Mitchell’s laws:
●The more federal 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.
●The penalty for ignorance is slavery.
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Here is all you suckers need to know about Barack Obama — that great protector of the middle and lower income groups. Read this excerpt from Policymic.com
Treasury secretary Timothy Geithner is reported to have offered a set of proposals that include increasing tax rates on the wealthy, a one-year postponement of scheduled cuts in defence and domestic spending, and $400bn in savings from Medicare and other entitlement programmes.
First, get angry at Obama for doing what he long has told you he would do: Cut benefits to the middle and lower classes, and camouflage this with a puny tax rate increase on the wealthy (which they won’t even notice, scarcely will pay, and in any event, will do you no good whatsoever).
But after you’re finished blaming Obama, blame yourselves for believing the BIG LIE that makes these cuts possible — the BIG LIE that federal deficits must be reduced.
You didn’t even try to understand Monetary Sovereignty, a simple statement of the fact that the federal government never can run short of dollars.
You didn’t even try to understand why, far from being too high, federal deficits have been way too low. You didn’t even try to understand why federal finances are different from personal finances and local government finances. You didn’t even try to understand why taking money out of the economy, via tax increases or spending cuts, causes recessions — always, always, always.
You didn’t contact your Senator and Representatives, demanding that they tell the truth about federal finances, rather than lying about deficits and debt. You didn’t write a letter every day, to Obama, demanding that he too tell the truth. You didn’t contact all those media types who speak and write the BIG LIE.
In short, you didn’t even try to save yourself. Instead, you allowed yourself to be brainwashed. Instead, you chose to mock those who tried to help you understand.
Rather than learning, you smugly made ignorant comments about how we would become the Weimar Republic or Zimbabwe if deficits grew. You rejected all the facts, and calmly allowed the BIG LIE to penetrate your skull.
And now, your chickens, as they say, are coming home to roost. Your chickens, your children’s chickens. Your grandchildren’s chickens.
Your Medicare will be cut. Your Social Security will be cut. Aid to the poor will be cut. Medical research & development: Cut. Infrastructure maintenance. Cut. Food and drug oversight: Cut. Financial regulation: Cut.
Those thousands of federal services that not only benefit the lower 99% income group, but help reduce unemployment and grow the economy; Cut, because you fell for the nonsense about the government being “too big” and the deficit being “unsustainable” and how people should be “self-sufficient,” and deficits cause hyperinflation, and those who accept government help turn into “sloths.”
Facts? Who needs facts? Not you. You have your intuition, and that’s all you suckers need. That, and the debt-hawks whispering in your ears.
The only thing that won’t be cut: Your taxes. FICA, the worst tax in America, the tax directed at you middle-class salaried people — that will go up.
Austerity. Just like Greece. It’s happening to you now, suckers, right under your nose. The upper 1% once again has won. They are taking your money, taking away your life — with your approval. No, with your insistence.
When the reality of your unnecessarily declining world begins to sink in, and you find yourself whining about expensive health care, inadequate Social Security, unaffordable college, unemployment and ever more frequent and severe recessions, you can remember all your dumb-ass, smart-ass, sarcastic, debt-hawk comments.
Suckers.
Now if this gets you mad, good. Use that emotion to contact every politician and every newspaper, and tell them to learn the facts about Monetary Sovereignty. Tell them the deficit is too low, and FICA should be eliminated, and federal spending should be increased. Tell them if they vote for austerity, they’ll lose your vote.
Use your self-proclaimed self sufficiency to save yourself.
Or just lie back and let them screw you, again. Suckers.
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 
Gosh Rodger. Tell us how you really feel!
Incidently, Rand Paul said on Marketplace Morning Report today that he knows raising taxes would hurt the economy but that he didn’t understand how cutting federal spending could in any way hurt the economy. And therein is the crux of the problem.
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After 15 years of trying to explain the simple proposition of Monetary Sovereignty to people who intentionally act ignorant — not just ignorant, but smugly ignorant — writing that post felt so-o-o-o good.
Rand Paul knows taking money out of the economy via taxes hurts the economy, and doesn’t see how taking money out of the economy via spending cuts hurts the economy.
But he has an excuse for his “ignorance.”. He’s paid by the 1% to think that way.
What’s the excuse of the 99%?
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“You didn’t even try to understand…”
Indeed. I think the USA’s main problem is that the average level of selfishness among everyone (statistically speaking) is too high. Show me a person who complains about government spending, and I’ll show you a person who wants government spending to benefit him and his values alone.
Selfishness breeds stupidity. The average person wants the U.S. government’s budget deficit to be cut, but he doesn’t want his Medicare or Social Security cut. He wants the rich to pay more taxes, even if it means he too must pay more taxes.
Delusion is everywhere, even among MMT people. Some at the New Economic Perspectives blog defend Senator Bernie Sanders even though Sanders wants to increase the FICA tax. Other MMT people are racists who insist that Zimbabwe’s hyperinflation problems (most of which have been resolved) arose because the Zimbabwe government didn’t like whites. In reality the West deliberately engineered Zimbabwe’s currency problems, as I have explained in detail at the New Economic Perspectives blog. (But no one wants to hear that.)
Here at Rodger’s blog, as we see from (some) reader comments, when people reject the facts of Monetary Sovereignty, they do not actually read what they are rejecting. They don’t care. Instead, they have vague guesses about how money works, and they want others to confirm their guesses, so they can be “right.” They enjoy arguing about phantoms and gibberish. They imagine that Monetary Sovereignty is about how money and the government should work, when in fact it is about how money and the government already work on the real world.
Meanwhile the 1% and their puppet politicians are preparing to worsen the depression by imposing brutal austerity on the 99%. And as more and more people fall into ruin, they will have no idea why. They will only know they are “right.”
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Mark,
I’d be interested in seeing your Zimbabwe comments on NEP. What’s the specific address?
Rodger Malcolm Mitchell
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Rodger, the conversation about Zimbabwe started because I disagreed with Stephanie Kelton’s claim that, “Zimbabwe’s hyperinflation problems happened because Mugabe took away farm land from white farmers, and redistributed it to blacks who had no farming experience. Hence there was no capacity to produce. This caused shortages, which led to inflation.”
My response was, “No, Zimbabwe’s hyperinflation problems happened because of Western sanctions. This caused shortages, which led to inflation.”
I made my points about Zimbabwe over the course of several comments. The link is at bottom, but here is a summary. The upshot is that the Western banks and corporations do not like the anti-imperialist, pan-Africanist Robert Mugabe. Therefore, beginning in 2001, the West imposed brutal sanctions on Zimbabwe. The purpose is to remove Mugabe by destroying Zimbabwe’s economy via hyperinflation.
During the 1970s, Rhodesian blacks revolted against corrupt politicians, both black and white, and again foreign imperialist corporations. The blacks were unhappy that about working in mines for very low wages, and unhappy that rich white landowners would not let them have any land to live on, or grow food on.
Robert Mugabe fought in the ensuing civil war, which was not a race war so much as a class war.
When rich whites lost their control of Rhodesia in 1978, the blacks entered into agreements with whites to institute reforms that did not initially include land redistribution. Average white Rhodesians were not opposed to this. Average whites, like average blacks, had grievances against rich whites. Plus, everyone was tired of civil war.
In September 1979 the British government invited rebel leaders, including Mugabe, to Lancaster House in England for cease-fire talks. There the rebels agreed to a truce. They agreed on a new constitution for a new Republic of Zimbabwe, with elections to be held in February 1980. Mugabe agreed to reserve at least 20 seats for whites in the new 100-seat Parliament. Mugabe also agreed to a ten-year moratorium on constitutional amendments. He renounced the use of force for political ends. He made many concessions, some of which the British didn’t even ask for. In December 1979 he returned to Zimbabwe and was cheered by average whites and blacks alike. (Rich whites hated him, of course.)
In return for the peace deal, the U.S. and U.K. governments offered to buy land from willing white settlers who could not accept the new arrangement (the “Willing buyer, Willing seller” principle). A fund was established to handle this.
All went well at first. In 1981 the British assisted in setting up the Zimbabwe Conference On Reconstruction And Development, pledging (but not delivering) more than £630 million of aid. The first phase of land reform, partially funded by the U.K., successfully resettled around 70,000 poor landless people on more than 7,700 square miles of land.
Then things went awry. As part of the bargain, the U.S. and U.K. assumed that Mugabe would let foreign corporations continue to extract Zimbabwe’s natural resources (e.g. coffee, copper and cobalt) for next to nothing. However Mugabe was a quasi-socialist who felt that foreign corporations should pay more for the resources they extracted. At the minimum, they should improve wages and working conditions for workers, both black and white.
This enraged the foreign corporations, but Mugabe would not back down. The U.S. and U.K. governments claimed that Mugabe’s quasi-socialism constituted “unworkable economic policies.” Therefore the U.S. and U.K. reneged on their promises to fund land reform. Mugabe responded by nationalizing some industries and some farm land owned by foreign corporations, and by seeking support from Moamar Gaddafy.
In retaliation, the USA, EU, IMF, World Bank, and Australia ganged up to destroy Zimbabwe via hyperinflation.
U.S. sanctions began with the Zimbabwe Democracy and Economic Recovery Act of 2001, which totally eliminated Zimbabwe’s access to finance and credit facilities. This Congressional Act empowered the USA to use its voting rights and influence (as the main donor) in multilateral lending agencies (e.g. the IMF, World Bank, and the African Development Bank) to veto any applications by Zimbabwe for finance, credit facilities, loan rescheduling, and international debt cancellation. Meanwhile Western banks confiscated all Zimbabwe assets that had been deposited in them, while Western governments imposed travel bans on all Zimbabwe government ministers.
It’s the standard pattern.
Thus, to punish Mugabe, international bankers cut Zimbabwe’s 12.6 million people off from international credit markets, thereby eliminating Zimbabwe’s ability to reschedule its loan payments and to apply for debt cancellations in times of severe financial crisis.
Once the IMF and World Bank stopped doing business with Zimbabwe, the country’s credit and investment rating dropped to zero. This killed all foreign investment, and caused whites to move abroad.
Libya survived imperialist sanctions because Libya had oil, but Zimbabwe took to relying purely on barter, and on concessions from mining, agriculture, and exports-generated foreign currency. This, plus the Western sanctions, slowly strangled Zimbabwe’s economy. Shortages eventually led to the hyper-inflation of the Zimbabwe dollar. In 2009 Zimbabwe stopped using its own dollar, and switched to a mixture of currencies (the euro, U.S. dollar, British pound, South African Rand, and the Botswana Pula).
This too was part of the Western plan. When sanctions on a nation cause that nation’s currency to collapse, and multiple currencies take its place, the nation remains economically unstable. However, a handful of people in the target nation get rich through currency trading. They resist the re-adoption of a single national currency. Such is the case today in Zimbabwe.
The sanctions and blockades have been in place for 11 years, and will remain until Mugabe is gone, and foreign corporations can once more extract Zimbabwe’s resources for close to free.
Meanwhile the corporate media has indulged in a non-stop vilification of Mugabe, just as the media did with Idi Amin, Moamar Gaddafy, Thomas Sankara, Patrice Lumumba, and many other Africans who stood for freedom and national self-determination. (The West arranged for the assassination of every one of them except Amin, who escaped, and Mugabe who is still alive. Libya, of course, was destroyed along with Gaddafy.)
This negative imperialist propaganda is swallowed without question by average Westerners, including MMT people.
THEREFORE when people use Zimbabwe in an attempt to refute Monetary Sovereignty, you can tell them that Zimbabwe’s hyperinflation is irrelevant. It was deliberately orchestrated by the West, via sanctions.
My original comments, with a few extra details, were here…
http://neweconomicperspectives.org/2012/11/stephanie-keltons-appearance-on-sam-seders-show.html#comments
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Your knowledge of Zimbabwe history may be better than mine, but somehow I don’t associate Idi Amin, Moamar Gaddafy, Thomas Sankara and Patrice Lumumba with “freedom and national self-determination.” I had always thought they were brutal dictators, the antithesis of “freedom.”.
Perhaps I have been fooled by the media, just as the populace today is fooled about federal financing.
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Rodger, a “brutal dictator” is any national leader that questions the elitist-globalist order, and will not bow to Western bankers and corporations.
Likewise, an “enlightened leader” is any puppet dictator who does the bidding of bankers, Wall Street, and transnational corporations at the expense of his own people.
If bankers and corporations don’t like you, then you are a “cruel and brutal,” no matter how kind and generous you are.
If bankers and corporations get rich off you, then you are “kind and generous,” no matter how cruel and brutal you are.
Moreover, if you serve the international 1% at the expense of your people, then you rule for life. Yoweri Museveni (the U.S. puppet dictator of Uganda) has ruled with an iron fist for the last 26 years, keeping his people in extreme poverty while foreign corporations extract Uganda’s resources. And Museveni is only one of countless examples.
All empires condemn their victims as “terrorists,” while praising their thugs as “patriots.” This pattern is universal, and never changes.
Meanwhile the masses believe whatever the corporate media tell them. This too is universal, and never changes.
Example: Idi Amin wanted foreign corporations to give safe working conditions to their African employees. When the foreign corporations refused, Idi Amin nationalized them. The Western media retaliated by inventing wild fables about Idi Amin, claiming that he liked to personally massacre entire villages with his machete, chopping off the heads of the children, and putting them on the shelves of refrigerators so he could give them daily lectures on his greatness and their wretchedness. This fable was laughably absurd, yet the Western masses believed it! Time Magazine said it, so it had to be true. CNN claimed that Gaddafi handed out millions of viagra pills to his troops so they could rape every women they saw. And the masses believed it. The masses believe ANYTHING..
Indeed, the more lurid, absurd, unfounded, illogical, and self-contradictory the media lie, the more the masses believe the lie. You have seen this a million times with regard to U.S. government finances. (“We must cut the deficit, but not cut it. Therefore we must cut it while avoiding cuts so we can have a balanced budget with a sizeable deficit, which we must cut.”)
The media lie phenomenon is not limited to national finances. The phenomenon occurs with anything and everything that increases the gap between the 1% and the 99%.
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Re. “brutal dictators,” are there any in Africa?
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Rodger asks, “Re. ‘brutal dictators,’ are there any in Africa?”
Of course we must first agree on a definition of “brutal dictator.” My point is that Western bankers and corporations dictate the definition, and decide who their definition will be applied to.
If a national leader lets foreign corporations extract his nation’s resources, while he keeps his own people in grinding poverty, then the Western media calls him an “enlightened and benevolent leader.”
However, if a national leader opposes the Western 1%, and he uses quasi-socialist policies to lift his people out of poverty, then the Western media calls him a “brutal dictator” and a “sponsor of terrorism.”
Robert Mugabe will not submit to US, EU or IMF dictates. Therefore the Western media calls him a “brutal dictator” and a “terrorist.”
Yoweri Museveni of Uganda is a firm ally of Western bankers and corporations. Therefore the Western media calls him a “statesman,” even though he has kept his people in absolute poverty for 26 years, and he executes anyone who questions his authority. It was the same with Meles Zenawi Asres, who ruled Ethiopia with an iron first for 17 years until his death on 20 Aug 2012. Mobutu Sese Seko ruled Zaire for 32 years until his death. He had tens of thousands of his people executed, but he let Western corporations extract his nation’s resources while his people starved. Therefore the Western media adored him.
Generally speaking, the more a national leader opposes the Western 1%, the more the Western media calls him a “brutal dictator,” regardless of how benevolent and generous that leader is toward his own people.
And the masses believe whatever the corporate media tells them.
MMT people have some understanding about how money and national finances work, but outside that topic, MMT people defend the lies of the corporate media, just as opponents of MMT defend the lies about money and national finances.
NOTE: This phenomenon is not limited to the USA. Throughout history, aggressive empires have always referred to their enemies as “brutal dictators” (or some equivalent term), and their sycophants as “enlightened leaders.” They call their victims “terrorists,” or some equivalent term. Among all aggressive nations, this is a universal constant.
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Er, uh, excuse me Mr. President, but what “boost”? We’ve had the Bush-era tax cuts since, well . . . the Bush era.
What you want to do is increase taxes on the rich, which will have zero benefit for the middle class. In fact, by removing dollars from the economy, it will hurt the middle class.
And of course, your pen also is ready to sign legislation cutting Social Security, again hurting the middle class who voted for you.
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White House spokeswoman Amy Brundage says, “The only thing preventing us from reaching a deal that averts the fiscal cliff is the refusal of Congressional Republicans to ask the very wealthiest individuals to pay higher tax rates. The President has already signed into law over $1 trillion in spending cuts.”
Wow. That $1 trillion cut should give a boost to our depressed economy, aye? Next Obama will mandate lethal injection for the 99%.
And notice the language, Rodger. “Obama reiterated his desire for Congress to extend tax cuts on incomes under $250,000, while allowing the Bush-era tax cuts on incomes over $250,000 to expire.”
“Tax cuts.”
The correct terminology is not “tax cuts,” or a “tax holiday” in the case of the 2% reduction in FICA. The correct terminology is “slight reductions in the rate of theft by politicians.”
Another term that annoys me is loan “forgiveness.” Bankers create loans by marking up accounts, just like the government does, but bankers add interest charges. If bankers agree to lower some of the interest or principal, then the bankers claim to be “forgiving” the debtor, as though the bankers have moral superiority. It’s like a mafia extortionist telling his victims, “Since it’s Christmas, you don’t have to pay me protection money this week. I’ll forgive you this week.”
In our society, everything is upside down and backward. If you cannot repay an extortionist banker, or if you walk away from a house that has an underwater mortgage, then society calls you a “deadbeat.” Even a “thief.” If you receive food stamps, you are a “parasite.” However, if you receive billions in bailouts money, you are a “patriot.
If you “strategically default” on a corporate loan, you are a “captain of industry.”
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You heard the man!
Don’t let Mr. Mitchell be the only one to say “I told you so” when you wake up to find a squalid country stricken with balanced budgets!
You can’t have growth without debt, as this chart proves:
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I don’t understand that chart, Craig. It says that during WW II, over 100% of the US GDP consisted of federal debt held by the public. How it that logically possible? How can any factor or combination of factors equal more than 100% of the GDP?
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If one is a negative.
Anyway, Japan’s debt is more than 200% of GDP.
GDP is a one-year, spending measure. Debt is a many-year measure of investment in bonds. GDP/Debt is a meaningless measure, though commonly used.
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Thank you for that clarification Rodger.
Question: when we say that Japan’s debt is more than 200% of GDP, we mean that the total amount of money currently invested in Japanese bonds is twice the yearly GDP of Japan, yes?
You say these numbers are meaningless. I agree, and I think the debt-to-GDP ratio is perhaps the most meaningless of all the nonsense spouted by the media and mainstream economists. And because this ratio is the most meaningless, it is among the most often repeated.
You write, “GDP is a one-year, spending measure. Debt is a many-year measure of investment in bonds. GDP/Debt is a meaningless measure, though commonly used.”
Yes, for Monetarily Sovereign governments, GDP is a time-relevant measure, whereas the national debt as a time-irrelevant measure. Thus, GDP and the national debt cannot be compared. (This is not the case for governments that do not have Monetary Sovereignty.)
U.S. Treasury securities have maturities ranging from thirty days to thirty years. These are arbitrary time spans. They have no bearing on today’s economy. The debt is outside time. The GDP is not.
If we challenge a mainstream economist about this, he will respond with gibberish, or he will simply change the subject.
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Yes, Mark,
I’ve published several posts about GDP/Debt, one being: https://rodgermmitchell.wordpress.com/2009/11/08/federal-debtgdp-a-useless-ratio/
If ever you read or hear anyone talking about how high or low the GDP/Debt fraction happens to be, you can be sure they have no idea what they are saying.
It is 100% meaningless.
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The devil is in the details.
What do mean by “growth”.
If you say GDP growth, you are right. But i fail to understand how growing just the debt portion of the equation adds anything to the results. Every year it takes more and more debt to add to GDP, so the growth you refer to above is debt growth, not economic growth. The fact that it takes more and more every year should be smacking you in the face and telling you something is wrong.
This is simple math guys.
Did anyone on this board take algebra?
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What growth measure do you use?
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Roger,
Does it matter?
Is the most important measure you have how much debt is growing? Than why not tell your readers that you want debt to grow. Who cares if it makes people better off or not, lets grow deficits at 10 trillion this year and 20 the next.If deficits were beneficial, we would have never had a debt crisis, high unemployment, an economy NOT growing, 46 million in wellfair, millions in disability, etc, etc, etc…
Is that what we had in 1950? Of course not.
Yet unemployment was low, jobs were plenty, we owned homes, cars, fed the family, paid for healthcare, etc, etc, etc…
We were much much richer than today, period.
Lets stop kidding ourselves with the useless gdp measure and lets start telling people the truth. The people deserve the truth.
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No, it doesn’t matter to me that you pontificate about “growth” but have no measure of growth, so don’t know whether the economy is growing or shrinking.
And yes, I want federal deficits to grow, and don’t care one way or another about federal debt, since deficit growth leads to GDP growth, but debt growth is irrelevant.
And I’ll bet you can’t understand why.
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When we learn something new, we sometimes slip back into the old brainwashing. We must re-learn the new information. It takes time to clean all the useless garbage from our minds.
Newcomers to the truth about Monetary Sovereignty sometimes slip back into the old brainwashing. For example, they start talking about U.S. government debt as though it is something to worry about. They must re-learn what they have already learned, namely that the U.S. government finances are not like private household finances. Some people must re-learn this many times until they fully get it.
Monetary Sovereignty is mainly concerned with fiscal policy. The U.S. national debt is irrelevant to this concern. It is more appropriate to the Fed’s monetary policy, since the Open Market process (the selling of T-securities) is a means for the Fed to control inflation by controlling the demand for bank money.
Notice I said bank money. Most books and web sites say, “The Fed controls inflation by controlling the money supply.” That is incorrect. The Fed does not control the part of the money supply that comes from government spending. The Fed is only concerned with the money supply that comes from bank lending.
In my opinion, far too much of the money supply comes from bank lending, and far too little comes from government spending. That is why there is an aggregate student loan debt of over a trillion dollars. All education should be free to students, and paid for by government spending.
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What would Noam Chomsky say about all that?
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Poor souls actually believe this…
Our jackals will kick the can as long as they can Roger. Stop making excuses for when we hit the wall, that is what you are doing.
Do you think its easier to give things away or cut benefits from a political perspective? I think we all know the answer.
The deficit pushers and the fed/frl are to blame, and the 99% for believing in the free lunch theory. The politicians will again kick the can come december 31, so you all should be happy. But it does not end there, you will be witness as to why money printing is destructive. Just keep an eye on monetary soveteign japan.
You are going to face mathematics whether you like it or not.
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Vane:
” . . . rates will continue higher while the value of the yen collapses into oblivion.”
The Japanese yen is worth about 12 U.S. cents today. Ten years ago it was worth about 9 U.S. cents.
Good enough mathematics for you?
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