●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.
Of our leaders – the President and his many advisors, the Secretary of the Treasury and his many advisors, the Chairman of the Fed and his many advisors, the Counsel of Economic Advisers and their 400+ economic PhDs, and Congress, 535 strong – not one of these thousand-plus leaders admits to understanding Monetary Sovereignty.
Not one admits to knowing the federal government cannot run short of dollars. Instead, 100% of them falsely claims the government is “broke” and the federal deficit is “unsustainable” and the debt will be paid by our children.
Not one admits to knowing the U.S. government, being Monetarily Sovereign, is different from the monetarily non-sovereign governments of Chicago, Ohio, Greece and France.
Not one admits to understanding why personal finances are unlike federal finances. So our leaders lie, as President Obama did, when he said, “You have to live within your means, so the federal government should live within its means.”
The followers of Modern Monetary Theory (MMT) reject the notion that this is a conspiracy, perhaps because conspiracy theories, in of themselves, so often have lacked proof. MMT says this simply is an example of massive and unimaginable ignorance, which can be cured by education.
So they try to educate our leaders with ever simpler and clearer explanations – all to no avail. Somehow, strangely, our leaders just can’t seem to “get it.”
Meanwhile, the charade in Washington, DC continues, as each political party competes to destroy the American middle class, by cutting benefits.
Recently, I read an article by Chris Cook, a senior research fellow at University College London and a former director at the International Petroleum Exchange. The piece is titled, THE MYTH OF DEBT. I urge you to read it.
Here are a few excerpts:
The fiscal myth of tax and spend shared by virtually all schools of economics is that tax is first collected and then spent. This has never been the case: the reality has always been that government spending has come first and taxation later.
Taxation acts to remove money from circulation and to prevent inflation: it does not fund and never has funded public spending.
THE clearing banks have their own power to create money, for the purposes of lending. They are responsible for most new money in the modern system They, too, are the subject of a well-peddled myth, which is that deposits are first collected by banks and then spent or loaned into circulation on the basis of requiring a certain reserve level of deposits to be maintained.
In fact, there is no constraint on UK credit/money creation of reserves: the constraint on modern money creation by private banks is the capital required to cover losses on loans. Private banks first lend . . . and then fund their dated interest-bearing loans (assets) with dated interest-bearing deposits (liabilities).
Putting most money creation into the hands of organisations whose raison d’etre is to make money from lending (and more recently, from speculation) is behind much of what has gone wrong with the financial system. As with all historic bubbles, the profit motive drove excessive credit creation.
Bank lending departments were abetted by everyone from bank lobbyists persuading the authorities to allow dangerously low capital ratios to trading departments devising increasingly complex instruments for shifting loans off bank balance sheets to make more and more lending possible.
From these observations, I reach two conclusions. First, the clearing banks cannot be trusted to freely create the credit which is modern money. If money is to be created by a middleman or intermediary then it should be either the central bank or the Treasury itself.
My second conclusion is that we must revisit the concept of the national debt itself and recognise it for the national equity it is in reality. We have only saddled ourselves with this debt delusion because we have forgotten what the true relationship actually is between public spending and taxation.
Mr. Cook’s article appeared March 5th, 2013, in the Scottish newspaper, the Herald. Clearly, he understands Monetary Sovereignty. His Scotland is part of the UK, which remains Monetarily Sovereign, while much of Europe surrendered its most valuable asset, its Monetary Sovereignty, by adopting that alien currency, the euro.
Why did Mr. Cook feel compelled to write this piece? Because, the leaders of the UK, and all their economic advisers, even now, debate the best way to sacrifice their middle class, while also debating the forfeit of their Monetary Sovereignty via entry into the eurozone.
So, is this an example of worldwide ignorance or worldwide bribery and conspiracy?
Aside from their provably wrong statements, there is no evidence these thousands of economics-educated people do not understand the basics of economics. There is no evidence telling us these people do not understand the clear and obvious facts expressed in Mr. Cook’s article and in thousands of other such articles written under the MMT banner and in this very blog.
While zero evidence tells us these people are ignorant, what is the evidence for conspiracy?
The Failure of Peterson-ism
By David Weigel|Posted Monday, Dec. 10, 2012
For 20 years, a coalition of wealthy people—Pete Peterson chief among them—has spent hundreds of millions of dollars to build public support for austerity.
Hundreds of millions of dollars? Where did those dollars go? Many went into the campaign funds of politicians. Hundreds of millions will buy a great many politicians.
Then there are the Koch brothers.
OpenSecrets Blog here are a few Koch political expenditures:
–Political Action Committee Spending (1989 to 2010): Koch Industries: $5,938,993
–527 Group Contributions (2001 to 2010): Koch Industries: $574,998
–Lobbying Expenditures (1998 to 2010): Koch Industries: $50,972,700
So well more than $55 million dollars were spent, most of them on “lobbying.” That too will buy you a great many politicians.
Then there is George Soros:
http://www.politico.com/news/stories/1010/43157.html Politico quotes him as saying, “Admittedly, consumption cannot be sustained indefinitely by running up the national debt …”
According to OpenSecrets blog: Individual donations to 527 organizations (2001 to 2010)
George Soros: $32.5 million
Hundreds upon hundreds of millions of dollars, given to politicians by people who claim the federal deficit and debt are, or soon will be, too large. Are these billionaires, with all their access to economic facts, also ignorant of economics?
Finally, the rich own the media, which promulgate the lie that deficits must be reduced.
So, which is more likely: Universal ignorance of economics by economics experts and the media or worldwide bribery of politicians and ownership of the media? All the evidence is on the side of bribery; no evidence supports worldwide ignorance.
What is the motive? Why do billionaires, who if anything, are experts in money, “waste” their valuable, and much beloved, dollars spreading the lie that deficits must be reduced? Because that lie will widen the wealth and income gap between the rich and the rest.
If you earned $50,000 per year, would you be rich? Yes, if everyone else earned $10,000. But no, if everyone else earned $50,000. It is the gap that makes the upper .1% rich and powerful, and the wider the gap, the richer and more powerful they are.
Without the gap, no one would be rich. That is why the rich are willing to spend millions, even billions, to widen the gap and to increase their power over the middle- and lower-classes.
Do we really believe we are so brilliant that we understand a Monetarily Sovereign government cannot run short of money, but these thousands of intelligent leaders simply cannot understand? A reporter in Scotland understands, but the leaders of the UK do not? Really?
These leaders are not stupid people. They are bribed people.
The public has been misled and brainwashed. The people do not want to learn economics, but rather wish to rely on their leaders. When the bribed leaders lie, the public believes.
So to change the world, and to save the middle- and lower classes, we who understand Monetary Sovereignty first must explain to the people how and why they have been lied to. We must not fear to explain the conspiracy and the motive.
Only when the people see the bribery and the lies, will they be willing to accept the truth.
And it is the truth that will save them from the ever growing disaster known as the “gap.”
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports