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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By now you may have seen articles like this one:
Huff Post
Influential Reinhart-Rogoff Pro-Austerity Research Riddled With Errors: StudyInfluential 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
Monetary Sovereignty
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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 
A good article, but for one, really ignorant comment. The article is:
The ignorant comment is: “Governments obviously need to be able to borrow, and nearly every government does so.” A Monetarily Sovereign government does not need to borrow.
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People are grossly more concerned with how everyone else they identify with thinks and believes, rather than what the objective truth actually is. Especially when considering how these subjective affirmations they credulously endorse effect their personal lives and are dreadfully fearful of the obvious alternative realities, so much so that they almost close their minds to rational discourse. This fear of facing reality is enhanced when acceptance might either change behaviors they fancy, and or positions they enjoy, subjecting them too seriously moral dilemmas.
Its funny, three things that effect humans so much in their daily lives, money, diet, and morality, are based on myths, misinformation, and lies. I certainly dont want to offend any one, but like Dave Dennet says, how do you tell someone, who has spent their whole life defending, believing, participating.acting upon, and maybe even defining themselves by something , that they are wrong without insinuating they wasted their time or hurt themselves and maybe somebody else, without at least offending them.
He was referencing religion, i added it to economics . Diet would be related to the myth humans need meat for nutritional health, and the environmental costs associated with this in feeding the growing worlds population a meat based diet, not to mention the obvious horror inflicted on the animals..
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Rodger,
Would you agree that the danger zone for private debt is 90% of GDP? I think that’s around where it was in 2005.
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Tyler,
Not sure what you mean by “private” debt, but if you mean all domestic debt that is not federal debt, it far exceeds GDP:
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Rodger, what would the reason be for the deviation around 1984? The domestic non federal debt, i.e. private debt seems to have begun its acceleration from then on. Until then it sort of kept pace with GDP. Does Reaganomics have to do with it? Also sort of coincides with Thatcherism
The privatization of public services began around this time?
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Rodger asks, “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?”
>>No. Actually, no human society has ever operated based on facts. All societies are governed by myths whose purpose is to maintain the social pecking order. Witches were burned for political reasons, although people pretended it was for religious reasons. (All religious dogma is political ideology.) Politics is about social hierarchies, and politics is always based on myths. The euro-zone’s myth is that it must have a single common currency. America’s myth is that the U.S. government is “broke” or “in debt.” Even in “socialist” North Korea there is the myth of “songbun”; a caste system in which your status and material comfort are assigned to you at birth. Your power, your luxury, even the amount and quality of your food depend on the political, social, and economic background of your personal ancestors. Despite this caste system based on family background, the North Korean government claims that all citizens are equal, and there is no discrimination on the basis of family background. It’s as ridiculous as the Western caste system based on money.
Yes, all human societies run on myths, denial, illusions, taboos, fantasy, hypocrisy, and lies. And within each society, most people uphold their society’s lies, in order to maintain their personal place in the pecking order. If all Americans stopped believing that the US government was “broke” or “in debt,” then this would undermine the lie that the poor deserve to be poor, which in turn could make middle class people feel less secure. Show me someone who smugly rejects the facts of Monetary Sovereignty, and I’ll show you a peasant who worries about falling several notches in the social pecking order. The more insecure he is, the more smug he is. Thus, for most people (not just the rich and their puppets) the facts of Monetary Sovereignty are taboo and forbidden. Not just “incorrect,” but sacrilegious. Not just “false,” but blasphemous.
In all human societies, any fact that threatens the social pecking order is odiously, heinously, hideously “wrong.” To mention facts is to incur penalties. And the more the social order causes pain, the more everyone clings to the lies that sustain the pain. It has always been this way, and perhaps always will be.
Speaking of lies and social status, that author Carmen Reinhart went from a penniless Cuban alien to the Peterson Institute in Washington, and later was given a professorship at Harvard as a reward for being a lifelong toady for the rich. Everything she and Kenneth Rogoff publish is meaningless gibberish and flat-out lies, designed to justify more austerity and a larger wealth gap. They are respected because average people tend to uphold the exact same lies for the exact same reason (maintaining their place in the pecking order)
Now their Rogoff-Reinhart garbage is challenged by alternate garbage from Michael Ash and Robert Pollin, two economics professors at the University of Massachusetts Amherst. They and Thomas Herndon (an economics doctoral student) co-wrote a paper titled: “Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff.”
It too is garbage because it maintains the Rogoff-Reinhart lie that the debt-to-GDP ratio is important, even when a nation has Monetary Sovereignty. It’s just that the authors do not agree that a 90% debt-to-GDP ratio is necessarily the end of the world. I suppose this is better than nothing, but the paper does not speak the whole truth. It is a deficit dove document, and therefore supports austerity.
Republicans and Democrats. Deficit doves and deficit hawks. All of them pretend to “disagree,” yet all of them push for austerity. All of them call the U.S. national assets (i.e. the amount of T-securities purchased) a “crisis.” They only vary on the timing. Hawks and Republicans say the “crisis” is today. Doves and Democrats say it is tomorrow. They all want to reduce the federal deficit by cutting social programs (hawks and Republicans) or increasing taxes (doves and Democrats). Either way the public is screwed.
Of course, that’s how most of the public wants it.
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Ralph Nader, be quiet.
He’s at it again, once more calling for an increased minimum wage, which can only result in higher unemployment and a worsened depression — UNLESS politicians increase federal spending. An increased minimum wage is austerity for employers. When this austerity is combined with federal budget austerity, the result is more poverty and unemployment.
Unless you attack austerity directly by calling for increased government spending, you will only worsen the depression, and widen the wealth gap.
Ralph Nader: “John Hammergren, CEO of McKesson Corp., received over $131 million last year, wbhich is equal to about $63,000 per hour. Meanwhile those on minimum wage made just $15,080 at $7.25 per hour. Mr. Hammergren had surpassed that amount by 9:15 a.m. on his first workday of the year. “
Yeah? You don’t like it, Ralph? Then quit calling for austerity. Learn the facts of Monetary Sovereignty. Until then, you will do more harm than good.
On 21 March, Rep. Alan Grayson introduced HR 1346 to increase the minimum wage to $10.50 per hour. This makes sense, since Grayson is a Democrat, and rich. Democrats want to impose austerity on small employers. Republicans want to impose austerity on workers. Either way, the public is screwed.
Ralph Nader: “Critics argue that increasing the minimum wage will harm the economy. In fact, when low-wage workers receive a wage increase, they spend that money back into the economy to pay for the necessities of life.”
Excuse me Ralph, but how can workers do that when an increased minimum wage causes them to be fired?
Ralph Nader: “In 2011, a Chicago Federal Reserve study showed that for every dollar increase in the hourly pay of a minimum-wage worker, the result was $2,800 in new consumer spending from that worker’s household over the year.”
Ah, yeah, theoretically, assuming, of course, that the increased minimum wage doesn’t cause that worker to be LAID OFF.
Ralph Nader: “Studies from the Economic Policy Institute indicate that a $10.50 hourly minimum wage would increase economic activity by at least $30 billion over each of the first two years and add 140,000 jobs.”
Gosh Ralphie, where would that $30 billion come from? Remember, you want to increase federal taxes. And elsewhere you have agreed that the deficit is a “problem,” which means you favor austerity. So where would that $30 billion come from? Loans from Wall Street? Great! Debt on top of austerity!
Yo Ralphie, the ONLY solution is lower federal taxes and MUCH higher federal spending. Until you understand that, keep quiet.
http://www.counterpunch.org/2013/04/17/americas-miserly-minimum-wage-needs-an-upgrade/
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See results of IDM Forum Poll of Economic “experts” from April 9.2013.
Center of the Universe simply says: “Wall of Shame.”
http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_3HK5k8CCffR7iV7
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Classic example of so-called “economists” from MIT, Harvard, Yale, Berkeley, Chicago, Princeton and Stanford being totally clueless about the differences between Monetary Sovereignty and monetary non-sovereignty.
And they pass their “world-is-flat” misinformation down to our kids.
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THE BLACK HOLE TAX
Yesterday Rep. Keith Ellison (D-MN) made his own call for austerity by filing HR 1579, the “Inclusive Prosperity Act.” It seeks a financial transaction tax, in order to “provide hundreds of billions of dollars in revenue annually at a time of great need, and allow the U.S.to join the rest of the world in a growing system of financial transaction taxes.”
Eight Democrats co-sponsored it.
It never ends, aye? Democrats pretending to “represent the people,” when they actually push for austerity-via-taxes.
In addition, Democrats introduce show-bills they know have zero chance of passing, but which make them look like Robin Hoods. An example is HR 1579. It went to the House Ways and Means Committee, which is 60% Republican, and is chaired by Michigan Republican Dave Camp. The committee chairman decides whether to assign a bill to a subcommittee, or just let it die. HR 1579 has zero chance.
Ellison says his tax “Will reduce harmful market speculation. Gambling on Wall Street does not benefit our society.”
If the tax actually did that, I might support it as a variant of the “sin tax” idea. But to impose a tax on Wall Street is pure fantasy, since Wall Street owns Congress. Also, I might support such a tax if ALL revenue went DIRECTLY to the states. But none of it will.
This Saturday at Murrow Park in Washington DC there will be a rally to support the “Robin Hood Tax,” which is really a Black Hole tax. Take from the rich and give to the void, since tax revenue is destroyed upon receipt. Demonstrators will include members of the Robin Hood Tax Campaign, Friends of the Earth, and the National Organization for Women. I could go there and explain the facts of MS, and explain that this tax is austerity, and is a scam, but they would lynch me.
University of Massachusetts-Amherst economist Robert Pollin claims that Ellison’s bill would generate up to of $300 billion per year in tax revenues. “These funds would enable us to fight against the austerity-agenda cuts to Social Security, Medicare, public education and other vital social programs.”
I love it! “To fight austerity, we must increase austerity, via taxes.”
Meanwhile across the Atalantic, in the euro-zone, the core nations are in the process of implementing a financial transactions tax in order to further extract wealth from the peripheral nations. Not only are the latter crushed by debt they can never repay (since they surrendered their MS); they will now have to pay even more to Troika bankers if the nations want to sell bonds.
Nonetheless, the peripheral masses will cheer, even as the tax accelerates their fall into poverty.
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Besides lamenting on sympathetic and frustrated internet posts, how the hell do you make a dent in the public domain. Obviously if you have money you can run adds, maybe produce movies that express subliminal messages, and if your highly successful and branded some one might promote you on talk circuits. Mosler made an unsuccessful bid for senator, and even with his wealth he hardly caused a stir. Without massive campaign dollars behind you there is no shot going against the redumpkins. How about getting this information out to someone like Jessie Ventura.. He might be the only one today that stands any outside chance of stirring up the pot or media as an independent. He seems like he actually cares,I dont think he has any economic agenda, not his fault he doesnt understand macroeconomics, and he is honest enough to admit it. Right now he subscribes to Ron Pauls ideas, how do we approach him?, he loves conspiracies, and this one might be the biggest.
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Rodger,
Joe Weisenthal has a great post here: http://www.businessinsider.com/america-is-not-drowning-in-debt-2013-4
It looks like financial debt should not exceed 80% of GDP if we want to avoid another financial crisis.
Also, household debt should be kept below 60% of GDP. It’s been above that since the 1990s and we’ve had numerous recessions.
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Rodger,
Just one passage in your article I didn’t quite agree with. You refer to “austerity in Europe and the U.S.” at the start of your article as if the explanation is the same in each case. There is actually a distinction between the two. U.S. austerity is driven entirely by economically illiterate debt-phobes like Rogoff. As to Europe, the dominant country there, i.e. Germany is certainly wary of inflation, and errs on the side of caution. But that’s unimportant compared to the inherent problems of a common currency.
I.e. the basic reason for periphery austerity is that periphery countries cannot devalue – at least not in a hurry. Instead of dealing with their lack of competitiveness overnight via devaluation, they get their costs and prices down via years of austerity.
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It was a quote.
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