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”
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.
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?
I don’t know the details, where the devil lives, but as a generality, paying for job training benefits the economy in two ways:
1. It adds dollars to an economy that is starved for dollars
2. It trains people.
This is reminiscent of my three posts titled “Salary for Attending School.” (https://rodgermmitchell.wordpress.com/2010/07/17/salary-for-attending-school/)
Rodger Malcolm Mitchell
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?)
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.
i understand the tax part, wouldnt the economy shrink if they cut spending?
The economy shrinks when the supply of dollars is reduced.
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This is a direct quote from Steve Forbes:
This time he was talking about the U.S. economy, not Europe’s, but the comment is quite appropriate. If only he believed it.