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.
==========================================================================================================================================
In the past day or two, I’ve been involved in a Facebook discussion about the federal deficit. The discussion began when Stephanie Kelton (Chair of the economics department at the University of Missouri, Kansas City) and I were talking about her frequent efforts to educate regarding MMT and Monetary Sovereignty.
I wrote to Stephanie,
Good work with your continuing efforts to educate the public. Unfortunately, we’re working against misinformation spread by upper .1%, which funds our political leaders, and wants the income gap to widen.
It is 100% impossible that the Obamas, Geithners and Bernankes of the world do not understand Monetary Sovereignty. They understand, but they are paid by the .1% to fool the public.
I mention this, because it should be an important part of our message to the public. People ask me, “Why do you know this and our leaders don’t.” The implication is that I must be wrong. My response: “They know it, but don’t want you to know it.”
The people need an enemy, and that enemy is the .1%. Without an enemy, you can talk yourself blue, and no one will listen. That’s why religion has a devil, and that’s why the preacher always talks about the devil.
My suggestion: Every time you talk about the economy, explain the motive for federal “misunderstanding.” The .1% want the income gap to widen. If we all would do that, we could change the world.
She responded:
Rodger, I am mostly in agreement. I often tell stories that show this to be the case (albeit not in every interview or presentation). The one I like best is the Clinton-Eisner story. Robert Eisner had been Clinton’s teacher. When C was in office, he invited E to the White House, where he asked E what he thought of his economic policies. E responded, “Not bad, but you’ve got to know you’re dead wrong on SocSec.” [C talked about using the surplus to shore up SocSec, etc. E had written quite a bit on SocSec — my personal favorite was called Save Social Security from its Saviors.”] C responded, “I know, Bob. But you’ve got to understand — this is politics.”
I tell similar stories about conversations with lawmakers, including one with the chairman of the congressional black caucus, who listened to Warren and I explain government finance for about an hour and then looked at us and said, “I can’t say that.” Not “I don’t agree with that” or “you are wrong,” but “I can’t say that.”
Still, I think there are people like Bernie Sanders who genuinely believe that the government has to get the money from “somewhere” and that it really is not all that different from a household (except, perhaps, that it can remain solvent longer than you or I).
Then I responded to her:
Understood. They really may believe they can’t say it, or they may say they believe they can’t say it.. But you can say it. I can say it. Warren and Randy can say it. We all can say it. And we should say it and keep saying it as a fundamental part of our explanations.
People are more apt to believe if they not only see the logic, but understand why they’ve been told lies and who has been telling those lies. What we’ve been doing so far, hasn’t made much of an impact on the public. The people need a devil. We have to give them a devil.Religion has devils to convince the populace. It’s the only way we’ll undo the brainwashing by the .1%.
At that point, someone else joined the conversation. He objected to sounding “conspiratorial and having little evidence to back it up,” and “would avoid motives.”
I replied:
So you believe that President Obama and all his educated advisers, and Secretary of the Treasury, Tim Geithner and all his educated advisers, and Fed Chairman Ben Bernanke and all his experienced bankers, and all 535 members of the U.S. Congress, really do not understand that the U.S. is not running out of money? None of them?
You believe that Bernanke, the inventor of the “fiscal cliff” slogan, and all of the above experts, really do not understand that deficit reduction hurts the economy?
And despite our many years of trying to point out ignorance — an effort which has resulted in the above experts still “not understanding” and the vast majority of Americans also not understanding — you feel that educational effort, which has failed miserably, should continue as before?
And you believe the fact that all of the above educated people, specialists in their field, somehow cannot seem to grasp a concept so simple as Monetary Sovereignty — you feel that does not constitute evidence?
And you believe that sounding conspiratorial is reason enough not to say it . . . because if we say it, we might not be believed . . . just as we have not been believed all these years? (Was it Einstein who said, “Madness is doing the same thing over and over again, and expecting different results”?)
The question is: Why do they pretend not to understand? The answer: They are paid not to understand.
Who is paying them? The upper .1% income group.
How are they paid? Via political contributions.
Why are they paid? To increase the gap between the rich and the rest. Cutting the deficit increases the gap, because most federal spending benefits the lower income groups.
Why do the rich want the gap increased? The rich don’t care about absolute dollars. They care about comparative dollars. If everyone had a million dollars, no one would be considered rich. But if one person has a million, and everyone else has a quarter million, one person is rich. And if everyone else has a thousand dollars, that one person is very rich.
The more the .1% can press down the lower classes, the “richer” they will feel. So they spread the myth that deficits are too high.
For people to change beliefs, they need to understand the motive for the lie.
There is a conspiracy, and when that story is told, the public finally will accept that they have been brainwashed, why and by whom, and then — only then — will they be ready to accept Monetary Sovereignty.
We must do more than educate. We must tell people why they should be angry. We must tell them why they should be afraid. That is the only way they will be ready to accept a new idea.
Anger and fear are our strongest emotions. To effect changes in the brainwashed, we need to use those strongest emotions. Religion uses devils, anger and fear.
Or we can just keep doing what we have been doing, failing as we have been failing, and attributing it to ignorance. And we will be right. Our ignorance.
Shortly afterward, I followed up with:
there is one additional reason why the leaders lie to us, and it too has nothing to do with education, and will not be cured by education: They don’t trust us to use the information, properly.
They think, if the populace understood Monetary Sovereignty, the people would demand all sorts of free things, and this not only would close the gap (horrors!), but also could cause inflation. They think Congress would not be able to resist the calls for help, and so would spend uncontrollably.
The fault with that sort of thinking is that Congress always has the perfect bogeyman: Inflation. All Congress needs to say is, “We are in an inflation we can’t control by other means, so we have to level off our spending.” Done. Bernanke could name it the “Inflation cliff.”
Of course, that would happen many years down the line, after we have free Medicare for all, free schooling for all and a Social Security that pays an living benefit.
But the rich would hate it. How would they prove they are rich?
So that is how the rich are screwing you — by bribing and threatening our leaders with political support or non-support. How can you fight back?
Short of picking up pitchforks and torches, you can pick up paper and typewriter. You can contact your local newspaper and your national politician. You can tell them you know that the government cannot run short of dollars, and that it could provide free Medicare for everyone, and a living Social Security benefit, and eliminate FICA — all while cutting taxes.
You can tell the politicians, if they vote for these things, you’ll vote to keep them in office, but otherwise you’ll vote against them. And tell your newspaper you know about Monetary Sovereignty, and what they are publishing is bullsh*t, and you’ll keep writing until they come clean. Teach them anger and fear.
You can start or join a group that protests against austerity, i.e. cuts in social spending, cuts to the deficit and any tax increases. March in the streets. Tell one coherent story. “NO TO AUSTERITY. NO TO BUDGET CUTS. NO TO TAX INCREASES. NO TO LIES.”
Get angry. Cause fear among the politicians.
The rich are doing it to you. They rely on your lethargy and passivity. They depend on your being sheep. So far, they have been right.
Extreme right.
Rodger Malcolm Mitchell
Monetary Sovereignty
====================================================================================================================================================
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 
Really 🙂
So than the government has been working for the little guy all this time. Man was I living under a rock.
When Bush Jr won the debt was under 7 trillion, this year 16 trillion. Wow, i would have thought the income gap would have seriously closed in those years, but it sure seems the opposite happened. Not sure what politics clinton, a democrat, was playing, but Bush, a right wing republican, sure helped the little guy if deficits were good. And Obama, he seriously cranked up spending. So much, i hear computers are running out of digits.
I wonder if the conspiracy is to con is not to have people believe balance budgets are good, but that increased deficits are. Judging on the last elections, it sure seems like the latter. I’m waiting to see the economy kick into high gear with all these manipulations and feeling of compasion from our politicians. God save us.
LikeLike
Apparently you believe that increased taxes and/or reduced federal spending (aka “austerity”) have been proven to stimulate economic growth. If so, you have no fear of Bernanke’s “fiscal cliff.”
When you are required to wait until you’re 75 to receive Social Security benefits, you can’t afford health insurance, your unemployment compensation runs out, your highways are falling apart, your air and water are more polluted, your food and drugs are not being inspected, your bank account isn’t protected by federal insurance, our military grows weaker and America is falling behind in research and development, please don’t whine too loudly.
After all, you asked for it.
LikeLike
Honestly, no…
My fear is not the cliff, it’s the lack of leadership we have in Washington. I actually see the opposite of what you see happening.
Politicians apeacing interest groups like the military complex, unions, healthcare, etc, etc… There is never a moment to stop and think what is good for the country. The spending and growth in spending have been there.
Highways and drug inspection are the wrong places to look. No brilliant mind is needed to know that this is a dog chasing iy’s tail. The more you apeace these groups, the faster you spin.
Not that i expect roses a day after we get our house in order, but where are roses today? 2 choices, live like the dog chasing it’s tail with deteriorating funfamentals, or stop and face the music.
I’m sure they will make you happy and kick the can once again mr mitchell. God save us..
🙂
LikeLike
So, your recommendation is . . . what? Increase taxes? Reduce taxes? Increase spending? Reduce spending?
LikeLike
Balance the budget tomorrow. The services you speak of will be there, just not as many tokens chasing them.
The economy has little to do with growth in tokens.
LikeLike
Balance by slashing spending to match tax revenues.
LikeLike
Flash, specifically which spending would you cut?
LikeLike
Monopoly subsidies to medical industry as well as military.
That will likely get you close. We have a choice now, if we keep playing games rates will rise and the game will be over in a much more catastrophic way.
🙂
LikeLike
Cut Medicare?
LikeLike
Actually no.
Improve competition in the medical industry, remove con laws, allow import of drugs, repeal emtala, and enforce/fine violators. This should make a dent in medical subsidies and prices.
LikeLike
The deficit is $1.1 trillion. How big a “dent” would your proposed savings make? And getting rid of regulations? Really? Lots of foggy thinking going on, here.
LikeLike
There is no foggy thinking. We keep whining about costs yet put up with special monopolistic treatment of the medical industry.
I dont need medicare, but those who better start asking for this monopoly to end for their own good.
I gave you the yist of what needs to be fix in the medical system to allow for cheaper prices for those on medicare. The other choice is to allow this to continue and price out the same people you want to help.
LikeLike
The irony is, people still wouldn’t know any better if there was enough unencumbered spending to keep us fully employed and happy.
LikeLike
You think there would be full employment if deficit was, say 10 trillion?
No, unemployment would be much higher. Government hadouts promote unemployment, not the opposite. It’s like trying to lose weight eating twinkies.
LikeLike
How do you know this? What is your data?
LikeLike
Flash, I think your twinkies analogy is misplaced if not totally unfounded. But there is always cause for concern about vacuum. If a monetarily sovereign government with unlimited ability to create money takes upon itself to relieve people from some want, it’ll be hard pressed to contain costs. So let’s deny such sovereignty.
LikeLike
Flash writes, “If you simply grow deficits, eventually everyone will be dependent on those deficits.”
>>>And if you simply shrink deficits, everyone will be dependent on bank loans, which impose a killer debt. And if the banks won’t issue loans, we will have a depressed economy. If deficits are then shrunk further, to zero, we will have NO economy. Game over. That’s what Flash wants.
Flash writes, “Government handouts promote unemployment, not the opposite. It’s like trying to lose weight eating twinkies.”
>>> Great, so let’s end Medicare and Social Security. In fact, let’s end the federal government, thereby ending the USA, since all federal spending consists of “handouts.”
What America needs is a DRAMATIC increase in deficit spending. An increase so HUGE, so WHOPPING that it gets us out of the current depression.
Would this be inflationary? NO!!! (I won’t explain why, unless someone challenges me.)
Would this encourage sloth? No!!! It would encourage activity. People want JOBS, but there are no jobs, since there is not enough money changing hands. Not enough sales and purchases.
What angers Flash is that government spending helps not only Flash, but other people in addition to Flash.
LikeLike
Back when I was happily ignorant about the economy, I had this fleeting sense that it was somehow a zero-sum game. And when I expressed this sensation to others in casual conversation, I’d hear lectures about how the pie grew, and with it, how everyone’s share grew, too. Now, it is clear to me that, without government deficits, it is worse than a zero-sum game because the playing field is not level, and the domestic private (non-finance) sector is doomed to lose. Not unlike the hunger games, perhaps.
LikeLike
I suppose you might have no idea on my question, here it is:
Do you have any reason to think there’s actual discussion about this, like “Listen, we will only support you if you keep this myth alive…” Or do you think it’s more subtle and institutional: i.e. the .1% just don’t throw money at anyone that ever speaks of such a thing?
The latter perspective reminds me of an ol Noam Chomsky speech What Makes Mainstream Media Mainstream? (http://www.chomsky.info/articles/199710–.htm) where he talks about how the filters are institutionalized, i.e. you just don’t make it into positions of power and influence if you say the wrong thing. And that this “filtering process” occurs in grade school, through high school, and into the professional world: the people that don’t conform, get shut out of the system.
What do you think?
LikeLike
I suspect both scenarios have happened, though more of the later than the former. Most wealthy people intuitively know it is important to keep the riff-raff in their place. They don’t feel comfortable with the waiter who has just won the Lotto.
LikeLike
True! Those who get shut out of the system become the Henry Fords, Jobs, Gates. Those who conform go into politics, are led by the nose, and do nothing but stick their foot in their mouth.
LikeLike
I cannot say for sure this is what will happen, but it seems we’ll get some help in educating the general populace in the form of recurring problems. How many times will the USA continue to be faced with ‘ceilings and cliffs’? We either fatally cut our budget (and our throat)– or we let the sovereign cat out of the bag and finally admit, as Alan Greenspan already stated on Meet The Press over a year ago, that we cannot run out of money?
Sooner or later the truth has to force its way into the general consciousness by repeated emergency if not by our efforts at internet education and book publishing. Ironically, by denying and suppressing the Truth, the power structure only magnifies it.
Eventually, it will become chic to ‘Greenspan’ the system.
Then we can all get on with our lives in a more normal fashion.
LikeLike
Judging from the majority (75-80%?) of feedback I receive with my MS/Federal “Debt” comments on various blog ,news or business sites, it appears MS/deficit spending is some sort of “liberal, left-wing,wealth redistribution conspiracy,” Very odd and ironic considering Conservative god Reagan nearly tripled the debt and Bush increased it by nearly 50%, both via deficit spending. I guess Big Bad Obama “adding” $4-5 trillion (25% increase !) must have caused these people’s memories to severely lapse. Reply after reply describe the virtues of austerity and a nearly overt desire for the federal govt to go broke. Moron after moron, on site after site actually believe we are broke, that I am full of sh*t, yet they of course can NEVER provide facts or data to substantiate their weak, opinionated claims. Yes, the media is doing their job! No politician I have written has gotten back to me, other than in the case of my local US Rep, who simply wanted a campaign DONATION.
LikeLike
You may be missing a point.
If you simply grow deficits, eventually everyone will be dependent on those deficits. If you still dont see the issue, there is no hope.
We are not broke in terms of fiat currency, we are broke in terms of capital.
LikeLike
O.K., we now have moved from the Weimar Republic/Zimbabwe, hyperinflation myth to the “everyone will be a sloth” myth. And as always with debt-hawks, punctuated by the “eventually” myth (as in, “eventually” the universe will collapse and the sun will explode).
Exactly how much would we have to grow deficits until everyone (including you, I presume) “is dependent on those deficits”? (Since we all are dependent on federal deficits, I also presume you mean no one will work.)
I know I’ve asked this before, and I really don’t expect a response, but do you have any data to substantiate your claims? No, of course not. Just a bunch of blah, blah, blah.
LikeLike
Steve writes, “Judging from the majority of feedback I receive, it appears MS/deficit spending is some sort of ‘liberal, left-wing, wealth redistribution conspiracy’.”
>>>Yes, I get the same thing, despite me saying I oppose federal taxes on anyone, rich or poor, corporations or individuals. Some people call me an idiot because they think every dollar in the system is borrowed from bankers. Try changing their mind on that one. Then there are the MMT people who mindlessly insist that the 1% and their puppet politicians are simply “misinformed.” On all sides we find smug stupidity.
Steve writes, “This is very odd and ironic considering conservative god Reagan nearly tripled the debt and Bush increased it by nearly 50%, both via deficit spending.”
>>>Yes, if the US President is white male who constantly whines that government spending must be reduced, then he will not only get away with increasing government spending; he will be loved for it. However, if a President is black, then no matter how much he slashes the deficit, he will be called a “big spender.” No matter how much he slashes the social safety net, as he serves the Wall Street uber-capitalists, the public will call him a “socialist” or a “communist.” For the public, whether deficits good or bad depends on the race of the president.
Steve writes, “Reply after reply describe the virtues of austerity and a nearly overt desire for the federal govt to go broke. Moron after moron, on site after site actually believe we are broke, that I am full of sh*t, yet they of course can NEVER provide facts or data to substantiate their weak, opinionated claims.”
>>> When they are laid off and homeless (Citicorp will fire 11,000 and close 84 branches); when they are reduced to living in refrigerator boxes; when they have no medical care and no food, don’t feel bad for them. They deserve it. They defend it. They insist on it.
LikeLike
Oops! I forgot to add one thing, so here goes-“liberal, left-wing, union!, wealth redistribution conspiracy.” Actually when I think about this, it’s actually TRUE-at least the wealth redistribution part. The majority of this spending goes to benefit the 1% -wealth redistribution UP and not down!
LikeLike
I’m surprised that Stephanie Kelton responded to you, Rodger. Most UMKC people and their acolytes live in a bubble. They tend to ignore issues of motives and socioeconomic classes. That’s one reason why the world rejects MMT.
(I refer to “most” UMKC people. Michael Hudson is an exception.)
When a prosecutor wants to prove that a defendant committed a crime, the prosecutor describes the means, motive, and opportunity. If the prosecutor cannot establish a motive, then he finds it difficult to convince a jury. Most of the UMKC people fail to grasp this simple principle when they try to persuade outsiders. Hence they ignore the most important factor of all: motive. You can try explaining this to them, but they will not listen.
For example, despite what Ms. Kelton mentions about politics, and despite her saying she “mostly agrees with you,” she continues telling her audiences that politicians simply “misunderstand” national finances. (You can see this in numerous videos of Ms. Kelton’s lectures available online.) And if politicians simply “misunderstand,” then they have no motive to lie. This view is absurd and counter-productive.
Another reason why the UMKC crowd is rejected is that their writing is atrocious. Few write plainly and succinctly (like you do). They never say in five words what they can say in fifteen, or even fifty. As individuals, each seems to fear that others in the crowd will ignore them if they don’t put each other to sleep.
Furthermore, they usually spend time talking about the history of money, which the public doesn’t care about. The public only wants to know, “What’s in it for me?”
Most of the UMKC crowd loves federal taxes. (“Taxes drive money.”) They also love Bernie Sanders, who wants to raise the FICA tax. They cling to religious-style dogma, such as their “jobs guarantee,” which is impractical and unnecessary.
Meanwhile, Monetary Sovereignty addresses the fate of our nation and its people. As such, I feel it is too important to be entrusted to academicians. Our most receptive audience is the young and the uneducated — those whose heads have not yet been filled with lies, and who plainly see that the emperor has no clothes.
For example, Mexicans are open to MS, especially Mexicans who have not spent much time in the USA, and cannot speak English. Give me a fifteen year old child who knows absolutely nothing about money or finances. I’ll have him fully up to speed in five minutes, with knowledge of the Truth.
The bottom line is that in many ways, the UMKC crowd (most of them) are as cement-headed as the gold bugs and as people who reject MMT and MS altogether. They are stubbornly blind.
+++++++++++++++++++++++++++++++++++++
JK writes, “Do you have any reason to think there’s actual discussion about this, like ‘Listen, we will only support you if you keep this myth alive…’ Or do you think it’s more subtle and institutional: i.e. the .1% just don’t throw money at anyone that ever speaks of such a thing?”
Rodger says it’s both, and I agree.
In the world of politicians, lies are never open, even behind closed doors. Taboos are unwritten and unspoken, yet clearly understood by all. You never discuss the truth about 9-11, or the “war on terror,” or Monetary Sovereignty. If you speak the truth, even behind closed doors, you threaten the entire game. You show that you cannot be trusted in public.
So, even among politicians who happen to be fishing together on a remote lake, blatant honesty is a very serious faux pas. Instead, politicians speak in code words and euphemisms.
To see how this works, listen to people who hate Obama. Some call him a “Muslim.” Some call him a “communist.” These are code words for “We hate him because he’s black.” Everyone knows this, but no one says it. It’s a taboo.
So it is with Monetary Sovereignty. Most or all politicians know the truth, but none dare say it openly, even behind closed doors. It’s an unwritten, unspoken, absolute taboo.
Our only hope is to educate the public so that they vote against a given politician so overwhelmingly that even electronic voting machines can no longer steal elections, as the machines do now.
+++++++++++++++++++++++++++++++++++++
Tetrahedron writes, “It seems we’ll get some help in educating the general populace in the form of recurring problems. How many times will the USA continue to be faced with ‘ceilings and cliffs’?”
My answer is, “probably an infinite amount of times.”
For instance, except for the period 1979-1995, the U.S. Congress has gone through the “debt ceiling” charade every fiscal year since 1939. That’s seventy-three years, and still the public believes the drama every time.
During the 1930s depression, the banks stopped lending, and started foreclosing. The government could have eased the depression, but opted for austerity. Now, here we are again. The only thing that will save us is another world war. Same pattern, over and over, perhaps forever.
And then we have the public. Most Social Security recipients get their money via direct deposit into their bank accounts, or onto a Direct Express Debit MasterCard. Beginning 1 March 2013, there will be no SS checks at all. It will be electronic only. More than ever, it is obvious that the federal government creates money by simply marking up accounts. And yet the public continues to reject the facts of Monetary Sovereignty.
Mankind never learns. Societies repeat the same patterns over and over. Technology advances, but politics and human selfishness remain. (I’m speaking in general, as a whole.)
So why do we keep trying to tell people about Monetary Sovereignty?
Answer: Compassion. The yearning to free people of needless suffering. A foolish mission? Perhaps. But compassion always has a foolish element. Compassion, including its foolishness, is what gives us the wisdom of the gods.
LikeLike
It amases me how we go from a society that helps people in need to a society enslaved by those people in need.
The rich have always been thieves for the most part. But when the people receiving government handouts dictate how we should spend, we cant be too far off from catastrophy.
And the middle class is either too busy busting their buts to support the rich and free loaders they dont have time to figure it out, or are too stupid to figure out they are being conned.
LikeLike
I’ve heard the same old comments you make over and over. It’s those lazy people, who don’t want to work and only want a free lunch that are the problem. What you say is tired and has been debunked so many times it really should just be ignored. It’s the rich, it’s the poor, no sir it’s those like you who do the most to impede change. You do so by failing to realize we are all in this together. The same as the 1% who are slowly killing the 99% to their own detriment. Realize, it’s not the money or its amount, it’s what is done with it that ultimately matters. Finally, are you some sort of masochist? How many times will you be made the fool by RMM before you throw in the towel or get out of the ring?
LikeLike
Yeah, like the too big to fail banks, big oil and big agriculture and corporations that off-shore production and I could go on and on, moron, those welfare queens, do you include them, dweeb?
LikeLike