–Which costs you more, federal government stealing or local government stealing?

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.

The following story has had major play, and will continue to have major play, for weeks. Both parties will attempt to spin it in their direction.

The Tea/Republicans will say it demonstrates all sorts of bad things about the Obama administration. The Democrats will say it shows we need more and better regulation. In short, the usual, political lip flap. But, how important is this story, that is, how much does it affect you?

Washington Post
GSA official’s wife accompanied him on trips at taxpayer expense
By Lisa Rein, Published: April 17

The senior government executive who organized the lavish Las Vegas conference at the center of a General Services Administration spending scandal took dozens of trips for the agency. The boss’s wife accompanied him on some of them — and taxpayers picked up the tab.

Deborah Neely wasn’t always just sharing husband Jeffrey E. Neely’s hotel rooms at resorts from Las Vegas to the Pacific islands. She handled party arrangements, directed event planners to spend government money and arranged lodging for relatives on the GSA trip to Las Vegas in 2010, an unusual role revealed in transcripts of interviews that the agency’s inspector general’s office conducted with Jeffrey Neely, as well as in congressional hearings.

Her role as the “first lady of Region 9” — as an investigator called her — shows a management culture in GSA’s Pacific Rim region that not only allowed the $823,000 Las Vegas gathering for 300 people and overspending on other conferences but also openly condoned perks for managers and their family members.

O.K., stealing is stealing. We can’t condone it. But here is a case where the stealing didn’t cost anyone anything. In fact, it was economically stimulative. Hotels and hotel workers received money. Restaurants and restaurant workers received money. Hookers (hey, they’re people too) received money (all but one, who pulled the plug on the entire operation).

Hundreds, maybe thousands, of people received money, and it didn’t cost you or me one cent. When a Monetarily Sovereign government spends it creates the dollars for that spending. It doesn’t use tax dollars. It doesn’t use borrowed dollars. It simply creates dollars.

So if you’re outraged, your outrage must come from envy, not from any personal damage. If you enjoy being outraged, try this article from the Chicago Tribune:

Charges against Dixon comptroller has ‘awakened a sleepy little town’
By Melissa Jenco, Tribune reporter, April 18, 2012

The small northwest Illinois town of Dixon, stunned by charges against its chief financial officer of misappropriating about $30 million in city funds, has placed the employee on unpaid leave a day after her arrest in City Hall by FBI agents.

See the difference? No, I’m not talking about the amount of money stolen. I’m talking about the fact that the federal government is Monetarily Sovereign, so doesn’t spend tax dollars, while state and local governments are monetarily non-sovereign, so do spend tax dollars. In the Dixon case, the taxpayers are stuck with a $30 million bill, and the stealing, most definitely, was not economically stimulative.

While federal stealing has several bad results, at least taxpayers aren’t financially hurt. But state and local stealing directly impacts taxpayers. Regardless of the amount of money involved, I am far more outraged by state and local stealing than by federal stealing. Deborah Neely didn’t cost me a penny. But the stealing where I live, in Illinois and Cook County, costs me plenty.

To find real outrage, look at your crooked town council or your criminal mayor. Look much harder at the guy who steals $10 from your village treasury, than at the guy who steals millions from the federal government. It’s the local guys who take money from your pocket.

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


19 thoughts on “–Which costs you more, federal government stealing or local government stealing?

  1. We know a person who around 2006~2007 who qualified for not 1, but 3 $500,000 mortgages while on a $50,000 salary. So of course this person took all 3 mortgages. Needless to say, the bottom fell out and managing the mortgage on all 3 properties is nearly impossible. She recently received government help in the form a write down in the remaining principal she owes since the value of these properties are now in the toilet and was allowed to refinance everything at these lower values with better interest rates.

    On a personal level, I’m furious (envious?) that such careless (reckless) personal financial behavior has been rewarded. If the value of these properties now go up, she’ll be able to potentially profit, while I bought a home that was within my means and took a mortgage that was manageable.

    Yet on the larger scale, I’m grateful for this policy. Hopefully this establishes a floor for home values and my own home’s value won’t erode any further as the number foreclosures in my zip code should drop greatly. Also if people aren’t worried about getting foreclosed and evicted, they can concentrate on being more productive at work.


  2. Hi Rodger,

    If all government debt was withdrawn (bought by the central bank, let’s say) and the government simply deficit spends by issuing by new money, how would the central bank then raise interest rates? If there are no bonds and only excess reserves the CB can’t carry out OMOs of course. Would it then raise rates by paying interest on reserves?
    Might there be any issues with this in the long term?




  3. Well that’s good! I’m glad someone has finally enlightened me about federal spending doing everyone good. The more we spend, the more we have! Yay! Also, we don’t need to tax anyone ever, because the whole idea of a “deficit” is a fabrication designed to keep people from dipping their fingers in the vast geyser of free wealth erupting from the ground in Washington!


  4. So, why can’t we condone it? It’s not “stealing” if, as you say, it didn’t cost anyone anything. Why don’t we just shriek out a quadrillion dollars and give it to everyone in the country? We’ll all be rich!


    1. That would cause inflation. Federal spending is restricted by only one thing: inflation. Fortunately, we know how to control inflation, and an inflation caused by spending is nowhere near, but a quadrillion dollars to each person would cause it.


      1. If we are nowhere near to causing inflation through printing more money, why are we seeing inflation as we continue to monetize our debt? If giving one person a million dollars to spend in Vegas only helps the economy, why wouldn’t it help the economy a thousand times more if we gave a thousand people a million dollars to spend in Vegas? What if we gave every person in the country a million dollars to spend in Vegas? How is this any different?

        Not to even touch on the idea of distributive justice, noting that any individual receiving something from the government means all citizens are to be given the same opportunity.


        1. The government believes a small amount of inflation, 2%-3%, is stimulative, so they set interest rates at a level that will yield that amount of inflation.

          So, if one is good, a million is better?? If drinking one glass of water is healthful, then drinking a million glasses would be more healthful??? Or if taxing is good for the nation, how about tripling everyone’s taxes??

          There is only one limitation on federal spending: Inflation. However, since we became Monetarily Sovereign on 8/15/1971, there has been no relationship between federal spending and inflation. Read: https://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/

          Rodger Malcolm Mitchell


      2. Okay, but you still didn’t say why we can’t condone it, if it does not cost anyone anything. If it didn’t cost anyone anything, it would truly be a victimless crime.


  5. I think all monetary sovereignty means is that the federal government is not revenue/debt constrained from spending. There are other considerations though. Discouraging people from taking on unmanageable amounts of personal debt may be one of them. But it could be that if we decide the government should pay for certain things that some people will get an undeserved benefit, and we just have to live with it.


  6. Do I have it right? As long as the Federal pay by money creation does not exceed the debt ceiling, then it all works? If the total exceeds the ceiling, then there needs to be more Congressional shenanigans and then more Federal ‘borrowing’ to cover it?


    1. The debt ceiling is an obsolete, artificial construct. It has no meaning and should be eliminated. Federal borrowing never is necessary. A Monetarily Sovereign never needs to borrow the currency it has the unlimited ability to create. That’s what “sovereign” means.

      Rodger Malcolm Mitchell


  7. here in ohio, the repubs want to refuse federal funds for planned parenthood. this is just evil. i read that rick parry(with an a) is trying to do that in texas as well, but is being challenged in court. the idiocy is never ending.


  8. I would like to point out that the actions of Rosa Parks on the bus were most definitely illegal, and I fully condone them. I do not decide the morality of an act based on its legality, for this reason among others. There are perfectly legal things that are immoral, and illegal things that are truly innocuous. If the actions of the GSA officials in Vegas truly did nothing but help the economy, it is a righteous act of civil disobedience to commit them, and something we can safely condone.


  9. Buster asks, “If giving one person a million dollars to spend in Vegas only helps the economy, why wouldn’t it help the economy a thousand times more if we gave a thousand people a million dollars to spend in Vegas?”

    That’s a great idea that would not cause inflation! The thousand people should all be post-9/11 combat veterans who received a medal for valor.


    1. Better yet, give it all to me.

      Buster’s comment reveals the ignorance of “If one is good, a thousand is better.” I hope he doesn’t take his medicine that way.

      But, his comment does reveal an interesting truth: Long term,the economy would benefit from that billion dollars, whether it all went to one person or was spread among thousands.

      So, it the government would like to give me a billion dollars, I can guarantee it will stimulate the economy.


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