–Three ignorant and one cleverly ignorant

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 = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.

Just catching up on a bit or reading –some old, some new — and not perceiving any increase in economics knowledge by media writers. Here are bits from four articles written by opinion leaders. As usual, the opinion leaders demonstrate abysmal ignorance of Monetary Sovereignty, the basis for all economics.

Nina Easton, Fortune Magazine, July 4, 2011

Average citizens are rightly shocked by the levels of public debt weighing down the economy – and their tax-paying children. According to the President’s National commission on Fiscal Responsibility and Reform, (headed by Democrat Ersking Bowles and Republican Alan Simpson), debt held by the public will outstrip the entire American economy, growing t as much as 185% of GDP by 2035 – with hundreds of billions of dollars doing nothing but servicing debt. Despite those numbers, conversations about how to reduce the exploding costs of entitlements – like Medicare – are swamped by screaming political rhetoric, with little hope of compromise.

The only screaming I hear comes from the “sky-is-falling” debt hawks, who claim the U.S. is going broke, already broke or somewhere beyond broke.

Jeff Colvin, Fortune Magazine, July 4, 2011

Medicare has become the largest issue in America because it threatens the country’s economic future. Ten former chiefs of the Council of Economic Advisers, from both parties, warned in March that if we don’t get the national debt under control, the result will be a “crisis that will dwarf 2008.” The first worrying signs have since appeared; the cost of insuring against a once-unthinkable U.S. debt default rose by more than 50% in late May, and Moody’s and S&P have warned that the country’s debt rating is in peril. By far the largest element in America’s worsening debt outlook is the growth of Medicare. If we don’t fix it the right way, the country will become dramatically poorer and weaker.

Given the time and inclination, I probably could post 50 Fortune Magazine articles parroting the standard, pre-1971 line. What is it about those people? The only way the U.S. could default on its debt is if the Tea Austerities convince Congress to stop paying – or make us join the euro nations! 🙂

Time Magazine
By STEPHEN GANDEL The Curious Capitalist 1/11/12

Inflation would shrink the value of the debts both the government and borrowers have to pay, improving our collective balance sheets.

This is the “paying debts with cheaper dollars” myth. Think: If you owe $10,000, your balance sheet reads “$10,000” and you pay $10,000, no matter what the exchange value of the money is. You don’t pay with value; you pay with dollars. Paying debts becomes easier only if your income rises, and there is no necessary correlation between inflation and income. The reverse can be true.

And, for the federal government, paying debts does not rely on income, so inflation has zero influence on the government’s ability to pay its debts.

Gandel makes a very special effort not to understand Monetary Sovereignty. I’ve sent him many Emails and often have commented on his articles, but he continues to write the same crap. Ignorance is excusable – we all have it — but intentional ignorance is not.

A. Barry Rand, CEO AARP 1/11/12

Without any changes, (Social Security) can pay all promised benefits until 2036 and roughly 75 percent of benefits after that. Social Security is not in crisis, but as you have told us, we need to do something — the sooner the better — to extend its life for generations to come. Social Security does not need a radical overhaul. And we can restore it to long-term solvency without making damaging benefit cuts, especially for current recipients.

If you pay into Social Security, you should receive the benefits you’ve earned over a lifetime of hard work.

Even AARP doesn’t understand Social Security. I don’t know what he means by “changes” (tax increases or benefit cuts, I suppose), but without either of these, Social Security could last, forever. In fact, benefits could be tripled and FICA could be eliminated, and Social Security still could go forever.

And you don’t earn benefits by paying FICA.

Sadly, AARP doesn’t understand Monetary Sovereignty, so is fighting a battle based on adverse assumptions, while it could be a force for education.

But perhaps Mr. Rand is the clever dope. Perhaps he realizes that if the government (properly) paid all Medicare benefits, consumers would have no need for supplementary insurance, and that massive insurance agency known as AARP might go broke. So it behooves him not to understand. Yes, give him credit for cleverness, albeit cynical cleverness.

In the unlikely event these people come to an epiphany, and see the truth, they undoubtedly will say they knew it all the time.

I award 4 dunce caps, one for each.

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


3 thoughts on “–Three ignorant and one cleverly ignorant

  1. “you don’t earn benefits by paying FICA”

    It’s not clear what you mean by this, but it is true that the amount of your SS pension is variable, and it depends on your FICA payments, and the age at which you elect to begin collecting the pension.


    1. Non-paying spouses and children get it. And there is only a partial relationship between amount paid and amount received, along with limits in amounts and time. You can pay FICA for 50 years, and not receive one cent (if you die before beginning to collect).

      I was making the point that you don’t “earn” benefits in the traditional sense.


  2. I think these people have a poor sense of their own history. We’ve had budget busting spending since 1940 and we ain’t broke yet. Plenty of money to chase little brown people around in foreign countries and destroy goat herder huts. And lots of loot to payback all those billions of campaign contributions through the years. And again, plenty of money to jail anyone they accuse of terrorism for ever.

    All in all, I’m betting the trend and as long as these people argue about it it will be another 60 years before someone notices it’s a figment of their imagination.

    Or perhaps they seriously believe President Romney will just fire all these government workers and save their half-baked theories.


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