be eliminated. They are the ultimate anti-stimulus. How taxing business helps the economy is a question never answered.
“Where’s the shared sacrifice?” asked the nurse who cited the study in front of Wisconsin Representative Paul Ryan’s Janesville office. . . . Nurse Dena McEwen . . . discussed the hard times that have hit so many families. Her 40-year-old sister nearly died of gangrenous gall bladder infection because she was out of work and without health care. A neighbor tried to commit suicide when she could not afford medications.
Popular misunderstanding #4: The wealthy should suffer if the poor have to suffer. Wrong. If you lose your bladder, having a wealthy person lose his bladder will not help you. What will help you are programs that will keep you from losing your bladder – more medical research, better health care for everyone, more and better doctors and nurses – programs the Tea/Republicans wish to cut.
All of these misunderstandings have existed for decades, but it took the Tea/Republicans to solidify them into a powerful movement for ignorance, a movement that is destroying America. The nurses say they must work harder, because Americans coming to them are sicker, the result of losing jobs that provided health care insurance.
As I read these pitiful articles, I repeatedly am reminded of yesteryear’s medical quacks who applied leeches to treat anemia, thereby killing their patients. The Tea/Republicans are removing the lifeblood of our economy – money – thereby killing America.
Out of ignorance, the anemic patients went along with their medical quacks, and out of ignorance the American voters are going along with their economic quacks. We, our children and our grandchildren all will suffer for our ignorance.
As an aside, many of my own friends, mostly college graduates and some with advanced degrees, don’t get it. They mouth the same ignorance as one would expect from the uneducated: “The debt is too big.” “The deficit can’t grow forever.” “The government is broke.” Explanations of why a Monetarily Sovereign government is different from monetarily non-sovereign people, are met with glassy eyes or even anger. Thankfully, my wife gets it completely, and whenever she hears a politician spew his ignorance, she looks at me, smiles and rolls her eyes. Thank God, I married a brilliant woman.
Anyway, sorry for the digression. I’ll just end with:
Ignorance kills.
Unlike the politicians, the nurse’s hearts are in the right place. So, I award the nurses just one, very sympathetic dunce cap.
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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings
MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Roger,
Can I make the assumption that no individual or entity bears any responsibility for the well-being of others and society as a whole except the Federal Government? Must I also make the assumption that the disparity in wealth that currently exists has absolutely no impact on lives at the individual level and only the financial policies of the Government does and can? Am I understanding the position you hold correctly in these cases?
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Charles,
No. Can I make the assumption that the government bears no responsibility for the well-being of others and society as a whole? Must I also make the assumption that the disparity in wealth that currently exists has 100% impact on lives at the individual level? Am I understanding the position you hold correctly in these cases?
Now that we have exchanged sophistry, what next?
Rodger Malcolm Mitchell
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Nothing more on this point is necessary. I now understand the position, I believe. Your second point makes it clear for me. Thanks.
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“The only thing that helps the poor is increasing the incomes of the poor. Reducing the incomes of the rich doesn’t do that. It does the opposite, by reducing the money supply.”
1) Setting aside tax policy for a moment, how do you propose to “increase the incomes of the poor”? The exponential growth in CEO compensation (in inverse proportion to those who actually produce) over the past 30 years indicates an irreversible trend in the opposite direction.
2) Is a dollar rotting in a vault (or as a digital accounting notation) in the Cayman Islands the same as/equal to a dollar in the hands of a working nurse who likely needs food on the table for the children tonight?
3) What, in the natural world (the place we live), grows forever?
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1. See: https://rodgermmitchell.wordpress.com/2010/07/11/a-partial-solution-for-the-gap-between-rich-and-poor/ and https://rodgermmitchell.wordpress.com/2010/07/13/one-step-toward-long-term-economic-growth/ The “exponential” growth of CEO compensation does not negatively impact the poor. Reduced compensation of the poor, relative to inflation would negatively impact the poor.
2. No. Foreign-held dollars are not the same as domestic dollars.
3. Ignorant debt-hawk insinuations that because something cannot grow for all eternity, it should not grow at all. They seem particularly unending.
Rodger Malcolm Mitchell
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This may come as news, but not everyone who disagrees with injecting more accounting notations into a failing system as a serious long term solution is a “debt hawk”.
Some just believe humans depend on functioning ecosystems to sustain themselves, and their actions affect those same ecosystems. Maybe a new term, “Artificial Scarcity Hawk” or “Endless Consumption Hawk” would be more appropriate.
“…that because something cannot grow for all eternity, it should not grow at all.”
– I’m not sure you intended the double negative here but you seem to agree that there may be a limit to “growth”. How will you know when you’ve hit the ceiling, when you’re mowing your lawn with a gas mask on or picking through the GMO foods at the giant Walmart as the only way of feeding yourself?
I know you find Mr. Eisenstein a little to radical for your taste, but I think he’s on to something here. Perhaps your reader’s might take something from him.
http://www.realitysandwich.com/money_a_new_beginning_part_2
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The system is failing because the people running it do not seem to understand it. Not because it is inherently wrong. The best way to live a greener life is to develop new cleaner technologies, which could happen quicker if government was willing to invest in this to a greater extent than they have done already. Businesses if not constrained by a shaky economy and a incompetent government would eventually evolve their technologies to fit modern day needs.
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> . . .not everyone . . . debt hawk.” It’s failing for lack of money, debt hawk.
“. . . functioning econsystems . . . “ Would the ecosystems function better with less money?
“How will you know . . . “ Repeatedly have said the limit to money creation is inflation. Will know when inflation can’t be controlled with interest rates, alone.
” . . . gas mask . . . “ So, reducing the deficit will improve the air?
” . . . Eisenstein . . . “ It’s intentional inflation (” the currency ‘goes bad’ – depreciates in value – as it ages.”) I thought you hated inflation.
Rodger Malcolm Mitchell
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“taxing the rich helps the poor”
Maybe, I say, depending on your assumptions. If you assume that total taxes are determined by some external criterion, say by an MMTer given the desired spending level and setting the desired deficit size; then taxing the rich more implies taxing the poor less. I think the nurses were working from that sort of assumption, not an increase in the level of total taxation.
Likewise for the HFT tax. HFT is profiting by virtue of their proximity to the trading floor (or market-controlling computers), at the expense of all other market participants. If there is any better example of a “rentier”, I don’t know what it is. Their activities are to be discouraged, and a tax is an effective way to do it. The increase in that revenue would demand a decrease in some other revenue source, in order to maintain the desired deficit. The net result on the money supply would be a wash.
Or maybe not a wash. Possibly shifting some income from rich to poor would mean an increase in consumption and growth.
Not that the nurses are perfect. It is hard for me to believe that someone with a gangrenous gall bladder who showed up at an emergency room without insurance would not be treated. Likewise, “could not afford medications” implies the non-existence of Medicaid, which covers medical care for those who cannot afford insurance (and many who can).
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John,
“If you assume that total taxes are determined by some external criterion, say by an MMTer given the desired spending level and setting the desired deficit size; then taxing the rich more implies taxing the poor less.”
A false assumption, historically, economically and philosophically. There is not an inverse relationship between the tax rates on the rich and the tax rates on the poor. Quite the contrary. When tax rates on the lower income s have fallen, tax rates on the higher incomes have tended to fall, too.
You are correct that hospitals usually treat even uninsured patients in the emergency room. So who pays for that? Insured patients.
Who should pay for it? Who can afford it? Whose paying actually stimulates the economy? The federal government.
That’s Monetary Sovereignty.
Rodger Malcolm Mitchell
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Rates, yes, taxes? … not so much. The big rate reductions of the 80’s shifted the income tax burden toward the higher brackets: the rich paid more, the poor less, the poorest reduced to 0. (I usually try to avoid “rich” and “poor” in this context. We tax income, not wealth. If your salary is $300,000 a year, and you owe $1M on a $500,000 house, are you “rich” or bankrupt? You pay high income taxes, though.)
Who should pay for uninsured patients? If you want to increase the deficit, and that is the way you choose to do it, then having the government pay will work to increase the deficit. When the deficit is already at the proper level, or higher, then having the government take on extra expenditures would mean also raising taxes, so as to avoid inflationary effects. So, the choice at full employment is whether the insured patients pay or the taxpayers pay. Or, perhaps, government pays for one thing and stops paying for another, so as to keep expenditures level.
The full employment choice is the relevant one, since that is our plan, and we don’t want to be changing this arrangement just because we succeed at it.
I would rather, I think, have the insured patients pay, since they and their third-party agents are incented to make the hospitals compete on price and quality, and because my political leaning is toward smaller government. It’s a political choice more than an economic one.
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