●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●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.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
Obama didn’t win; the Republicans lost. As German news magazine Der Spiegel said even before the vote:
It seemed like a new beginning for America when he took office. But, Obama didn’t close the Guantanamo Bay detention camp, nor lift immunity for alleged war criminals from the Bush-era, nor regulate the financial markets, and climate change was hardly discussed during the current election campaign. The military, the banks, industry — the people are helpless in the face of their power, as is the president.
Not even credit default swaps, the kind of investment that brought down Lehman Brothers and took Western economies to the brink, has been banned or even better regulated.
We want to believe that Obama failed because of the conservatives inside his own country. Indeed, the fanatics that Mitt Romney depends on have jettisoned everything that distinguishes the West: science and logic, reason and moderation, even simple decency. They hate homosexuals, the weak and the state. They oppress women and persecute immigrants. Their moralizing about abortion doesn’t even spare the victims of rape. They are the Taliban of the West.
Still, they are only the symptom of America’s failure, not the cause. In reality, neither the idealists and Democrats, nor the useful idiots of the Tea Party have any power over the circumstances.
The political system is in the hands of big business and its lobbyists. The checks and balances have failed. And a perverse mix of irresponsibility, greed and religious zealotry dominate public opinion.
The downfall of the American empire has begun. It could be that the country’s citizens wouldn’t be able to stop it no matter how hard they tried. But they aren’t even trying.
The picture that emerges is of an American president, weak before the forces of wealth and evil. The Presidency, Congress, even the Supreme Court, all have been compromised by big money. Is it as hopeless as Der Spiegel says?
Now that Obama is a lame-duck President, he has left himself so little time. Future accomplishments for history to judge, will have to take place in the next two years. Even so, his problem will be the mid-term elections, which will occupy those running.
Sadly, Obama will focus on his “grand bargain”: $2.50 of spending cuts for every dollar in new tax revenue? He and his advisers surely know both federal spending cuts and tax increases reduce GDP growth. His “grand bargain” is a plan to reduce GDP growth — a plan to widen the gap between rich and poor.
And that is how he will be remembered, because his motivation for deficit cuts is not based on ignorance. Rather it is based on his knowledge – the knowledge that spending cuts and tax increases each impacts the lower 99% income groups far more than the upper 1% income groups.
The Supreme Court may give Obama some possibility for accomplishment. If the elderly on both sides have the decency to retire, Obama could nominate enough justices to swing the balance away from the 17th century thinking of the current majority.
But then what? The “grand bargain,” even with a more humane Supreme Court, still spells a weakening economy and an ever widening gap between the rich and the rest. Are we lost, or is there a cowboy film in our future – a cavalry that will ride to the rescue?
I believe there is, and in a twist of plot, the face of that cavalry is in shades of brown – and young. For seemingly, in America today, the people who truly understand why this great nation was founded, are the young and the people of color, and thankfully, they are the fastest growing segments of our population.
Romney’s base, the mean-spirited, selfish, white male, is on the decline, no longer to be the majority, and we will be all the better for it. While the young, the Latin and the black don’t have the money, they have the votes and the real morality (not the phony religiosity), and that combination will be unstoppable.
If (big IF) Obama wanted history to remember his administration favorably, he would focus on two simple initiatives:
1. Use the voice of the Presidency to educate the public about Monetary Sovereignty — the need for increased federal deficit spending to grow the economy. Then, using this truth as his sword, cut taxes for everyone – rich and poor – and increase spending on such programs as Medicare for all; increased Social Security benefits, science, education, ecology, poverty.
2. Ease immigration policy and provide a short, sweet path to citizenship. “Give me your tired, your poor, your huddled masses yearning to breathe free”. Immigrants built America. They created the American dream. They, not the selfish excluders, will be the future of American greatness and pride.
Obama has drifted through mediocrity. Accomplishing just these two initiatives would move him toward greatness. His time is running short.
Our time is running short.
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
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 Imports
11 thoughts on “–What does Obama’s victory mean for the future of America? Will the cavalry ride to the rescue?”
“[C]ut taxes for everyone …”
I don’t think the rich should receive a tax cut. They do not need one. For example, Donald Trump does not need a tax cut.
You are correct. Donald Trump doesn’t need a tax cut — but the economy does. Every dollar Trump pays in taxes is a dollar he never will spend — a dollar lost to the economy, forever.
If we don’t tax it, it will sit in the bank account of a man who already has far more than he can ever spend or invest. Just as lost. Instead of increasing the money supply while the wealthy accumulate dollars they will never use (or just play economic games with) it also makes sense for the government to redistribute the existing money supply in an optimal way — by moving money from the glutted investor class to the increasingly impoverished spender classes. Admittedly it would be nice to have an economy that did that without government intervention but that’s unlikely in the foreseeable future.
We can always hope, Rodger, but I’m not optimistic about Obama. I wish to go off on a tangent, and then tie my comment into your post above. Let me back up a sec. I say the reason why President Clinton’s Treasury Secretary Robert Rubin cut the government budget deficit far enough to create a budget surplus was to increase the debt tyranny of banks over the public. By radically slashing government spending, Secretary Rubin forced Americans to use up all their savings, and start taking loans from banks. Simultaneously Rubin led the repeal of Glass-Stegall, which opened the door for bank fraud, wild speculation, and the housing bubble. President Bush reversed Clinton’s deficit policy enough to fund Bush’s wars, while the housing bubble made Americans feel temporarily prosperous. When the bubble popped in December 2007, the economy fell into a depression. Today Wall Street wants to use the depression and the “fiscal cliff” to achieve its long-held dream of privatizing Social Security, so that hundreds of billions in FICA taxes go straight to Wall Street. This would not be possible with a Republican President. Therefore Wall Street re-installed Obama so that Obama’s “grand bargain” will make it possible. And indeed, the same Republicans who rightly condemned Clinton’s budget surplus now praise it (e.g. Paul Ryan). Meanwhile Republicans want to lower taxes on the 1%, while increasing taxes on the middle and lower classes (i.e. “broaden the base”) in order to increase the gap between the 1% and 99%, and keep average Americans in debt slavery to the banks (student loans, etc.). Republicans also want to eliminate or privatize all social programs, especially Social Security, which Obama may well hand to Wall Street on a gold platter.
I am very worried about this. And you are right. Obama must choose how he will be seen now, and will be remembered for all time. Will he worsen the depression, plus the debt slavery to the financial sector, thus becoming the greatest betrayer in American history? Or will Obama develop a moral conscience and at least try to keep the depression from growing worse? His choice is crystal clear. There can be no excuses or rationalizations. He truly has the fate of America’s economy in his hands.
guantanamo bay… admittedly, i’m getting old and my memory is getting fuzzier by the day, but i coulda sworn that shortly after he took office, he signed an executive order calling for the closure of guantanamo bay and congress got wind of it and forced obama to back down by quickly coming up with a “bipartisan” bill to keep the base open.
i just think that, like the media, you often overestimate the power of the presidency. congress is in control of the economy and, if the president wants something, he has to basically get on his knees and beg for it. or use the bully pulpit to get the public to force congress’ hand.
i guess he could also threaten to arrest individual congress members for treason (or, more realistically, for “corruption”), as biden obliquely suggested during the debt ceiling debates last year, but what president would go that far?? and if he were to do that, the press, led by FOX NEWS, would just attack him relentlessly for being a (african-style) “dictator.”
“use the voice..” “ease immigration policy…” though i agree with you in spirit, i think that given the conditioning that the public has been subjected to for millenia now, going public about this would be counterproductive. i think he just has to try to push congress from behind closed doors and perhaps threaten occasionally to “go public” just to force their hand.
Yuu Kim, you say that, “Like the media, Rodgers often overestimates the power of the presidency. Congress is in control of the economy, and if the President wants something, he must get on his knees and beg for it, or use the bully pulpit to get the public to force Congress’ hand.”
Many thanks for your comment, but I disagree with it. In the first place, both the Congress and the President decide on the U.S. government’s budget. The President proposes the budget, and the Congress considers it. If the President doesn’t like what the Congress does to his budget, then the President can veto the budget. Thus, the President and the Congress are equally responsible for U.S. government fiscal policy. (By contrast, monetary policy is a function of the Fed’s control of interest rates via the sale of T-bonds.)
In the second place, Presidents do myriad things on their own. If we are lucky, Presidents issue Executive Orders, so we can see them. When Truman wanted a naval blockade of Korea, Congress refused to give him money, so Truman ordered it on his own. Then Truman escalated the war without Congressional authorization. Obama ordered the destruction of Libya without Congressional authorization. Obama orders myriad things on his own, e.g. drone strikes, disaster relief, etc. Nixon’s Executive Order 11615 took the USA off the gold standard, and ended the Bretton Woods agreement on 15 Aug 1971, radically transforming the USA. This was done in concert with the Economic Stabilization Act of 1970, passed by Congress. So, fiscally speaking, the President and Congress work together. In most cases they have equal power, as dictated by the US Constitution, although Congress can ultimately override a Presidential veto.
As for the debt ceiling debates, these are circuses designed to keep the public subordinate to politicians and the 1%. The more frenzied, the better. The charades make the American public falsely think that the U.S. government has a “debt crisis,” and must “cut the deficit.” That is, we must eliminate or privatize all social programs like Social Security, Medicare, food stamps, WIC, etc. Meanwhile we must increase spending for wars and bailouts of the 1%.
I urge you (nay, I beg you) to keep learning about MMT and Monetary Sovereignty. If you have questions, then Rodger can answer them. Learn all you can, and spread the word. Quite literally, all our lives depend on it.
Your suggestion that the younger generation can provide the force for change is completely consistent with the forecasts in The Fourth Turning — An American Prophecy by William Strauss and Neil Howe. Published in 1997, this book predicted today’s descent into turmoil as a natural part of the long (80 to 100 year) cycles that that have dominated the past five centuries of Anglo-American history. The Introduction says that each cycle is like a year with four seasons, which it calls “turnings”. They predicted that the Fourth Turning would begin about 2005.
– The First Turning is an upbeat era of strengthening institutions and weakening individualism, when a new civic order implants and the old values regime decays.
– The Second Turning is an Awakening, a passionate era of spiritual upheaval, when the civic order comes under attack from a new values regime.
– The Third Turning is an Unraveling, a downcast era of stref=gthening individualism and weakening institutions, when the old civic order decays and the new values regime implants.
– The Fourth Turning is a Crisis, a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one.
If you have not read this book, it has a lot of meat to consider. It is standing the test of time.
Dear Tip, I agree that we must never underestimate the potential power of youth. Our task is to reach out to them. If I were a popular musician, I would write catchy songs about MMT, Monetary Sovereignty, and so on. I’d wear tee-shirts saying, “The government debt crisis is a lie!” and “Increase the deficit!”
We want a “paradigm shift” from today’s mainstream “economics” (filled with lies and absurdity) to the sanity of MMT and Monetary Sovereignty.
In most paradigm shifts, a mature adult devises a better explanation, but he is attacked because he threatens existing power structures. The new paradigm must usually wait until the physical death of most of the adults in power. Then the next generation (the youth) can apply the new paradigm to create a better world. I would like to see this happen in my lifetime, but at least I know that the new paradigm exists.
Of course, it’s not new. It has existed since 1971. But a “paradigm shift” usually consists of getting people to admit that the emperor had no clothes all along. Even in the original fable, it was a child who spoke the truth.
The wealthy don’t let their dollars “sit” in bank accounts. The wealthy invest their dollars, i.e. transfer their dollars to someone else.
The government does not “move” dollars from one class to another. The government creates dollars by spending and destroys dollars by taxing. Tax collections are not related to federal spending for the lower classes.
If all government taxes fell to $0 or rose to $100 trillion, neither event would affect the federal government’s ability to spend. That is a fact of Monetary Sovereignty.
You may be thinking about state and local government, which are monetarily non-sovereign, and which do move dollars the way you said.
Practically speaking destroying dollars from one class (taxing) and creating dollars for another class (spending) is the same as “moving” the dollars. The overall money supply (number of dollars) stays the same but (hopefully) is more optimally distributed. Your spending-only approach to what is partially a distribution problem strikes me as similar to adding oil to a leaky engine, or an engine where the oil keeps flowing to an area where it’s not needed and away from places it is. Wouldn’t it be better to plug the leaks or redesign the engine?
Lifelong, I understand your feelings, but when we talk about “redistributing the wealth,” and taking money from the rich to help the poor, we deceive ourselves into thinking that infinite fiat dollars are somehow physical and finite, like gold. We think there is a limited amount of fiat dollars, such that wealth distribution is a zero sum game. If the rich have more, then we have less. For every winner, there must be a loser. Right?
Wrong. All fiat money is essentially a game of credits and debits on computerized spreadsheets or ledgers. If the government wants to spend money, or if banks want to lend money, they simply change the numbers on spread sheets. There are limits to how far the banks can push this. (Banks can become insolvent.) However the U.S. government is only limited by the potential for inflation, and we are far from that. We want enough government spending (i.e. a large enough deficit) to create 100% employment, but not so much as to cause inflation. (Personally I regard inflation as a chimera. The Fed can always control it with interest rates. The USA is not Zimbabwe, which does not even have a national currency to inflate.)
So how about this…instead of taking from the rich, why don’t we have the government spend more into the economy for all of us, so we all have decent jobs? There will be more money in circulation, not as bank loans, but as regular debt-free dollars. (All dollars are debts, but I use the metaphor “debt free” to distinguish government dollars from loan dollars.)
Think of the government as a well in the desert. If the water is available to all, then we can lead decent lives. But if the government restricts access to the well, then we must get water-loans from banks, which put us into so much debt that soon we cannot get any more loans of water. Therefore, instead of trying to take all the water from the banks (which we can’t do anyway, since banks are too powerful) why not go back to the well and demand that it be opened up for all?
If you had a job that was interesting and worthwhile, a job you enjoyed, and which paid you enough to live a decent life, debt-free, then would you really care that the rich have so much money? I wouldn’t. I have better things to do that bash the rich – unless they are stealing from me because the government will not spend enough. That IS a problem.
Indeed, I would say that the purpose of MMT and Monetary Sovereignty studies is to stop the theft by waking people up to the truth, so we can all forget about money and go on with our lives. The purpose of MMT is to create a world in which MMT becomes trivial. That would be a paradise.