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.
Under the “Misery loves company” banner, the euro nations, having indulged in a spate of self-mutilation by adopting the euro, are really, really angry at Britain for remaining whole. Unfortunately, like naive teenagers who mindlessly join their peers in folly, Britain yet may succumb.
New York Times
Britain Suffers as a Bystander to the Euro’s Crisis
By Sarah Lyall and Stephen Castle, December 7, 2011
LONDON — No matter what happens at the European summit meeting on the euro in Brussels that begins Thursday, Britain is sure to lose.
There is looming recognition at 10 Downing Street that if the euro falls, Britain will sink along with everyone else.
Total myth. A Monetarily Sovereign nation never needs to “sink” financially. In the crazily extreme case where every last citizen and every last bank in Britain saw their eurobond holdings drop in value to zero, Britain still could exchange pounds for those worthless bonds, and just keep on sailing.
But if Europe manages to pull itself together by forging closer unity among the 17 countries that use the euro, then Britain faces being ever more marginalized in decisions on the Continent.
Many Europeans have been irritated by British Conservatives’ quiet satisfaction throughout the crisis with the decision not to join the euro (the United Kingdom ostentatiously kept its currency, the pound), particularly when juxtaposed with the panic over Britain’s inability to have any significant impact on Europe’s biggest crisis since the end of the cold war.
Sure they’re irritated. They blindly gave away the single most valuable asset any nation can have – their Monetary Sovereignty – and now they look with envy at a nation that was not so foolish. The euro nations resemble the followers of Harold Camping, that guy who repeatedly predicted the end of the world. These folks gave away all their money and worldly possessions, and undoubtedly are angry at those who weren’t so nuts.
“Germany is the unquestioned leader of Europe,” said Charles Grant, director of the Center for European Reform. “France is definitely subordinate to Germany, and Britain has less influence than at any time I can recall.”
Yes, Germany is the unquestioned leader of the broke, battered and busted. Weep for Britain, which being Monetarily Sovereign, can pay any bill of any size at any time, and does not need to come hat-in-hand to the EU, begging for euros. How sad for Britain.
Despite all that is at stake, Prime Minister David Cameron’s coalition government looks doomed to be cast in the role of impotent bystander, torn between anti-Europe forces and European leaders’ moves toward greater fiscal integration on the Continent — with or without Britain.
Yes, “doomed” to have money, while the euro nations continue to struggle with half-baked solutions to their mounting problems. There are two, and only two, long-term solutions for the euro nations:
1. Return to Monetary Sovereignty by re-adopting their sovereign currencies (just like Britain).
2. The EU to give (not lend) euros to member nations as needed (just like the U.S. can and should do for its states).
There are no other long-term solutions. None.
On Wednesday, Mr. Cameron told a fractious Parliament that his main goal in Brussels was to “seek safeguards for Britain” and “protect our own national interest” by resisting measures like a proposed financial transaction tax. But such Britain-centric rhetoric has annoyed the brokers of Europe’s future, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who are trying to find a way to save the euro while imposing legally binding fiscal discipline on the Continent’s floundering southern economies.
In short, Merkel and Sarkozy scream, “Help, we’re drowning, because we drilled holes in our ship of state and then threw away our life preservers. So Britain, we want you to drill holes in your own boat, and jump in with us losers – or we’ll be angry at you.”
They have not been shy about expressing their frustration. Just six weeks ago, after Mr. Cameron tried to inject himself into talks about the euro, Mr. Sarkozy said bluntly, “You have lost a good opportunity to shut up.” He later added: “We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.”
In even shorter, “We screwed up, and now we’re drowning. We can’t swim, things are getting worse by the minute, and we have no idea what to do. But we resent your advice. Glub, glub, glub.”
“Said Alexander Stubb, Finland’s minister for European affairs. “When we look at future E.U. rules, it is the triple-A countries that are running the show.”
Perfect. Monetarily non-sovereign France, which would go broke without EU help, has an AAA rating. The Monetarily Sovereign U.S., which cannot go broke, and needs no help, not only is rated AA by S&P, but has been threatened with further downgrades. That tells you nothing about the U.S., but speaks volumes about S&P (the guys who gave an AAA rating to worthless mortgage securities, and still haven’t admitted to being stupid or crooked.)
France and Germany have already made it abundantly clear that they will go ahead with their plans for the euro zone without regard to the needs or interests of Britain.
The explosive debate in Britain, while never welcome, comes at an unusually inopportune time for Mr. Cameron. The so-called special relationship with the United States is not looking all that special right now, and enormous cuts in defense spending are making it hard for the British military to maintain its status as America’s right hand.
The austerity budget is fraying at the edges, amid strikes and protests over layoffs and rising fees. Growth has been slowing, despite Mr. Cameron’s insistence that businesses would pick up the pace when it became clear that the government’s finances were sound. And now Britain looks to be in an unusually poor position to defend its interests in Europe.
And that is the saddest paragraph of all. Britain is Monetarily Sovereign, but as in the U.S., its leaders have convinced the populace they are monetarily non-sovereign. So, they subject their people to grinding austerity for no reason whatsoever.
Most dangerous to Mr. Cameron was the unwelcome intervention of the mayor of London, Boris Johnson, a potential wild-card rival for the Conservative leadership. Mr. Johnson, who is perhaps Britain’s most popular politician, enjoys injecting himself into questions of foreign policy when the spirit moves him.
If Britain was asked to sign a treaty creating “a very dominant economic government” across Europe, he told BBC radio, then Mr. Cameron should veto it. “And if we felt unable to veto it, I certainly think that it should be put to a referendum,” he said. He added that in rescuing the euro, there was a danger of “saving the cancer, not the patient.”
Exactly correct. There is no benefit for Britain, or any other Monetarily Sovereign nation (the U.S. included), in merging with the deadbeats of the eurozone. They may call Britain bad names, as they “tempt” the British with a nice, fancy suicide belt, but Britain was the smart one.
I pray the citizens of Britain soon understand the massive advantages they have in being Monetarily Sovereign. Too bad the citizens of the U.S. have not yet learned that lesson.
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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports
13 thoughts on “–Oh, woe! The euro nations blast Britain for not joining them in economic suicide.”
QUOTE RMM ,
“Exactly correct. There is no benefit for Britain, or any other Monetarily Sovereign nation (the U.S. included), in merging with the deadbeats of the eurozone.”
What if the Great American Benefector “Helicopter Ben ”
were to have the US Treasury (via his co-conspiritor Geithner) make a direct loan of $1.33 trillion at a rate of 2% for 36 years to the EURO Group ?
NOT GUARANTEEING THE LOAN,BEING THE DIRECT LENDER !
Their payments (Est. $6 billion per month ) going directly to the US Treasury as funding for Congressional appropriations (perhaps,allowing a new income tax that would be 0% for the income of up to $75,000).
The U.S. government, being Monetarily Sovereign, does not need any form of income — taxes or borrowing. It has the unlimited ability to create dollars. What possible use would it have for dollars it already can create in unlimited amounts?
And lending money to people already too deeply in debt, simply makes their problems worse.
The U.S. could give money to the euro nations. However, the EU is better suited for that.
Rodger Malcolm Mitchell
May I explain ?
A MS does not need income? Correct, but if it wishes to control the quality and quantity of its money,it needs to have a means to control it.What better way is there then that of using the “most powerful ” one in the universe ? An unlimited creation could cause a future problem,whereas quality control could avoid any future unpleasenties.
Why “GIVE” away an opportunity to place European nations in servitude,it’s only payback for history pass.Also it is impossible for them to pay back without someway of acquirering dollars elsewhere ,other than the $1.3 trillion (the loan amount)the interest accumulated would be $1.33 Trillion.
The MS does not have to collect taxes either,but since it does (read the US) it still would be a great excuse not to have to pay them.
LAST but not least,the EU is not smart enough to do it.
Please read “The All Inclusive Solution.The Federal Reserve Bank of America” and N.B., I use words like,”MAY,COULD,SHOULD” ,what I suggest is not “written in stone”
No matter how you would want to slice it ,it would be a payment of $6 billion a month to the US Treasury for as long as they make payments.And,oh yes, we have FORGIVEN FOREIGN DEBT IN THE PAST,BUT LET’S WAIT FOR THAT ! t
Justa . . .
“Why “GIVE” away an opportunity to place European nations in servitude . . .”
That line of thinking is what led to World War II.
Rodger Malcolm Mitchell
Are you implying that Banks are leading us to WWIII ?
Because even though they have been given trillions upon trillions of dollars they still refuse to “GIVE” away an opportunity to delay AMERICAN SERVITUDE.Instead of buying down their gains (interest accumulation) they made additional profit from that money.Getting it at
almost zero and using it for a higher rate of return.
But once again,thank you for the response,it shows you are reading,for which I thank you.But ,please,challenge “The All Inclusive Solution. The Federal Reserve Bank of America”.
By the way.Yes,MS can print all the money it wants,needs,or desires but the statement without conditions is FALSE because if a MS were to continuously print more and more it would reach a point where QUADRILLIONS would not be enought for it to continue.Oophs ,wrong because mathematically you can increase any number to infinity ?? It’s really just about the unintended consequences.
Have you read Prof. Michael Hudson’s works regarding interest and compound interest?http://michael-hudson.com/
Did US lend money to Germany after WWI ?, Thought they did that after learning their mistake from after WWI and US then did that (lend and give) help rebuild etc.
The line of thinking after WWI was punitive;the taking of their assets,you know just like asking a country, (PIIGS) too…”Austerity breeds austerity and leads to civil disorder”
Yes, it did. Germany had to pay huge reparations to the WWI Allies, hence the hyperinflation. It also got loans from the USA & American banks to pay them, and its later default on them was part of the financial instability of the Great Depression.
Rodger, Should you want to apply for British citizenship, I’ll back you.
I went to that economic roundtable last night. I didn’t get to ask the biggest economic question of today, but applauded when Steven Rattner reminded everyone that debt reduction is contractionary. Lawrence Mishel advocated letting the Bush tax cuts expire.
I assume that following Rattner’s comment, the discussion resumed regarding how to cut the deficit.
Yes, it did. David Walker is a dangerous man.
There’s a scandal going on in the NBA right that mirrors the Euro Crisis. Twelve months ago, the NBA bought the New Orleans Hornets for $300 million. Every other owner (29 in all) split the price for the franchise. Hornets GM Dell Demps was told he would be able to swing moves just like any other general manager. Well, that turned out to be false. Demps recently attempted to trade Chris Paul to the Lakers, but the owners and league commissioner David Stern blocked the trade!
For the whole story, here is Bill Simmons’ article: http://www.grantland.com/story/_/id/7334835/the-sixth-day-nba-christmas
justa . . .
The limit to deficit spending is inflation, which the Fed effectively has controlled to about their 3% target rate — a rate at which they believe the economy can grow best. They don’t want 0%. They don’t want 6%, so they use interest rates to come to what they feel is optimum.
Absolutely no one (except debt-hawks who intentionally mischaracterize), is talking about infinite spending. Yes, steady 3% spending growth can lead to infinite spending — in an infinite amount of time.
Rodger Malcolm Mitchell