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.

Here is a letter I just received from the Division of Customer Service, Bureau of the Public Debt, Office of Retail Securities, Parkersburg, WV, 26106;

December 22, 2011
Dear Mr. Mitchell, This refers to your letter dated November 24, 2011.

Article 1, Section 8 of the Constitution empowers Congress to borrow money on the credit of the United States. This authority has been delegated to the Secretary of the Treasury. As an organizational entity withing Treasury’s Fiscal Service, the Bureau of the Public Debt is authorized to conduct such borrowing for the federal government.

So far, so good.

The Bureau of the Public Debt borrows the money needed to operate the federal government and account for the resulting debt. We borrow by selling Treasury bills, notes and bands, as well as U.S. Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investor’s securities. Every time we borrow or pay back money, it affects the outstanding debt of the United States.

We trust that this information will be of assistance.
Division of Customer Assistance.

So there you have it. The people, who do the so-called “borrowing,” think they “borrow the money needed to operate the federal government.” They have no clue about what happened on August 15, 1971. Although going off the gold standard was the single most momentous financial change in the past century, to the Treasury, absolutely nothing happened then.

I would give Richard Nixon’s Treasury Secretary, John Connally props for encouraging the end of the gold standard, but he also encouraged the disastrous wage and price controls. So give him 1/2 half a prop, which still puts him way ahead of Timothy Geithner.

My next letter to the Treasury will read something like this:

“Thank you for your note in which you said, ‘The Bureau of the Public Debt borrows the money needed to operate the federal government.’ On August 15, 1971, the U.S. went off the gold standard, thus giving the federal government the unlimited ability to create money. So, why do you continue to borrow?”

I don’t expect a coherent answer, but anyway . . .

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