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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.
Often, I receive notes from folks on the right, who hating government and professing macho self-sufficiency, tell me government doesn’t create anything or do anything or benefit anything, and that all the benefits come from the hard work of private people and private companies.
In one sense, these folks are correct, as everything ultimately does come from people (so far, until the machines take over ala “Terminator”), but diminishing the vital role of government seems especially ignorant of fact.
I won’t get into the myriad scientific, environmental and social initiatives funded by the federal government. To deny them is to be deliberately obtuse.
Rather, I’ll allow those on the right to stew over the following graph:
The red line shows annual changes in federal deficit spending. The blue line shows annual changes in corporate profitability.
There are many causes for corporate profitability and unprofitability, and deficit spending is just one of them, so the lines are not perfectly in parallel — but pretty close for economics, a science in which every effect has multiple causes.
So, unless one wishes to believe that corporate profitability somehow stimulates federal deficit spending, or that the whole thing is one giant coincidence, and not cause-and-effect, we are left with the fact that federal deficits increase corporate profits.
This makes logical sense, if for no other reason than deficits pump dollars into the economy, and dollars are what fund work. Corporations are part of the “private people and private companies” that ultimately accomplish everything.
[You may believe that not only is government spending useless, but corporate profits are equally useless, in which case please return to chipping your stone ax prior to skinning a mastodon.]
During recessions, when the federal government and the public temporarily remember the need for deficit spending, corporate profits actually rise.
But after the recessions end, when the government and the public forget what cured those recessions, and “stimulus” becomes a bad word, the government cuts deficit spending, and corporate profit growth begins to fall — as is happening, now.
And the whole ridiculous charade begins anew.
Now, yet again the public has turned against what lifted us from the last recession and we yet again are in the deficit cutting mode, and we yet again head for recession, and corporate profit growth yet again is falling.
Yet again and yet again and yet again and yet again — learning nothing from yesterday.
Isn’t it amazing how the world’s most intelligent species can be so ignorant?
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)
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
THE RECESSION CLOCK
As the lines drop, we approach recession, which will be cured only when the lines rise.