●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.
HOW MONETARY SOVEREIGNTY BEGAN
Sometime in 1993, for reasons unknown, the words of a former teacher — I believe a high school teacher — rose to my conscious memory: “All money is debt.” Perhaps way back then, I had been reading about America’s “unsustainable” debt growth as being a “ticking time bomb.”
I recall wondering why, if debt growth really were unsustainable and a ticking time bomb, how were we able to sustain it for so many years, and why hadn’t that old bomb exploded by now. The mystery would be explained if my teacher were correct, that indeed, all money is debt.
Money is sustainable and surely not a ticking time bomb.
So I thought and thought — for three years I thought –and jotted down my thoughts. By 1996, those jottings turned into a book titled, “THE ULTIMATE AMERICA — UNLIMITED POWER AND TOTAL CONTROL.
The book’s final words were:
I wrote the Ultimate America, because I believe the country is in danger of making the most terrible mistake of its economic life — the drive toward a balanced budget. My hope is that you will see the same danger I do, and will contact your friends, relatives and especially your representatives in Congress, to help them see the danger, too.
If enough of us understand the problems and the solutions, our precious country may be saved. That is what I believe.
It was my original writing on Monetary Sovereignty, though I didn’t use the term at that time. What I see now as predictable, I wasn’t able to find a publisher. So I self-published and sent free copies of the book to everyone in Congress and to hundreds of media writers and business people.
Back then, I believed the truth alone would save America. I didn’t yet understand the motive.
A year later, I edited THE ULTIMATE AMERICA, and the result was FREE MONEY, PLAN FOR PROSPERITY. It ends with these words:
A growing economy must have a growing supply of money.
The federal government is the only U.S. entity that can create an unlimited amount of money.
Therefore, the federal government can and should end its borrowing and taxing, and very simply, create the money needed to grow our economy.
By 2009, realizing that a few thousand books would not make a dent in the public’s mindset, I began this blog, trying to reach more people with the message.
As FREE MONEY also couldn’t find a publisher, I again had decided to self-publish, and in addition to giving copies away, sell it on Amazon. In 2010, someone at the University of Missouri, Kansas City bought and read FREE MONEY. I was invited to speak before one of Randy Wray’s classes. You can read the full text of the talk, here.
I flew down there, gave the talk, and only later that evening, at dinner with Randy and others, did I discover I was not alone. I never had heard of Warren Mosler’s Modern Monetary Theory (MMT), and sincerely believed my talk would be ill-received. I was shocked that people actually agreed with me, a rare experience.
In short, my invention had been preceded.
By 2010, though I agreed with virtually all of MMT’s economic descriptions, and most of its recommendations, I began to discover enough differences (especially regarding the need for taxes, the prevention of inflation and the cure for unemployment) that I decided to differentiate my “invention” by giving it the name, “Monetary Sovereignty” (MS).
WHERE WE ARE NOW
For many years, I had agreed with MMT that the problem we faced was one of ignorance, and if only we could phrase our beliefs in ever simple enough terms, politicians, economists, the media and the people eventually would “get it.”
Though we were right about the people — theirs really is a problem of ignorance — it was a great conceit on my part to believe that of the President of the United States, every member of Congress, every member of the Counsel of Economic Advisers, every mainstream economist and media writer — every single one of them — not one was bright enough to understand what I understood: The clear and obvious facts of Monetary Sovereignty and the disaster of austerity.
Even were I vain enough to believe I’m smarter than most of them, I knew no one should think of himself as smarter than everyone. No, it couldn’t be ignorance that separated those who understood MS from those who seemingly didn’t.
It couldn’t be ignorance that had virtually everyone claiming the debt and deficit were too large and that by some magical mathematics, austerity would grow our economy. It had to be something else.
I asked myself, “Who benefits from austerity,” and the answer came: The upper .1% income group — the super rich — benefits, because deficit reduction invariably involves reducing programs that benefit the middle- and lower-income classes.
The rich are not rich because the have a lot of money. They are rich because they have a lot more money than the rest of us.
It is the gap that makes them rich. Without the gap, no one would be rich, and the wider the gap, the richer the rich are.
It instantly became clear that the super-rich were bribing the politicians (via campaign contributions and promises of lucrative employment, later), the media (via ownership) and the economists (via contributions to universities, ownership of the publications in which economists needed to publish and lucrative employment).
The rich were bribing all the opinion-makers, who in turn were brainwashing to public into believing that something that never worked, and by definition cannot work, somehow not only worked but was necessary and prudent.
Early this year, I began to discuss this bribery (which was amplified by the right-wing, Supreme Court’s Citizen’s United decision), and ever so slowly, ever so tentatively and reluctantly, MMT writers have begun to join in.
I also wrote how the media, the economists and the politicians eventually would tell the world that austerity is a bad idea, and how they knew it all the time.
And it has begun:
Austerity doctrine is exposed as flimflam
By Katrina vanden Heuvel, Published: April 23
The austerity claque got it wrong. And the harsh bill is being paid by millions of Americans and millions more in Europe in jobs lost, homes foreclosed, families split apart, hopes crushed.
They can’t repay the costs of their folly. We don’t really need an apology. But could they at least get out of the way so we could get on with the jobs programs that we should have undertaken years ago?
Austerity has been tried and found wanting in practice. Instead of expansion and growth, Europe has been driven back into recession. With Britain’s credit rating downgraded, its economy contracting, its unemployment rolls soaring, its debts rising, three years of rosy forecasts shredded, Tory Chancellor George Osborne’s tears at the lavish funeral for Margaret Thatcher may well have been for the burial of his own reputation.
The IMF, once a bastion of austerity economics, has admitted its errors, warning that austerity is now sabotaging recovery.
So, will the “Fix the Debt” austerity claque, the Republican Tea Party Caucus and McConnell get out of the way so the president and Democrats can pass jobs programs to put people to work?
Don’t count on it. As the case for austerity was eviscerated, Simpson and Bowles came out with yet another austerity plan, once more calling for urgent reforms to cut Social Security and Medicare benefits in order to avoid economic collapse.
Sadly, austerity’s reign of misery continues, even as it has been demolished in theory and practice. We will be freed of austerity’s grip only when those in power return to common sense, fact-based politics and when we hear much more from the unemployed and the immiserated and much less from bankers and their favored economists.
Welcome, Katrina. Hope you don’t get fired.
And then there’s this lift from the previous post’s comments:
Austerity as a bridge to nowhere
By Eugene Robinson, Published: May 7, 2012
Economic austerity is a dangerous, self-defeating intellectual fad. Perhaps I should say that’s what it was, given Sunday’s election results in Europe. Perhaps I should also say good riddance.
Voters in France, Greece and even Germany — a hotbed of the austerity cult — told their political leaders, in no uncertain terms, that boosting economic growth is more important than cutting government spending. Here in the United States, I hope that Democrats, at least, were paying attention; I fear that the addled ideologues who control the Republican Party will never get the message.
One obviously bad option would have been to withdraw from the euro, default on a mountain of debt and slowly climb back from a deep economic depression. Officials in Athens decided to go with a worse option — stay with the euro, impose draconian austerity, muzzle anyone who utters the word “default” — that also sent the country into a deep economic depression with no apparent way out.
What? Could it be that some columnists, chafing under the iron rule of their publishers, actually are ready to speak the truth? (Although withdrawing from the euro would not require default, the truth is here. Right?) Well, sort of:
That loud chorus of “Duh!” you just heard came from the many leading economists who have been screaming at political leaders for years now that we’ll never cut our way out of this economic slump and instead must grow our way out. It is obvious that deficits, debt loads and entitlement spending have to be brought under control — but equally obvious that the necessary adjustments should be made when the economy is going great guns, not when it’s gasping for air.
It’s the TRUTH that is gasping for air. Suddenly “many leading economists” have been saying it “for years now.” (“Many” means about half dozen, mostly from UMKC. I’ve been saying it for almost 20 years, but my voice has been a tiny squeak, while standing next to a roaring jet engine built by Koch, Peterson et al.)
We seem to have arrived at the segue where:
1. Austerity is good and necessary
2. No, wait. Austerity is good, but it’s bad right now. It’ll be good later.
3. No, wait. Austerity is bad today and bad tomorrow, and we always knew it.
Someone tell Obama. He’s still stuck at #1.
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