Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.

●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●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.


In March of this year, I posted: The end of private banking: Why the federal government should own all banks.

Recently, Warren Mosler wrote:

the question of public vs private is about pricing of risk. when the public sector prices risk it tends to get politicized, like Solyndra, and all the other scandals surrounding loans by the public sector. When the private sector prices risk you get the problems we’ve seen recently. both have serious issues. i tend to favor the private sector pricing risk with some skin in the game/private capital, but operating narrowly as per my proposals.


And bank regulation and supervision is plenty tight to consider today’s banks public sector entities. The FDIC can fire bank management and limit compensation as well as dividends at will. What we’ve seen in the last 5 years is a total failure of regulation and supervision, partly because congress’s banking regulations allow them to do more than regulators can possibly keep up with.

My response was: “Warren: There never will be a time when bank regulators are able to keep up with regulations or with bankers. If regulators ever were able to maintain the tight reins you describe, they would in effect, run the banks. At that time, bank employees would be unnecessary puppets.

“Not only are the regulators unable to keep up, but the regulations themselves are unable to keep up. Why? The profit motive taints the entire banking industry. Remove the profit motive and you eliminate virtually all the illegality.

“You worry about Solyndra ?? I worry about JPMorgan Chase, BoA, Citigroup, Wells Fargo and all the other crooked, “too big to fail” banks, that bribe lawmakers and regulators to look the other way.

“So long as there are private banks with ‘skin in the game’ (aka ‘profit motive’) there will be bankster criminals bribing regulators and lawmakers, and the public will pay the price. This has been true, throughout history.

“(By the way, Solyndra was a private company with a profit motive. Just sayin’)”

The importance of this debate cannot be underestimated. Banks create the vast majority of dollars in existence. And banksters are ruled by the profit motive. They do not care what’s best for the public or for the nation.

Monetary Sovereignty
(The green line is total dollars; the blue line is bank-created dollars; the red line is federally-created dollars)

Now, the blog Naked Capitalism has published a post titled Is Public Ownership A Solution? Excerpts from that post:

Gar Alperovitz, professor of political economy at the University of Maryland, pointed out how the growth expectations for public companies are at odds with resource conservation and how their rampant short-termism stunts investment. Some economists have recently taken a systematic look at the latter problem. From a 2011 post:

Most recently, in 2011 PriceWaterhouseCoopers conducted a survey of FTSE-100 and 250 executives, the majority of which chose a low return option sooner (£250,000 tomorrow) rather than a high return later (£450,000 in 3 years). This suggested annual discount rates of over 20%.

Recently, Matthew Rose, CEO of Burlington Northern Santa Fe (America’s second biggest rail company), expressed frustration at the focus on quarterly earnings when locomotives lasted for 20 years and tracks for 30 to 40 years. Echoes, here, of “quarterly capitalism”.

That same post published a comment by someone named “psychohistorian,” who wrote:

The propaganda argument that private industry can be more responsive and do everything cheaper is bunk.

Yes, there are things private industry can do better, and there are things the government can do better. But we Americans have become so vaccinated with “free enterprise always is better than government,” we tend to be hostile to any government action, which we incorrectly label, “socialism.”

When private individuals control vast amounts of money, and when they are compensated according to their control of this money, even the saints among us would be tempted. Bottom line, private banking is, and always has been, crooked, the bigger the bank, the greater the temptation, the more crooked.

In banking, the profit motive corrupts. And combining the profit motive with short-termism corrupts absolutely. Always has; always will.

All banks should be federally owned.

Rodger Malcolm Mitchell
Monetary Sovereignty

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