Mitchell’s laws:
●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.
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Are you shocked that someone should be so disrespectful as to call the President of the United States a liar and a traitor? Even I am shocked at my own words. They burn in my throat. But what else can you call a man who was elected on the solemn promise, often repeated, that he would benefit America by lifting the struggling middle and lower classes — a man who had zero intention to do so?
By Jake Horowitz (jhorowitz@policymic.com), 14-Nov-2012
Obama Sets Steep Tax Target – (via WSJ) “President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade – double the $800 billion discussed in talks with GOP leaders during the summer of 2011.
Mr. Obama, in a meeting Tuesday with union leaders and other liberal activists, also pledged to hang tough in seeking tax increases on wealthy Americans. In one sign of conciliation, he made no specific commitment to leave unscathed domestic programs such as Medicare, leaving the door open to spending cuts many fellow Democrats oppose.”
So here is how Mr. Obama will help the middle and lower income groups. He will raise taxes on the upper income group and he will cut Medicare, Social Security and food stamps.
Got it? He will claim to remove $1.6 trillion from the economy. (Will that help you and your children?) He will reduce social programs (Will that help you and your children?)
And he will continue to tell you that in some mysterious, magical way, this will make you happy. That’s called an “Obama compromise:” Give the rich what they really want – an increased gap between them and the rest of us – then claim this is good for us.
And it continues:
Today, Obama meets with CEOs from GE, Honeywell, Wal-Mart, Ford, Chevron, and IBM to discuss the fiscal cliff.
What do you think all those rich guys will tell Obama? Will they say, “Raise rich people’s taxes, don’t raise poor people’s taxes, and above all, don’t cut the social programs they need so desperately”? Sure they will.
For many years, MMT and Monetary Sovereignty have been working under the delusion that the President “doesn’t get it,” and if only we could explain it better and more simply, he would see the error of his ways. It was a fool’s mission. The President gets it. He’s no fool. And he has plenty of smart people advising him, and they get it, too.
But he does the bidding of the 1%. He learned about money in Chicago, from people like convicted swindler Tony Rezko, who magically got Obama some real estate at a big, big discount. Obama believes in magic, and hopes you will, too.
The demand that taxes be raised on the 1% is a magicians misdirection, forcing you to believe he is for the “little guy.” The rich don’t give a fig about that income tax increase. They never will pay it. But the President wants to cut social spending even more, and that is what will increase the gap.
Obama’s whole “grand bargain” is a charade to fool the voters. It really is a discussion about the best way to increase the gap without being too obvious. As you will see, when this all is resolved, the middle and lower classes will take a big hit, and the 1% will not even be scratched.
Bottom line: Any plan to reduce the deficit will reduce the money supply, and by formula, will reduce Gross Domestic Product. There is no mechanism by which any tax increase and/or any spending cut can have a positive effect on economic growth. Obama knows this. The rich know it. The poor, who elected Obama, don’t. So he will let them suffer for their ignorance. “Liar”? “Traitor”? Add “cruel” to the description.
But then, Romney would have been even worse. He would have appointed another Scalia. That’s why I voted for Obama.
Rodger Malcolm Mitchell
Monetary Sovereignty
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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
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
(1) Rodger writes, “For many years, MMT and Monetary Sovereignty have been working under the delusion that the President ‘doesn’t get it,’ and if only we could explain it better and more simply, he would see the error of his ways. It was a fool’s mission.”
Indeed, many MMT-ers are as much in denial as people who reject MMT altogether. Warren Mosler even titled one of his books “The Seven Innocent Frauds.” (Innocent???!!)
We do not excuse a murderer by saying, “He just doesn’t get it.” Why then should we excuse politicians who murder and impoverish hundreds of millions of people?
Austerity is forcing Spaniards to eat out of garbage cans, and Italian children to work ten hours a day. Austerity is causing a suicide epidemic in Europe. Austerity will do the same in the USA. But don’t blame Obama or the Congress. After all, they “just don’t get it.”
Only people who are fat and comfortable believe such nonsense.
(2) “Today, Obama meets with CEOs from GE, Honeywell, Wal-Mart, Ford, Chevron, and IBM to discuss the fiscal cliff. What do you think all those rich guys will tell Obama?”
They will demand that Obama slash or privatize social programs, and increase taxes on the middle and lower classes. Simultaneously they will demand that Obama give them $134 billion in tax breaks, which Obama calls “middle class tax breaks.” (http://thinkprogress.org/economy/2012/11/13/1179931/corporations-fix-the-debt/)
House Speaker John Boehner says he will accept higher taxes on the middle and power classes if Democrats cut Social Security. Obama likes this, as part of his grand bargain. “Let’s be fair about this. I will cut social programs for the middle and lower classes, as long as the upper class lets me raise taxes on the middle and lower classes.”
“Heads we win, tails you lose.” All this happens because average people refuse to accept the truth about Monetary Sovereignty. Each person’s stupidity adds to the problem. One candle sheds scant light, but millions of candles are easily visible from outer space.
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Raising taxes on corporations is a wonderful idea, because as everyone knows, business is great these days, so we should cut business profits. That will help reduce unemployment. Right?
The 1% are laughing at the 99%, who thought Obama was their friend. With friends like Obama, the 99% don’t need enemies.
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I agree with everything you say, so what are we to do???? How do we get this message to the masses that can make the change? I do everything I can here by forwarding these blogs, but everyone still don’t get it……
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Good question.
For many years, MMT and MS have attempted to argue the facts and the logic behind the facts. This hasn’t made much of a dent, simply because the facts are not appealing.
No one wants to admit that for the past 40+ years, they have been taken for fools, and have been paying unneeded taxes, without so much as a whimper — and even have helped spread the lie that federal deficits and debt are too high
What has been missing from the story is motive. Why would the politicians and the media support a fiction that so obviously is harmful to America?
The motive, of course, is that this lie benefits the 1% by widening the gap between the 1% and the 99%, giving the 1% more power over the rest of us. That is the story that needs to be told.
We need to show how and why the government and the media are in the hands of the enemy. If we can get that point across, guys like Warren Mosler, who have run for office on a sensible (therefore bland) platform, would have a chance.
That is the other missing piece: Passion.
To win in politics, you need a demonized enemy. Negative advertising works. We have to (rightly) demonize those who tell us austerity is the way to prosperity, when in fact it is the way to destruction.
They are the true traitors of America.
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The Huffington Post, Nov. 14, 2012
Lloyd Blankfein (Goldman Sachs CEO) On Fiscal Cliff: “Obama Needs To Channel FDR”
Tom Hickey’s (Mike Norman Economics Blog) response to the above Huffpo blog piece follows below:
“When inflation is low and unemployment high, there is plenty of room to expand the economy by increasing demand. As long as business doesn’t choose to invest due to lagging demand and external saving remains elevated due to a CAD, then only government can increase demand by dissaving, i.e., running a deficit that offset nongovt saving desires. That means that taxes are too high and spending too low. Increasing taxes and offsetting it by decreasing spending, i.e., increasing govt saving, is the wrong way to go under the circumstances. This is simple algebra and arithmetic using nothing more than the fundamental identity of macro. plugging in some data, and doing the arithmetic. A high school kid could figure this out if taught correctly.”-Tom Hickey
I understand what Tom is saying, except stupid me doesn’t know “CAD”, Rodger, what is “CAD?”
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Current Account Deficit — net dollars flowing out of the domestic economy. It’s part of the balance of trade. These days, about $40 billion – $50 billion more dollars leave America than enter.
So, as a beginning, the federal government needs to run a $50 deficit, just so the economy can break even — and break even = recession, so far more deficits are needed.
Our Monetarily Sovereign nation welcomes a negative CAD, because it has no difficulty paying for valuable imports. A monetarily non-sovereign government runs into trouble, when its CAD remains negative . Examples are U.S. states, counties, cities and euro nations.
Tom Hickey is correct about the high school kid figuring it out, which is further evidence that Obama knows exactly what he’s doing, but is owned by the upper 1%.
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I really think the liberals are caught up in a political game. For twenty years Rush, Hannity and Fox have dominated the republicans. The old republicans, who said one thing and negotiated in the end, are gone. The Teaparty were raised on the right wing entertainment radio/tv machine, and they are now running for office. I figured out that the republicans only policy is “If Liberals like it, we have to hate it.” Once you figure that out their odd policy stances and flip-flops make complete sense.
Now, I told you that story to tell you this one. When I explained MS to my mother, a long time liberal, she could not get past the “all taxes are bad.” She would say “But we need the revenue from the rich.” And I would say, no the government can pay any debt at any time. But she had bought into the anti-rich story and couldn’t get past it.
I think that is what has happened to the liberals. We want to be right about taxing the rich. Obama wants to be right about taxing the rich. He wants to be right about being a better deficit cutter. He wants to be better then Clintion, minus the BJs. He wants to win. We are in a political system where victory in elections and the news cycle matter the most.
The republicans know that the deficit doesn’t matter. Romney’s tax plan had no way to make it budget neutral, because he was never going to make it neutral. The economy would have got better and he would have got a second term. But, the 1% republicans change their tune when the other party is in power.
Why. Because they want to win.
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I wouldn’t say all taxes are bad, state and local government need them for funding, and I would argue they should be levied against ‘rent seeking’ (the 1% love rent seeking) speculative style investment, to discourage that style of business activity in favour of, for want of a better term, real businesses that make and do stuff.
Aside from that, yeah, the least worst guy won.
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Right,
Monetarily non-sovereign entities, like people, companies, states, counties, cities and the euro nations must have income in order to spend.
Monetarily Sovereign entities like the U.S. government, Canada, Japan, Australia, China et al, do not need income, as they create their sovereign currency ad hoc.
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Here is my assessment. Nobody is lying and nobody is trying to purposefully impoverish anyone. Maybe I am a bit naive but hear me out.
This entire problem stems from the mistaken myth that debt and deficits are bad at the federal level, and equated to a household budget. Not innocent, just sheer ignorance of the mechanics of the deficit, and money supply. I have had countless arguments with monetarists that believe that the deficit does not add money to the economy. These are people with PHDs.
The Democrats believe we need tax increases to reduce the budget and Republicans want to cut spending. Many serious economists believe deficits and debt are always bad.
Then you have the dynamic that increases in taxes on the rich will reduce inequality – and it won’t. Many people believe the Clinton tax hikes were the greatest economic achievement of all time (despite inequality rising at that time). Tax increases on the rich redistributes exactly zero.
Even economists like Krugman won’t come out and say leave the tax cuts there because he is being blinded by his political views of the rich – raising taxes on the rich is not important right now. Krugman only says leave the spending there. When the right answer is maintain spending and make the tax cuts permanent. But now we have Obama trying to satisfy the political desire to “stick” it to the rich in the name of deficit reduction, and the Republicans trying to gut spending that we need.
I knew no matter who was elected we would have this problem. And expect a crappy deal, and recession mid-year 2013.
I wish Obama would trade making all tax cuts permanent, while NOT cutting spending.
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You suspect that the problem is one of ignorance, and if only we could educate Obama, Congress, the Fed, the media and the mainstream economists, the problem would be solved.
Welcome to the club. I believed that for many years. MMT still believes it. Today, I have changed my mind. Bernanke is well aware of the truth. He already has admitted he creates dollars by pushing a computer key.
It simply is not possible that the President of the United States, the Treasurer of the United States, the Chairman of the Federal Reserve Bank of the United States and other assorted experts do not understand how dollars are created and destroyed.
[See: http://www.forbes.com/sites/johntharvey/2012/09/10/impossible-to-default/%5D
Bernanke is well aware of the truth. He already has admitted he creates dollars by pushing a computer key.
So the only question is: Why do they pretend not to understand. And the only answer I can come up with its: They are paid to pretend.
Who has the money and the motive to pay them” The wealthiest Americans.
No other conclusion makes any sense at all.
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now you’re talking, rodger!!
so, now what are we to do?? because, as currency users, we are totally at the mercy of the currency issuer. apart from grumbling, shouting slogans and holding up cool signs with catchy phrases, there’s not a whole lot we can do, because he who has (creates) the money owns everyone who doesn’t. that’s the genius of the system and the reason why it was created.
i’ve been reading your blog for the past coupla years and you’ve actually come a long way in your thinking, but there’s still a ways to go.
in a technologically advanced society, what good is there to have a monetary system at all? actually, that goes for even a “primitive” society (look at polynesia, some parts of the americas, southeast asia, the south pacific and some parts of africa before the white man (or other “pastorialists”)) came around. because as long as you have it, you’ll have what we have now.
socioeconomic inequality is the cause of all social and psychological ills and as long as you have a monetary system you WILL have inequality.
though you haven’t phrased it as such, the problem that you’re describing is inequality–you call it “the gap.” and we are all dominated by a group of people hellbent on maintaining inequality and even increasing it. i just don’t see a way to turn this thing around–well, not in my lifetime…
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All it will require is one brave, well-known, probably wealthy patriot, whose words carry a lot of weight, to tell the story.
Bill Gates could do it if he had the brains. Warren Buffett could do it if he had the will. Michael Bloomberg would do it if he felt it would bring him adulation.
So, if you know any of those guys, and can clue them in, you might save America.
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i dunno, rodger. forgive me, but those are all old guys.
once, on one of your rants against #Occupy, i jokingly challenged you to go out and meet them. what was your reply? something like, “who me? i’m too old for that sort of thing!”
young people have gobs of energy, but no understanding of how the system works.
old people have gobs of understanding, but no longer have the energy, or strength to fight and to deal with the beatdown they’re gonna get for bucking the system.
at this point in time, i’m convinced those 3 guys understand how the system works and, in the case of buffett, he’s practically come out and said it, albeit in a roundabout way.
i think the only possibility of change will come due to what’s euphemistically referred as a “demographic shift” in the US population.
the system now is dominated by old white men, and, by that, i mean those who came to adulthood before ’71 or shortly thereafter.
with the “browning” of america and the die-off of that older white generation, say, 20 yrs. or so from now, perhaps there will be a larger impetus from the public for a shift in the congressional mindset.
unfortunately, if it happens, i’ll be too old to enjoy it. assuming, of course, i’m still alive then…
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Yuu Kim,
O.K., if you are young and active, you do it. Oh, you don’t have the money, time or energy? That’s a shame. But the bigger shame is that at your young age, you have given up.
I’m 77, but at least I still write . . . excuse me, “rant.”.
Bill Gates is ancient at about 55, but is very active in social causes. Bloomberg is about 70, but he seems pretty active, too. And Buffett still makes comments about the economy — just the wrong comments.
Maybe a youngster of 40 will step up to the plate.
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@ Yuu Kim: Warren Buffet, Bill Gates, and Michael Bloomberg are all deficit hawks, since they represent the 1%.
In a 2011 interview with CNBC Buffest said, “I could end the deficit in 5 minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.” (See YouTube video http://www.youtube.com/watch?v=uNEp7q30JCw
Michael Bloomberg is a billionaire, the 11th richest person in the USA, who calls the NYPD his “own private army.” He is firmly with the 1%, and has no interest is revealing the truth.
Bill Gates agrees that the U.S. budget deficit is a “crisis,” but that taxing the rich will not reduce the deficit. Thus, he is a double-liar. He says, “We have a huge budget deficit, so taxes are going to have to go up. And I certainly agree that they should go up more on the rich than everyone else. That’s just justice. I hope we can solve that deficit problem with a sense of shared sacrifice.”
Translation: I want the government to pretend to raise taxes on rich people like me, who don’t pay taxes anyway, while it “broadens the base” by raising taxes on the peasants.
All of these creeps are sleaze-balls and scumbags. Rich little maggots. Why? Because increased federal spending will not take one single penny out of their own pockets. On the contrary, it would boost Microsoft’s sales and profits.
Note, however that the 1% can increase the gap between themselves and the peasants by either increasing their profits, or by crushing the peasants. Bill Gates and the other maggots feel it is more efficient and entertaining to crush the masses.
There have been national leaders that spoke the truth about national finances, but the rest of the world ganged up to destroy them and vilify them for all eternity. I could name one, but I won’t.
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I suppose the reason they pretend is the politics. Nobody wants to come out and say “Hey folks deficits are good for you.” But many of them are ignorant, and Warren Mosler has numerous examples in his book. There is a mistaken conventional wisdom even among our elite economists like Summers. Even Krugman says we should run surpluses during good times – when we should only run them if there is bad inflation.
Like Mosler’s story in 7 Innocent – where he explained it to Al Gore, but Al looked at him in a way that said it is political suicide.
The thing is this, in the end if the economy is good – nobody will give a crap about the deficit. Reagan got away with it, as well as Bush Jr for awhile.
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I think surpluses during boom times, to lean against excessive and inflationary private credit growth, might sometimes be needed, or they come about as natural outcomes of private excess being absorbed by the automatic stabilisers of rising tax revenues and falling social security payments.
But yes, that is different to saying we MUST run them in good times to pay for the bad times as per Krugman.
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Yes, IF we have inflation, and IF that inflation cannot be cured by raising interest rates, then yes, the federal government would need to run a surplus.
Of course, that scenario has not occurred in my long (77 year) lifetime, and is so unlikely today as to be on a par with death by meteor or your winning the Lotto — twice.
But, it’s a prime worry for the debt dopes.
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I think the biggest ignorance among all these so called learned people with PhD’s is not knowing the importance of going off the gold standard in 1971. They continue to operate and believe as if nothing has changed since the foundation of this country . See this article,
http://qz.com/26062/one-chart-that-tells-the-story-of-us-debt-from-1790-to-2011/
Nowhere in there do they mention the fact that we went off the gold standard and so now we no longer have to borrow to create our currency. The sad truth is no one stops to think as to where did all these trillions of dollars come from that the US borrowed. Who had it before we borrowed ? If someone had it, how did they get it in the first place? It is not a chicken & egg situation, is it?
The top 1% and their elite bankers have done a good job in brainwashing the public with talking points like
– Fiat currency is funny money, causes hyperinflation.
– Govt is not the solution, Govt is the problem.
– Private sector is more efficient than the govt and that pvt sector can better provide social needs of a nation like education and healthcare. Now they have entered into the correction/detention system too. Look at all the private prisons in this nation.
– National debt is bad, but at the same time, going into private debt is encouraged. News item proclaim, the economy is improving as more and more households have increased their credit outstanding.
– They even mislabeled the “credit score” as if its something nice to have. It should be called the debt score, the higher the number, the deeper you can get into debt with these bankers.
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I believe it is the willingness of those in charge to step out of the box, I am sure they can figure out MMT but lack the willingness to pursue.
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Ready? Perpetual growth (unstoppable force), meets finite planet (immovable object). What happens at the end of this story? Look around you. We don’t need to throw more money at the problem, we need a new monetary system suitable for a complete reversal of this direction. All prescriptions that beg and hope for some new elite to step out of the central hierarchy and shepard the sheeples are doomed to fail. Demote money, promote wealth.
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