–Sen. McCain (remember him?) writes to me. Creates run on dunce caps.

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 breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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It’s eye-rolling time. Here are excerpts from today’s letter:

If you agree that we need to create jobs in America — long term, meaningful, private sector jobs — then I need you to take immediate action.

Last week, I was joined by a number of my Republican colleagues in the U.S. Senate in introducing an alternative to President Obama’s jobs plan. Our plan, the Jobs Through Growth Act, is focused on growing jobs through American entrepenuership. I am sure you agree with me that its [sic] private sector, not government, that will grow U.S. jobs.

I’m not sure why people believe the “private-business-always-is-better-than-government” myth. Surely, by now, we have learned what such private businesses as banks, derivatives speculators, insurance companies, oil companies, car companies, Madoff et al can do to us. People are people. The good and the bad, the greedy and the generous, the competent and the incompetent, the honest and the dishonest are found in the government and in the private sector.

I will agree to one thing, however. There does seem to be an inordinate number of bad, greedy, incompetent and dishonest people in Congress vs. the private sector. Could that be what Sen. McCain means?

As for jobs, the U.S. census bureau says the federal government employed an average of 3.8 million people through last year, with an estimated salary of $19.6 billionper month. About $235 billion went from the federal government directly into the pockets of working people — and that doesn’t count the $3+ trillion the government sent to businesses, much of which also goes to salaries.

Of course, this figure probably will decline in 2011. Why? Because Sen. McCain et al believe firing federal employees to cut the deficit, somehow will reduce unemployment. Huh?

Our plan will help give the certainty and confidence that our private sector so badly needs to invest, grow and create jobs again. By cutting taxes, reforming our broken tax code, reducing spending and getting the burden of overregulation off America’s back we can get our economy moving again.

Excuse me, but confidence doesn’t improve business. Improved business builds confidence. Yes, I agree taxes should be cut – starting with FICA. But if “reforming the broken tax code” means some version of a Tea/Republican flat tax to “spread the burden,” it will guarantee the poor will pay more and the rich will pay less.

And then we come to reduced (federal) spending. Does anyone out there understand how reduced spending will reduce unemployment or grow the economy? I’ve asked a great many economists and politicians this question. No one seems to know.

And “overregulation”? Are we really regulated too much? Are the banks, the stock speculators, the insurance companies, the drug companies, the food companies, the water poisoners and air polluters – are they really regulated too much. Was it too much regulation that caused the recession, and will less regulation help prevent the next one?

And now comes the pitch:

If you agree with me, that business-created jobs are the way to lower the unemployment rate, please take a moment to sign this petition in support of our plan by following this link. . . . After you sign our petition today, I ask that you consider making a contribution to help Country First PAC support pro-business candidates up and down the ballot in every area of the country. Your support makes a difference in bringing real change and growth to our economy.

I award Sen. McCain a maximum of 5 dunce caps, not just for today’s ignorance, but for all his ongoing ignorance including, but not limited to, Sarah Palin. Fortunately, my being dunce cap sovereign (a concept Sen. McCain never will understand) means I always will will have plenty to give him in the future plus plenty left for any who may send him political contributions.

(I now am running a dunce cap deficit of 50. Sen. McCain might say I should learn to live within my means.)

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

25 thoughts on “–Sen. McCain (remember him?) writes to me. Creates run on dunce caps.

  1. Check out this letter I received from my senator – Chuck Schumer. This was in response to a letter I sent him outlining the principles of Monetary Sovereignty and MMT. Notice the immediate disconnect by the 2nd sentence….

    ************
    Thank you for writing regarding you concerns over the impacts of cutting government spending. Like you, I believe it is important to deliberately and responsibly cut government spending to reduce the deficit and debt as well as protect our long term economic health without sacrificing vital government services.
    There is no question that there needs to be a deliberate effort to curb government spending in order to ensure that essential government services will be available to future generations but as you recognize, this must be done in a way that does not threaten our long term economic health or the vital benefits the federal government provides.

    A reasonable and balanced compromise is the only answer to our current fiscal woes. While that compromise has yet to be determined, it is well understood that this means the debt reduction plan must not balance the budget on the backs of middle class New Yorkers while protecting millionaires and billionaires. Massive cuts to Medicare, Social Security, Pell Grants and homeowner assistance programs will only exacerbate both our economic and fiscal woes and in a time that the government is collecting its lowest tax revenues since 1958, largely due to tax loopholes for the wealthy, there is certainly room to increase our revenues without sacrificing economic growth.

    There are commonsense ways for us to bring our fiscal house into order without punishing middle class Americans. A surtax on millionaires and billionaires would help to reverse the damage the Bush tax cuts did to our fiscal health. Ending tax breaks for luxury items such as corporate jets and yachts would also help the United States get back on the track to fiscal responsibility.

    These are just two of the many reasonable and practical to curb our deficit. While we have avoided the catastrophic consequences of a default, the recent economic news shows us that we still have a ways to go. While the recently brokered compromise including certain cuts that I disagreed with, I was happy that the compromise did not cut vital benefits for Medicare and Social Security beneficiaries and responsibly trimmed the fat in the bloated Pentagon budget. The super committee created in the deal to raise the debt ceiling must seek a balanced approach of both responsibly cutting spending and modestly increasing revenues on those who currently do not pay their fare share.

    Again, thank you for contacting me on this important issue. Please do not hesitate to contact me again if I can be of further assistance on this, or any other matter.

    Sincerely,

    Charles E. Schumer
    United States Senator
    ***********

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  2. Yes, broll,

    The line, ” . . . there needs to be a deliberate effort to curb government spending in order to ensure that essential government services will be available to future generations . . .” is wonderful. Reminds me of that famous Viet Nam- era line, “We had to destroy that village to save it.”

    But the best line is, ” . . . modestly increasing revenues on those who currently do not pay their fare [sic] share.” If he were Tea/Republican, he would mean the poor people who pay no income tax, but are swamped with payroll and local taxes.

    But he’s a Dem, so he thinks raising taxes on the “rich” will help cure unemployment and stimulate the economy — by some unknown magic.

    I’d send you some dunce caps to award him, but you know, with my dunce cap deficit, I could run short. Sorry. I want my dunce cap house to be in order.

    Rodger Malcolm Mitchell

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    1. What galls me is how my original letter to him was pretty much exactly the opposite of everything with which he responded. The “Like you, I believe it is important to deliberately and responsibly cut government spending to reduce the deficit and debt” line blatantly shows how he (nor any member of his staff) even bothered to read my letter.

      With representation like this how can we even begin to pretend this is a a true representative form of government?

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  3. “I’m not sure why people believe the “private-business-always-is-better-than-government””. Because the government doesn’t make anything. If you strip away every item the OWS nuts have, clothes, signs, cell phones, and the resat, they would be naked. Yes, everything the government has and OWS uses came from the private sector. Even the printing press or computer key you often mention comes from the private sector. You are a liberal so close down the private sector and see what happens. I challenge you to be so bold and brave. I know I can live off the land, so I know I can survive. Can you?

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  4. John,

    If, as you say, the government doesn’t make anything, then the private sector makes everything, and McCain’s comment (“. . . its [sic] private sector, not government, that will grow U.S. jobs.”) still makes no sense. He’s comparing private sector production with government sector production (which you say, makes nothing.)

    Well, in fact, the government does make one thing. It creates money, which the private sector uses to make things.

    As for closing down the private sector and daring me to live off the land, that really is the silliest argument I’ve heard in years. I’d give you a few dunce caps for that one, but my dunce cap deficit is too big. I am however appointing a dunce cap super committee to reduce my dunce cap deficit. Want to be on it?

    Rodger Malcolm Mitchell

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    1. And extactly how would government print money without the private sector providing them that means? Maybe they could snap their figures and make magic dust. You see by disreguarding the private sector as a means of money growth, you eliminate all possible of economic stability and growth. You often mention that the US recessions and depressions have been caused by reduced government spending. Another one of your liberal myths. The real cause of All ressions and depressions was government idea of printing money and making easily available. In other words, money wasn’t earned, but foolishly created by the people bow down to and worship. What you and all liberal worship is you want your cake and eat it to. Your fat waist line goes to prove my point. Remember A is A.

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      1. “The real cause of All recessions and depressions was government idea of printing money and making easily available“ NOT true.
        “consumer and government spending have driven economic growth over the past century, not corporate profits.” Whenever government spending was reduced, the economy suffered. For proof I quote from http://bil­bo.economi­coutlook.n­et/blog/?p­=17095 where Tyler says:
        Thursday, December 1, 2011 at 0:38
        1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
        1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
        1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
        1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
        1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
        1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.”

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  5. Rodger,
    So you would agree that North Korea is also a Monetarily Sovereign government, they gave up the dollar peg in 2001 and now have the ability to create as many WON as they need for their economy.
    Based on what you have been writing here, they seem to be the perfect example of what you would like to happen in the United States. The DPRK govt provides everything their citizens needs, education, healthcare, govt jobs. Have you wondered what life is like inside that country? Don’t say they have a dictator running the country. It can happen here too, when you have an all controlling govt then it becomes a dictatorship, if not by one leader, by 535 members of congress.

    I agree with you that govt does make one thing, it create money. But what good do it do to spend $235 Billion to pay 3.8 million people in 1000+ departments to push paper and produce nothing of value and not be held accountable to what they are supposed to do? Like the regulators in SEC who are asleep at the wheel?

    Wouldn’t it be better to have a smaller and efficient govt that facilitates private enterprise to produce goods of value and productively employ the +25million who are either unemployed or under employed instead of just sending them a check every week to do nothing? I’d rather have that 3.8 million people work in the private sector where they can produce something of value that would hire more workers in turn.
    What we have now is a wage inflation in the Govt (public sector) employment (free money for a selected few, have you seen the latest report on the demographics of DC area? They beat Silicon Valley) and a wage deflation in the private sector with more and more jobs being shipped offshore.

    As a country we cannot go on this path much longer of just being consumers and depend on a large government to support us for nothing. We have to produce things of value that will make our fiat currency valuable. Else we can just become North Korea.

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    1. Backer,

      False analogy. Making the government smaller will not make it produce more things of value.

      Every depression and nearly every recession in U.S. history has been caused by reduced deficit growth. See: https://rodgermmitchell.wordpress.com/2009/09/07/introduction/

      Years ago, a tiny high school basketball team of only 7 players won the Illinois state championship. Following your hypothesis, all the other basketball teams would win championships if they reduced their team size to only 7 players.

      Your last paragraph is out of touch with economic reality. I wish I had a dime for every time a debt-hawk told me we can’t continue federal deficit spending. See: https://rodgermmitchell.wordpress.com/2010/04/27/the-federal-debt-is-unsustainable/

      The proper approach is: Learn first; talk second. You have it backwards.

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      1. When you say fake analogy, are you saying North Korea is not a Monetarily Sovereign government ?

        Nowhere in my comment did I say we have to reduce the deficit. I said I’d see that money go to productive hands than to pay inflated wages to govt workers who are not held accountable for their actions and don’t produce anything for the common good of the nation.

        I’d rather have a city with 10 times more teaches/fire/police who are paid average salaries like the rest of the pvt sector and be held accountable for their jobs (i.e. no job guarantees) than have a select few collecting inflated overtime payments to do a shoddy job and then collect lifelong pensions and medical insurance when the rest of the people can’t even dream of a regular paycheck.

        All I am saying is that the current Big government structure is broken and it needs to be fixed first else we will keep spending even more money for nothing.

        None of the recent stimulus has worked because a controlled group of people have taken away a big chunk out of it and it never reaches the people it is intended to.
        The new deal worked in the 30s because there most of it was used for productive purposes and not to line the pockets of selected few lobbyist and union bosses and politicians and their family. Today it is the other way around.
        When you need a $Billion for a presidential election, you know that the system is broken. You don’t address that, all you see there is a $Billion going into the economy, It doesn’t. it gets hoarded by a select few and rest of us have to live on scraps.

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        1. North Korea is a broken economy, that has changed its money several times in a direct effort to impoverish the citizens and make them beholden to a megalomaniac dictator. There are dozens of reasons why its a fake analogy, as you surely know, since of all the nations on earth, you chose to select a communist dictatorship with zero resemblance to the U.S government.

          You really should try to learn Monetary Sovereignty, so you can explain exactly what happens to a dollar when it is “hoarded.” Where does it go? How do you “hoard” money?

          And, now that I have published your wish list, what is your proposal? How do you suggest we get from here to your paradise?

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  6. I’m starting to think that maybe President Obama should not be reelected. He incessantly proposes to raise taxes on the rich.

    At least a guy like Romney would lower taxes dramatically.

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  7. Rodger,

    To those like ‘John Galt’ (who, in the “make pretend” world of Rand and her Libertarian Moron Army must realize was a sociopath or are they so far removed from reality that they cannot comprehend) I ask, simply:
    How many roads and highways have private industry financed? Without which interstate commerce comes to a virtual halt. How many improvements to our ports has private industry financed? Without which international commerce comes to a halt? Oh right, Galt, they pay with their taxes. Wrong. Did private industry pay for the R&D that was responsible for the creation of the internet, computers? No, they did not. The list could fill a book. Wake up Galt. And, you are so sure you would and could survive without government. There are many here among us who would love to challenge directly those that believe as you. There are many who could, would and quite easily remove you from this existence. The government forces that would protect tough guys like yourself won’t be there to help you. Think about it, Galt.

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  8. John Galt and nutbacker,

    I infer from your comments Government cannot provide real or permanent jobs.

    This is simply refuted by our men in uniform, many who serve (work) 20 years or more in their occupation, and then using these learned skills enter private industry as valued added labor. We have maintained a standing army and navy since WWII.

    The military-industrial complex employees tens of thousands of civilians in the private sector. These are real jobs, preformed by real people, paid by Government spending.

    NASA, conceived and funded by Government, employs thousands that found new ways to apply technology for its space missions, which the private sector (Silicon Valley) parlayed into all the wonderful gizmos that now enrich our lives. Your smart phone, as only one example of many, is more sophisticated than the computers used in the first moon mission, but its origin started there.

    On the State level we have police, firefighters, schoolteachers. All respectable professions created and funded by Government.

    All this requires a support mechanism of administrators, accountants, and, omg, bureaucrats.

    We can eliminate all Government created “make work”, but what kind of society do you really want to live in?

    .

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    1. I never said that I want to eliminate all Govt. All I am saying that a govt job should be on par with a pvt job. No special favors like unconditional job guarantees, no inflated salaries and overtimes & life long pensions to a select few.
      There was a time when govt jobs were low paying jobs, not anymore.
      I would rather have 10 times more govt workers providing a good service while drawing average salaries like the rest of us, than having to pay two or three times more for a select few who don’t even do what they are expected to do and not be accountable for it.

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      1. All I am saying that a govt job should be on par with a pvt job. No special favors like unconditional job guarantees, no inflated salaries and overtimes & life long pensions to a select few. Why not have all these things for everyone? The nation certainly can afford it, easily. Nobody else but the government can afford to guarantee a job to everyone. Full employment, a job guarantee is an enormous boon to the economy, raising production, real wealth, stability, and lowering inflation.

        There was a time when govt jobs were low paying jobs, not anymore. That’s not because government jobs have gotten better, or that government workers are lazy fatcats. That’s because the private sector has gotten worse.

        All jobs ultimately come from the government. A job is work in exchange for money. Money ultimately comes only from government. The private sector is just a subcontractor. The wealthiest are usually the people who control the subcontracting, the flow of government money. Omnipresent anti-government propaganda is then spread so that only they will be the beneficiaries of the state, and their control and source of funds disguised & denied.

        Government non-intervention is a logical contradiction in a monetary economy. The only question is whether the “intervention” – the institutions – will be in the interests of everyone or just a few. The essential is for people to understand how money works, and there has been general regression, not progress, in the last few decades.

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        1. Nutbacker,

          Let me add to what Calgacus writes.

          There is unfairness in a system that allows the plutocrats on Wall Street to set up an oligarchy in Washington, where a select few benefit at the expense of the many. This is the outrage that motivates OWS. Since the economy is not functioning to everyone’s benefit we look to place blame, often on those who do not deserve it, or will not solve the larger problem even when true.

          Rodger points out taxing the rich does not benefit the poor Likewise, punishing govt workers does not help me to live a more productive and fulfilled life.

          Maybe a better questions to ask is how can a government of WE the People serve all its constituents? A Monetary Sovereign Government has the unlimited ability to provide health care, education, Social Security and every other resource necessary for the betterment of its citizens. Must we have a zero sum game where one class wins only if another loses? After all, we are all in this together, and OUR government has the means to create a more egalitarian society for each and every one of us.

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  9. galt obviously believes in a society which is a free for all. where corporations and business are unregulated, do as they please no matter the effect on society or the environment. where criminality goes unpunished if the crime perpetrated is good for the bottom line and profits for shareholders. where those less fortunate can be swept to the gutter. where those who choose to take from others what they want are allowed to do so because there will be no laws or regulations to keep them in check. where everyone is out for me and me only. where the stronger can take whatever advantage they choose of the weaker amongst us. where there is no compassion and the world is a really shitty place for most of those who inhabit it. where persons like galt hide in terror.

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    1. In other words, he wants an Ayn Rand, Tea Party, anarchist world, which won’t seem so wonderful when his house is burning, a robber is shooting at him, cancer is spreading, his streets are filled with potholes, his food is tainted, his kids can’t read, the nearest hospital is in another country, terrorists are bringing down his plane, our soldiers have no weapons, no new drugs are being invented and he’s getting old.

      Then this formerly self-sufficient, macho guy will whine in his weak little voice, “Help me, help me.” But his neighbors simply will have him for lunch. Literally.

      Rodger Malcolm Mitchell

      Like

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