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.

International Monetary Fund’s Managing Director Christine Lagarde tells us there is a “debt crisis.” She says there is too much debt in the world.

Yahoo News
IMF’s Lagarde warns global economy threatened

PARIS (Reuters) – The head of the International Monetary Fund said the world economy was in danger and urged Europeans to speak with one voice on a debt crisis that has rattled the global financial system. In Nigeria last week, IMF Christine Lagarde said the IMF’s 4 percent growth forecast for the world economy in 2012 could be revised downward, but gave no new figure. “The world economy is in a dangerous situation,” she told France’s Journal du Dimanche in an interview published on Sunday.

The debt crisis, which continues into 2012 after a European Union summit on December 9 only temporarily calmed markets, “is a crisis of confidence in public debt and in the solidity of the financial system,” she said.

European leaders drafted a new treaty for deeper economic integration in the euro zone, but it is not certain that the accord will stem the debt crisis, which began in Greece in 2009, and now threatens France and even economic powerhouse Germany. “The December 9 summit wasn’t detailed enough on financial terms and too complicated on fundamental principles,” said Lagarde. “It would be useful for Europeans to speak with a single voice and announce a simple and detailed timetable,” she said. “Investors are waiting for it. Grand principles don’t impress.”

Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.” Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.” She did not specify which countries she was referring to.

Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia. “These countries, which were the engines, will suffer from instability factors,” she told the newspaper.

Here is what Ms. Lagarde means:

  CIA World Factbook 2011

  Nation   Debt in $Trillions
     USA	  $ 9,133	 
     Japan	  $ 8,512	
     Germany	  $ 2,446	 
     Italy	  $ 2,113	
     India	  $ 2,107	 
     China	  $ 1,907	 
     France	  $ 1,767	 
     UK	          $ 1,654	 
     Brazil	  $ 1,281	 
     Canada	  $ 1,117	 
     Spain	  $   823	 
     Mexico	  $   577	 
     Greece	  $   454	
     Netherlands  $   424	 
     Turkey	  $   411	 
     Belgium	  $   398	
     Egypt	  $   398	 
     Poland	  $   381	 
     South Korea  $   331	 
     Singapore	  $   309		
     Taiwan	  $   279

CIA’s World Factbook lists percentage of GDP, the debt amount and per capita is calculated with GDP (PPP) and population figures of same report. (

Lots of debt, everywhere you look. To whom is all this debt owed? Mostly, to two groups: Domestic public and private parties, and foreign public and private parties.

If every nation owes every other nation, what exactly is the “debt crisis”? And if some of a government’s debt is owed to its own citizens, what is the crisis?

Here’s the answer: She really isn’t referring to the fact that some nations owe more than others. And, it’s not a debt crisis. It’s a systems crisis.

The word “debt,” when applied to nations, measures the money that nation’s government has created. The U.S. government’s “debt” is $10 trillion. All that means is the U.S. government has created $10 trillion net of taxes collected.

Is there a “too-much-money crisis” in the world’s economies? I see no evidence of that. One bit of evidence would be world-wide, uncontrollable inflation, but that doesn’t seem to be happening. More accurately, there is a “too-little-money crisis in the world, though I question whether that is what Ms. Lagarde means by a “debt crisis.”

I can only speculate, but I think she may mean:

“We really screwed the pooch. We stood by while the euro nations gave up their most valuable asset — Monetary Sovereignty — and now they can’t grow their economies. We always tell everyone to reduce their debt, and for monetarily non-sovereign nations, this means reducing their money supply, which is anti-growth. That’s why our scolding, combined with lending to nations with excessive debt, never seems to work.

“So, we actually have a monetarily non-sovereignty crisis, but no way am I going to admit that, because it would make us look like fools. Better to say it’s a “debt crisis,” which puts the blame on the countries, instead of on us. This way we keep our jobs, and the pay is good.

“As for the U.S., Canada, the UK, China, Australia et al, they are Monetarily Sovereign, so I know they can pay any debt. But we have to scold them too, or we’d look inconsistent. And anyway, Standard & Poors reduced the U.S. rating to AA+ — you know Standard & Poors, the guys who gave a AAA rating to worthless mortgage securities and who still rate France AAA(!) S&P’s ignorance gives us cover for our ignorance, which is nice.

“And yes, I know we always encourage auserity, and I even know austerity = poverty, but why should I care? As I said, the pay is good.

Note to all: Any time you read or hear someone equating U.S. finances with the finances of the euro nations or with our states, counties and cities, mark that person as ignorant of economics.

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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports