–How economic ignorance benefits 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.

On rare occasions, economic ignorance can benefit America. As readers of this blog know, our Monetarily Sovereign federal government can “afford” to pay any bill at any time. There is no limit to the federal government’s ability to pay creditors by marking up their checking accounts.

Old-line economists’ ignorance of this fact has caused massive hardship, but at least in one situation, this ignorance is beneficial. The Washington Post published an article titled, “Amid new guidelines, Va. woman’s deportation case comes down to the last minute,” By Eli Saslow. Here are excerpts:

In a country with 11 million illegal immigrants, the government can only afford to deport 400,000 people per year. Immigration courts had record backlogs; some judges were booked solid into 2014. Democrats and Republicans were divided over how to reform immigration, and Congress was gridlocked. States such as Arizona have attempted to pass their own laws, only to be sued by the federal government.

In truth, the federal government could pay for an increased number of judges and courts to try all the cases. It could deport every illegal immigrant, thereby losing 11 million people, the vast majority of whom are honest, hard-working, tax-paying assets to our society. Their loss would create great damage to America.

New guidelines had empowered ICE employees to use “prosecutorial discretion” and offer their own case-by-case solutions. But each of their decisions — each case — required a series of calculations that echoed across the immigration debate.

Did granting an illegal immigrant more time in the United States solve a problem or prolong it? Would the United States benefit from focusing exclusively on deporting serious criminals? Or did dismissing hundreds of thousands of immigration violations qualify as ignoring the law?

Dismiss or pursue?

How would you decide? What facts would help you make a decision? Take the case of Paula Goday, the focus of the Washington Post article:

An enforcement officer looked over Paula Godoy’s file in the late afternoon. It was more than 25 pages. The law supported her deportation: She had entered and reentered the country illegally, and her case already had cost the government time and money. She had been detained briefly in two crowded facilities and then outfitted with a tracking device on her ankle.

But the new guidelines supported leniency: Godoy’s attorney had attached more than a dozen documents to her application to depict her as a person with strong ties to the United States. Here was a photocopy of her daughter’s U.S. proof of birth; her father’s permanent-resident card; her brother’s driver’s license; her 2010 tax statement. Here, near the back of the packet, was a grainy, black-and-white photo from early August that showed Godoy in a hospital bed, too tired to smile, with her new daughter wrapped in a receiving blanket.

The enforcement officer confirmed the details in the file and then consulted with his supervisor. It was after 5 p.m. Fourteen hours left. Time to decide. He picked up his phone to make the call.

Godoy was cleaning a house in suburban Richmond when her phone rang. She stepped out to the curb and answered. It was an officer from ICE, and he said they had reached a decision.

“Si?” she said. Yes?

Reprieve is brief

Three days later, after the government had decided to grant her a stay of removal, Godoy left her apartment in Richmond for an appointment with Malik. She had been given six more months in the United States thanks to the new guidelines, and at first she had been overcome by relief. She had unpacked her makeshift suitcase and taken a day off work to spend with her boyfriend. Cousins had brought over pupusas. ICE had said it would remove the tracking device on her ankle.

But, within a few days, her elation had given way to confusion and then a familiar dread. She wanted to ask Malik what the decision meant for future. She sat down in his office and thanked him for his work.

“It’s good but not all good,” he told her.

He explained that nothing about the decision or the new guidelines had granted her legal status; that she would possibly need to file for another stay of removal soon; that she should set aside some money to buy her next deportation plane ticket. He explained that her solution was only temporary. It wasn’t a fix.

“Technically,” Malik said, “you now have less than six months.”

And already her countdown had started again.

The “law ‘n’ order, right wing, stone hearts would say, “Kick her out. She steals jobs from citizens. If she’s illegal, she’s illegal,” ignoring the simple truths that employed workers spend money begetting more employment, and the law is a man-made artifact. Change the law, and she could be legal, today.

So here we have Paula Godoy, the tax-paying mother of a legal citizen, a good person and an asset to America, dangling on the cusp of being tossed out of the country, because current, easily changed law does not consider her to be an individual, but rather to be a document.

Her salvation, and the salvation of the other beneficial immigrants, may not lie in the logic of her situation, but rather in the ignorance of federal financing which says the federal government is too “broke” (John Boehner’s word) to deport her.

How’s that for irony?

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


11 thoughts on “–How economic ignorance benefits America

  1. Today, Dean Baker writes, “Consumption as a share of disposable income is actually higher than its post-war average.”

    I guess we don’t have a demand problem right now.


    1. Not sure where he found his numbers. “Post-war average” is a silly number.

      Saving, consumption, income

      PCE/DPI is Personal Consumption Expenditures / Disposable Personal Income

      PSAVE/DPI is Personal Saving / Disposable Personal Income.

      What does this graph tell you?


      1. “What does this graph tell you?”

        I jump into the discussion.

        The graph tells me that people get money form somewhere else. I think they are borrowing money from the banks.


      2. It says that despite the drop from its peak, PCE is higher than at any time from 1957-1996, and PCSAVE is lower than at any time from 1957-1996.

        It says PCE dropped 4% during the recession, from 95 to 91, and is now back up to 92.

        The deficit is up way more than that, by about 6-7% of GDP (and GDP is a bigger number than DPI). Why is that not enough to offset the increased savings?

        Are we doomed if PCSAVE goes back up to 8-10%, where it was for most of the time before 1987?

        I’m getting to be quite sympathetic, not to say enthusiastic, about MMT, but sometimes the numbers just don’t add up, and this is one of those times.


  2. Paula Goday either snuck across the border or overstayed her visa to become an illegal immigrant, because she just didn’t feel like waiting her turn. I have a lot more sympathy for her cousin, who is still in Mexico, waiting for her residency application to be approved, which might happen in 10 years if she is one of the lucky ones.

    If we need 11 million more immigrants than our immigration quotas allowed, then we ought to change the immigration quotas.

    I think our demographic crisis demands more young workers to replace the boomers who are retiring, and to create the wealth that we have promised to current and future retirees. But letting the lawbreakers stay while denying entrance to the law-abiding is immoral and indefensible, and only encourages more law-breaking.


  3. ” . . . letting the lawbreakers stay while denying entrance to the law-abiding is immoral and indefensible, and only encourages more law-breaking.”

    Agree completely. So what should we do? Keep sending the Paula Godays back or stop denying entrance to the law-abiding? Shall we blindly ignore the bad law and keep enforcing it, because “It’s the law”? Or can we learn from the Paula Godays of America, and change the law?

    Every bad law is changed after someone breaks it. Thank goodness for Paula. Maybe she will be the impetus for improvement.

    Rodger Malcolm Mitchell


  4. I would

    1. Grant amnesty for 6 months to all the current illegals, so that they could return home without penalty and sign up for a visa to reenter legally.

    2. Increase the current year immigration quota (one time) by 11 million

    3. Review annual immigration quotas to determine how much higher they should be raised.

    4. Continue with employer sanctions to catch those who fail to comply with #1.

    5. Complete the border fence in the South. The sections where the fence is in place have very few illegal crossings now. The open areas, notably Pima Country, Arizona, are where the vast majority of illegal crossings are occurring.

    6. Exploit technology rather than human guards to monitor the border and direct interception efforts.

    7. Vigorously pursue and prosecute coyotes and drug smugglers.

    8. Have ATFE stop selling guns to the cartels.


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