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.
●Everything in economics devolves to motive.
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Katrina vanden Heuvel is the current editor and publisher of The Nation, a magazine founded in 1865. It’s founding prospectus reads::
“The Nation will not be the organ of any party, sect, or body. It will, on the contrary, make an earnest effort to bring to the discussion of political and social questions a really critical spirit, and to wage war upon the vices of violence, exaggeration, and misrepresentation by which so much of the political writing of the day is marred.”
Here are excerpts from Ms. VandenHeuvel’s article demonstrating her “war upon . . . misrepresentation.”
It’s time to tax financial transactions
By Katrina vanden Heuvel, Published: March 5On Friday at midnight, the sequester kicked in, triggering $85 billion in deep, dumb budget cuts that sent “nonessential personnel”— such as air traffic controllers — packing.
Not to worry, though: Wall Street’s day was pretty much like any other. Billions of dollars in profits were made off of trillions of dollars in financial transactions. And the vast majority of those transactions were conducted tax-free.
We don’t need a team of policymakers to tell us this isn’t good policy, or that it needs changing.
Comment: The budget cuts were “dumb” if you care about America, but they were smart if you want to widen the gap between the wealthiest .1% and the rest of us – which is what Congress has been bribed to want. (The bribing consists of massive political contributions, courtesy of the Supreme Court, plus promises of lucrative employment, later.)
Those budget cuts directly impacted the 99.9% while leaving the .1% relatively unscathed, thus accomplishing the gap-widening that is the real goal of the .1%.
Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions — three pennies on every $100 traded.
Translation: The cure for “dumb” budget cuts, which suck dollars from the economy is taxes, which suck dollars from the economy.
The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it.
But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.
And here is where the economic ignorance kicked in. Ms. vanden Heuvel, the editor and publisher of The Nation, actually believes federal taxes pay for federal spending.
She is clueless about the difference between a Monetarily Sovereign government (which neither needs nor uses tax revenue), and a monetarily non-sovereign government (which does need, and does use, tax revenue).
Apparently, she believes monetarily non-sovereign Illinois, Chicago, Greece, you and I are financially identical to the Monetarily Sovereign U.S. government, which has the unlimited ability to pay its bills, and never needs to ask anyone for dollars.
And this is a woman who writes an economics column!! Is it any wonder the public is confused?
And after years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax .
When it comes to cutting the deficit, 6 in 10 Americans prefer taxing the financial industry to cutting social spending.
Imagine that! Most — 6 in 10 — Americans would rather tax Wall Street than see their Social Security benefits cut? (But who the heck are those other four Americans??)
Note there is no discussion about whether the deficit should be cut – no discussion about whether to bleed the anemic patient. That merely is assumed. The only discussion is how best to bleed the anemic patient.
After all, the tax isn’t just a good revenue raiser. It’s smart regulatory reform.
The high-frequency traders that now dominate our markets would be hardest-hit by the tax. A top economist recently concluded that their lightning speed, algorithm-driven trading drains profits from traditional investors. And analysts fear that such mass trading strategies could lead to disaster if markets behave unexpectedly.
Translation: One unnamed “top economist” concluded, without proof, that high frequency trading drains profits by . . . well, we don’t know how, so we simply will accept the word of this unnamed “top economist.”
Also, since this tax would be “insignificant” (her description), it wouldn’t eliminate high-speed trading, so what is she trying to say?
Europe, at least, seems to agree. Eleven nations, led by the conservative German government, are on track to start collecting the tax by January 2014. Expected revenues: $50 billion per year.
Er, ah, Ms. Katrina Vanden Heuvel, are you talking about monetarily non-sovereign Europe, which not only does need and use tax dollars, but which has the worlds worst record with regard to economics, and is suffering for it? Is that the Europe you’re referencing for economic wisdom?
Sequestration is a septic wound, self-inflicted by lawmakers who can’t agree on anything. Here, at last, we have a smart idea with widespread support — Americans and Europeans, populists and economists, progressives and conservatives.
After Friday’s dumb budget cuts, a little smart policymaking would be nice for a change.
Yes, sequestration is a bad idea (though not a “dumb” one, when the real motive is to widen the income gap.) It’s a bad idea because it sucks dollars from the economy, just as taxes do.
Even the editor and publisher of The Nation magazine is clueless about economics. It’s discouraging that she doesn’t understand the difference between Monetary Sovereignty and monetary non-sovereignty – a difference that provides the basis for all modern economics.
It’s even more discouraging that apparently she never has tried to learn.
And most discouraging is that she indoctrinates the American public with her ignorance.
That is how The Nation aids the .1%’s effort to enslave the nation.
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 
I don’t think Katrina ever represented herself as an economist, or meant that this column should be considered an economic argument. She’s the most Progressive of all Progressives, IMO based on seeing her on TV appearances. The point is to take money from the high frequency traders, who are able to profit by having and acting on market information before other market participants, and use it to fund the Progressive agenda. Even if she understood MS, she would still want to tax them, in the name of equality. It’s not possible to raise everyone to their level, so they must also be brought down. She’s your ally in attempting to close the gap.
BTW, the profits made by the high frequency traders are razor-thin, far less than 3 cents per $100. Such a tax would shut them down completely, because it’s a high overhead operation that requires lots of volume in order to break even. I’ve seen estimates that they account for 70% or more of market activity.
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“Katrina vanden Heuvel is the most Progressive of all Progressives…Even if she understood MS, she would still want to tax them, in the name of equality.”
I respectfully disagree.
Unless you openly admit the facts of Monetary Sovereignty, you serve the rich at the expense of the poor. For example, when Katrina vanden Heuvel calls for taxing the rich, or taxing financial transactions, she calls for austerity, which always serves the rich at the expense of the poor.
She does this intentionally, since she openly aligns with Democrats. Both Republicans and Democrats want austerity. Republicans want austerity via cuts in social programs (plus higher taxes on the middle and lower classes). Democrats want austerity via higher taxes (again on the middle and lower classes, since Democrats know that the rich never pay taxes). As a Democrat, Katrina vanden Heuvel loves federal taxes. She said on ABC TV, “A tax cut has never built a bridge, or helped with a deteriorating infrastructure of this country.”
For every dollar in symbolic non-taxes that we PRETEND to impose on the rich (or we PRETEND to impose on financial transactions) we ACTUALLY cut three dollars in social spending. Katrina vanden Heuvel knows this. She keeps her job by banging the “tax the rich” drum, in order to maintain the delusion that tax revenue pays for the federal government, and that taxing the rich will somehow help the poor. When she calls for taxing the rich, she means, “We must cut social programs for the middle and lower classes.”
This is how the game is played. It’s what Democrats do.
True, she says that right now we should focus more on creating jobs than reducing the deficit, but she also claims that the U.S. government has a “debt and deficit crisis.” She says that more jobs would produce the tax revenue that the U.S. government “needs.”
Therefore, no matter what she claims, she upholds the lies that support austerity and kill jobs. She is a Democrat.
REPUBLICAN: To cure anemia, we must apply more leeches today.
DEMOCRAT: To cure anemia, we must apply more leeches tomorrow (except for the FICA tax leech, which we must apply today).
Below, Rodger says, “The idea is not to bring down the rich, but to bring up everyone else.” Agreed. The rich pay no taxes anyway – and even if they did, it would remove dollars from the economy. Better to focus on strengthening the middle and lower classes via REDUCED FEDERAL TAXES AND INCREASED FEDERAL SPENDING.
Would you like to have a decent job with decent pay, or would you prefer to see the rich being taxed, while unemployment continues to explode? You cannot have both under austerity. Most people want the latter (including Katrina vanden Heuvel). I want the former.
I’m sick of pseudo “progressives” who knowingly serve the rich, and get praises for their acting. (“She cares.”)
Higher taxes and lower spending both equal austerity – i.e. genocide.
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Rodger,
Your post about reducing the gap was good, but how can it be done? Either we prevent the top 1% from getting money, or we take it from them after they feet it and redistribute it in the economy. The transactions tax is a way to do that. I would make it 1% rather than 0.03%, not to raise money for the government, but to reduce the profitability of using money just to make more money through parasitic trading rather than productive investing. Just as I can’t see how MMT can do much about the gap, I don’t see how it can be reduced without imposing taxes on those things that favor the top 1%.
What am I missing?
Tip
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See: “Nine Steps to Prosperity” at the bottom of the post. The idea is not to bring down the rich, but to bring up everyone else.
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Sounds good (“bring everyone else up”) but isn’t that akin to Reagan et al defending trickle down economics with “a rising tide lifts all boats”? The question is, how is it possible to bring everyone else up when the rich have cornered (and are hoarding so) so much of the nation’s wealth and resources? What’s left over for the rest of society is but a turnip, and as the old saying goes ‘you can’t squeeze blood from a turnip’ (although apparently that is not stopping the .1% from trying!).
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Read “Nine Steps to Prosperity” at the end of the above post.
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Here are some Americans, real human beings, who would lose their jobs or have their pay cut because of the sequester. Guess which of them is among the upper .1% income group: http://www.washingtonpost.com/wp-srv/special/politics/sequestration-federal-agency-impact/?wpisrc=nl_fedinsider
Then guess which politicians want to cut the federal deficit.
Then guess why they want to cut the deficit.
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Every day i read your comments, after digesting more examples of insane government policies or political agendas with pundits responses, depression overwhelms me. Communicating with people about economics or politics becomes laborious.
The idea of monetary sovereignty is so simple to grasp yet so hard to project to the masses who have become so lethargic in their use of critical thought Maybe the media has done too great a job at brainwashing, for a people so proud of freedom we seem locked in a mental box accepting authorities depiction of reality without question.
Tautology might be to blame. Sometimes language fails when the meanings of words we associate as good or bad are than used in operational descriptions of very arcane,, and unfortunately, boring bureaucratic complex ed systems.
Obviously these things are purposely woven in this way, easier for those in power to be obsequious and manipulative. Debt, in our society is perceived as bad or immoral, so by using that word to describe what in reality is governmental accounting measures, the masses are already predisposed to judge it harshly.
Since our monetary system is a work in progress, not a commandment from an Omnipotent entity, maybe questioning the entire system would be enlightening. You make a great point, the rich are hijacking the rest of our prosperity and using the inevitability of debt as shackles.
The disparity creates the position, for a few to be extraordinarily wealthy, there must be a gap large enough to insure it, inevitably coercing poverty on most. So sad, class war fare never ends, only the definitions change. A rising tide isnt in the interest of the top, but a tidal wave followed by rip tides to insure few catch up.
If reality wasnt so obscene it might really be comical. Just to touch on a few examples: our entire monetary system, or the creation of currency be it digital or hard, is based on debt. If we dont borrow from banks the money supply we all use as a medium of exchange for goods and services will eventually spread too thin. After the booms bust, people who borrowed and failed are ridiculed and punished for doing the very thing needed by everybody else to insure a healthy economy in a debt driven system.
The economy needs debt to expand, or new loans to be generated to expand the money base in order to increase revenue or sales for enterprises to profit and encourage job creation, with increased wages to attract the best talent offering upward mobility for all those inclined to work hard and succeed , so hopefully enough disposable income is generated to provide adequate consumerism thus offering prosperity for all and the increased standard of living capitalism promises.
The interest associated with those loans however is never created, but based on the expected flow of payments, some mathematical wizards calculate the impossibility of squeezes on currency supplies because new loans are constantly being generated, and the likelihood of all outstanding debt being called in simultaneously is zero. Plus government creates money with expenditures, oh!, but in our current insane system that too must be borrowed,but from whom ?, themselves of course, though for some strange reason they enjoy declaring how insolvent they are becoming from all that borrowing from themselves, than conjure the clever spin about future generations being committed to pay the debt back via tax revenue.
The popular myth about selling out our children is constantly piped in. Must not allow that tragedy, we all identify with the burden of excessive debt, so this becomes an easy horror story to create, no need to be factual since the fantasy is so horrific.
Plus, since this monetary system is a work in progress with no clear beginning, cultural proclivities seem able to be passed on easy enough through successive generations, repeating both healthy traditions and damaging incongruous falsities,as religious propensities eloquently exemplify. When economic textbooks were written the world used an exchangeable commodity currency ,now all countries but three use fiat currency controlled by colluding central banks.
Unfortunately politicians are advised by economists still reading macroeconomic textbbooks written years ago. While the deficit hawks pander to the uninformed people, likening government today with household and small business budget constraints, the broken down indebted and many times jobless people are angered that their government can borrow endlessly and they cant.
They see what happened to themselves or relatives that borrowed more than they could reasonably pay back, and now are impoverished and unable to access credit . The obvious analogy to their government is easy to make without any macroeconomic background. Heck even the experts make the comparison.The big question is why? Adding even more pressure on the wealth gap is the fact we are now an importing country with our currency hemorrhaging internationally, which like a drain allows for escapement, in our case currency.
Increased pressure on economic constraints related to the scarcity of dollars at the bottom. The foreign central banks siphon the dollars out of their domestic economies replacing them with their own sovereign currency , subsequently parking the exchanged dollars at the fed where they figure some interest will be accrued.
Truth is they dont really need those dollars, for all intents they could erase those U.S digital zeroes and replace them with their own brand. But the world still favors US dollars when trading in commodities so an acccount at the fed might serve them better for the time being. This exodus and resulting hoarding , does reduce the domestic supply of available dollars when we have a trade deficit in real things.
This should reduce the deficit hawks tone, since without government stimulus to replace some of the dollars exported, as well as decreased lending standards to encourage more borrowing to expand the money supply, the questions remains as to what the hell is going to spark our artificial and heavily manipulated economy onward.
The republicans tout stability and confidence that government will not interfere in markets, or borrow more money from themselves than the sum of tax revenue they collect, or a possible better phrase like vacuum out of the system , will cajole the private sector to invest more , in turn stimulating the business cycle to either borrow more , hire more , pay more, sell more , buy more, and all the other mores that are needed in order to have more of an economy so people can be some what more “productive” . All the while of course forgetting that this whole ponzi scheme depends on growth, exponential infinite growth from a finite planet, Scarcity of course being the motivator, the resources we all depend upon being governed by natural laws that are usually not obeyed or even recognized as potentially restricting, while the human laws, that are really just rules of the game, are strictly adhered to as long as the money interests at the top are taken care of.
The highest esteem is given to those who profit well. Forgetting about what it is they actually are doing to earn those oversize profits. The free market capitalist mindset takes on religious zeal. Any threat to the establishment is quickly marginalized, not by way of any conspiracy, but by a self reinforcing closed gate, most of the people in a position to do something about it are benefiting from it , plus the very qualities needed to succeed are usually different from the traits revolutionary shakers of culture posses. There by insuring those that make it and are in a position to cause beneficial changes to the illogical system wont have the mindset needed to incur shifts needed. As a personal attack on the capitalist program i would like to point out the fallacy relating to the ridiculous idea that those parties engaging in enterprise are fully abreast and knowledgeable of all the information pertaining to the transaction, entering into a contract where all parties are basically getting what they want and furthering the cause of progress, furthermore while in pursuit of their selfish interests the greater interests of society will be served. The truth is that most enterprises rely on misinformation and lack of knowledge to further their profit motives, and usually it is lack of pertinent information that guides the sale. Yes many great discoveries have resulted from our business cycle and profit motive, but surely many would also have arisen had shared profits been common. No one will ever convince me that in the pursuit of ones selfish interests the greater good of mankind, or for that matter all the other wonderful sentient species that inhabit this globe, are equally served. I maybe the perfect example, while young and dumb, i marched froward conquering my selfish interests, luck played a large factor and success seemed easy, than the second bust in my adult life commenced, lost all my investments in real estate and stocks, revenue from my consumer electronic business subsided and credit issues developed. The whole thing came tumbling down awful fast. With little else to do but read about the crisis and government ineptitude i soon became too distracted to mindlessly resume selling consumer products touted as slightly better and newer than the competition. Suddenly the worlds problems seemed like mine, only i could do less about them than my own. But i so want to be apart of the solution not a harbinger of the problem. Feel like i fell down a rabbit hole , or rather walked out of a matrix like subversion , that now makes it too hard to go back to the previous mindset.
Our wonderful government lies to us every night through the media that along with the financial , energy , pharmaceutical, large agri and food interests , and last but not least huge military industrial complex, own our democratically elected yet corporate influenced oligarchic government. You want to know why those elected officials who ought to know better lie to the american people every day, maybe they just dont understand how our giant bureaucratic modern monetary system works. But you and i, as well as a tiny few do, ha? Sounds crazy man. We all fell down that rabbit hole , or woke up from the matrix.
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Your comment contains several errors that begin with this one…
“Our entire monetary system, or the creation of currency be it digital or hard, is based on debt. If we don’t borrow from banks, the money supply we all use as a medium of exchange for goods and services will eventually spread too thin.”
This is a zombie idea that refuses to die. The Walking Undead. The false notion that the U.S. government does not create its own money, and does not have Monetary Sovereignty. The false notion that all money in the U.S. economy exists only as bank loans. The false notion that when the Treasury credits the account of a Social Security recipient by direct deposit, it is a loan from a bank.
Here’s a question for you. The USA has a net trade deficit of about $25 billion per month, meaning $25 billion per month flows out of the US economy. (Some of it ends up invested back in U.S. Treasuries, but that money is not circulating in the U.S. economy.) Does that $25 billion a month exist as bank loans? Do U.S. banks supposedly lend money to China, which supposedly lends it back to U.S. banks?
No. There are two ways that money enters the U.S. economy. One is by bank lending. The other is by government spending. When bank lending is down (because of the credit cycle, a.k.a. the business cycle), the government must increase its spending. If the government does not increase its spending (because politicians serve the rich by imposing austerity), the result is a depression. That’s what happened in the 1930s. It’s what’s happening today.
Regarding the trade deficit, you write, “Adding even more pressure on the wealth gap is the fact we are now an importing country with our currency hemorrhaging internationally.”
Hemorrhaging? How so? Americans enjoy a great advantage. Each month we buy $25 billion more in goods and services from abroad than we sell to foreigners abroad. We get the money to do that from government spending and yes, from bank lending. Banks and the U.S. government both get money from nowhere. They create it on computer keyboards. This is a nice deal for us. Foreigners send us goods and services. We send them paper. (Actually we credit their accounts electronically.) Sweet! It would only be a problem if the US government did not have Monetary Sovereignty.
There are many other things in your 1,700-word comment that I disagree with, but I do agree with you that the situation is depressing. Among Monetarily Sovereign nations, all recessions and depressions are gratuitous.
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As usual, MR nails it. Thank you Mark!
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Maybe i failed to express myself good enough, i was just pointing out all the insane contradictions between what actually happens and what people think happens. No i dont think banks are loaning china money, or that we are in debt to china. China simply takes the currency we send over there and than parks it in treasuries. Yes, i agree that sending pictures of dead presidents in exchange for tediously produced consumer goods in sweat shops is beneficial to us, maybe not kind, but certainly not the menace to our economy we hear repeatedly from media pundits. Hemorrhage wasnt meant literally , just in the sense that like an open cut looses blood, we are loosing currency to trade domestically since our imports are expatriating currency. Without government stimulus recessionary pressures wont abate. At the bottom of the economy where i swim, there is less cash available to conduct business, people are too frugal, penurious is an understatement. Our interests would be better served getting higher educations, and entering more skilled occupations. Some how the powers that be would rather americans sew underwear, as if we will forget how ,if the chinese keep doing it . The hemorrhage i referred to was pointing out the currency deficit caused by a trade deficit, since china isnt repatriating the money back in reserve notes from us exports, ( obviously some is, but a smaller %), but parking it in tbills, The us govt,. without any constraints relating to real debt, since we are monetarily sovereign, needs to stimulate our economy by spending on entitlements or any other appropriations in order to circumvent the decreased circulating available dollars left after their excessive taxes coupled with exported dollars from trade deficits, and a recessionary environment. I understand the operational mechanics of mmt, and hole heatedly agree. Once again i fully understand money creation comes from both the government and their heavily regulated banks ( except the most needed aspects like the hybrid financial derivatives traded that almost crippled the system, and caused the damn depression ,but that is another topic) , and in times of down business cycles like our present one when lending institutions shy away from doing what they are supposed to do, lend, the govt needs to pick up the slack. Yes all the money digital or otherwise is created out of thin air today, the funny thing to me is the sanctity most people place on banks , and of course the moral implications associated with inability to pay back debt. I have read many of your posts, and agree with most. I do think there is a motivation to increase the wealth gap by the privileged, or at least their advisers, Once again i apologize for the long winded blob, but iam really curious where you disagree with me outside the operational mechanics of our monetary system and MMT’s descriptions that i believe i understand but may have used out of proper context. Our government does borrow money from itself, the treasury sells a bond to the fed, which conjures the money up out of thin air and loans it to the treasury for the bond, then the fed. sends the majority of its profits from the interest on the “loan” back to the treasury. Seems to me to be a shell game like 3 card monte. What we should be talking bout is simplifying the quagmire so everybody can understand it better. The fed sets interest rates through sales and purchases of treasuries through their open market operations. I guess they need bonds to do this, but why so many types, how about just a yearly note. Furthermore how about the fed being absorbed into the treasury, end the arcane game of pretend borrowing of government monies and just spend the dollars into existence. This atleast would simplify things and end the deficit distraction, paying off the pretend national debt with a coin and move forward.Begin understanding that economics is not separate from politics . Maybe the problem with getting people to understand mmt or mmr is that it can smell of socialism. Government creates the money supply free of debt and appropriates it possibly in what could be viewed as a redistribution, which is an anathema to free market capitalism and its mythological mantra heralding how dynamics are controled by nothing but an invisible hand. When i explain its points , i m met with the same disbelief’s,. People cant wrap their head around the idea that our government doesnt need tax revenue to run, since it can create all the money it needs, there fore entitlements are never endangered from lacking funds , but political will. Unfortunately everybody thinks the government is in this horrible debt debacle. Explaining the difference between Government budgetary constraints and households is difficult when the media and politicians use the same analogys to uphold the myth. Than of course you really loose them when you try to bring up various conspiracy theories. Explaining away the disconnect by stating that those in government just dont understand how the system really works , sounds arrogant. Personally i cant figure out how this system makes any sense if growth is not addressed. How can we really believe economic expansion is good if this path continues to lay havoc on our environment , and continue to displace natural habitats with human managed ones.
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Larry Silber,
Can you please write in paragraphs?
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Your a ball breaker, and funny, i have too much anger for the system any way, i’ll keep reading everyone else’s comments, they’re informative and you are enlightening. I have learned a great deal from your postings, surely am glad i can at least thank you in some what of a direct way , I am not tech savvy, or used to writing in this form any how. I train horses. Sorry for the long winded non paragraphed babble.
Though I wish there was some role available to help get your important perspectives more main stream. Blogs are great , but it seems as though the message is spreading to the already converted. Other than Mike Norman , these ideas are rarely brought up in the mainstream media, how about trying Bill Maher, he has a large audience, and influence. Currently, he unfortunately incorrectly views the deficit as bad, and tax revenue equals government funding myth, as most mistakenly do. Hudson would also be a great guest on his panel.
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You’ve learned a great deal from my posting? I rarely comment. You must mean RMM’s postings.
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Yesterday, I tweeted Katrina that I prefer a payroll tax cut for the working poor to a new tax.
She replied, “Why not both a payroll tax cut for working poor and a financial transactions tax? America is not broke. Our priorities are.”
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Right. America is not broke. So why pull dollars out of the economy, thus depressing the economy, by instituting a new tax? I wonder what her priorities are.
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It seems clear to me, her priority is equality. It doesn’t seem reasonable that we could all have the kind of real wealth that the 0.1% have – there isn’t that much real wealth to go around – , so I think the reasonable strategy, Katrina’s strategy, is that the 0.1% (perhaps more like 10-20%) have to lose some while the rest gain some, and the level at which we all become equal is in the middle, not at the top.
Yes, even a small tax on the 0.1% hurts the economy as a whole, but it can easily be offset by other spending and taxing policies, which Katrina favors.
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golfer,
No matter how you figure it, increasing the tax on the wealthy does not benefit the poor. Those “other spending and taxing policies” could be implemented without tax increases, in which case they would help grow the economy, rather than just offsetting a new tax.
Every dollar of taxes shrinks the economy.
I’m being a bit picky on this (sorry), only because I want people to focus on lifting the middle and poor. This approach probably would receive less push-back from the rich.
In fact, my preferred approach would be to cut taxes on the rich and implement those other spending and taxing policies.
I’d love for Obama to say, “Let’s start by getting rid of last month’s tax increase on the rich and eliminate FICA, too.” Even the Republicans might go for that.)
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Right, Rodger, but no matter how much you lift the water level, the big boats will always be just as much bigger than the small. Unless you take from the rich, redistribute the wealth, the gap will not shrink enough to achieve equality. Maybe the essence of the difference between you and Katrina is that you want everyone to be well enough off, she wants everyone to be equally well off.
The Republicans (at least their leader) proposed cutting taxes on everyone. It didn’t fly.
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False analogy. Lifting the poor does not does not lift the rich, equally.
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But it does lift the rich as well as the poor. The rich are the owners of businesses, who prosper from the increased aggregate demand when the incomes of the poor and middle rise. Trying to raise the poor and middle without also reducing the rich can never completely close the gap, because if you try to raise the poor and middle to the level of the rich without redistributing, you run out of real resources.
It’s also not clear to me that programs to increase incomes only of the poor and middle closes the gap at all. The gap was shrinking from 1947 to 1967, and widening since then. What changed? The “Great Society” program comes to mind. Is there any mathematical study that shows that the profits to the owners of resources due to the Great Society programs was not greater than the money that went to the poor and middle?
Let’s try one out. Say you give each of the 99% one dollar, and they spend it. There would be 99 dollars of new sales by businesses owned by the 1%. If they make a profit of 10% of sales, they get $9.90 per person. The 99% gain $1 each, and the 1% gain $9.90 each. Does that shrink the gap or widen it?
If I were a 1%er, I would find that scenario attractive enough to try it out. After all, it’s not my money that would be used to do it.
I have no proof that that was what happened, but is there any proof that something different happened? The gap did widen. Is there an alternative theory that says the rich do not profit from the increased demand? Or that they do profit, but their profit is so little that the gap would tend to shrink, rather than widen?
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So whatever we do with the poor, widens the gap?
So if we increase FICA, that widens the gap. If we decrease FICA, that also widens the gap? Give the poor money; that widens the gap? Take money from the poor; that also widens the gap.
Just by virtue of making the poor better off, we widen the gap?
Somehow, the logic escapes me.
By the way, here is your error: “There would be 99 dollars of new sales by businesses owned by the 1%.“ Think is out.
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Maybe the size of the gap is the result of a variety of economic and cultural factors, and the best we can do is to pursue full employment and liberty and justice for all, and not worry so much about some being better off than others. The poor (in the US, at least) are a lot better off today than they were in 1967. That’s evidence that we’re moving in the right direction, not the wrong one. (Since 1967, not necessarily since 2008)
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Give me another clue about my error. Are you saying there is a math error? Or that the 1% don’t own the businesses? Or that the increased sales would not equal the increased spending? Those last two are assumptions in my example. There are more unstated assumptions, of course, and other effects. It’s very simplistic.
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Not sure why we would pursue full employment. Working for a living is not the goal many people have. The goal, of course, is money, and it happens that money is power.
The priority is closing the gap, because the gap represents power.
Whether today’s poor are better off than people during the Depression or serfs during Edwardian times, is not the issue. The real issue is: How much power do the rich have, vs the rest?
If one man can direct $1 billion toward the election of his candidate (courtesy of our Supreme Court), and you can afford only $100, that man has as much power as you and 10 million of your friends, so he can pass more laws that give him even greater power over you.
Maybe he even can pass laws that make it illegal for you to vote (and a compliant Supreme Court will approve that, too.)
If your income increases and/or your expenses decrease, you gain power, even if the rich guy’s net income also increases (so long as his net income does not increase proportionately.) If his net income was 1,000 times yours, and now it is 900 times yours, some power has shifted to you.
The key is to increase your income and/or decrease your expenses.
The gap is all about power, and that is why it is the single most important issue in America.
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have you seen this yet? http://mikethemadbiologist.com/2013/03/06/wealth-and-inequality-in-america/
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Thanks.
Yes, the issue is the gap, the gap and the gap. I wish I could get MMT to focus on the gap.
Instead, there is no focus. One talks about the deficit; another talks about the debt. One talks about the origins of money; another talks about unemployment.
Without focus, the message becomes blurred, and this is exacerbated by it being counter-intuitive.
The gap is clear, simple and intuitive.
To paraphrase Bill Clinton’s winning strategy (“It’s the economy, stupid”), It’s the gap, stupid.
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The gap is counterproductive to a free democratic society, the disparity in wealth will eventually create an aristocracy that will prevent any idea of equal opportunity. Today we are following the 19th century vision of free market enterprise at the expense of the 18th century republican vision of men and women bound together in community and shared values. The laws that connect us should be representative of those moral identities that we share as a culture. The free market ideal believes shared moral goods are nonexistent and laws provide neutral constraints necessary for unimpeded conduct of a civil society.I think today the prerogative of life is making a living, we have rules of the game and they are written and enforced by the moneyed interests. Just like a monopoly game. The more money you have , the easier it is to win, well the rich want to win., and they are going to rig the rules in their favor. But if people dont understand our modern monetary system how the hell do they make rational choices , and not just back down from defenses like class warfare , envy, and jealousy. No matter how the system evolved, at the end of the day MMT diffuses the idea of government interventions in the economy on the macro level akin to its citizens interactions on the micro level. Government can act as a benign rule maker, not susceptible to the dynamics of the market, nor constrained by revenue. This is a very hard concept for people to accept, when it is counter to everything they have been told, or they thought they new. The system we have today , whether or not arisen from design or just serendipity, is quite useful in being a force for good. Maybe that old cliche of if its too good to be true is nagging. All the same the current system allows for a better place if people would just bother to understand. The nuts in congress could pass a amendment requiring a balanced budget, that would assure a growing wealth gap and the end of our countries great experiment in self government. That scary idea exemplifies why the 99% needs to understand our modern monetary system.
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or this? http://mikenormaneconomics.blogspot.com/2013/03/richard-wilkinson-how-economic.html
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Inequality destroys nations and societies. The end result is always the same. Destruction is inevitable. There are no exceptions. When the 99% do nothing but serve the 1%, who do nothing but enjoy their power over the 99%, civilization is finished. It stops building, exploring, evolving, or developing. When the parasite sucks the host dry, both perish.
This is a fact that mankind still has not learned, and perhaps never will.
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MS/MMT are a way of saying we can afford anything we need short of inflation or resource shortage. As a metaphor, MS&MMT are like our Sun. We get free power, a constant injection of strength into the biosphere. Everything is under control in scientific principle and all the parts are working together, so far!! No inflation/deflation of the planet or the gravitational pull.
MS/MMT offer the possibility of a Macro constant injection into the bio(life) sphere of economics to spark it. The macro end is not to profit; that is a private function. The Macro end is to insure the injection in SUPPORT of the Micro-private economy so they can keep profiting and keep serving we-the-people. Macro is super to micro. Micro has the knowledge and high tech while Macro has the fuel injection of money to keep it going, i.e., too big to fail.
It’s all interrelated and the not-for-profit government is the supplier while the for-profit microeconomy is the receiver of the supplied power. Pitcher and catcher. Sender and receiver. What is missing however, is the feedback loop to make the catcher the pitcher to pass it on and continue the pitch it back and forth ad infinitum. Moreover, as Mitchell states, the middle and lower classes must be the primary beneficiaries of this model in order that we may bring up the bottom without touching the top, else top WILL push back, U can bet on it.
In summation, we need a bring up the bottom system that wont interfere with the top and sustain a constant injection of monetary power without price instability, a sort of “solar model” in life support, economically speaking.
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A Wall Street Sales tax or Financial transactions tax might do some good if 100% or a large percentage went directly to the state government and local government as “revenue sharing.”
Sure, it would take some money out the private sector but mostly of those transactions taxed are either harmful speculation or capital flight with no real value to real production anyway.
Besides it’s fair. The states are raising sales taxes on everything except large speculative financial transfers so why shouldn’t the rich be taxed on what they spend on rather than all sales states tax to be on the people for basic necessities like clothing, gas, heating, textbooks, etc…?
Roger seems to think that all private sector wealth increase is of equal value.
Increasing the wealth of the filthy rich also increases the gap so taxing harmful “wealth” does benefit the poor especially if then government redistributes that wealth through state programs.
Roger doesn’t seem to understand MMT. Taxes are simply a tool of destruction not necessarily an automatic evil.
A Wall Street Sales taxes could be proper tax policy if it was set up to increase the cost of the things that are harmful to the public good (speculation, hft, etc…) and if all of that “revenue” is simply spent right back into the economy then you haven’t lost anything and you’ve punished the bad behavior. It’s a win.
Roger is also failing to understand behavioral economics. Higher revenues means Congress is more likely increase the rate of spending than if the revenues are static or declining. So taking “useless money” out the economy by taxing those can afford the reduction their “hoardings” err “savings” if it results in more spending for what is actually needed i.e. consumption isn’t a net loss in the long run. So the policy is a win-win.
See..”http://unlearningeconomics.wordpress.com/2012/01/06/cutting-taxes-on-the-rich-causes-inflation/.”
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>>Aaron Garcia, writes, “Taxes are simply a tool of destruction, not necessarily an automatic evil.”
Agreed! Money destruction is good, especially when the economy does not have enough money. The FICA tax is good, because it hurts only the middle and lower classes. The mortgage interest deduction is NOT good, since it does not destroy money. All federal taxes make the middle and lower classes poorer, which is good, since federal taxes destroy money.(Yes I am being sacrcastic.)
>>Aaron Garcia writes, “Roger doesn’t seem to understand MMT.”
I believe that Rodger understands MMT better than most MMT people. It’s just that Rodger (and I) disagree with several aspects of MMT. For instance, we do not see the viability of the “jobs guarantee,” which Rodger has analyzed in past posts. Nor do we agree that “taxes drive money.” That is, we do not agree that federal taxes are necessary to control inflation and maintain fiat authority. We say that inflation can be controlled via interest rates, while fiat authority can be maintained via state, county, and municipal taxes.
Nor do we agree with MMT people who claim that austerity is an outcome of “innocent mistakes” by “misguided” politicians and bureaucrats. The latter notion is especially childish and insulting. Many MMT people have much to learn.
>>Aaron Garcia writes, “Rodger is also failing to understand behavioral economics. Higher revenues mean Congress is more likely to increase the rate of spending than if the revenues are static or declining.”
Hijole! Who doesn’t understand MMT? Let’s shout it once again, so the folks in the back can hear. THE FEDERAL GOVERNMENT EFFECTIVELY DESTROYS TAX REVENUE UPON RECEIPT. IT DOES NOT NEED OR USE TAX REVENUE.
Therefore, taxing money out of the economy has zero effect on Congress’ ability or willingness to spend. All taxing and spending decisions (at the federal level) have nothing to do with revenue. They are purely political.
>>Aaron Garcia writes, “A Wall Street Sales tax or financial transactions tax might do some good if 100% or a large percentage went directly to the state government and local government as revenue sharing. Sure, it would take some money out the private sector but mostly of those transactions taxed are either harmful speculation or capital flight with no real value to real production anyway.”
This statement seems reasonable on the surface, but it is another manifestation of a desire to punish rich speculators. This is a fantasy, no more. The rich are too powerful to punish.
Therefore, in order to fight the rich, we must take power for ourselves, which means spreading the truth about Monetary Sovereignty, so that ordinary people can participate in money-creation. Rather than take money from the rich (which won’t happen), we must focus on taking money from nowhere, and giving that money to ourselves. (“Nowhere” meaning computer keyboards.)
When you seek to punish the rich, you act from resentment. You think like a peasant. “It’s not fair! Tax them!” You basically stamp your feet in frustration. Rather than this, I want average people to think like equal players, such that they say, “I want the same power the rich have!”
Stop trying to punish the rich.
Start trying to take some of their power for yourself. Spread the facts about Monetary Sovereignty.
(That’s my opinion, anyway.)
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Quote: “Agreed! Money destruction is good, especially when the economy does not have enough money. The FICA tax is good, because it hurts only the middle and lower classes. The mortgage interest deduction is NOT good, since it does not destroy money. All federal taxes make the middle and lower classes poorer, which is good, since federal taxes destroy money.(Yes I am being sacrcastic.)”
I’m sorry that you didn’t understand my post. Your statement that the economy doesn’t have enough money or debt seems rather odd. We have a Quadrillion in various private speculative debt and thus a quadrillion of claimed assets in the derivative markets.
Do we need more claims against existing real capacity sitting around in bank accounts or do we real demand for real goods and services?
The economy isn’t starved of money. It’s starved of effective demand and demand isn’t the same as the nominal amount of money. The distribution of money matters to demand.
Are you denying this? If you deny that the distribution matters then why argument against the gap?
My post had nothing to do with FICA but a Wall Street Sales Tax with 100% of the proceeds going directly back to the States.
Quote: “Hijole! Who doesn’t understand MMT? Let’s shout it once again, so the folks in the back can hear. THE FEDERAL GOVERNMENT EFFECTIVELY DESTROYS TAX REVENUE UPON RECEIPT. IT DOES NOT NEED OR USE TAX REVENUE.
Therefore, taxing money out of the economy has zero effect on Congress’ ability or willingness to spend. All taxing and spending decisions (at the federal level) have nothing to do with revenue. They are purely political.”
I know that Federal Government effectively destroys tax revenue upon receipt which why I said credit the same back to the non-sovereign states so we don’t have a net loss. Learn to read. 100% Revenue Sharing.
Quote: “This statement seems reasonable on the surface, but it is another manifestation of a desire to punish rich speculators. This is a fantasy, no more. The rich are too powerful to punish…When you seek to punish the rich, you act from resentment. You think like a peasant. “It’s not fair! Tax them!” You basically stamp your feet in frustration. Rather than this, I want average people to think like equal players, such that they say, “I want the same power the rich have!”
Stop trying to punish the rich.”
So just more appeasement and surrender to the evils of predation of are particular class? Why?
I say along with Bill Black “Fiat justitia ruat caelum.” Taking money that will only be used unproductively or destructively is economically efficient by definition. Letting the rich keep their ill gotten gains is what creates the dynamics of future exploitation.
Quote: “Therefore, in order to fight the rich, we must take power for ourselves, which means spreading the truth about Monetary Sovereignty, so that ordinary people can participate in money-creation.”
BS. Ordinary people understanding Monetary Sovereignty doesn’t give them any ability in money-creation. The only people participating in money creation is Congress and they only act on a pay to play basis and if you aren’t part of the .01% then your influence in net money creation is zero.
The only way you take power is by taking it away from those who already have it and you demonstrate this via public forms of punishment i.e. a symbolic tax.
In real economics, money is nothing, politics is everything.
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I’m amused by your name change. First it was Moron Garcia, and now Jackoffer. What next?
I started reading your drivel, but I came across this sentence right away: “The economy isn’t starved of money.” Wow. I didn’t need to read any further.
You win!
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I’m sorry about the name change. It’s the stupid login accounts of wordpress versus the others. I lost track of the original so I’m using my back up. I’m not trying to sockpuppet. I comment at Mike Norman’s blog under Septeus7.
Yes, that wasn’t the best phasing. Yes, the economy is starved of effective real money. However, it isn’t starved of “money like things” i.e. debt instruments that people trade and new debt creation.
You don’t seem to be trying to understand the difference that taxes are used by the state level government but not the federal level so “revenue sharing” is a way to have taxes without the deflationary effect on total money supply that federal taxation has. If this is not correct, please explain why? I don’t know of anyway to argue that it’s a net loss other than perhaps some interest earnings lost in the time between the collection of the tax and the new spending by the state governments similar to the argument for the deflation effects of QE.
Perhaps you could argue that most of spend would go state debt settlement effectively transferring the money right back to the financial sector but wouldn’t the newly cleaned slate for the state governments have a positive effect toward future spending?
You haven’t even tried answer. I’m getting real tired of everyone stating and restating their ideological beliefs rather than trying to an honest debate. I’m finding this debate rather sad. I honestly respect your ideas Mark and your comments about Zimbabwe are spot on and part of my collection of good argument that I use as a reference. I’m not trying to troll I’m trying to have a good discussion and I want you to convince my that my arguments are wrong so please stop insulting me.
Please, what is wrong with the Wall Street Sale tax program (100% sharing) that I described ( not the one in Congress which is basically a joke)?
The program I describe is redistributionist program even under MMT operations and I hard it to believe that that you would have a problem with it since MMTers all admit the purpose of government debt to transfer resources from one sector of the economy to another.
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Politicians vote to beat up on the little guy and widen the gap — yet again:
And the beat goes on. The gap widens and widens and widens, and the ruling .1% grows its power, while the people stand in slack-jawed approval.
Thus are dictatorships created and maintained.
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“A person is smart, but people are dumb, panicky dangerous animals.”
~ “Men in Black” (1997)
“Madness is rare in individuals – but in groups, parties, nations, and ages it is the rule. “
~ Friedrich Nietzsche: “Beyond Good and Evil” (1886)
Mankind routinely lapses into madness on a global scale. We saw it in both world wars. We saw it with the 1930s global austerity mania. We see it in today’s austerity mania. We see it in the denial of global climate change, and in many other ways.
The madness is continual, and it comes in waves, like the waves on a beach — except the beach is global. No single wave sweeps up everyone, but it does affect everyone. The governments of Iran and Israel are enemies, yet both are imposing gratuitous austerity on their citizenry. Millions of people march off to kill and be killed in wars. Millions more demand to be wiped out in genocide (i.e. austerity).
Is there a “logical reason” for these continual waves of madness? A “cause” that we can prevent? Perhaps not. Perhaps Nietzsche was correct. On a collective scale, mankind is incorrigibly insane. The waves of madness go on.
Perhaps they always will.
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Golfer,
Because the .1% indeed have increased the gap, historical data merely would show that the .1% have an increasing share of GDP. But that does not take into account the kinds of recommendations I’ve made.
For instance, list which of the following you believe would increase the gap, and why?
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%
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Mark your dogmatic way of thinking is your downfall.
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