Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
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 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.
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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 WilePaul 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.
Here’s more:
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.
Don’t you?
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. 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
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Rodger,
Most people have trouble with “more is better” when it comes to money/currency supply because most economists advocating increased spending via federal government money printing don’t explain that says law, which most people implicitly believe, is NOT true.
Most people (the 99%) think that money printing is trying to “get something for nothing”.You spend a ton of time complaining about 1% enslaving the 99% via false beliefs in “federal debt is bad” and false “inflation” demons.
Please spend more time teaching the 99% the how process of increasing the currency/supply and spending it and how it interacts with the goods and services production process in the economy and does not necessarily have to create inflation and in fact may help to avert deflation.
Most non-economists (the 99%) think deflation is a good thing because prices go down.
Mansoor H. Khan
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Mr. Khan,
Though I believe your thoughts are correct, the majority of the 99% are beyond learning and therefore teaching. Until conditions reach a point intolerable for the masses you will not motivate them to action. People still are supporting WalMart in vast numbers. How many buy there? I’m not a wealthy person by any means, yet I’ve never set foot in one no matter the savings I might secure. People must remove themselves, if not completely, but to as great a degree possible from this system of slavery. You’ve got to hurt them in the only place they care of, their grimy pockets.
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Hey Rodger……
I’ve never read the Daily Bell or any work by Anthony Wile, so I trust your judgment…..however, how can the paper be “very good” if the creator of said paper can be so misguided? Putting MS aside (as if that were possible), the libertarian\conservative meme of “smaller govt” is truly the dumbest and most ignorant philosophy I could ever imagine, and I can’t see how a publication that even puts the myth of “free markets” in their motto or whatever that was, could ever earn your praise.
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It’s “very good”{ because he publishes thought-provoking pieces. Don’t always have to agree with him, to find it interesting. I recommend it.
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fair enough, like I said…..I’ve never read it
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Almost everything is political. Almost anything can be made political. As far as his statement ” and that the most successful and livable societies offer people the ability to influence their communities in a positive way at a local level”. That is true when it comes to making local political decisions and supporting local enterprises and agriculture in order to remove oneself from the big corporate terminators. I also believe change can only come from the community level upwards. For a nation of this size small government is just delusional. Wile is another moron, most likely a libertarian at heart and a supporter of the mindless Paulians of the world?
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Reply from The Daily Bell (from your comment there, earlier):
…Of course, for a Monetarily Sovereign government, there is no such thing as an inflation that cannot be controlled otherwise, because such a government not only can control its money supply, but also can control its money’s value…”
“Interesting. From Rome to Greenbacks to the Weimer Republic, “sovereign currencies” have always collapsed into actual or near-ruin from over-printing or over-minting … Your comment acknowledges none of that. Those who are unaware of history are destined, etc. …”
Rodger, what a clueless sack of stupidity, this guy, Anthony Wile.
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Additionally, any blog that offers “testimonials” from the likes of morons like Jim Rogers, Doug Casey or Peter Schiff can count me out as a subscriber free or otherwise (apparently it’s a $34.95 value). Typical retread free market/libertarian tripe, through and through. Move on.
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Actually, very few inflations are caused by “over-printing.” Usually, over-printing is caused by inflations. Weimar was a result of onerous punishments put on Germany by the victorious Allies.
The typical process is:
1. Something bad happens — physical or financial disaster of some sort — to a monetarily non-sovereign nation (i.e. a nation linking its money to gold or another currency.
2. The economy falters
3. Trying to save the economy, the government prints paper.
4. The economy continues to sink, so the government prints more paper, in an endless downward helix.
Remember, Weimar lasted only three years, after which Germany “printed” enough money to build the greatest war machine the world had ever known.
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And I’m sure the government would have nothing to do with with the accidents on step one.
Hint, it’s no surprise countries end up in a war, convenient scapegoat for policy mistake. How about a financial meltdown and it’s all wall street’s fault. Sure, wall street saved itself.
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Rodger writes, “Actually, very few inflations are caused by “over-printing.” Usually, over-printing is caused by inflations. Weimar was a result of onerous punishments put on Germany by the victorious Allies.”
>>Correct, just as Zimbabwe’s hyperinflation was caused by onerous punishments imposed by the USA. It ended when Zimbabwe stopped using the U.S. dollar as its only currency. Zimbabwe is still being sanctioned and blockaded (like Cuba) but it does not have hyperinflation.
The main point is that “over-printing” does not cause inflation. It’s the other way around. Of course, clowns like Anthony Wile cannot grasp that.
By the way, the Weimar Republic lasted 14 years, not three. And yes, Nazi Germany created its own money. (So much for idiot Jew-bashers who falsely claim that “Jews financed Hitler.” Actually the Nazis financed themselves.)
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Talking about the Weimar hyperinflation.
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[1] Anthony Wile says Paul Krugman opposes austerity. In reality, Krugman supports austerity. Krugman just wants it tomorrow instead of today.
Krugman also claims that the U.S. government has a “debt crisis.” He just wants the government to focus on jobs today, and the “debt crisis” tomorrow.
[2] Anthony Wile says, “We believe austerity is a wrong approach from a theoretical standpoint because it is one that uses government to correct government excesses.”
>>WRONG! The housing bubble and subsequent crash were caused by bank fraud and government deregulation. How does this constitute “government excesses”?
Also, Mr. Wile shows his ignorance when he decries “money printed from nothing.” ALL money is created from nothing. Bank loans and government spending are created from nothing. Even when money enters a nation’s economy from a trade surplus, that money is only created when digital bank accounts are credited. Again, it is created from nothing. It is an accounting notation that represents goods and services, but the money itself came from nothing, is nothing, and goes to nothing. Reason: no money in the entire world is physical. (Gold is physical, but gold is not money, and not currency.)
The lingering fantasy that money is physical is one of the hardest illusions to dispel in people. The other persistent delusion is that a Monetarily Sovereign government is like a private household, and thus has a “debt crisis.”
Both delusions keep the peasants enslaved.
[3] Anthony Wile says, “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.”
>>By “forced confiscation,” I presume that Mr. Wile refers to federal taxes. A lot of right-wing retards think that “austerity” means spending cuts (which they like), but not tax increases (which they do not like). Many of them say that since some euro-zone nations enacted more tax increases than spending cuts, those euro-zone nations have had no austerity at all! Other right-wing retards say that because some euro-zone nations still have budget deficits, they have had no austerity at all!
Folks, in a nation that does not have Monetary Sovereignty, if you wipe out jobs, you wipe out tax revenue, thereby creating a budget deficit — unless you shrink government spending to zero, in which case you have no government, and no monetary system, and thus no money.
[4] Anthony Wile says, “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.”
>>First of all, there is no “problem.” Government spending should increase until unemployment is at or near zero, the economy is strong (regardless of tghe private business cycle), and the government is able to perform its functions. Simple.
Second, I don’t know what Mr. Wile means when he refers to “curing” old spending. Perhaps he thinks that economic problems derive from too much government spending. If so, then he is truly an imbecile.
[5] RODGER writes, “Wile says Krugman is wrong because he’s political, as though austerity were not political.”
>> Yes I caught that too. What blatant arrogance. Mr. Wile implies that spending cuts are right and good and necessary, and therefore “not political.” This is the same self-righteousness that makes people say, “I want what’s yours, and if you question my theft, then you are a terrorist.”
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Mark Said:
“Both delusions keep the peasants enslaved.”
Exactly. The best way to enslave someone is not via “ball and chains” but by keeping them “stupid”.
The method of intellectual slavery has been used for thousands of years by priests to keep the masses serving a small minority (i.e.,the priests) at the expense of the majority.
The “priests” of the current aesthetic developed world are the international bankers and the creditor class they represent.
The “economics” departments in the developed world are their churches and politicians their “useful” idiots.
But (inshallah) their power will be broken as the lie of the usurers is laid bas been bare open by the internet. I consider the internet as the Gutenburg printing press 2.0. Just like the power of the Church was broken by the Gutenburg Bible and other thoughts which were spread by books the power of the international banking cartel will be broken by the internet.
Mansoor H. Khan
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Rodger,
I not an economist by training or by profession but I took a shot at the above suggestion I made:
Please follow the link below:
http://aquinums-razor.blogspot.com/2011/08/what-is-relationship-of-money-to.html
Mansoor H. Khan
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This is news to me, how can a government control the value of it’s currency?
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Governments do it all the time. The most common way is to change the interest rate. Increasing the rate strengthens the currency; decreasing the rate weakens it.
Less frequent, but even more powerful, is revaluing the currency. In 1967, the UK devalued the pound (See: http://news.bbc.co.uk/onthisday/hi/dates/stories/november/19/newsid_3208000/3208396.stm)
In 1994, Mexico devalued the peso (See: http://www.frbatlanta.org/filelegacydocs/J_whi811.pdf)
A sovereign currency is nothing more or less than a creation by a sovereign government, which originally created the currency out of thin air, by passing laws.
That government can pass any laws it wishes. It can create, destroy or revalue its currency, at will. It has total power over its sovereign currency. It also can peg its currency to another currency, which makes their currency monetarily non-sovereign, so long as the peg is in place.
Sadly for the euro nations, they were foolish enough to give up their sovereign currencies — arbitrarily — and adopt an “alien” currency, over which they have no power.
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Not questioning that it’s possible to devalue or strengthen the currency, but you make it sound like the government.y could do it anytime, when the truth is a but different.
A government’s first priority is power. Second is using it’s power to enrich the already rich and themselves. Third is to expand it’s power by ‘giving’ people things, in other words, spending.
When a time warrants cutbacks to assist the currency from collapsing in a similar fashion as the sovereign nations you mention, instead of increasing rates, rates will be lowered to continue spending. Instead of reducing spending, spending will be expanded.
There has NEVER been a good time to cut rates and spending and there will never be. That’s why the nations you mentioned collapses and ours will too.
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” . . . rates will be lowered to continue spending. . . ”
Monetarily Sovereign government spending is not constrained by interest rates.
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As a further clarification I’d say legal and real are very different. Anything real has natural existence while legal can be a belief like the tooth fairy. Legal ” ink and words on paper” are real, but the “reality” of, say, ownership or monetary value are not. We own nothing. It all belongs to Nature or God or the Universe. Money is without real value, only legal value. Yes it’s backed by taxes, but taxes are legal also and therefore unrealistic. Fruit have Vitamin C. Gold is a great electrical conductor. Money is has no real backing, i.e., unscientifically designed and must eventually fail by some means painful or otherwise and be replaced by something that works for all….. ie, reality.
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A better way to put it is:
Money is a social arrangement involving laws, people and productive capacity of the economy and people’s trust and confidence in the currency issuer. If the public does not use a particular currency it cannot work and will be abandoned.
All social arrangements are complex and abstract (they cannot be touched) but they are real. Not just atomic things (things) are real. But relationships are real too and have real consequences in the physical world around us.
Mansoor H. Khan
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You’re right, relationships are real, as are handshakes, trust, promises, integrity and your signature on paper.
Unfortunately, the system is not all inclusive. We still have poverty. Btw,I like your idea of a $500/month social dividend for adults, and it may be gradually increased short of inflation.
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