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.


Here’s yet another writer, or group of writers, who equate a Monetarily Sovereign nation with a monetarily non-sovereign business, thereby coming to the same diametrically wrong conclusions as the rest of the austerity buffs.

The Daily Bell
Now They Tell Us: China Debt Levels ‘Unknown’
By Staff Report

A senior Chinese official said on Friday that the government did not know precisely know how much debt local governments had built up and warned that it could be more than previous estimates.

Fitch downgraded China’s sovereign debt rating in April.

Oh woe, a credit downgrading. We all know how accurate the credit reporting industry is. It gave AAA ratings to worthless securities and downgraded the U.S. debt, presumably because, as John Boehner lied, “We are broke.

We didn’t understand how any economy could generate 10 percent growth per year for literally decades, but others seemed to feel that there were so many Chinese that normal economic rules did not apply.

No, that wasn’t the reason. Some of us “others” believed China understood Monetary Sovereignty, and was willing to keep pumping money into their economy. So long as inflation was controlled, the economy would grow.

Why? Basic algebra:
GDP = Government Spending + Non-government spending + Net Exports

In a modern central banking economy, the primary factor is monetary policy.

Actually, monetary and even more importantly, fiscal policy. But why quibble over semantics?

Earnings don’t matter; management doesn’t matter. In other words, you can have the best run company in the world with the number one product, but the real determinant of success at any given time will be the economy’s performance – subject to monetary policy.

We don’t mind the sarcasm. We do mind the ignorance that equates China with a company. The former is Monetarily Sovereign; the later is monetarily non-sovereign. Not understanding the difference equals not understanding economics.

China’s miracle was a central banking one, and monetary stimulation can cover up a host of sins.

True. Let the economy without “sin” (i.e. inefficiency) throw the first stone. All economies “sin.” All economies grow by so-called “covering up” — i.e. by increasing the percapita money supply. “All” meaning every growing economy in the history of the world.

The Chinese were printing money – lots and lots of it – and this was causing “all boats to float.” It was a kind of Potemkin Economy … Asian style. Now it seems the boats are sinking along with misconceptions about the realities of Chinese finance.

Ah, the old “printing money” epithet. Writers need only to utter the magic words “printing money,” and those who don’t understand economics will exclaim, “Ooooh,” and shake their heads in disgust.

But “printing money” is what Monetarily Sovereign governments do, must do, always do — unless they want recessions and depressions.

Whenever the U.S. has stopped, or even slowed, its so-called “printing” of money, we have had recessions and depressions, virtually all of which were cured by — yep, you guessed it — “printing” money.

(Never mind that money never is “printed.” It is created electronically by spending. Contrary to popular wisdom, a printed dollar bill is not a dollar.)

China’s localities have borrowed trillions. Vice Finance Minister Zhu Guangyao said Chinese banks have reported 9.54 trillion yuan in loans to local financing platforms.

Concerns have grown that the debts incurred could sour as many infrastructure projects in China are for public use and not profitable. Many local governments have also borrowed from companies in private arrangements at high cost, with the money often used in speculative real estate projects.

More fear-mongering out of ignorance. The Chinese central government could, if it wished, pay off all that local debt in one electronic instant. It simply could credit all debtors’ accounts by the amounts of their debts. Bingo! No local debt.

But wouldn’t all this so-called money “printing” cause inflation? Nope. Borrowing creates money and paying off loans destroys money.

If all the local borrowers somehow paid off their loans (say, by selling assets), the Chinese economy instantly would lose the above-mentioned 9.54 trillion yuan — a disaster.

However, if the central government “printed” the 9.54 trillion yuan to pay the loans, there would be no net increase in money supply, and no reason for inflation.

(And anyway, inflation can be controlled by increasing interest rates, which increases the value of money.)

The cycle hasn’t turned for China, or not fully. But it will. And so we say to Zhu … Just wait.

Waiting isn’t a bad idea. Learning is a better idea.

What is a bad idea? IMHO, taking economics advice from the Daily Bell staff.

Rodger Malcolm Mitchell
Monetary Sovereignty


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