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.
Here is why the economy will have great difficulty recovering from the recession, and more likely will fall into a depression:
Obama Loses Big on Jobs Bill
By Patricia Murphy | The Daily Beast|10/12/11
Nothing quite illustrates the depth of Barack Obama’s weakness in Washington better than the painfully public defeat the Senate handed him Tuesday by blocking his signature American Jobs Act.
The defeat was . . . a vote of no confidence on . . . his idea that flooding the economy with public money will jump-start the private sector. But even Obama’s fellow Democrats seem to have developed sufficient spending fatigue to put the brakes on new outlays, while the most moderate Democrats say the economy will never recover as long as the deficit continues to spiral out of control.
There you have it: The media’s and the politicians’ puzzling belief that our economy, which is starved for money, will not recover if we feed it. Instead, the idea seems to be we should reduce the debt, i.e. starve the economy, to feed the federal government, which never can starve because it has the unlimited ability to create “food.” It’s madness.
Visualize the poorest among us sending dollars to Warren Buffett, and even that picture doesn’t begin to show the magnitude of the ignorance. Or, no need to visualize. Just look at what happens when deficit spending growth declines: Recession. And what happens when deficit growth increases? Recovery. And which way is the line headed, now?
The latest Obama plan would have spent $447 billion on infrastructure projects, teacher salaries, and an extension of a payroll tax cut that is set to expire. To pay for it, Senate Democrats last week protected a series of popular tax loopholes in favor of slapping a 5.6 percent surtax on households making more than $1 million a year.
Spending $447 billion is far too little to create a recovery, yet even that inadequate effort is stymied by the myth a Monetarily Sovereign nation – a nation with the unlimited ability to create dollars – needs or even uses tax dollars. The words, “to pay for it” demonstrates total lack of economic understanding. While state taxes pay for state spending and city taxes pay for city spending; federal taxes do not pay for anything.
Sens. Bill Nelson and Jon Tester, two moderate Democrats up for reelection, joined the GOP to block the bill. Tester said he wanted more infrastructure spending and fewer tax breaks in the package. Nelson said the half-trillion-dollar price tag was too rich for his blood.
Meaning, a half-trillion dollars is too much economic recovery for his blood.
“The bottom line is, I don’t believe the potential to create jobs with the Act justifies adding another half trillion to our almost $15 trillion national debt,” said independent Sen. Joe Lieberman.
Congress does not want to increase the meaningless national debt number – an accounting figure that could be eliminated today by the simple expedient of crediting the checking accounts of all T-security holders. Congress prefers austerity for all of us (so long as their own salaries continue.)
Thus do the blind lead the blind into the chasm of despair.
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