●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.
By now you may have seen articles like this one:
Influential research by U.S. economists Carmen Reinhart and Ken Rogoff, touted by policymakers pushing government austerity in the United States and Europe, is riddled with errors, a bombshell new academic study claims.
The findings may not have much impact on the debate over government debt, and it probably won’t cause those who have spent the past several decades panicking over government debt to stop their panicking. But it seriously erodes the intellectual underpinnings of the pro-austerity argument — and makes the damage done by austerity in Europe and the U.S. in recent years all the more poignant.
Right. Deficit reduction, aka “austerity” has ruined millions of lives around the world. And it all has been unnecessary.
“This is a mistake that has had enormous consequences,” wrote Dean Baker of the Center for Economic and Policy Research. “If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit reduction policies being pursued in the United States and elsewhere.”
And there is the key sentence, for of course, facts do not matter. The supposed need for deficit reduction is a lie that never has been based on facts, but rather on motive — the motive of the upper .1% income group to widen the gap between the rich and the rest.
The Reinhart-Rogoff paper, “Growth in a Time of Debt,” has been THE definitive research document backing austerity. It said, countries with public debt more than 90 percent of gross domestic product had significantly slower growth. It lied.
House Budget Committee Chairman (R) Paul Ryan, the notorious shill for the rich, referred to the Reinhart/Rogoff study in his 2013 budget, “The Path to Prosperity: A Blueprint for American Renewal.” He said, “Essentially, the study confirmed that the massive debts of the kind the nation is on track to accumulate are associated with stagflation — a toxic mix of economic stagnation and rising inflation.”
It is a lie — a lie that was obvious to those who understand Monetary Sovereignty, though it is a lie widely believed by a brainwashed public.
And when faced with the facts, Reinhart and Rogaff didn’t even have the decency to admit their errors. Instead, they announced, “. . . we are very careful in all our papers to speak of “association” and not “causality”. . . ”
Get it? They now say, the paper cited by politicians to “prove” big debt causes slow growth, doesn’t do that at all. They now say, slow growth may cause big debt, rather than the other way around. Maybe. Possibly. Or not. Summary: This much lauded paper is so filled with errors, it shows nothing and proves nothing. It’s a nothing.
Remember, not once, had Reinhart/Rogoff ever complained that their (false) research results were being misused. Instead they sat back and bathed in the warm glow of esteem provided by the austerity plotters, while millions suffered and died as a result.
Never did Reinhart/Rogoff say, “Our research provides no reason to cut Social Security, no reason to cut Medicare, no reason to fire federal employees, no reason to cut food inspection, drug inspection, food stamps and NASA, no reason to cut postal service, aid to the poor, aid to states and rebuilding of infrastructure, no reason to cut aid to education, anti-pollution efforts, ecology protection and R&D.”
Even now, Reinhart/Rogoff defend their findings by saying their data have “many nuances of alternative interpretation” (their words). “Many nuances of alternative interpretation”?? Isn’t that academic-speak for, “We are as likely to be wrong as right, but we won’t admit it.”
Bottom line, the need for deficit reduction is a monumental lie backed by quack-science.
John Boehner lied when he said America is broke. Obama lied when he said America needs to live within its means. The Republicans lie every time they say federal spending should be reduced. The Democrats lie every time they agree with the Republicans and Obamausterity.
They all are paid to lie by the .1%, via monster campaign contributions (Thank you, right-wing Supreme Court) and promises of lucrative employment after they leave office (aka being “Clintonized”). The rich want the gap between them and the rest to widen. They want to press the middle class down into poverty. They want to increase their power over the people. Reinhart/Rogoff were complicit in the plot.
Federal spending costs the taxpaying public nothing. Not one cent. But what does cost the public dearly is austerity. It costs in lost jobs and lost income. It costs in hunger, homelessness and crime. It costs in lost happiness and lost hope.
The rich claim our grandchildren will pay the federal debt. A lie. Our grandchildren will pay for the poverty our austerity passes down to them.
Will the revelations about the Reinhart/Rogoff “research” affect Obamausterity. Will the Republicans and the Democrats rethink their relentless drive to impoverish America, while widening the gap? Will they base their actions on economic fact rather than on myth?
Did fact keep despots from burning witches at the stake?
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