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.
Do You Believe in Magic? Spain does.
If you believe in magic, come along with me
We’ll dance until morning ’til there’s just you and me
By the Lovin’ Spoonful
Everything is wonderful in Spain. Tax increases and government spending reductions, which never in the history of human existence, have stimulated an economy, now have, by euro magic, cured Spain’s recession.
Your feet start tapping and you can’t seem to find
How you got there, so just blow your mind
Spain has no idea how it got where it is, and no idea how it will get where it wants to go. Their minds have been blown by euro-nonsense.
Spain reaps benefit of austerity measures, says economy minister
By Tobias Buck in Madrid
Spain’s nascent recovery shows that the eurozone’s austerity measures have worked after all, the economy minister has said, offering a riposte to the backlash against the continent’s response to the crisis.
“We are much more confident than we were six months ago,” Luis de Guindos told the Financial Times, adding that he expected the Spanish economy to emerge from recession in the current quarter.
“It has been tough for the population. But we implemented difficult tax measures and expenditure cuts. We have implemented some reforms that were not popular. Now, we expect to reap the fruits of these policies. And we are starting to see the light at the end of the tunnel.”
Yes, it has been tough for the population to pay more taxes and receive less in benefits, to go hungry, jobless and homeless, unlike the politicians, who are doing just fine, thank you.
But what is the magic that takes more money from the pockets of the populace, while putting less money into their pockets, yet somehow stimulates the economy?
Spain has been “reaping the fruits” of these policies for many years: Recession, depression, starvation. What’s changed, now?
Mr de Guindos said Madrid was already expecting the end-of-year unemployment figure to be better than previously announced, with the jobless rate predicted to fall below 27 per cent.
Wow, now that’s a recovery. After years of austerity, the jobless rate will fall below 27 percent. 27 percent!! Yikes.
But really, what is the reason for this wonderful “recovery”?
According to Mr. de Guindos, the economy will be shown to have grown by as much as 0.2 per cent in the three months to the end of September, fueled by a sharp rise in exports from newly-competitive sectors such as the car industry.
And there it is. Exports.
To grow, any nation, Monetarily Sovereign or monetarily non-sovereign, needs a growing supply of money. A monetarily non-sovereign nation, as all euro nations are, cannot create its sovereign currency. It has no sovereign currency.
So how can a euro nation increase its money supply? How can it grow?
Answer: To grow long term, a monetarily non-sovereign government must have net money coming in from outside its borders. The U.S. states, also monetarily non-sovereign, survive by having a positive balance of payments with the Monetarily Sovereign U.S. federal government. Federal deficit spending grows state economies.
But the euro nations do not have a federal government willing to give them (not lend them) euros. They must rely on exports. In the eurozone, those nations having net exports prosper. Those nations having net imports shrink.
“The automobile industry is transferring a lot of production not only from Europe but also from Asia to Spanish factories. This is an indication that you have the correct cost of labour and that you have much more flexibility here in Spain than in other areas,” he said.
Apparently, for Spain to grow it must replace China, India, Viet Nam and other nations having low standards of living.
“In real terms, our exports of merchandise are growing at a rate of 8 per cent; we are second to none in the eurozone.” Mr de Guindos said. Spain’s current account, he added, was expected to show a surplus of about 2 per cent of GDP this year – another record.
Mr de Guindos insisted that Spain would start creating jobs on a sustained basis in the second or third quarter next year. “Our projection is that the labour market reform has clearly reduced the threshold at which we start to create jobs.”
Sadly, for Spain to take business from its euro neighbors and from Asia, those jobs will have to be low-pay, just like China’s have been. One wonders, will Spain recruit its children to work in Nike factories making tennis shoes?
Mr de Guindos’s economic outlook contrasts sharply with the more bleak prediction made by the International Monetary Fund, which has warned that Spain may be saddled with unemployment of about 25 per cent until 2018.
When even the IMF thinks your austerity isn’t going to work, you know you have problems. Spain will continue to struggle. The Spanish leaders believe in the magic of applying leeches to cure anemia (as do the American leaders, just less so.)
Here is one way in which Monetarily Sovereign nations (U.S., UK, Canada, Australia, Japan, et al) and monetarily non-sovereign nations (euro nations) all can grow their economies:
1. The monetarily non-sovereign nations maintain a positive balance of trade with the Monetarily Sovereign nations.
2. The Monetarily Sovereign nations run national deficits greater than their negative balances of trade.
That way, every nation’s money supply will grow and their economies will grow.
But, of course, it won’t happen. Spain is doomed by economic ignorance.
We all are.
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.