–Debt reduction madness: How Congress continues to diminish America

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Washington Post: “Obama backs ending Saturday mail as part of deficit proposals”

“9/20/11: By Ed O’Keefe: The Obama administration inserted itself Monday into a years-old fight over the future of the U.S. Postal Service, backing proposals to end Saturday mail delivery and to raise postage rates beyond the rate of inflation.”

The support for the proposals came as part of broader White House ideas to pay down the federal deficit. . . . But Rep. Darrell Issa (R-Calif.), who is pushing competing proposals, called Obama’s ideas a “thinly veiled attempt to offset continued operating losses with a taxpayer-funded bailout.”

Sen. Susan Collins (R-Maine), another lawmaker closely tracking postal affairs, said ending Saturday mail “will only make matters worse and accelerate the Postal Service’s death spiral.

Never mind that taxpayers do not pay for federal spending. And never mind that the postal service, a vital part of the American economy, is being sacrificed to deficit (i.e. money) reduction madness.

Washington Post: Senate to try to force confrontation with House over FEMA dollars

9/21/11: By Rosalind S. Helderman: Senate Democrats plan to add billions of dollars for disaster relief to a House-authored measure to fund government when the fiscal year ends at the end of September, a move that could force House Republicans to decide whether to hold-up the must-pass bill over additional dollars for disaster victims.

The House will vote Wednesday on a continuing appropriations measure designed to fund government through Nov. 18.
[…]
The House measure includes $3.65 billion for the Federal Emergency Management Agency’s disaster relief fund, which has run almost dry as a result of a series of tornadoes, fires and storms.
[…]
In their version of the bill, $1.5 billion of FEMA funding, which would become available to the agency immediately upon the bill’s passage, would be balanced out with a cut to a program that offers loans to auto manufacturers to encourage the production of energy efficient cars.
[…]
“I was disappointed to see the House shortchanged the Federal Emergency Management Agency,” Senate Majority Leader Harry M. Reid (D-Nev.) said on the floor of the Senate Tuesday, announcing he would move to amend the House resolution with additional dollars.
[…]
Democrats will need the support of Senate Republicans who backed boosted FEMA funding last week to send the bill back to the House. Assuming they get it, the House will then have to decide whether to accept the funding or reject it, as the possibility of a shutdown no one wants looms.

So here is Congress, debating whether to reduce postal service or to help victims of tornadoes, fires and storms or to encourage production of energy efficient cars. Why must we choose? Why must our Monetarily Sovereign nation – once the greatest nation in the world, with the unlimited ability to pay any bill of any size — now repeatedly be forced to make such decisions? Why has our America become so feeble and hesitant?

Because Congress is victim to debt-reduction madness, and we are victim to Congress. It’s as though children were voting the best way to do brain surgery. And everyone is surprised we, the patients, are dying.

“Down and down we go
We’re in a deadly spin
Hating this spin we’re in
Our helpless panic grows
Down and down and down we go.”

(Alice Cooper: “Deeper”)

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

3 thoughts on “–Debt reduction madness: How Congress continues to diminish America

  1. IF the US allowed genuine private currencies then US Government spending would be no one’s business but the US Government and its payees. The private sector would not care since overspending with regard to taxation would make fiat cheaper. Thus certain taxes would be easier to pay.

    But if we insist on a single government/private sector money supply then we are doomed to endless arguments about how to manage it. Furthermore, we risk an insane gold standard or other nonsense such as a balanced budget amendment.

    If we wish that the US Government should be able to spend freely then we must abolish the “stealth inflation tax”.

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  2. Federal Deficits – Net Imports = Net Private Savings

    How does this work, in terms of cause and effect?

    It seems to me that net private savings are determined by savers, and net imports by consumers here and abroad. Thus, Federal Deficits ought to be predetermined by these other economic factors. However, we also believe that we control the deficits, or Congress does, by its spending and taxing decisions. If so, then which of the other variables is changed by Congress’ decision? Do imports and exports respond to changes in the Federal Deficit? Or are millions of people’s savings decisions influenced by the size of the deficit? What if Congress changes the deficit, and nobody responds?

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  3. John,

    Look at the big picture.

    Any one individual either saves or spends, but he spends, the money goes to someone else to save. Thus, all the dollars entering the economy are considered “savings,” and all dollars leaving the economy (via imports) are reductions from “savings.”

    The cause/effect is this: The federal government causes increased total savings via deficit spending, and the private sector reduces total savings via imports. And of course, federal taxes reduce savings.

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