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.

Millionaire tax sought by Obama is panned by GOP as ‘class warfare’
Republican leaders accuse President Obama of trying to incite class warfare by proposing the ‘Buffett rule’ — a new tax on people making $1 million or more.
By Jim Puzzanghera, Los Angeles Times, September 18, 2011

Reporting from Washington— Top congressional Republicans on Sunday accused President Obama of trying to incite class warfare with his proposal for a new tax on millionaires and said they would not support the measure because it would hurt economic growth.

Republicans are correct on both counts. Class warfare has been a mainstay of Democrats’ politics for at least 80 years and taxes hurt economic growth by removing money from the economy.

“Class warfare … may make for really good politics, but it makes for rotten economics,” House Budget Committee Chairman Paul D. Ryan (R-Wis.) said on “Fox News Sunday.” “We don’t need a system that seeks to prey on people’s fear, envy and anxiety. We need a system that creates jobs and innovation and removes these barriers for entrepreneurs to go out and rehire people.”

. . . Senate Minority Leader Mitch McConnell (R-Ky.) said wealthy individuals such as Buffett were free to pay more taxes, but the government shouldn’t impose an increase on people who help provide the investments that create jobs . . . “ we don’t want to stagnate this economy by raising taxes.

Absolutely correct. Tax increases of any kind, whether on the rich or on the poor, remove money from the economy, and are anti-stimulative. And heaven forbid the politicians ever “prey on people’s fear, envy and anxiety.”

But Sen. Lindsey Graham (R-S.C.) said Obama’s millionaire proposal was simply a political move that would do little to reduce the budget deficit. . . .”The truth of the matter is if you raise taxes on billionaires and millionaires it adds a de minimis amount of money to the Treasury to pay off the debt.”

Thank goodness for that. Every dollar of reduced deficit is a dollar stripped from an economy that desperately needs dollars.

Sen. Richard J. Durbin (D-Ill.) showed the tack his party might take when he slammed Republicans for not supporting Obama’s $447-billion jobs bill. “I think his team put together a positive good plan.”

Just one little problem with all this talk: There is no financial difference between a tax increase and a spending cut. Financially, they are identical. Both reduce the deficit; both reduce the money supply. Both are anti-stimulative. Both will result in a recession or depression.

So here we have the Tea/Republicans, the Democrats, the President, the media and the old-line economists all clamoring for debt reduction, but both agreeing the economy needs “jobs and innovation and (removal of) barriers for entrepreneurs to go out and rehire people.”

The Tea/Republicans want spending cuts, while complaining that a tax increase would “stagnate the economy.” The Democrats also want deficit reduction, but with spending increases. If you think you have just fallen down the rabbit hole in Alice’s Adventures in Wonderland, you’re right. There is zero logic being expressed here.

It will be fascinating to see how all the parties, especially the old-line economists, who should know better, play with sophistry, to confuse you into believing:

Tax increases are bad
Spending increases are bad
Deficits are bad
And the economy needs to be stimulated.

A pox on all their houses. I award three dunce caps to all involved, but specifically to President Obama, Representative Paul Ryan, Senator Mitch McConnell, Senator Lindsey Graham, Senator Dick Durbin, the media and the old-line economists (Hello University of Chicago and Harvard Nobel winners.)

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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings