Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
●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 ultimately 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.
I subscribe to the Daily Bell, a very good online paper, which about itself says,
Welcome to The Daily Bell – home of the Internet Reformation and of Free-Market Thinking.
I’m Anthony Wile, and I work hard – together with my team of advisors, writers and editors – to bring you cutting edge, freedom-oriented, sociopolitical and economic analysis and solutions.
. . . we don’t believe in the massive solutions that are evidently and obviously run by a handful of elitist individuals for their own benefit rather than for yours or mine. We believe “smaller is better” – and that the most successful and livable societies offer people the ability to influence their communities in a positive way at a local level.
Ah, yes, the “smaller is better” slogan as in “America would be better if it were smaller in size?” No? Not that one? How about, “America would be better if its people had less (a smaller supply of) money? No? What about a smaller oil supply? Smaller research & development? Smaller highway system? Smaller rivers? Smaller mountains?
Funny, how when all your thinking begins with a little slogan, your thinking becomes little, and you find all those exceptions to your fixed beliefs — which brings me to an article that appeared in The Daily Bell, today”
The Daily Bell
Krugman Misses the Point
By Anthony Wile
Paul Krugman recently published a column called “The Unbearable Lightness of Being Right.” In it, he once again explains failures of so-called “austerity” and defends his own perspective, which is thoroughly Keynesian.
Now, within the context of free-market economics, we’ve long been anti-austerity but not for the reasons that Krugman advances. Krugman believes that austerity is wrong because governments ought to print lots of money from nothing. This is basically a Keynesian point of view and it is one he advances relentlessly.
Not sure to what Wile objects, the “lots of money” or the “from nothing.” America is big (not small) and big countries need “lots of money” to grow, or even to survive, and yes, a Monetarily Sovereign government creates money from nothing.
So what’s the problem other than “print lots of money from nothing,” though necessary, sounds oh, so reckless to the uninformed?
We believe austerity is a wrong approach from a theoretical standpoint because it is one that uses government to correct government excesses.
Wile doesn’t define “government excesses,” but whatever they may be, they surely are different for a monetarily non-sovereign government, which can spend beyond its means, vs. a Monetarily Sovereign government, which having no “means,” never can spend beyond it.
This is not to say that shrinking government is bad.
Nor does it say that shrinking government is good. But yes, he believes “smaller is better,” so a smaller government must be good. After all, that is his slogan, and the world must fit within it.
But it ought to be accomplished with a broader agenda in mind, one that acknowledges the larger failures of regulatory democracy generally.
Here we get to an important point. Never, and I mean NEVER, does Wile acknowledge the ongoing, horrific failures of austerity, everywhere in the world it has been tried.
Every depression in U.S. history has come on the heels of austerity. The Great Depression was caused by austerity, then worsened by more austerity.
The recession following Bill Clinton’s reign was caused by Clinton’s austerity. And please don’t even ask about the euro nations and their austerity.
Admittedly, saying austerity is “wrong” or “isn’t wrong” is like saying bunting in baseball is wrong.” It depends on the circumstance.
For monetarily non-sovereign governments (the euro nations, the American states, counties and cities), austerity may be “right” to the degree it’s necessary.
These governments cannot create their sovereign currency, simply because they don’t have a sovereign currency, so eventually they can run short of money. Under that circumstance, they may need austerity, heaven help them.
For a Monetarily Sovereign government (the U.S., Canada, UK, Australia, Japan, China), austerity is “wrong,” always has been “wrong” and always will be “wrong.”
Austerity removes money from an economy which by definition (GDP = Federal Spending + Non-federal Spending – Net Imports) is recessive.
Further, a Monetarily Sovereign government, having the unlimited ability to create its sovereign currency, has only one reason to adopt austerity: An inflation that could be controlled otherwise.
Of course, for a Monetarily Sovereign government, there is no such thing as an inflation that could not be controlled otherwise, because such a government not only can control its money supply, but also can control its money’s value. That is what being “sovereign” over your currency means.
Thus, for a Monetarily Sovereign government, austerity always serves only to widen the gap between the rich and the rest.
Sadly, Anthony Wile, not understanding the many differences between Monetary Sovereignty and monetary non-sovereignty, writes an article that in essence says “bunting always (or never) is wrong.”
Those who don’t understand those differences do not understand baseball or economics and surely should not comment on either.
Even if government gets it right, it will eventually get it wrong. Austerity policies merely substitute one kind of official action for another.
Here, “austerity is seen to be neutral. Never mind that austerity always makes the poor and middle suffer. . To Wile, it’s just “one kind of official action,” maybe something like changing the design of the flag.
Krugman acknowledges none of this. He is focused, at least most recently, on a study provided by two Harvard economists whose research has come into question.
“Come into question” is Wile’s euphemism for “disgraceful bit of misleading research, that omitted all negative results and didn’t consider the fundamental differences between government financing systems.”
Krugman and others like him always start with the idea that SOME government spending is necessary and justified. The problem is always HOW MUCH. And in Krugman’s case it is even worse. He is determined to cure old spending with even more new spending.
What can one say about this inanity? Does Wile mean that SOME government spending is not necessary?? Does he mean the problem is not HOW MUCH? And what the heck does he mean by “cure old spending”?
And because of the Reinhardt Rogoff reversal, he believes his arguments are justified . . .
Well, Reinhardt Rogoff sure didn’t overturn Krugman’s position.
He is waiting for those who have endorsed austerity to repent, or at least receive additional public condemnation.
So am I, but since the austerians are bribed by the super rich, that won’t happen until the populace gets so fed up with austerity-caused destitution, they begin to drag out the Guillotines.
Overall, it’s hard to think of any previous episode in in the history of economic thought in which we had as thorough a showdown between opposing views, and as thorough a collapse, practical and intellectual, of one side of the argument.
And yet nothing changes. Not only don’t the policies change; by and large even the people don’t change. Reinhart and Rogoff may get a bit fewer high-profile invites, as will Alesina and Ardagna; but Bowles and Simpson are still touring, the same people at the BIS and the OECD are still issuing dire warnings about the dangers of easy money, George Osborne is still making pronouncements, Paul Ryan is still the intellectual leader of his party.
Krugman can’t help himself. Even when addressing an economic issue, he ends up politicizing it. He is at heart a political animal, whose economic principles revolve around statism and support big government nostrums. Of course, he would not be writing for the big-government New York Times if he supported anything else.
Wile says Krugman is wrong because he’s political, as though austerity were not political.
Krugman is certainly correct about austerity, but not for the reasons he believes. Forced confiscation always reduces prosperity as price-fixing must do, by introducing distortions into the marketplace.
No, it’s not the “distortions” that are the problem. It’s the “forced confiscation.” Money and livelihoods are being stolen from the masses. Calling austerity a “distortion” is like calling smallpox a health “distortion.”
Krugman hopes for an apology, and for an admission by opponents that their viewpoints have been supported by a research paper with computational flaws. This perspective almost entirely misses the point.
Actually, Krugman hopes, not for an apology, but rather for a realization that austerity is and always has been a death sentence for an economy, and serves only to make the lower and middle classes sink deeper and deeper into misery, while the rich celebrate.
Gee, Mr. Wile. I feel the same way.
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. Click here
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%
10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt
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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports