●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.
As readers of this blog know, the primary goal of the super-rich is to widen the income gap between them and the middle, so as to increase their power.
Readers also know federal taxes do not pay for federal spending. The federal government is not like state and local governments, and not even like euro-nation governments.
State and local government taxes do pay for state and local government spending. These governments are not Monetarily Sovereign. By contrast, the U.S. government is sovereign over its currency, the dollar.
Being Monetarily Sovereign, the U.S. government has the unlimited ability to pay any bills and never can run short of dollars. If all federal taxes fell to $0 or rose to $100 trillion, neither event would affect by even one penny, the federal government’s ability to pay its bills, forever.
What then, should one make of the following?
For Immediate Release:
Contact: John Kartch, email@example.com, 1 april 2013 202-785-0266
WASHINGTON, D.C. – Berkshire Hathaway Chairman and CEO Warren Buffett today announced he had written a donation check to the U.S. Treasury in order to personally comply with “The Buffett Rule.” In addition, all investors in Berkshire Hathaway will have 30 percent of their capital gains and dividends withheld by the company and sent directly to Washington.
After which, those Buffett investors are free to file amended tax returns, and get all their money back. We call that the “Romney Ruse,” commemorating Mitt’s fake income tax returns, in which he claimed not to have taken all his charitable deductions, but was free to file amended returns.
Championed by President Barack Obama and congressional Democrats, the Buffett Rule is a proposed 30 percent tax on all income over $1 million.
Translation: A “donation check” would have only one economic effect: To remove dollars from the U.S. economy, and thereby be recessionary. Mr. Buffett’s “heroic” effort would hurt America, while making him seem like a hero, which presumably would be the purpose.
But why would Obama be thrilled about it? Because there would be another effect. Read on.
The Oracle of Omaha will personally unveil a three-foot by six-foot donation check at an afternoon press conference on the Treasury steps. According to a statement released in advance of the event, Buffett said, “As I wrote in the New York Times, ‘My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.’ Today, I, Warren Buffett, am personally getting serious about shared sacrifice.”
The White House praised Buffett’s action. “Let me be clear,” said President Obama. “This puts to rest any GOP-driven allegations that Warren Buffett was a hypocrite on the tax issue or was just engaging in a bit of moral preening.”
Translation: Standing in front of reporters, bragging about a big check he has written, is not “moral-preening” in Obama-world. It alludes to a clever scheme. Keep reading.
Because the federal tax code is already steeply progressive, the Buffett Rule, if enacted, would raise just $31 billion in tax revenue over the next decade, according to the Joint Tax Committee. To put that in context, that is less than one-tenth of one percent of federal spending over the next ten years.
Translation: The self-aggrandizing publicity would be priceless. But this whole “pay my share” idea is more than publicity.
Americans for Tax Reform is a non-partisan coalition of taxpayers and taxpayer groups who oppose all tax increases. For more information or to arrange an interview please contact John Kartch at (202) 785-0266 or by email firstname.lastname@example.org.
Translation: Actually, this act by the Oracle (and we use the word “act” in all its meanings) is a tax increase, albeit tiny, but Americans for Tax Reform hasn’t yet figured that out.
You might think the Oracle doesn’t understand the difference between Monetarily Sovereign and monetarily non-sovereign. You also may think the President, Congress, the Counsel of Economic Advisers — not one of these 1000+ experts — understands fundamental economics.
But don’t be deceived. Something deeper actually is happening.
Buffett’s apparently heroic surrender of dollars to the government would allow Obama to rationalize his desired cuts to Social Security, Medicaid and all the dozens of benefits to the middle class.
That is what Obama’s incessant urging for “balance” means: Take a bit from the rich and a lot from the middle, the purpose being to widen the gap between them.
Bottom line: Buffett would get the saintly public relations he craves, while giving up the relatively few dollars he wouldn’t miss. Obama could cite this great sacrifice by the rich to justify an even greater sacrifice by the middle. The rich would be thrilled that the gap widens, giving them even greater power over the rest of us.
One day, Buffett and his super-rich pals will give Obama that big Obama library in Chicago, great speaking gigs, and lots of money for his family. Think: Bill Clinton.
So everyone would be happy — except for the 99% who are not among the rich, and who will see their federal benefits fall. But who cares about them? They aren’t the big campaign donors and they won’t provide Obama and his family with the big library he wants and with those six-figure speeches.
The Buffett Rule; the Romney Ruse; the Clinton Con; the Obama Obfuscation. The American people are taken with these guys. Yes, that’s the word: “Taken.”
H.L. Mencken: “No one . . . has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.”
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