A little note to all you who believe federal spending should be cut and taxes increased. Enjoy your slice of just deserts

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.

Huff Post
Nancy Pelosi Says She’d Back Simpson-Bowles Plan

WASHINGTON — Two progressive organizations have found themselves in the unusual position of being on the opposite side of House Democratic Leader Nancy Pelosi. Over the course of the past two years, the former House Speaker has been the most significant obstacle to the ongoing effort to slash entitlements and cut social spending.

But a series of recent comments, and reports that Pelosi was willing to accept draconian cuts as part of a debt-ceiling deal, have liberals worried that their most powerful and passionate defender may be buckling on the issue.

I’m no longer surprised that Pelosi (as stalking horse for President Obama) would sacrifice Social Security and Medicare in favor of the ridiculous, completely unnecessary anachronism, known as the “debt ceiling.”

Obama is a liberal only by comparison with the Tea/Republicans. Today, we have no liberals. The liberals are conservatives and the conservatives are fascists.

During a recent press conference, and again during an interview with Charlie Rose, the California Congresswoman said that she would support what’s known as the Simpson-Bowles plan. The co-chairs — former Republican Sen. Alan Simpson of Wyoming and Morgan Stanley director Erskin Bowles, a Democrat — have worked recently to revive it, and the political class speaks of it as if it passed and is an official recommendation of the commission.

The “political class” speaks of it as though it actually made any sense, which of course, it doesn’t.

At the end of March, a version of the Simpson-Bowles plan was given a vote on the House floor. It was annihilated, 382-38, with Pelosi and most Democrats voting against it.

But Pelosi, the day after the vote, said that she could still support the plan if it stuck more closely to the original version put out by Simpson and Bowles. “I felt fully ready to vote for that myself, thought it was not even a controversial thing … When we had our briefing with our caucus members, people felt pretty ready to vote for it. Until we saw it in print,” she said. “It was more a caricature of Simpson Bowles, and that’s why it didn’t pass. If it were actually Simpson-Bowles, I would have voted for it.”

Heaven help the working poor. Or the non-working poor. Or the working or non-working middle class. Or all of America.

Yet when the Simpson-Bowles plan had been originally unveiled, Pelosi called it “simply unacceptable.”

The Simpson-Bowles plan is a mix of tax increases and spending cuts that trims four trillion dollars off the deficit in ten years. Its cuts to social spending and entitlement programs made it “simply unacceptable” to the Democrats’ liberal base almost as soon as it was announced. Pelosi’s rhetorical retreat from that hard-line position has progressives worried they’ll have nobody left to defend the social safety net, even Medicare and Social Security.

Wake up, America. Obama is not whom you thought he was. He’s far right wing on everything except, perhaps, Israel. The problem is, Romney is exactly whom you think he is: A clueless rich man, who will say anything, no matter how nuts, to tell you what he thinks you want to hear.

So the November choice will be: The Fraud vs. the Sleaze. You decide who is who.

The Washington Post reported:

[President Obama] warned Senate Majority Leader Harry M. Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) that he might return to the position under discussion the previous Sunday — that is, cuts to Social Security, Medicare and Medicaid in exchange for just $800 billion in tax increases.

Perfect: Cut Social Security, Medicare and Medicaid, and additionally increase taxes by $800 billion, thereby assuring a recession if we are lucky and a depression if we’re not.

The Democratic leaders “kind of gulped” when they heard the details, [White House chief of staff William] Daley recalled.

Gulped? How about them having the backbone to shout: “This if f*cking stupid. How can you grow the economy with spending cuts and tax increases?”

Remember, Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

But cuts to Social Security and Medicare will decrease Federal Spending, decrease Private Investment and decrease Consumption, while a tax increase also will decrease Private Investment and decrease Consumption. With all elements of GDP decreased, what would increase GDP?

I’m just coming around to thinking that Obama will be remembered as the worst President since Jimmy Carter — maybe worse, yet. And then, I start to think of Romney as President . . .


Please folks, contact your Senators and Representatives. Don’t bother trying to explain Monetary Sovereignty to them. They never will understand it. Just tell them: “If you cut entitlements and/or raise taxes, I won’t vote for you.” That, they’ll understand.

Five dunce caps to Pelosi, each to be shared with Obama. (Two people can share one hat if the heads are small enough.) Fortunately there is no Simpson-Bowles committee on dunce caps.

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


8 thoughts on “A little note to all you who believe federal spending should be cut and taxes increased. Enjoy your slice of just deserts

  1. Please explain how you would run the country if austerity is not the only way to reduce the federal debt from continuing to increase? Since the USGovt is borrowing approx. 42% of every dollar it spends how long can this continue before no one wants to purchase govt debt instruments without higher interest?
    Are you suggesting the US Govt can solve our economic dellima by continually increasing debt?
    Please share with your readers how you will solve this delima by means other than austerity!


    1. There is no dilemma, as debt is a relic of monetarily non-sovereign days. Federal debt is not like personal debt, so try to think creatively.

      Federal debt merely is the total of Treasury securities outstanding. Stop creating and issuing Treasuries, and voila, no debt.

      The federal government spends by instructing banks to credit checking accounts. Neither borrowing or taxing are necessary for sending these instructions.

      Federal debt is not the total of federal deficits. They are two, completely separate concepts. We could have deficits without debt, and we could have debt without deficits.

      Being Monetarily Sovereign, it does not need to borrow its own sovereign currency — the currency it already has the unlimited ability to create.

      Ask yourself this question: What are the differences between Monetary Sovereignty and monetary non-sovereignty? Once you understand those differences, the rest begins to clear up.


      1. YES, YES !! As you state, “There is no dilemma….STOP CREATING AND ISSUING Treasuries, and voila, no debt.”
        Perhaps should read no new debt. We would still have to click the “mouse” to eliminate all the stupidly owed money (interest ) of $15 trillion. And of course, end Fractional-Reserve Banking so that banks and financial institutions can no longer create NEW DEBT.
        As you state, “so try to think creatively…”
        For the solution:”We cannot solve our problems with the same thinking we used when we created them”.Albert Einstein
        Perhaps the answer lies in how you redistribute the wealth of a nation; not in how you make it.
        As justaluckyfool states,
        “Great News!!Zero Income Taxes (2013) Solves Worldwide Economic Crises !” Please read and challenge.


  2. The “debt problem” can be eliminated simply by our monetarily sovereign government funding the debt through our own nation’s central bank, effectively interest free or by the Treasury issuing the “money created” outright, interest free. Congress apparently has the authority to do this by the creation of just sixteen to twenty “trillion dollar” coins. Seriously. The debt has been on the books since 1835, long before the U.S. became monetarily sovereign. What about the leeches of the Federal Reserve?


  3. I disagree with you only slightly: The democrats are mostly fascists now, while the Republicans are neo-feudalists and Social Darwinists.
    We had extensive discussions on the debt, monetary sovereignty, and I even got to hold up my U.S. Note – here at the Public Banking forum just completed in Philadelphia. Many people “get it” but there are still a few goldbugs (we’ll need a gold price collapse to shake them out I think), anarchists etc.
    More later. Keep up the good fight….


  4. I hope you comment on this great article:
    Death of a Fairy TaleBy PAUL KRUGMAN
    Published: April 26, 2012

    This was the month the confidence fairy died.

    “For the past two years most policy makers in Europe and many politicians and pundits in America have been in thrall to a destructive economic doctrine. According to this doctrine, governments should respond to a severely depressed economy not the way the textbooks say they should — by spending more to offset falling private demand — but with fiscal austerity, slashing spending in an effort to balance their budgets. ”

    Justaluckyfool found “Kostas Kofas” Comment interesting.
    .”.Mr. Krugman’s characterization of the state of affairs may be right, but how is it useful, given the absence of a viable alternative?”
    Justaluckyfool says, “There is an alternative.”
    A solution to, (as stated on ” 60 minutes” (12/11/11)”
    President Obama said,”You can’t raise revenues by lowering taxes unless you get the money from somewhere else.” ?
    “Great News!!Zero Income Taxes Solves Worldwide Economic Crises !”
    For the solution:”We cannot solve our problems with the same thinking we used when we created them”.Albert Einstein
    Perhaps the answer lies in how you redistribute the wealth of a nation; not in how you make it.


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