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.
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Yesterday’s post contained excerpts from an interview with Christine Lagarde, the managing director of the International Monetary Fund. The post contained many of her comments, but one was so amazing, I repeat it here, to make sure you didn’t miss it:
“When the world around the IMF goes downhill, we
thrive. We become extremely active because we
lend money, we earn interest and charges and all
the rest of it, and the institution does well.
When the world goes well and we’ve had years of
growth, as was the case back in 2006 and 2007,
the IMF doesn’t do so well both financially,
and otherwise.”
Christine Lagarde
In short, the IMF relies on its clients doing poorly. Now, at last, you can see the motivation for the IMF’s truly terrible advice — the push for austerity and the lending to nations that should not borrow. The IMF is a clone of the crooked U.S. banks that gave all those “liars loans,” which caused the great recession.
The above quote should hang on the wall of every politician in the world, as a reminder of what the “cut-government,-raise-taxes” crowd will do to ruin economies, and why they do it.
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 
vulture capitalism at its finest
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Don’t know that it’s capitalism, but it sure is vulture.
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RMM, I write posts on facebook for friends to read. Much of it is influenced by MS, MMT, and MMR. I understand if you’re not interested in reading it. But I’m going to paste it here. I’d appreciate it if you let me know if I’m telling things accurately. Thanks.
REVISITING THOUGHTS ON MONEY AND PUBLIC PURPOSE
This is going to get abstract. Bear with it..
Money is commonly defined in three ways:
1) As a store of value – meaning: something that maintains worth over time
2) As a unit of account – meaning: how we distinguish what one thing is worth compared to another
3) As a medium of exchange – meaning: what we use in place of barter
What is important to realize is that none of them are tangible. They are definitions. Money is merely an abstraction, or a conception: we as human beings “thought” money into existence. What this means is those dollar bills in your wallet are merely a (tangible) representation of those three definitions of money. Likewise, those numbers in your bank account are merely a (intangible) representation of those three definitions of money.
You may be thinking: “So what?”
When you pay taxes, you do not actually hand something over to the government that it then uses. When you pay taxes, invisible numbers in your bank account go down. When this happens, money is destroyed. It is eliminated from existence instantaneously. But, the government has bank accounts too. After your numbers go down and that money is destroyed, the numbers in government bank accounts go up… and money is created! Whether this “transfer” of money happens simultaneously or not, it makes no difference. Numbers going down is money destroyed and numbers going up is money created.
You may be thinking: “Yea I don’t know, but so what?!”
We often hear in the news and from our elected representatives that the United States is going broke, or that the United States can’t afford Social Security, or whatever. Pick an issue. But think about it: if money is destroyed and created all day every day as numbers move up and numbers move down, how is it possible that the U.S. government can’t afford to pay for something? Can’t it just move numbers up to pay for something? Yes! That’s exactly what it does everyday. That’s what the budget deficit “is” …it’s more numbers going up than going down. And the national debt is how much numbers have gone up, more than down, over the course of U.S. history.
It seems like our tax dollars fund U.S. government spending, but it’s an illusion.
Do a thought experiment: if the budget deficit is more numbers going up than going down, imagine the opposite. Imagine that every year more numbers went down than up. Eventually all money would disappear. When people talk about paying down the national debt, this is what they’re talking about… moving more numbers down than up. If you follow this thought to it’s logical end, without government spending we’d have no money!
The truth is the U.S. government can always make a payment simply by moving the numbers up in a bank account. That’s “how” the U.S. government spends money. And there is no risk of insolvency. Just like a scoreboard at a sporting event can’t run out of points, the U.S. government can’t run out of dollars.
You and I can go though. People go bankrupt all the time. We have to earn or borrow (or steal, etc.) money before we can spend money. But the U.S. government is different. It’s unique. It does not operate like you and me. And why would it?
Imagine if you could create money out of thin air. Would you ever need to earn or borrow money in order to spend money? Of course not! You may choose to work because you enjoy the activity, but working would not be necessary for you to be able to spend money.
Are you still thinking… “So what?”
We are told day in and day out that we (the U.S. government) can’t afford things: we can’t afford to provide health care to sick people, we can’t afford pay teachers to teach our children, and so on. Really??
There is no such thing as “can’t afford” for the U.S. government. And the realization of all of this has broad implications. What do you want in a society? Do you want high-speed rails connecting every major city in the United States? We can afford that. Do you want blanket coverage of Internet access, free of charge, everywhere you go… be it walking around a city or climbing up a mountain? We can afford that. Do you want a solar farm in Nevada that provides free electricity for the entire country? We can afford that. Or, if the technology doesn’t exist yet, we can afford to pay scientists and engineers to develop it!
Ignorance and feelings of “things are the way they are” prevent us from much greater prosperity.
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Not bad. The part about numbers going up in the government’s bank account might be confusing, because the government controls its bank account numbers. Those accounts are not part of money supply. They don’t affect the economy. The only numbers that affect the economy are the numbers in accounts outside the government.
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Thanks reading and commenting. What I meant was U.S. Treasury accounts in commercial banks. Isn’t it true that when we pay taxes, although money is destroyed when our numbers go down, money is then created when U.S. Treasury bank accounts go up?
Are you saying that doesn’t happen, or are you saying that the way I describe it needs to be more clear?
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The best way to think about it is this: Federal spending creates dollars; federal taxing destroys dollars.
Under the scenario you describe, even a balanced budget would increase the dollar supply, which does not happen.
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I think I see what you mean…
Even if numbers go up in a U.S. Treasury bank account, that’s not really dollars created? (as mosler says, the issuer neither has nor doesn’t have dollars).
It’s when non-government bank accounts are credited that money is created?
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JK,
Correct. Non federal government accounts. State and local bank accounts contain dollars that are part of the money supply.
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I like that JK, mind if I copy that onto my FB?
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