–Steve Forbes almost wins, but falls flat only inches from the finish line

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. 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.

He came close, oh, so close:

Europe’s “Going in the Wrong Direction,” Forbes Says: “The Worst of Both Worlds”
By Aaron Task | Daily Ticker (Scottrade)

The EU has probably bought itself “several more months,” thanks to the Greek restructuring and the “radical measures” adopted by the European Central Bank, says Steve Forbes, chairman of Forbes Media. “You can keep kicking” the can down the road, “but crises emerge.”

In sum, Forbes fears European policymakers have failed to take the “right” lessons from the Greek tragedy.

Right now “you have the worst of both words” in Greece, he says. “The economy is going into the tank without the pro-growth reforms to get it back again.”

At this point I became so excited. Steve Forbes was about to win the race to be the first media leader who understands the fundamentals of Monetary Sovereignty.

Forbes prescription for Greece — and Europe’s other so-called PIIGS — is familiar to anyone who’s followed his work over the years: less regulation, labor reform and a “radically reformed tax structure,” featuring (of course) a flat tax. (See: “Everyone Is Making a Bungle of Things”: Steve Forbes’ Rx to Fix Greece)

The type of tax is much less important than the amount of tax. If his flat tax would collect fewer euros than the current tax, that would help the private sector. But of course, Greece still is monetarily non-sovereign, which needs to be corrected.

“They’re going in the wrong direction” in Europe, he says, citing new tax increases in Spain and Portugal and Greece’s failure to really reform its bloated public sector.

Right. Tax increases are anti-stimulus. Austerity is anti-stimulus.

“They need remedial education,” Forbes says of EU policymakers. “They’re all tied to defunct notion of Keynesianism that government spending somehow stimulates the economy — that easy money stimulates the economy. No it does not.”

Forbes compares European policymakers to medieval doctors who tried to “bleed the patient to cure the patient. So they killed the patient.”

OMG, the guy almost has it. Then he misunderstands his own analogy. Steve, think it out. Your analogy is this: Taking blood out of the sick patient is bad; taking money out of the sick economy is bad. If a patient has anemia, you have to add blood via a transfusion, i.e. add euros via a money transfusion.

Steve, think very slowly, now. If, as you correctly say, tax increases are bad, why are they bad? Because they remove money from the private sector. Anything that removes money from the private sector hurts the private sector. Hurting the private sector hurts the economy. Similarly, adding money benefits the private sector. This isn’t quantum chromodynamics.

What a shame. The guy was almost there. But his pre-Monetary Sovereignty education in economics, prevented him from taking that last step. He has no idea what happened on August 15, 1971, and how it changed economics 180 degrees. He’s still saying the same stuff he would have said in 1970 and before.

Perhaps in another year or two . . . ? Dare we hope?

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


11 thoughts on “–Steve Forbes almost wins, but falls flat only inches from the finish line

  1. Forbes is one of those obfuscators like Paul Krugman and so many others who speak just enough truth to beguile their readers. They “get it” just enough to seduce their readers into thinking the current system just needs a few more tweaks and adjustments, and all will be rosy. This lets the obfuscators maintain their deception forever.

    “We just need a few more adjustments.”

    The more that de-regulation and “labor reform” (i.e. crushing workers) causes mass destruction, the more people like Forbes say the problems arise because we haven’t done enough of it. The reason Greece is being destroyed is that we haven’t sufficiently destroyed Greece. If we just finish the annihilation, then Greece will be fine.

    Forbes writes, “They’re all tied to defunct notion of Keynesianism that government spending somehow stimulates the economy — that easy money stimulates the economy. No it does not.”

    That depends on how you define “economy.” If Forbes means the financial economy, i.e. propping up zombie banks and speculative casinos, then yes, government spending stimulates the “economy.”

    But what if government spending put money into the REAL economy? What if it caused money to start circulating among the masses?

    Forbes doesn’t want to hear that, because for his type, it is not enough that he prosper. No, the rest of us must suffer. Indeed, elitists define their own prosperity but how much the masses suffer in comparison.

    It would be harsh of me to call Forbes a fool, so I will be polite and call him a worthless LIAR.


  2. Roger,
    This may be off-topic to this post, but I wanted to read your opinion. What do you think of Obama’s $4,000 job-training grant plan?


  3. grover norquist was on the daily show (another useless p.o.s.) what would happen to our economy if grover got his wish and we cut taxes and spending?(what with the trade deficit and all?)


  4. Dave,

    Cutting federal taxes is good, since federal taxes do not support federal spending, and they remove dollars from the economy.

    Cutting spending reduces GDP growth, and reduces the benefits of federal spending.


  5. Ecologize growth


    MONEY & LIFE is an essay style documentary that investigates the many faces of money. This cinematic odyssey takes us on a journey, exploring the origins of money to connecting the systemic dots on the current global financial crisis and how we got here. But most importantly looking at what is emerging in the so-called New Economy.

    In addition to exploring perspectives on money and the workings of the money system we ask the viewer to engage and examine their own assumptions and beliefs about money, attempting to unearth and make visible the implicit and explicit agreements we have made around money and how it has come to govern our lives in ways that create suffering and dissatisfaction. The central thesis is understanding that different monetary designs produce different results in human society and in the natural world. If that is really so, then what is possible?

    We interview an all-star cast of deeply engaged global citizens (please visit the interviews page to learn more about the interviewees):

    Bernard Lietaer
    Lynne Twist
    Thomas Greco
    Hazel Henderson
    Charles Eisenstein
    Jacob Needleman
    David Korten
    Br. David Steindl-Rast
    Jean Houston
    John Fullerton
    Nipun Mehta

    John Bloom
    Dr. AT Ariyaratne
    Orland Bishop
    Sarah Hearn
    Aaron Kipnis
    Eric Smith
    Roshi Joan Halifax
    Jamie Traeger-Muney
    Thom Hartmann
    Judy Wicks

    Elisabet Sahtouris
    Rabbi Steven Leder
    Vandana Shiva
    Rev. Bozzutin-Jones
    Jim Ritchie-Dunham
    Ellen Brown
    Larry Emerson
    John Perkins
    John & Ocean Robbins
    Graciela Chichilnisky

    The film looks at new practices and innovations in the world of money, such as complementary currencies. It profiles courageous businesses leading the way in sustainable practices and the renewal of healthy communities. And it documents personal stories of transformation in relationship to money and its role in life.

    There is a sea change occurring in the world today, the so-called “paradigm shift” of the globalized world. Economist Bernard Lietaer states that “money is the highest leverage point for change in our society.” Money & Life aspires to be a part of bringing a new consciousness to our understanding and the practices in the world of money through a film that will be part-investigative journalism, part-cinematic essay, serious ad light-hearted, intimate and inspiring. It will inform you and more importantly it will open your heart, expand your mind, and help us collectively realize our greatest capacity as human beings.


  6. the thing that really irks me is that money is a creature of the state, “we the people” make up this state, if it wasnt for “we the people” the state would not exist. the economy currently is geared for “the haves” if you are not a “have” you are a lazy bum.(according to some) i am currently reading “the case against intergenerational accounting” by randy wray, james galbraith, and warren mosler, this stuff is really fascinating, to learn how it should be, instead of the lies that are constantly fed to the public.


  7. This is a direct quote from Steve Forbes:

    “”There are no real obstacles. Just wrong thinking, bad assumptions. When you build strategies and policies on wrong assumptions, the more you execute, the worse you make everything, which is what we are doing now.”

    This time he was talking about the U.S. economy, not Europe’s, but the comment is quite appropriate. If only he believed it.


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