–Absolute proof deficit reduction (austerity) works, even though you can’t.

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.


Here is absolute proof deficit reduction (aka “austerity”) works in the United States and everywhere in the world (i.e. works to crush economies, destroy middle classes and widen the gap between the rich and the not-rich.)

This unblemished record of success demonstrates why President Obama and both political parties continue to advocate deficit cutting.

Obama budget would cut entitlements in exchange for tax increases
Friday, April 5, 8:00 AM
President Obama will release a budget next week that proposes significant cuts to Medicare and Social Security and fewer tax hikes than in the past, a conciliatory approach that he hopes will convince Republicans to sign onto a grand bargain that would curb government borrowing and replace deep spending cuts that took effect March 1.
Factory Data Shows US Manufacturing Dead In The Water As Headlines Mislead
4 April 2013
Wall Street Examiner
The headlines today blared of a 3% increase in factory orders in February, completely obscuring the truth of just how bad the US manufacturing trend is. The real story lies in the fact that factory orders have been flat for two years and have trended lower for the last four months.
Wall Street falls at open on weak payrolls
NEW YORK (Reuters) – Stocks fell more than 1 percent at the open on Friday, following a payroll report that was much weaker than expected, the latest in a series of reports to indicate that economic growth may be losing momentum.
A vanishing middle-class — the new normal?
Almost half of middle-class households today live paycheck-to-paycheck, according to a recent survey by financial services firm NestWise.
Sequester cuts already hurting small businesses
Most companies don’t expect to hire next quarter

Hiring slowed to 88K jobs in March; unemployment rate drops to 7.6 percent
Washington Post 4/5/13
Businesses sharply reduced their pace of hiring in March, according to government data released Friday morning, deflating hopes that the nation’s economy is ready for takeoff. Gallup chief economist Dennis Jacobe said the recent spate of job growth has done little more than keep pace with population growth. “If you’re out there looking for a job, the dismal situation is no better now than it was a year ago,” he said.
Moody’s sees gloomy outlook for Spain banks
The Economic Times 4/5/13
MADRID: Global credit rating agency Moody’s warned Friday that Spain’s battered banks face a grim outlook even after a European-funded rescue, with high levels of bad assets set to worsen “significantly” in the recession.
Fitch sees bad loan charges to keep hurting Italy banks
By Reuters | 5 Apr, 2013, 12.13PM
MILAN: Fitch said on Friday it expected a rise in impaired loan charges at Italian banks to continue through 2013, adding this trend was unlikely to slow down until the economy improved. Italian banks have been forced to book writedowns and hike provisions against a steep rise in deteriorating company loans.
Workers Protest to Get E.U. Leaders to End Austerity
By AP / March 14, 20133 Comments
(BRUSSELS) — Some 10,000 workers from across the European Union protested outside a summit of EU leaders Thursday, demanding they end years of austerity and focus instead on curbing runaway unemployment with more spending. Trade unions and an increasing number of economists say austerity has inflicted severe economic pain — the economy of 17 EU countries that use the euro are stuck in recession and joblessness is at a record high.
Greek Unemployment Reaches Record 26%
By Associated Press March 14, 20133
(ATHENS, Greece) — Unemployment in debt-crippled Greece rose to a record of 26 percent in the last quarter of 2012, as austerity measures combined with a deep recession took a harsh toll on the workforce.
Eurozone crisis: Portugal protests against austerity
Hundreds of thousands of people have taken part in protests across Portugal against government austerity measures. Huge crowds gathered in the capital Lisbon to demand the government resign. Many carried placards condemning the “Troika” of the IMF, the European Commission and the European Central Bank, which demanded budget cuts in return for a financial bailout. The conservative government has introduced steep tax rises as it tries to reduce a huge budget deficit. Unemployment is at a record 17.6% and the economy is expected to contract by 2% this year – the third straight year of recession.
Where are the activists as austerity bites? They have been beaten back
Protesters face violence, arrest and serious charges. Only the brave dare face this savage suppression
The Guardian, Thursday 4 April 2013
As millions of people stare down the barrel of job losses, benefits sanctions, destitution and desperation and the rich are given tax cuts, I hear a lot of people asking why there isn’t more resistance going on. It was brutally and systematically put down. The students, the street-organising anti-cuts campaigners, the Occupy movement. They were cleared out, arrested and beaten back by police,

Ah, that good old austerity. Gotta love it. At least the rich do.

Here, deficits are “unsustainable” (even though the U.S. government can fund any deficit of any size), but austerity is sustainable because it only punishes the middle and lower classes.

Numbingly, it’s the middle and lower classes who believe austerity is necessary. Why? To prevent hyperinflation, like Germany and Zimbabwe had. Never mind that the German and Zimbabwe hyperinflation were not caused by deficits. And never mind that the U.S. never has had hyperinflation, not even during depressions and world wars — not even during the civil war.

And never mind that the Fed easily has been able to maintain inflation near its target level. And never mind that as a result, we are nowhere near an uncontrolled inflation, while recession and unemployment and poverty and the resultant crime are upon us.

And never mind that austerity widens the gap between the rich and the rest. And never mind that the politicians have been bribed by the .1% (via campaign contributions and promises of lucrative employment later) to widen that gap.

Let’s just keep doing what has not worked, cannot work, and never will work, anywhere in the world, anywhere in history: Cut those deficits. Cut Social Security. Cut Medicare. Cut Medicaid. Cut federal employment. Cut aid to the poor. Cut aid to education. Cut research and development. Cut food inspections, drug verifications and financial regulations. Turn once-great America into a 3rd world, banana republic, where the rich rule and the rest starve.

And while we’re at it, let’s keep cuting our own throats. That seems to work, while so many of us can’t.

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


19 thoughts on “–Absolute proof deficit reduction (austerity) works, even though you can’t.

  1. “Obama budget would cut entitlements in exchange for tax increases.”

    Great. “I’ll agree to an increase in austerity via spending cuts, if you agree to an increase in austerity via tax increases.”

    Democrats and Republicans both want austerity. And the more that austerity kills us, the more politicians claim that austerity is making us healthy. “Gulp down this cyanide. It tastes bad, but it’s good for you. If it causes problems, it’s because you haven’t swallowed enough of it.”

    Meanwhile regarding Europe, I’ve noticed an increase in corporate media articles defending the euro currency, especially in the context of Cyprus. This indicates that Troika bankers are worried that the people of Cyprus are serious about dumping the euro that has enslaved them. (Of course, Cyprus politicians will keep the euro, in order to keep themselves personally on the Troika payroll).

    Mario Draghi is the Goldman Sachs bastard who now heads the ECB in Frankfurt (although it’s actually controlled by the Germans). Yesterday (4 April 2013) Draghi gave an hour-long press conference in which he vowed to impose more austerity. He also defended the Cyprus Heist.

    Draghi (whose name means “dragons” in Italian) said no country would be better off leaving the euro. “What was wrong with Cypriot economy doesn’t stop being wrong if they are outside of the euro,” Dragi claims. “An exit entails many risks — big risks.”

    Yes indeed. Big risks to Troika tyranny. If Cyprus dumped the euro, and returned to the Cypriot pound, then Cyprus would become prosperous and free. That scares the Troika bankers.

    The corporate media defends Draghi’s lies by spouting bullshit and minutiae regarding bank interest rates. Never does the media address the central question of, “Where does money come from?”

    In the euro-zone, money comes from the computer keyboards of Troika bankers, who create it out of nothing (or refuse to create it) thereby wielding supreme power, and widening the wealth gap. The money they do create exists as loans. Therefore, in the euro-zone, Ellen Brown and her disciples are correct to say that all money originates as bank loans. (However they are NOT correct when they claim that this also applies to MS governments.)

    Troika bankers encourage euro-zone governments to put each other in debt by buying each other’s bonds. The Troika bankers imply that they will create money on their keyboards if anything goes wrong. But what little money they do create is debt (loans). Every “bailout” is more lethal than the previous one.

    Troika bankers don’t even provide euro-zone-wide deposit insurance. Each euro-nation must provide its own deposit insurance, using money the nations do not have, since the money comes from the Troika bankers as debt. So, in effect, there is no real deposit insurance ANYWHERE in the euro-zone. The Troika can steal anyone’s deposits at any time. Cyprus was just the first example. Many more are imminent.

    Personally, I attribute mass stupidity not to the media or politicians or the rich, but to petty selfishness and self-righteousness among the peasants. The euro-scam is so obvious that anyone who defends it is quite simply an asshole who deserves a beating, or worse. Same with anyone who defends austerity in the USA.


  2. Bill Black does it again.

    “When a Nation gives up its sovereign currency it puts its sovereignty at risk. It becomes subject to the attacks of the bond vigilantes and can be forced into situations in which it can offer its young people so little opportunity that it forces many of its best and brightest to flee the Nation.”



    Now can Bill Black to say WHY nations give up their Monetary Sovereignty, and / or adopt austerity mania? Can he say it just once?

    No, of course not. Bill Black in an academician, which means that full honesty and truthfulness are “beneath” him.

    That’s one reason why I use the term “MMT morons.”


      1. That academicians are the “useful idiots” of the .1%. But of course, they cannot admit this nor tell the truth about what is really going on because if they did they would:

        a) Lose their privileged positions, or
        b) Lose face (i.e., they must be seen as above the fray and somehow smarter than everyone else).


      2. Nations give up their Monetary Sovereignty because bankers bribe politicians to do so. Bankers create money out of thin air on their computer keyboards, and they use it to keep politicians on their payroll. This lets bankers and the 1% rule as gods. It widens the gap between the rich and the rest.

        MMT morons deny this fact. They claim that politicians are innocent, and are simply “misguided.” They claim that austerity is a “mistake” and a a “failed policy.” They are idiots.


    1. “I flat guarantee you there will be no changes in Social Security.”

      Biden said this last August when Obama was running for re-election.

      Today it means this….

      “I flat guarantee you there will be no changes in the STRENGTH of Social Security. To prevent all changes, and to keep Social Security strong, we must cut benefits. The cuts will preserve the present status. The more we cut, the more we avoid changes.”



    2. This coming Wednesday, Obama will propose cuts to Social Security and Medicare in his annual budget. Immediately afterward (on Wednesday) Obama will celebrate by having dinner with a dozen Senate Republicans.

      The NY Times article also says that Republicans continue to oppose tax increases.

      (Republicans only oppose taxes on the rich. Republicans love to increase taxes on the poor, such as the FICA tax. MMT morons also love federal taxes.)

      The NY Times article also spouts this excrement: “The growth in entitlement programs, especially for health care, is a main driver behind projections of mounting federal debt as baby boomers age and medical costs rise.”

      You don’t like federal debt? No problem. Just call T-securities “federal assets.” Problem solved.

      “Some Senate Republicans have been urging the president to speak out more to Americans about his ideas for reducing the growth of entitlement programs.”

      As unemployment explodes, so does the need for things like food stamps. The food stamps are a “crisis,” but unemployment is not. Therefore we must reduce food stamps, Social Security, and so on.Obama’s budget will include $400 billion in “savings” to Medicare.

      “Obama’s budget plan will bring the total deficit reduction to more than $4.3 trillion over 10 years.”

      Cool! $4.3 trillion sucked out of the economy. It’s part of Obama’s “compassion for the poor.” He loves them so much he wants to create many more of them.

      Like I keep saying, the depression is only getting started. Maybe we need another world war. Most people are slugs who will not be missed when they are slaughtered.

      Meanwhile the increased federal spending will create jobs and social programs for the rest of us.


      1. No we don’t need another war (the ones we already have have only gotten us deeper into the hole), what we need is a revolution!


  3. Obama to propose $35 billion in federal retirement program savings

    Posted by Joe Davidson on April 5, 2013

    President Obama is expected to propose $35 billion in federal retirement program savings in the fiscal year 2014 budget plan he will release next week.

    The budget savings would come through increased charges to federal employees for their retirement benefits.

    See, it’s like this: Our Monetarily Sovereign government, which has the unlimited ability to create dollars, actually is broke, but federal employees are rich.

    So, like Robin Hood, we take from the rich and give to the broke.

    Got it?

    (And please don’t say I’m doing this because the truly rich in America bribe me with billions in campaign contributions, plus promises of a big Obama presidential library in Chicago, plus lucrative speaking engagements for Michelle and me, plus big jobs for my kids.

    I deny it.)


    1. We will create $35 billion less on our computer keyboard.

      We will require federal employees to pay that $35 billion out of their own pockets.

      Thus, $35 will be extracted from the real economy, and sent to the financial economy, i.e. to Wall Street.

      See? We are saving money!

      Most federal employees currently surrender 0.8 percent of their salaries to their pensions. That amount will increase almost four-fold to 3.1 percent.

      Therefore, if I make $40k per year, I will pay an extra $920 per year to Wall Street. Just what a depressed economy needs, aye?

      Obama is “saving money,” which benefits all of us, since Obama is “getting our fiscal house in order.” Right?

      It’s all about enriching Wall Street at the expense of Main Street.


  4. The issue is not austerity, it’s not the lack of deficits – it’s the lack of both for years.

    If you stuff yourself day in and out without regard for the future, would you say austerity is the issue or your own irresponsibility by sitting in your butt stuffing your face and not saving for a rainy day.

    I will remind you again, japan has begun what i mentioned not too long ago. They are pretty close to shutting themselves from the market and collapsing their currency. I would love to see the excuses when it happens.


  5. US sequester cuts treatment for thousands of cancer patients
    By Kate Randall, 5 April 2013

    Cancer clinics across the US have begun to turn away thousands of Medicare patients as a result of the sequestration order signed into law by President Barack Obama on March 1. The action is mainly due to cuts to Medicare reimbursement for expensive chemotherapy drugs, which is making it financially untenable for clinics and oncologists to maintain their operations.


    1. Remember what i said a while back sir.

      The biggest issue we have is conspiracy within the medical industry to fix prices. You cant go to mexico or canada either, thanks to our policie.

      Instead of pushing on a string, why not allow the market to drive prices. Let me also remind you that price fixing is illegal.


  6. Intelligence director says budget cuts could be ‘insidious’ for national security

    James Clapper ,director of national intelligence, said, “We’re cutting real capability and accepting greater risk. For intelligence, this is not quite like shorter hours for public parks or longer lines at the airports. For intelligence, it’s insidious.

    “The capability we cut out today, you won’t know about that, you won’t notice it,” he said. “The public won’t notice it. You’ll notice it only when we have a failure.”

    The austerity beat goes on


  7. Sequester means 11 percent cut in unemployment benefits

    A report, released Friday by Pew’s Fiscal Federalism Initiative, shows the widespread effect of cuts to unemployment benefits, which are administered by the states.

    As of early March, 1.8 million workers—or 15 percent of the total number of unemployed Americans—received insurance benefits that are completely federally funded.

    The sequester also cuts by 5 percent the federal grants to the states and the District of Columbia to administer the unemployment insurance program.

    Congress and the President: First we cut their jobs; then we cut their unemployment compensation. That’s how we crush the middle class.


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