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.
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The single, most valuable asset any nation can have is Monetary Sovereignty – the unlimited ability to create its sovereign currency, the unlimited ability to pay any bill any time and the unlimited ability to grow economically.
Monetary Sovereignty is more valuable than all the land and all the buildings in a nation. Until now, “only” 17 out of the 27 members of the EU had voluntarily surrendered their Monetary Sovereignty – their most valuable asset. Many are paying the price. Now, all but Britain seem to have joined them in a monumental fiscal suicide pact.
Washington Post:
European Union leaders agree to forge new fiscal pact; Britain the only holdout
By Anthony Faiola, Published: December 9/ 11BRUSSELS — A landmark summit of the 27-nation European Union ended here Friday with both a pledge and a wedge: A pledge among nations to work toward a new treaty binding them more closely in a pact to save the euro, and a wedge between the continent and Britain, which opted to sit it out.
Rather than trying to save the euro, these nations should be trying to save their economies. Classic tail wagging the dog
In a summit portrayed by leaders as a make-or-break moment in the decades-long march toward European unity after World War II, the outcome signaled the growing clout of Germany and a potentially wayward path for Britain.
In euro-speak, “wayward” describes a nation with the sense not to destroy its own sovereign currency, over which it has total control, in exchange for the failing euro, over which it has no control.
After marathon talks, nations unveiled a deal to quell a debt crisis that is threatening the global economy. The summit organizers announced early Friday that they had agreed to try to forge a new pact centering on strict caps on government spending and borrowing to shore up the euro’s foundations.
In other words: Strict caps on your economic growth together with no ability to recover from recessions and depressions, together with loss of control over your money supply. What could be wrong with that?
But the veto by British Prime Minister David Cameron, a Conservative euro-skeptic who cherishes the pound and looks askance at a heavy European hand in British affairs, underscored his nation’s long unease with relinquishing national powers to the E.U. and left London isolated in a region now moving toward deeper integration without it. His move left Britain’s Guardian newspaper asking, “Will it be splendid isolation or miserable?”
One day, the British will erect a statue of Minister Cameron, alongside that of Churchill and Nelson, and celebrate him as a man who saved Britain.
Without Britain on board, the 26 other E.U. nations face potentially complicated legal obstacles to meet one of the prime objectives of a new treaty: giving fresh powers to E.U. institutions to slap automatic penalties on governments that recklessly spend and borrow.
Rather than coming up with a plan to help nations grow, the EU developed a plan to do the exact opposite, and to enforce that recession-generating plan with penalties. Sort of reminds me of the U.S. Congress and the terrible debt ceiling. Apparently, the Atlantic is no barrier to ignorance.
Leaders have tried, and repeatedly failed, to come up with grand plans to fix the region’s two-year-old debt crisis, allowing troubles that began in Greece to spread to much bigger economies such as Italy and Spain.
As I’ve said repeatedly, there are two, and only two, long-term solutions for euro nations:
1. Return to Monetary Sovereignty by re-adopting their sovereign currencies, or
2. The EU to give (not lend) euros to member nations as needed.
Hungary, the Czech Republic and Sweden agreed to Friday’s deal at the last minute. Along with Denmark, Latvia, Poland, Lithuania, Romania and Bulgaria, they committed only to the possibility of taking part in a treaty after consulting with their national parliaments.
Six more lemmings dive over the cliff. Let us pray these nations’ parliaments have more intelligence than do the negotiators, who have traded their absolute guarantee of eternal solvency for a guarantee of future insolvency.
The leaders of Germany and France, the anchors of the 17 nations that share the euro and the two largest economies in the European Union, hailed the accord as a “breakthrough” that would restore confidence in the euro.
Ah, the “confidence fairy” rears her lovely head. Note to EU: Confidence is something you earn, after you have proven solvency, not before. Reminds me of the guy who dives out a window, and on the way down, shouts, “So far, so good.” That’s the EU brand of confidence.
German Chancellor Angela Merkel declared herself indifferent to whether Britain signed or not. (She) said she had no intention of giving in to a British demand — a written promise that Britain would be free from potentially cumbersome European rules and regulations that could hamper London’s vast financial district. Instead, her message to the British was clear: If you want to be part of Europe, you must submit to its rules.
“I have achieved what I wanted to achieve,” Merkel said.
Yes, Chancellor, if you wanted to achieve the financial destruction of Europe, you’re doing a fine job, perhaps better even than that noted, historic countryman of yours.
French President Nicolas Sarkozy was less delicate, suggesting that the rest of Europe was growing weary of Britain’s independent streak.
What? A Frenchman who doesn’t like another nation’s “independent streak.”?
Cameron, who is one of Europe’s leading advocates of austerity and has enacted historic cuts at home, is actually seen as more moderate on Europe than many fiercely anti-E.U. members of his Conservative Party. . . . In recent days, he had incurred the wrath of his party by suggesting that his primary consideration now should be helping his neighbors save the euro. . . .
Uh oh. Cameron is a leading advocate of austerity? His primary consideration is saving the euro, not saving the pound? There goes his statue. Sic transit gloria.
Rodney Barker, professor emeritus of government at the London School of Economics, said Cameron was in a “precarious position.” While trying to placate his party’s right wing, which wants less involvement in Europe, Cameron also risked making Britain irrelevant with its neighbors.
“You can’t leave a club then complain you’re not involved in its meetings,” Barker said.
What a “risk.” Being “irrelevant” to a group of nations wearing suicide vests. A few years from now, as the euro nations continue to battle insolvency, recession or even depression, and assuming Britain is wise enough to use its Monetary Sovereignty for growth, the British won’t have to worry about “irrelevancy.” They will be the most powerful nation in Europe, and the euro nations will beat a path to their door.
Addressing the problem of high borrowing rates in countries such as Italy, though, may require greater intervention from the European Central Bank, which could print money to lend to countries at affordable rates, or from Germany, which could allow countries to borrow money with guarantees from the full euro zone.
Merkel has previously hinted that she might accept euro bonds — regionwide instruments like U.S. Treasurys that could require German taxpayers to back up the debts of Greeks and Italians — but only as long as other countries bind themselves to deep fiscal overhauls.
Clever: Lend more money to insolvent nations, thereby increasing their insolvency, while simultaneously preventing them from growing. Visualize your brother-in-law, who has maxed out credit cards, now coming to you for a loan – and you give it on the condition he doesn’t invest the money! That’s the EU solution.
The craziness of the EU negotiators qualifies them to run for U.S. Congress, or even the U.S. Presidency, where ignorance of Monetary Sovereignty seems to be a condition of election.
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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Rodger,
I have been trying to come up with a 30 second sound bite to introduce people to Monetary Sovereignty, so please tell what you think.
“New money enters into circulation either by government spending which benefits ALL the citizens, or by banking loans which benefits ONLY the bankers, so why aren’t we doing it JUST by government spending?”
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You want to do away with lending?
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Of couse I don’t want to do away with lending!
I just want all the money to come into birth as a credit on the Federal ledger instead of a debit as it does when the Federal Reserve introduces it.
Goverment spending on a “true” public central bank would be the lender of first resort instead of the “quasi” public central Federal Reserve Bank which is really private entity, even though the Federal Reserve Board Of Governors is public entity to purposely confuse the issue.
I believe that our legal tender should be United States Notes and not Federal Reserve Notes nor another private entity’s commercial paper.
Over 40% of our “so called” national debt is owed to the Federal Reserve bank as interest, and don’t think it is fair that the families who own stock in that bank have the right to introduce money into circulation, while the families who own stock in the “criticalthinker” bank do not get that perk of!
It is an issue of fairness to me.
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This is what “ownership” of the FRB really means: http://www.factcheck.org/2008/03/federal-reserve-bank-ownership/
Rodger Malcolm MItchell
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Rodger,
I read the link and I think we are saying the same thing.
The stockholders in those banks that are part of then Federal Reserve system are the owners, but a majority of the voting shares of stock in those banks are owed by a few families.
Think about it, the Federal Reserve returns about $40 – 50 $billion dollars a year to the Treasury as excess “profits” which means less whatever they subtract as expenses including outrageous salaries, so if we removed them as the middle man who knows the exact amount the government could have “profitted”, but we know for sure that it will be more than that!
I did computer programming for the Federal government, the major banks, and the S&P rating agency, and I am familar with the accounting aspects and I understand the accounting difference to the Federal Ledger when a United States Note is issued (credit) versus when a Federal Reserve Note is issued (debit), and I am of the mind that the central bank should be a totally public entity for that reason.
Anyway my original point is to come up with a 30 second sound byte so how about this one instead:
“New money enters into circulation either by government spending and government loaning which benefits ALL the citizens, or by banking loaning which benefits ONLY the bankers, so why aren’t we doing it JUST by government spending and government loaning?”
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Critical,
“. . . the exact amount the government could have ‘profited’ . . . “
Profits not only are unnecessary for a Monetarily Sovereign nation, but they are harmful in that they remove dollars from the economy. Unlike the state and local governments, the federal government never should make a profit on anything.
” . . . banking loaning which benefits ONLY the bankers . . . “
A bank loan is a contract between a lender and a borrower, both of whom believe they benefit, else they wouldn’t enter into the contract.
While I agree that private banks are unnecessary, and all should be replaced by one federal banking institution, my reason has to do with compliance and borrower safety. I believe this federal bank should give, not lend, dollars.
I do not favor federal lending, as lending requires repayment, for which the government has no need. Federal lending temporarily creates dollars, but repayment destroys those dollars, and if there is interest involved, more dollars are destroyed than created.
I favor government giving, which does create money permanently.
Rodger Malcolm Mitchell
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Rodger,
I understand and agree with your points, the government should give away money, but the question is how to get their from the current system and how do we get people to buy into the idea.
When I mean bank loaning which only “benefits” the bankers, I am talking about the “benefit” of the Federal Reserve banks not having to loan their depositors money like commmunity banks and credit unions do, because they can loan money created from thin air.
I only mentioned the term “profited” in the context of today’s system where the Federal Reserve Bank returns money to the Treasury that they consider “excess profits”.
I wish the current system would go away to a pure Monetary Sovereign one, but because it hasn’t and isn’t going away any time soon, so I think it would be better for us to take the a small first step.
By getting way more than $50 billion in “excess profits” by eliminating the middle man that is the Federal Reserve Bank and calling it a “money creation tax” to fool the debt hawks, when in reality both you and I know it would only be taking part of the money created from thin air for fractional reserve banking purposes and the bankers benefit, and using it for the public citizens benefit.
After reading your blog you seem to be big on the concept of “fairness”, so I find it hard to believe that you do not see the “unfairness” of a single private entity having their commerial paper elevated to the status of legal tender and put on an equal footing with government issued notes.
Why should not our dollars say “United States Notes” instead of “Fedeal Reserve Notes”?
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