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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Let’s remind ourselves of the basics. The U.S. federal government is Monetarily Sovereign. It cannot run short of dollars. It can create unlimited dollars to pay any bills. That is what “sovereign” means. It needs to stop spending only in the face of an inflation it can’t cure. Otherwise, it can spend, forever.
You and I and every company are monetarily non-sovereign. We cannot create unlimited dollars. We must stop spending when we run out of dollars. That’s what non-sovereign means.
The same is true of Illinois, Cook County, Chicago, France and Greece. They too are monetarily non-sovereign. Unlike the U.S. government, but like you and me, they can run short of money.
That is the difference between Monetary Sovereignty and monetary non-sovereignty. (If you don’t understand the difference, read: Monetary Sovereignty: The key to understanding economics.)
The difference is what brings me to a Rick Unger article that recentlyappeared in Forbes Magazine:
Nation’s Largest Theater Chain Cuts Employee Hours To Shirk Obamacare Responsibility
Get that “Shirk Responsibility” bit? You see, the federal government, which has the unlimited ability to create its sovereign currency, has passed the “responsibility” hot potato to the private sector. That’s considered fiscally “prudent.”
But, if the private sector, which cannot create dollars at will, doesn’t want the responsibility, Rick Unger calls it “shirking.”
In other words, the theater chain doesn’t care to pick up any additional cost as a result of providing health benefits to employees. Their answer —like much of the fast food industry—is to simply cut back on the hours its employees are permitted to work, denying employees not only reasonable health care benefits but the opportunity to earn a living.
In this way, the company is able to sidestep the requirement of the ACA which obligates employers to provide the benefits to employees working 30 hours a week or more.
Of course, if the government doesn’t care to provide health care benefits, it simply cuts back on federal spending, thus denying citizens reasonable health care benefits and the opportunity to earn a living.
In this way, the government is able to sidestep its obligation to care for its citizens.
Interestingly, a manager who spoke with Fox News blames the problem on the law—not his employer— saying, “Mandating businesses to offer health care under threat of debilitating fines does not fix a problem, it creates one. It fosters a new business culture where 30 hours is now considered the maximum in order to avoid paying the high costs associated with this law.”
That man is smarter than Fox News, Rick Unger, and 99% of Americans, who claim it’s the private sector’s obligation to pay for what the federal government refuses to pay.
I can’t help but wonder if this theater manager is aware of the fact that the company employing him brought in $2.8 billion in revenue in 2011 or that profits were so good in 2012 that the top executives got huge pay increases and bonuses?
How shocking. $2.8 billion! That comes to about 1/1000th of the amount that our “broke,” Monetarily Sovereign government took in last year. Not that it matters, because unlike Regal, which relies on income to pay its bills, the federal government could pay all its bills even if it had $0 income.
I suppose it does become difficult to provide healthcare benefits to those responsible for making the local theaters run successfully when the top executives are taking millions of the profits in annual pay increases.
But not nearly as difficult as it is for President Obama — whose health care is 100% subsidized, who is treated like a king, and who will make many, many millions when he leaves office — to claim that Medicare needs to be “reformed” (i.e. gutted), and to pass the obligation on to the private sector.
As you consider where to watch the film of your choice, you might also keep in mind that many of the people you rely upon to make your movie going experience a good one are doing so without the benefit of health insurance coverage for their own families.
As you consider who should receive your vote, you might also keep in mind how many Americans are doing without the benefit of health insurance, because the government, which easily could afford it, has shirked its responsibilities.
If possible, chose to take the family to a theater that is not a part of the Regal chain. And if the movie you wish to see isn’t playing somewhere else, wait a few months and watch it at home.
By doing this, it won’t take long for the movie studios that supply the films to recognize that Regal’s behavior is bad for business and for the Regal executives to grasp the notion that treating their employees in this way means that their 2013 bonuses and pay raises will not be quite so sweet.
Great idea. Brainwash the private sector into turning on itself, like a pack of snarling dogs fighting for a bone, when their master has an unlimited supply of bones.
The upper .1% has done a wonderful job convincing us the federal government needs our money more than we do. So sure, blame the private sector for lack of health care, lack of education, lack of roads and bridges, lack of retirement income, too much unemployment and too little economic growth — whatever is lacking, blame the private sector.
Then tell me why we pay Congress and the President, if their big plan — their “Grand Bargain” — is to pass more and more of their obligations on to the private sector.
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 
The private sector is too weak financially to supply social goods like health education pensions public utility, infrastructure and services.Have you seen the green parties county local election campaign? Video?
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the 1% has also done a great job of blaming the government for all of our ills; the same government that provides them with every sort of backstopping they need in order to bribe politicians, create favorable legislation and on and on. Aren’t these wolves part of the private sector? You vote for those who make it all possible, no? You put your faith in that slimy group, no? The lesser of two evils, right. Well the lesser of two evils will not formulate and put into action the policy changes necessary for the Federal Government to put into place what some believe is reality. The banks rule the roost, unfortunately.
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The professors are growing some. The world is changing…
Anyone reading your comment should be up in arms for an insult to their intelligence. Governments bones are not the same as goods and service bones. One requires pushing on a key and redistributing (not creating) purchasing power, the other requires work, sweat, effort.
http://globaleconomicanalysis.blogspot.com/2013/04/explosive-video-on-fractional-reserve.html
I see a glimmer of hope.
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Flash,
Whose comment is an insult to intelligence, the original essay by Mr. Mitchell or one of the responses? This isn’t a trick question.
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More smart men…
http://m3financialsense.blogspot.com/2013/04/john-hussman-optimist.html
Government spending is nothing more but the high-jacking of purchasing power for non-productive capacity. Either we learn to live with a smaller government or the US will lag up and coming third world nations like China and Brazil. The difference between these is simply the size of governments. You can guess where the governments are larger relative to population.
We are going down the whole really quick.
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Government spending is nothing more but the high-jacking of purchasing power for non-productive capacity.
Ummm, no. Government spending creates (not redistributes) purchasing power for productive capacity, unless the economy is already at full employment, which is very rare. In the US, hasn’t happened since WWII, or generously speaking, a short time in the late 1960s.
Because the US is a rich economy, as Keynes understood and explained, it has been unable to run a full employment small government economy since 1926 ( WIlliam VIckrey’s date) or maybe 1907 (Harold Vatter & John Walker’s date) . The small government economy you want and wrongly think is beneficial is something that has been practically impossible for around a century. The richer the country becomes, the harder it becomes to understand the economy in non-Keynesian terms, the more important and inevitable and beneficial an increasingly large proportion of monetarily sovereign government spending becomes.
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I agree that government has -short of inflation- has the capacity to initiate a responsible economic system. The question is: how do we initiate the spark? Do we not need a policy mechanism, a feedback circuit that will initiate a regenerative (sustainable) virtuous cycle that everyone –including the .1% and their stooges– will support?
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RANDOM OBSERVATION
Euro-zone nations doomed themselves to a permanent depression when their politicians surrendered their Monetary Sovereignty.
Since those nations no longer have their own money, they must sell bonds, or else beg for loans from the IMF and from Germany (i.e. the ECB in Frankfurt).
The latter create loan money on their computer keyboards. Germany is staunchly opposed to the creation of a European banking union, because euro-zone nations would expect such a union to give them money (not lend it, as the ECB does now). This would reduce some of Germany’s power, and perhaps undermine the austerity propaganda.
Today German Finance Minister Wolfgang Schaeuble said, “Reducing deficits is an absolute must.” Meanwhile Jens Weidmann, president of the Bundesbank, (Germany’s central bank) said that to ease austerity, “Would be to repeat the mistakes of the past.”
As a result, euro-zone nations (other than Germany) keep falling further into debt. Local politicians on the Troika payroll use this debt to justify more austerity, which justifies more debt, which justifies more austerity.
All because of the euro currency.
The Business Insider blog rationalizes this genocide by claiming that austerity is, “A consequence, not a punishment.” It implies that Europeans “lived beyond their means,” and must now pay the bill.
“The governments of the developed world amassed huge sovereign debts in the course of the Debt Supercycle. As interest rates fell, borrowing to finance consumption and spending became easy. But now that decades-long supercycle has ended.”
Blah-blah-blah. This gibberish extends to 6,000 words, and includes a pathetic defense of the Rogoff-Reinhart fraud.
Question: “Since leeches make the patient’s anemia worse, why do we keep adding more leeches?”
Answer: “Because of the Debt Supercycle, blah-blah-blah…”
These bastards say ANYTHING to distract readers from the simple fact that the euro currency causes all the euro-zone’s economic problems.
http://www.businessinsider.com/austerity-is-a-consequence–not-a-punishment-2013-4#ixzz2R4aG4Imu
By the way, since the Vatican City uses the euro, the Vatican too has fallen into ruinous debt, and is imposing austerity on its 4,000 employees, which range from gardeners and gendarmes to clerks and cleaners. Francis, the new pope installed on 15 March, has terminated the bonus that traditionally comes with the election of a new pontiff. Until now, Vatican employees received cash gifts on the death of a Pope, and another cash gift with the election of his successor. In 2005, when John Paul II died and was succeeded by Benedict, Vatican employees received 1,500 euros each.
No more. The Vatican posted a 15 million-euro deficit in 2011. Now it is probably 20 billion euros, and climbing.
The new pope lives in a modest Vatican accommodation block instead of the palatial apartments inhabited by his predecessors. He has shunned official Vatican limousines in favor of minibuses. He wears plain black shoes instead of the soft red loafers favored by Benedict. He eats with priests in the Casa Santa Marta, the Vatican ‘hotel’ where he is living. He does ANYTHING to keep the euro currency, and worship the Troika bankers.
Actually this is poetic justice, since the Catholic Church has always sided with the rich against the people. (The only exception was “Liberation Theology” clerics in Central America, who were de facto excommunicated by the Vatican.) Now the Church is being eaten by the same demons it has always been allied with.
Of course, politicians impose austerity even when their nations still have MS. In the UK, hundreds of thousands of Britons now rely on food banks and other charities. The Trussell Trust (a charity that works with local communities on maintaining food banks) said the number of people coming for food doubled last year, and will double again this year. People in Tower Hamlets (one of London’s poorest districts) gaze up at the money gods, represented by the gleaming signs of HSBC, Barclays, Citigroup, etc.
The more that austerity causes poverty, the more David Cameron and his finance minister (George Osborne) vow to impose even more austerity. Osborne is so fanatically pro-austerity that he regards Troika bankers as “Keynesian” (his word).
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Mark,
I would condense your lengthy observation as both educational and as a good description of the negative feedback loop (vicious cycle) now in operation where ever austerity is imposed.
I’m working on a positive loop in concert with General Systems Thinking, MS and MMT. I’m however trying to channel my anger into forceful statements of principle without compromise. I don’t feel the future belongs to walking the fence. It will be all or nothing, sink or swim, for 7 billion citizens. And I really don’t think this can go on forever- or another century – or even another decade without hell breaking loose. Evolution is only so patient.
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