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.
More than any other single factor, Saudi Arabia arbitrarily determines oil prices, which strongly affect gasoline prices.
The President of the United States is not the king of Saudi Arabia. So as powerful as the Presidency is, Obama has minimal-to-zero control over oil or gasoline prices.
Yet . . .
Gas prices sink Obama’s ratings on economy, bring parity to race for White House
By Dan Balz and Jon Cohen, Published: March 11
Disapproval of President Obama’s handling of the economy is heading higher — alongside gasoline prices — as a record number of Americans now give the president “strongly” negative reviews on the 2012 presidential campaign’s most important issue, according to a new Washington Post-ABC News poll.
Increasingly pessimistic views of Obama’s performance on the economy — and on the federal budget deficit — come despite a steadily brightening employment picture and other signs of economic improvement, and they highlight the political sensitivity of rising gas prices.
Nearly two-thirds of Americans say they disapprove of the way the president is handling the situation at the pump, where rising prices have already hit hard. Just 26 percent approve of his work on the issue, his lowest rating in the poll. Most Americans say higher prices are already taking a toll on family finances, and nearly half say they think that prices will continue to rise, and stay high.
Friday’s employment report showed a gain of 227,000 jobs in the past month, continuing an upward trend and offering the White House something positive to point to. Still, the survey — conducted Wednesday through Saturday — finds 59 percent of Americans giving Obama negative ratings on the economy, up from early last month.
Voters think of the President (any President) as “daddy,” and when something goes wrong, they expect daddy to fix it. I suspect that the price of oil this election year will depend in large part on whom the Saudis want as U.S. President. If they prefer Obama, oil prices will drop before November.
Interestingly, the poll shows the Democrats with huge leads over the Republicans in:
“Better represents your own personal values”
“Is more concerned with the needs of people like you”
“Cares more about issues that are especially important to women”
Never use the word “voters” and the word “logic” in the same sentence. We’re into a strange, puzzling, fun eight months.
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
4 thoughts on “–U.S. voters elect Obama Sheik of Araby”
I don’t know how to email you directly so I’m posting this in one of today’s comments sections.
Ralph Musgrave has an interesting piece that seems to take the MMT side in main difference between MMT and Monetary Sovereignty…. fiscal policy vs. monetary policy. Maybe you’d like to respond to each of his 16 points in your own post? (http://ralphanomics.blogspot.com/2012/03/sixteen-reasons-why-mmt-is-right-on.html)
1. “An interest rate change works only via households or firms which are significantly reliant on variable rate loans:”
Wrong. This would be true only if those people were not part of the economy. What affects any one person — you, me, your Aunt Susie – or any group of people, affects the economy. No man is an island.
2. Wrong for the same reason as #1. However QE is ineffective for other reasons.
4. Partly true, but mostly false. High rates are both inflationary and deflationary. The more powerful influence: They increase the demand for money, which is deflationary. Less powerful: They increase the money supply, which is inflationary.
5. False. See #1
6. The first sentence is correct, and is the same point I make re. #4.
9. I agree. The purpose of interest rate adjustment is to affect inflation.
10. Probably true. Also, credit card rates probably have negligible effect on spending.
11. OMG! He says, “ . . . when government borrows, that tends to raise interest rates, which has a deflationary effect,. . . “ But in #4, he says, “Low interest rates can have a DEFLATIONARY effect. . . “
Anyway, the final paragraph of this point is correct.
13. The rate of interest is determined by the Fed, not by the market.
14. He missed the point. The problem is political. While the Fed can change interest rates instantly, Congress debates endlessly, and makes decisions having nothing to do with the economy. Also, fiscal changes cannot be made incrementally, and are not made in a vacuum. They affect specific sectors, via long-term commitments. Example: How do you spend more money on building a road today, but not continue to spend (to finish the road) tomorrow?
15. Wrong. Federal borrowing has no effect on the economy. It merely takes foreign-owned dollars and exchanges them for foreign-owned T-securities. Those dollars disappear, and never enter the U.S. economy.
16. Not if there is disagreement about the effect of interest rates.
Rodger Malcolm Mitchell
Rodger — Look at recent posts by Chris Cook that have been promoted at Naked Capitalism. He really seems to know his subject and with some of the shenanigans going on that he has discovered, I would contend that the rise in oil prices is caused by the efforts of the big integrated oil companies. They have the ability to manipulate prices and have done so in the recent past. And, of course, they are very unhappy with some of Obama’s recent actions and would very much prefer a Republican president.
I do believe that the Saudis would have to at least tacitly approve of the actions of the oil companies, but they will generally be happy with higher prices.
Rodger – Apparently my comment from last night was unacceptable or it fell off awaiting moderation. I’ll try again.
Look at the recent posts by Chris Cook promoted at Naked Capitalism. He seems very knowledgeable in his subject. With all the shenanigans going on that he has discovered, I think the big integrated oil companies are responsible for the recent increases in the price of oil. He shows how they have manipulated prices in the past and continue to do so. These companies would much prefer to have a Republican president who will open all the areas to drilling and approve the Keystone pipeline. They know that high gas prices will turn the public against the President even though he has little or know power to influence prices. Poll results I read about yesterday seem to indicate that Obama’s approval rating is falling just for this reason.
I do believe that the Saudis would have to at least tacitly approve of such actions by the oil companies, but they are generally happy with higher prices.