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.
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The wealthiest 1% domination over the other 99% is based, in part, on misdirection. Never allow the 99% to understand the real reasons they are dominated. Make them think their situation is natural, even inevitable, and that some other, unrelated situation should be the focus of their anger. Example:
Mr. Paul Krugman, noted Nobel winner, wrote about the federal tax code, specifically that the wealthy 1% paid the lowest rates – and how unfair this is.
Writing about the “unfairness” of the tax code is classic magician’s misdirection. Get people talking about raising taxes on the rich and they’ll miss the whole point. Federal taxes on the rich being too low is much less an issue than federal taxes an the non-rich that are too high. When people fret about rich people’s taxes, they forget about their own taxes.
Here are a few excerpts from Krugman’s article:
Taxes at the Top
By Paul Krugman, Published: January 19, 2012Although disclosure of tax returns is standard practice for political candidates, Mitt Romney has never done so, and, at first, he tried to stonewall the issue. Then he said that he probably pays only about 15 percent of his income in taxes, and he hinted that he might release his 2011 return.
But the larger question isn’t what Mitt Romney’s tax returns have to say about Mitt Romney; it’s what they have to say about U.S. tax policy. Is there a good reason why the rich should bear a startlingly light tax burden?
In 2008, the most recent year available, the 400 highest-income filers paid only 18.1 percent of their income in federal income taxes; in 2007, they paid only 16.6 percent. The rich pay little either in payroll taxes or in state and local taxes, implying that they faced lower taxes than many ordinary workers.
Most of their income takes the form of capital gains, which are taxed at a maximum rate of 15 percent, far below the maximum on wages and salaries. Mr. Romney’s tax dance is doing us all a service by highlighting the unwise, unjust and expensive favors being showered on the upper-upper class.
Like a stage magician, Mr. Krugman misdirects us. He points our eyes at the rich paying too little, rather than at the BIG issue – the less-than-rich pay far too much.
Raising tax rates that most affect the rich, will do nothing for the middle class and the poor. You could tax every millionaire at the 100% on all their income, and that would not improve the average American’s lifestyle or wealth by even $1.
Almost every tax you can name — FICA, payroll tax, income tax, sales tax — not only is unnecessary, but it hurts the economy and the lower classes far more than the wealthiest.
Visualize this analogy. Each day, the richest 1% buy and wear brand new wardrobes of opulent clothing, and each day throw away the old. The clothing is made by the 99% — that’s their source of income — who themselves wear old rags.
Mr. Krugman tells the 99%, this is unfair; he suggests the 1% change clothing every two days instead of one. The 99% are mollified, because something has been done to hurt the rich, so forgetting they still wear rags.
The moral: If you truly want to keep the 99% in bondage, turn their focus to increasing taxes on the 1%, and make them forget about their own, unnecessary taxes – just as Mr. Krugman has done.
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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Yes, there is SO much misdirection and outright dishonesty that has seemingly become acceptable in our culture. The illusion of scarcity, and the fear that accompanies it, comes from the basic misunderstanding about how our economic system actually works. Thanks for helping to dispel that illusion.
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Sadly, Mr. Krugman disagrees with both MMT and Monetary Sovereignty. He truly is an Old Keynesian.
It’s a shame. He has a huge platform that he doesn’t utilize to its best potential.
It would take real courage, and humility, for him to go on national television and admit that say, the FICA tax, is completely unnecessary. I don’t think we’ll see it.
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The worst thing that happened to him was to win a Nobel. It precludes his learning anything.
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i personally think krugman is a lost cause. i work at a university and we have books from him from way back in the 70s. so, to ask him to openly embrace MMT (i’m convinced he does in secret) is in effect asking him to say, “ok guys, i confess i’ve been wrong so, toss out all my old books, b/c for all these years, 30 years or so, i’ve been totally wrong!
how many people does anyone here know who have the courage to do that?
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Wow Rodger, you couldn’t be more right about this.
I even find myself (one who tries to understand Monetary Sovereignty and MMT as best he can) become diverted by the discussion of who should be taxed.
Nearly everyone believes (particularly those in Washington) that SOMEONE needs to be taxed to “pay for” things. So as long as this is the belief held by the PTB at some point you have to start thinking – that while you know all taxes hurt the economy at this time, you get to the point of: better them than me.
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Wow, this should be the slogan for #OWS.
Federal taxes on the rich are not too low. It’s the federal taxes on the non-rich that are too high.
Thanks for posting this in such simple terms.
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Taxes on the wealthy don’t harm the economy because the wealthy aren’t doing anything with the money anyway. Taking it from them and giving it to people who’ll actually spend it makes sense when we’re in a recession that’s caused by lack of demand. This is true even though the (federal) government doesn’t need taxes to pay for things.
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Contrary to popular myth, federal tax money isn’t given to anyone. It simply disappears.
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I know that, but if it’s offset by spending directed at people who’ll put the money to better use what’s the loss? Why not make optimal use of the existing number dollars as well as adding more dollars as needed? Admittedly “optimal” here is a political/economic judgment but so what? That’s part of why we have government.
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“existing number OF dollars”
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The government can spend any way is wishes, which has nothing to do with taxing. Do you wish to give your child an allowance by telling him the tooth fairy brought it?
We have enough trouble educating the public without using myths.
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Is there any way to get proof of this? As much as I argue that fed tax dollars are just ‘money out’ and get put to death, I only have a couple of econo-blogger’s claims to back my attempts to educate. Thus far, it isn’t enough to convince anyone.
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Pete, the problem is people aren’t thinking. They have only a blurry concept of how dollars are created, and have no idea that the federal government is different from them.
As them to logic it out: If they federal government has the unlimited ability to create dollars (The ignorant falsely call this “printing money,” but they agree the government can do it), ask them why the federal government would spend tax dollars.
It’s like me creating dunce caps. I can create all I want. Would I tax and spend dunce caps?
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RMM,
The problem with your dunce cap analogy isn’t that you can or can’t run out of them, the problem is neither you nor anyone else can do anything with the dunce caps. Whereas with money we purchase real goods and services.
I think that those of us that have an understanding of Monetary Sovereignty but still grapple with whether or not the most wealthy among us should pay higher taxes (i.e. have some of their wealth destroyed) are talking about wealth distribution and “relative” wealth inequality.
I understand and appreciate that it doesn’t help the economy to destroy wealth (taxes), especially in a recession, and that it would be better (as you say) to bring up the poor than to pull down the rich.
BUT.. two things: 1. there may be net benefits to having less severe wealth inequality i a society. I believe there is plenty of socio-psychological research that suggests this. and so from that 2. so long as the majority of people don’t understand monetary sovereignty, then the myth that helps us out of the recession the best is that the rich should pay higher taxes and the poor should pay lower taxes. (because the poor spend more of the money and pay down their debts?)
Meaning, if myths must persist, some myths are better than others, right?
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“Taxes on the wealthy don’t harm the economy …”
I doubt that’s true. I bet charitable giving goes up when the wealthy have more money in their bank accounts.
A true statement is, “No taxes on the wealthy wouldn’t harm the economy.”
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J Kra,
The problem with agreeing with a myth is that later in the conversation, it comes back to bite you.
If the government doesn’t destroy tax money, then it must use tax money for something. Right?
And if it uses tax money, then sending tax money to the government helps the government. Right? And if it helps the government, taxes are beneficial. Right?
And soon you find yourself arguing against the facts, which are, the federal government has no need and no use for tax money, so it destroys it..
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Let me rephrase it, putting it into a context that emphasizes my point:
If we’ve got two political parties and neither of them understand monetary sovereignty. Wouldn’t it be better to support the party that wants to give less help to the more wealthy and more help to the less wealthy?
Do you see what I’m getting at?
I’m not suggesting we verbally argue for any of the myths. But the myths remain. And the myths will continue to have definite consequences. So while we continue the crusade toward truth, is there not also an obligation to “support the myths” (i.e. the party that uses the myths the most wisely) to better the living standard for those who need it the most?
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Here, here! Thank you! This brings up a problem with the “Occupy” crowds. Too many of them focus on punishing the rich. I say let’s bring the masses up, rather than the rich down. And thank you for pointing out Krugman’s games. Krugman is popular because he serves the rich, while telling the poor what they want to hear. I ignore his garbage.
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