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●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.
The July 6, 2013 issue of NewScientist Magazine contained an article asking the following question:
What do we fix first – the environment or the economy?
08 July 2013 by Fred Pearce
Before we analyze a few excerpts from that article, take a moment to think about the choice. The clear implication is that in some way, “fixing” (a non-scientific term) the economy and fixing the environment are mutually exclusive — that if we do one, we can’t do the other, at least not at the same time.
It is one of the most pressing questions of our time: what is the relationship between financial and environmental meltdown? Are the two crises the same thing, needing to be dealt with together?
Or do we, as even some business leaders suggest, have to “fix the environment” (another non-scientific term) before we can fix the economy?
Unfortunately, especially in a science magazine, the author never is specific about what “fixing” really means, so determining precedence is a foggy enterprise at best.
You might expect a strong “yes” from the greens to fixing the environment ahead of the economy. Long-time Greenpeace activist Amy Larkin (says) the high costs of coping with extreme weather, pollution and declining resources are, she says, catching up with capitalism.
“Coping with” is not exactly “fixing.” We can “cope with” extreme weather and pollution by staying indoors, and we can “cope with” declining resources by finding more resources — but is that what the greens really want?
Our carefree attitude to the “externalities” of wealth generation has generated an environmental debt that is loading unsustainable financial debt on us all.
Ah, “unsustainable financial debt.” Is that what needs fixing? Is there really any such thing as “unsustainable financial debt”?
For you, yes. For me, yes. For Chicago, for California, for Greece — yes, yes and yes. All are monetarily non-sovereign, so can run short of money.
But for the U.S. government, no. Being Monetarily Sovereign, the U.S. government never can run short of dollars. It never can be unable to pay any size debt payable in dollars. “Unsustainable financial debt” does not apply to the U.S. government
As shortages of natural resources push up prices, a looming resource crunch is manifested in market meltdown.
Shortages of natural resources can push up prices. All that means is more money would be needed to buy these resources. But for Monetarily Sovereign nations, the supply of money is unlimited. So what’s the problem?
Well, there IS a problem, but it’s not a price problem. It’s the problem, very simply, of being short of natural resources.
Paul Donovan and Julie Hudson, economists for the Swiss bank UBS, argue that “there is a second credit crunch”, an environmental one.
By ransacking global resources and enfeebling ecosystems, the authors say, we are drawing down environmental credit as surely as reckless spending on a credit card draws down financial credit.
Investment strategist Jeremy Grantham warns in even starker terms of the escalating impacts of growing food and water scarcities, linked to climate change. “The days of abundant resources and falling prices are over, forever.”
Again, a false parallel is being made between limited resources, like food and water, and the unlimited resource of money.
Many economists argue that reckless consumption, driven by easy credit, helped fuel financial crisis. Environmentalists agree that the same consumer binge drove up environmental debt.
No one knows what “reckless” consumption is, other than it’s what the other person does. Similarly, no one knows what “easy” credit is. Right now, interest rates are near zero, which is pretty “easy.”
The financial crisis was caused by bank fraud, not “easy” credit, and it has been fueled by federal austerity.
The rising prices of diminishing resources such as metals, agricultural products, timber and fish were a constant theme in the run-up to the financial crisis.
Actually, overall inflation (“rising prices) was not particularly high during the years preceding the recession, and inflation did not precipitate the recession.
Now a growing number of business people believe that only by tackling environmental and resource issues head-on can they return to prosperity and growth.
Agreed, depending on what “tackling” means.
The Worldwatch Institute, a highly regarded environmental think tank, argues that we know how to generate renewable energy, feed 9 billion people, restore landscapes, stabilise climate and manage water, while taming corporations and improving social justice.
“There is no physical or technical impediment…”
Alan Weisman (author of Countdown: Our last, best hope for a future on Earth?) says that humans do have a sustainable future – provided there are many fewer of us. “Either we humanely bring our numbers down or nature’s going to hand out a pile of pink slips.”
Robert Malthus rises again.
Weisman is a little behind the curve here. The average woman in the world today has fewer than 2.5 children, half the figure of 40 years ago. We are most likely heading for peak population by mid-century.
That puts the onus where it belongs – on the overconsuming rich rather than overbreeding poor.
Disagree on both. The rich are not “overconsuming” (yet another non-scientific term) nor are the poor “overbreeding.”
Most authors argue that dealing with them will mean we have to “deleverage”, as economists say. In other words, reduce both financial and environmental debt.
“Financial debt” is another term for “money supply.” The author doesn’t realize it, but he is suggesting the solution to our economic problems is to reduce the money supply.
But for me, they all miss a fundamental difference between the crises. We can write off financial debt, directly through bankruptcies or indirectly through inflation.
But the natural environment is the planet on which we live. We can’t default on climate change, write off disappearing ecosystems, or inflate away eroded soils. There is no way we can shrug off environmental debt.
Well, he’s sort of, kind of right. Money is an artificial, nonphysical construct. We can make as much or as little as we wish. Instantly.
The U.S. government, being the creator of, and sovereign over, the dollar, could if it wished create more dollars than there are stars in the sky, and do it with the push of a computer button.
However, clean air, clean water, plants, food, housing and animal species are physical and real, and come in limited quantities. We cannot create unlimited amounts, instantly.
So getting back to the title question, “What do we fix first – the environment or the economy?” the answer is, we should stimulate the economy by repairing the environment.
For instance: Federal investment in “cleaning” water (sterilization and desalination) would employ people and add dollars to the economy, thereby stimulating the economy.
Federal investment in finding/developing less polluting energy sources (wind, water, solar, geothermal, maybe nuclear) also would employ people and stimulate the economy.
Federal investment in research and development to solve all our ecological problems, merely involves exchanging an unlimited resource (money) for limited ecological resources.
In short, the answer to the title question is: We can help fix the economy BY fixing the environment.
The enemy is not overpopulation. People are our most valuable resource. Nor is the enemy excessive consumption by the rich, although the rich are the basis for our problems.
The enemy is economic austerity, which has been fostered by the rich as a means to widen the income gap between the rich and the rest.
We already have everything we need — money, manpower, brains and science — to solve our environmental problems. We just need to dump the superstition of austerity.
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