–There are two, and only two, long-term solutions for Greece and the other euro nations.

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. 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.

The news about Greece grows louder.

In giving up the drachma, and taking on the euro, Greece voluntarily surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty.

Greece now is monetarily non-sovereign. There is an absolute rule in economics: No monetarily non-sovereign government can survive long term without money coming in from outside its borders. Germany, another nation that gave up its most valuable asset, the mark, and also is monetarily non-sovereign, survives on exports.

Nevada, which also is monetarily non-sovereign, survives mostly on tourism (aka gambling). No monetarily non-sovereign can survive long-term on internal taxes or borrowing.

By contrast, Monetarily Sovereign nations do not need money coming in from outside their borders, because they create unlimited money simply by paying bills.

For Greece and the other euro nations, long term survival requires one of two, and only two, events:

1. Adopt some form of a sovereign currency, and become Monetarily Sovereign
2. The EU give (not lend) euros to its member nations as needed.

There are no other solutions. None. All the running in circles by the European financial geniuses will be to no avail. Each day they come up with some new lending plan, and the next day abandon it in favor of some other lending plan.

But none of these plans has any long-term benefit. The euro nations are like rats in a cage, scurrying in all directions, with no hope of freedom. But still they scurry, at top speed.

If you read about any plan that does not include #1 or #2 above, know that it will fail.

Those who do not understand Monetary Sovereignty do not understand economics (and that goes for the U.S. politicians, media and old-line economists, who still claim to believe the pre-1971, anti-debt economics.)

I have been awarding one to five dunce caps for economic ignorance, but now the ignorance has grown so pervasive, with the euro nation leaders and our own Tea/Republican, Democrats, and the media and the columnists and the old-line economists –none of whom admit that what happened in August 1971 completely changed economics — I feel even five dunce caps does not do justice to the universal economic ignorance.

So today, I award 1000 dunce caps to all the self-styled experts, who blather on and on, spouting intuitive economics, but know nothing of the facts Monetary Sovereignty exposes.


There is a second reason I award 1000 dunce caps: To demonstrate what sovereignty can do. I can create all I wish. I never will run short. I cannot be forced into dunce cap bankruptcy. I don’t have to “live within my means.” I don’t need a balanced budget. I don’t need to tax or borrow dunce caps. I don’t need to be dunce cap prudent. I am dunce cap sovereign.

In that sense I am identical with the United States government which is dollar sovereign. It too can create all the dollars it wishes, never will run short, cannot be forced into bankruptcy, doesn’t have to “live within its means,” doesn’t need a balanced budget, doesn’t need to tax or borrow and doesn’t need to be dollar prudent.

I now have awarded 1065 dunce caps. Because I levy zero dunce cap taxes, I have run a total deficit of 1065 dunce caps. If there were a dunce cap clock, it would read “1065 caps.” My children and grandchildren will not have to “pay for” my dunce cap deficit.

Attention American debt-hawks and euro nations: Is there any way I could draw a clearer picture for you? Now wake up. Your stubborn ignorance is killing your countries.

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


7 thoughts on “–There are two, and only two, long-term solutions for Greece and the other euro nations.

  1. Interesting. I think you perhaps made a point for all of the inflation hawks. By awarding 1,000 dunce caps today, you have suddenly made all of the previously awarded dunce caps less valuable. While it is true that you can always award more and more, a debt hawk would say that you’ll soon need to be awarding 100 trillion dunce caps just to keep them meaningful.

    I joke to a certain extent, but inflation is the fear in everyone’s mind – It’s not that the government can’t issue more money, it is that the money already issued (and stowed in a bank account earning 0.25%) is worth less (or that a person who got 3 dunce caps now looks pretty smart).


    1. You’re right — partly. It does boil down to inflation, though you wouldn’t know it from the comments about “living within our means” and “our children will pay the debt,” and our country is “broke,” none of which speaks directly to inflation. Instead all those comments really mean the federal government is like us, and can’t pay its bills. Simply ignorant.

      So let’s talk about inflation. You’re referring to the law of supply and demand. Right? Increase the supply and the value goes down. Right?

      Well what about demand? The law of supply and demand does not say, “Increase the supply and the value goes down.” The law says, “Increase the supply compared to demand and the value goes down.” Why do debt-hawks always forget about demand? Strange, isn’t it?

      And why do debt hawks ignore the fact that since 1971, when we became Monetarily Sovereign, there has been zero relationship between federal deficit spending and inflation? (See:https://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/) Strange, isn’t it?

      My dunce caps have “avoidance value.” Their value comes from how much people want to avoid them. Think about it: How would you like to receive five dunce caps for the ignorance of your comment? Do you feel different, now that I have awarded 1000 dunce caps? No, you still would be insulted. Increased supply did not change the value at all.

      As I long have said, in numerous places: The limit to federal spending is inflation. We should spend until inflation threatens. Then we should increase demand by raising interest rates. Only if that doesn’t work should be cut back on spending. So far, inflation is under control, and the Fed knows how to keep it there.

      The current “system” is to institute austerity which guarantees a miserable life for us, rather than risk the distant possibility of an inflation we won’t know how to cure. It’s like cutting your throat to avoid a headache.

      There are two separate and distinct questions:
      1. How much can the government spend?
      2. How much should the government spend?

      The debt hawks like to confuse the two in all their arguments.

      Rodger Malcolm Mitchell


  2. The perverse and hypocritical thing about Germany, is much of that export income that has supported it’s economy, is coming from the other Euro states like Greece, who it is now chastising for borrowing so much money from German, French etc banks to pay for it all…. The PIIGS have also acted to suppress the value of the Euro relative to what a free floating Dmark would be, thus making Germany’s exports even more competively priced, but their own overpriced.

    Anyway, I’d vote for a full or partial breakup of the Euro as the best solution, as I think the cultural differences between the members are still too large for a United States of Europe to work yet. Probably wont happen because the egos of the Euro elite can’t handle admitting their pet project was fundamentally flawed from the outset.


  3. Monetizing your site with affiliate advertising add more… Greece got trouble, any words on the recent bankruptcy of MF Global?


  4. Roger, I see you drop notes at popular blogs such as “Naked Captalism,” trying to wake people up to the simple facts of monetary sovereignty. I know it’s frustrating to see that people Just. Don’t. Get. It.

    I just want you to know that some of us are absolutely on board with you.


      1. I would think the message would of Ms/mmt would be quick to get around since the news is all good. Fears of inflation can be put to rest. Affordability is reality. Federal “spending” is a good word, supplemental, not lost, a net gain, not to be confused with nonsoveriegn budgets.

        But somehow I get the feeling that anyone of stature spouting MS/MMT principles would fear losing respect and station in life. SO the beat(ing) goes on, the conflation of soveriegn and nonsoveriegn. I don’t see speaking engagements/lectures outpacing the power of the internet.


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