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.
President Obama’s State of the Union speech told of the many federal spending initiatives and tax cuts he wants. Very impressive. The entire talk might be summarized in this single, 20-second excerpt, from smack dab in the middle:
In the last 22 months, businesses have created more than three million jobs. Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s. Together, we’ve agreed to cut the deficit by more than $2 trillion.
That exercise in fantasy leaves us with three questions:
1. How is it possible to cut taxes and increase spending, while cutting the deficit? The President’s answer: Increase taxes on millionaires. Puleeeze! You could tax millionaires 100%, and you still wouldn’t get to $2 trillion, especially with the huge tax cuts on American industry and the federal spending projects he proposes.
2. Why should a Monetarily Sovereign nation, with the unlimited ability to create its sovereign currency, need to, or want to, reduce the life-blood of its economy: Money? What harm has the increase in the money supply (misnamed, the “deficit”) been causing?
3. How will cutting the deficit stimulate employment? There is no known mechanism by which a reduction in the money supply can grow the economy, improve business and increase employment.
So the speech was the usual assemblage of platitudes about the innate greatness of Americans (all of whom are descended from foreigners) and the wonder of America, and our manifest destiny to lead the world and set it free (despite the Patriot Act). The Democrats will be in awe and the Republicans will be in disgust. And the Tea Party . . . well does anyone really care about the Tea Party any more?
It brings to mind a fourth question:
4. When our leaders lie, exaggerate, misstate, cheat and otherwise tell us what we know simply could not be true, why do we calmly write it off as “politics.” Why aren’t we outraged? Why do we keep voting for the Obamas, the Gingrichs, and the Romneys of the world?
Is it simply that we Americans don’t want to hear the truth? Do we prefer to be lulled with fairy tales? Has it become impossible for an honest, intelligent, able, accomplished person to be elected?
If so, who is to blame?
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