The cattle, dumb, drooling and defeated, obediently slump into the slaughterhouse, with never a “moo” in protest.

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.

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Today, Congress continues its politicized debates about the best way to destroy health care and the American economy. With friends like these, who needs enemies?

Every economist is familiar with this equation:

Federal Deficits – Net Imports = Net Private Saving

It describes how money flows in the economy. Every economist also knows this equation:

GDP = Private Consumption and Investment + Federal Spending – Net Imports

Both equations tell you: When federal deficits are reduced, fewer dollars are created, the saving rate in reduced and the economy suffers. None of this is hypothesis or prediction or guess-work. These equations simply are the actual facts of federal financing. They cannot be debated. They are as certain as Assets = Liabilities + Equity.

Yet the media, the politicians, the old-line economists and the public, at the behest of the upper 1% income group, deny these fundamental truths. Here is yet another example:

Detroit Free Press

Health care overhaul will reduce deficits, Congressional Budget Office finds
By Ricardo Alonso-Zaldivar and Andrew Taylor, July 25, 2012

WASHINGTON — President Barack Obama’s health care overhaul will reduce, rather than increase, the nation’s huge federal deficits during the next decade, Congress’ nonpartisan budget scorekeepers said Tuesday, supporting Obama’s contention in a major election-year dispute with Republicans.

Republicans insist the plan will raise deficits — by trillions, GOP presidential candidate Mitt Romney says. But that’s not true, the Congressional Budget Office said.

The CBO gave no updated estimate for deficit reductions from the law, approved by Congress and signed by Obama in 2010. But it did estimate that Republican legislation to repeal the overhaul — passed recently by the House — would itself increase the deficit by $109 billion from 2013 to 2022.

Translation: “To hell with facts. Deficit reduction is good for America. Fewer dollars help expand he economy. Applying leeches cures anemia. A drought helps crops grow. Trust us.”

Tuesday’s budget projections were the first since the U.S. Supreme Court upheld most of the law last month. The CBO said the law’s mix of spending cuts and tax increases would more than offset new spending to cover uninsured people.

As expected, the budget office said the law will cover fewer uninsured people because the Supreme Court ruled that states won’t have to sign on to a planned expansion of Medicaid for their low-income residents.

Thirty million uninsured people will be covered by 2022, or about 3 million fewer than projected this spring before the court ruling, the report said.

Translation: “To reduce deficit spending by our Monetarily Sovereign government – a government with the unlimited ability to create dollars – about 3 million more people will do without health insurance. Two great results — slower growth for the economy and poorer health care for millions of Americans.”

As a result, taxpayers will save about $84 billion from 2012 to 2022.

Translation: “Don’t tell anyone this secret, but there is no historic relationship between federal taxes and federal spending, so taxpayers will save nothing. Nothing. But, because the public is stupid, we’ll keep feeding them this nonsense. They never will catch on.”

Democrats immediately hailed the findings as vindication for the president. “This confirms what we’ve been saying all along: The Affordable Care Act saves lots of money,” said Senate Majority Leader Harry Reid, D-Nev.

Translation: “To the degree the ACA cuts deficit spending, your savings will be lower. You’ll learn to like being poorer.”

Republicans said they remain committed to repealing it, anyway. When combined with other budget-cutting measures, GOP leaders say that repeal ultimately will reduce deficits. Romney says that if elected, he will begin to dismantle the law his first day in office.

Translation: “Not only do we want to cut the deficit, which will reduce GDP growth, but we want to cut health care coverage for millions of people. Now, if only we could cut Social Security benefits, we’d have a perfect trifecta to increase the income gap between the upper 1% income group and the lower 99%.”

Bottom line: The federal government can and should provide fully-paid Medicare to every man, woman and child in America. It would improve health care for you, for your friends, family and neighbors, stimulate economic growth, and reduce unemployment.

But, the cattle, dumb, drooling and defeated, obediently slump into the slaughterhouse, with never a “moo” in protest.

Rodger Malcolm Mitchell
Monetary Sovereignty

Sadly, I must award three dunce caps to the American people, who have allowed the media, the politicians and the old-line economists to get away with saying that taking dollars out of the economy benefits the economy. Think, people, think.


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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

11 thoughts on “The cattle, dumb, drooling and defeated, obediently slump into the slaughterhouse, with never a “moo” in protest.

  1. “But, the cattle, dumb, drooling and defeated, obediently slump into the slaughterhouse, with never a “moo” in protest.”

    oh, come now, rodger!! never a “moo?” what about #Occupy?

    where have YOU been?? oh, i know–you’ve been too busy slamming them!! and you’re the one who supposedly wants to save them! no wonder they’re “defeated!!” the obedient “slump” should come as no surprise…

    it’s tough not feel defeated when you’re getting attacked quite literally from all sides of the political spectrum, not to mention getting beaten, shot at, bulldozed and pepper-sprayed!!

    are YOU strong enough to stand up to THAT, rodger? who do you know is?

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    1. Right. #Occupy is mooing.

      But, that’s all they’re doing. Since they don’t understand the problem, they have no viable solutions. They have had some input from Warren Mosler, which one would think should get them on the right path, but I see no evidence they yet can comprehend Monetary Sovereignty.

      Until they do, their contributions will be limited to mooing.

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  2. “Back in the early 1960s a dollar of new debt added almost a dollar to the nation’s output of goods and services. As more debt enters the system the productivity gained by new debt diminishes. This produced a path that was following a diminishing line targeting ZERO in the year 2015. This meant that we could expect that each new dollar of debt added in the year 2015 would add NOTHING to our productivity.

    Then a funny thing happened along the way. Macroeconomic DEBT SATURATION occurred causing a phase transition with our debt relationship. This is because total income can no longer support total debt. In the third quarter of 2009 each dollar of debt added produced NEGATIVE 15 cents of productivity, and at the end of 2009, each dollar of new debt now SUBTRACTS 45 cents from GDP!

    This is mathematical PROOF that debt saturation has occurred. Continuing to add debt into a saturated system, where all money is debt, leads only to future defaults and to higher unemployment.

    This is the dilemma created by our top down debt backed money structure. Because all money is backed by a liability, and carries interest, it guarantees mathematically that there will be losers and that the system will eventually reach the natural limits, the ability of incomes to service debt”.-Nathan A. Martin
    Hi Rodger: I was snooping around as usual and found this doomsayer analysis of something called debt saturation. Maybe this applies to total debt and not just “federal debt”. Could you elaborate on total debt vs. federal debt in a future blog (jee whiz, you probably have already) ? thanks, b

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  3. Total, unadulterated BS, mixing uneconomic hypotheses with buzz words from physics.

    If he’s talking about productivity, he needs to learn that productivity has increased over the years. See: http://www.bls.gov/lpc/prodybar.htm and http://www.bls.gov/news.release/prod2.nr0.htm

    The primary reason: Computerization.

    If he’s talking about accumulated interest preventing future debt service, he forgets that the federal government can pump endless dollars into the economy, to cover endless interest.

    And as for “phase-transition,” gimme a break.

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    1. As a person who has used socialized medicine around the globe, I would rather have that then the system we have today. You can always buy more insurance if you can afford it.

      To your point, GDP increased by almost 50% while the total number of jobs remained the same. Automation is the greatest threat because what do you do when a janitor is replaced by automation ? Send them to college? Retrain them to do what? Teaching them to fix and work on automation works until advances in reliability reduces employment. This problem will only get worse and will work its way up the ladder of IQ and Education.

      2000 – 131.7 Million Non-Farm Jobs
      2007 – 137.5 Million Non-Farm Jobs
      2008 – 136.8 Million Non-Farm Jobs
      2009 – 130.8 Million Non-Farm Jobs
      2010 – 129.8 Million Non-Farm Jobs
      2011 – 131.3 Million Non-Farm Jobs

      Below is the link to the BLS site that shows “Historic Employment” .

      ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt

      Like

      1. You are correct that on an individual basis, automation destroys jobs. That has been the same argument since the Industrial Revolution began in the 18th century.

        Today, automation combined with computerization eventually will reduce working hours but not necessarily jobs. If we are wise enough to reduce daily working hours, while we increase per person income, automation will continue to increase the quality of our lives.

        That, after all, is the goal, isn’t it. Nothing says an 8-hour day is sacred or even common, world wide. Automation is a tool we must learn to use for human benefit.

        (One day, farms will be thousands of acres, each run by one guy, sitting in his house, working one hour a month, telling his computer to run his farm equipment. Then later, all food will be manufactured in factories, by machines, and there will be no farmers at all. )

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        1. When I first got a spreadsheet I was able to produce 5 times the number of tables. The result was my boss did not hire more people and the company used that money towards the bottom line and paid out bonuses to me for doing such a good job. I still worked the same number of hours and now was expected to produce 5 times the number of tables.

          I am not sure what mechanism would go into effect that would allow the worker to work less hours since we trade our time for money and other workers are willing to exchange that time no matter what the output requirements are.

          I believe that is the root of our real economic problems. As both of our examples show, for what reason will you pay someone for their time? What do we do with all those out of work farm people? Shorter hours is only an interim step. Will food production, education and healthcare have to be a government controlled product that is freely distributed? Would Atlas Shrug?

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  4. I agree that the greatest ponzi scheme ever is the national debt and we must use it for the good of America. If we did not have it we would be stupid not to create it. It works as long as those paying into it believe in its stability and relative safety compared to other alternatives. By letting so money countries invest massive amounts in the scheme, that the scheme has power of its own and they also are now participants. If we increase government spending by 10 times we would quickly realize this scheme is not the never ending profit machine for America. The question is how far can we push this forward.

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    1. A “Ponzi scheme” is a program in which later investors pay the income of earlier investors. The federal deficit and debt are nothing like that. No one pays for the federal deficit and debt.

      For a Monetarily Sovereign nation, government spending is not supported by taxes. The government creates dollars by spending, and could create unlimited dollars, even if taxes were $0.

      Federal finances are different from personal finances. Federal finances also are different from state and local finances and from euro nation finances. All are monetarily non-sovereign.

      It’s important to understand the difference.

      Like

      1. My problem is I am still stuck on widgets of output represent some measure of time to produce which is traded for currency as a substitute for time at a base level. Would the unlimited printing of money in fact remove the effect of peoples time and people would be paid based on their political ability to rise up the ranks like in a communist country?

        Like

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