–Please sir, a dollar to feed my children?

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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Sen. Ted Cruz isn’t the only one who wants to gut your health care.

The Tea Partiers aren’t the only ones who want to cut government spending for your social programs.

The Republicans aren’t the only ones who have been bribed by the rich to widen the gap between the rich and the rest.

The Democrats aren’t the only ones who pretend to be friends of the downtrodden, while voting for the powerful.

No, they aren’t the only ones. The entire American populace seems to agree with them.

You have been brainwashed that government spending is “bloated,” “wasteful,” “excessive” and “needless” (to use some common terms), and should be reduced. All lies.

You repeatedly have been told the debt and deficit are “unsustainable,” “unaffordable,” “a ticking time bomb” and “will be paid by our children and grandchildren.” More lies.

So once again, let us look at what happens when government spending is cut.

The most common measure of economic growth (or shrinkage) is Gross Domestic Product:

monetary sovereignty

Gross Domestic Product (GDPA) is the blue bar.

Gross Domestic Product is composed of four measures:

–Personal Consumption Expenditures (PCECA)
–Gross Private Domestic Investment (GPDI)
–Net Exports of Goods and Services (NETEXP)
–Government Consumption Expenditures & Gross Investment (GCE)

These four measures, when added together, make up the orange bar, which as you can see is identical with the blue bar.

Now, see what happens to Gross Domestic Product if we eliminate government spending (GCE):

monetary sovereignty

Gross Domestic Product drops by about 20% — the difference between the orange bar and the blue bar — a monster decrease.

Let’s see what happens if we cut government spending only by half:

monetary sovereignty

We suffer a 10% decrease in Gross Domestic Product. That still is a huge decrease. Consider that GDP fell 2% from 2008 to 2009. Cutting government spending in half, would cause a loss five times greater than the crash of the Great Recession.

But it gets worse. Government spending pumps dollars into the economy, which helps to grow Personal Consumption Expenditures and Gross Private Domestic Investment. A reduction in government spending will reduce private spending.

Let’s take a look at what happens if we reduce private spending by just 10%:

monetary sovereignty

Gross Domestic Product falls about 19%. And that folks, is called a depression.

What happens in a depression? The richest .1% of our population does just fine, because the rest become so desperate for money, you will accept slave-labor jobs.

You become the servants of the rich, begging them for whatever handouts they wish to give you.

It’s happening even now. With unemployment high, the rich offer part-time jobs and reduced salaries, which you accept, both reluctantly and gratefully, while you do without proper health care, education, food, housing and all the other things no American should lack.

Corporations profit while the populace suffers.

The sequester, once considered outrageously so harsh, no politician would dare allow it to happen, now is the norm from which further cuts will be made.

The right wing (including Republicans and Democrats, there being no left wing in America) continues to demand ever more cuts in government spending.

They want you to believe the lies.

And the rich want slaves.

Please sir, a dollar to feed my children?

Rodger Malcolm Mitchell
Monetary Sovereignty

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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
Monetary Sovereignty Monetary Sovereignty

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

6 thoughts on “–Please sir, a dollar to feed my children?

  1. Mr. Mitchell. Enjoy your blog. Keeps me motivated to try to spread the word.
    I usually hit a stonewall of silence (tellingly, not disagreement), but not always.
    Question, maybe I don’t fully understand, but isn’t it a reduction in the deficit which reduces private sector incomes, GDP and so on – not a reduction in spending per se. .That is, I think of government spending as equal to
    T(taxes) + D (deficit). For example, a decrease in spending accompanied by a decrease in taxes would not be helpful – but I believe it would be a wash from an accounting standpoint. If I am thinking correctly, ironically (to most people) it is the higher (good) or lower (bad) deficit which equates to the change (good or bad) in GDP, private incomes, etc. If this in incorrect, I would appreciate any additional insight. Thank you.

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    1. Lets leave aside multiplier effects for any given type of spending or tax, since that makes the whole conversation more complicated. They are real and important mind you, if you raise taxes on someone making $100 million a year by $10 million and then spend that $10 million on poor people, even though the deficit would be the same, GDP would increase. Thats because money that circulates continues to add to GDP and money that is saved does not.

      With that said, you are right, its the deficit that matters most. Both Repub and Dem plans are to move spending and taxes in the same direction. Dems tax and spending up and R’s tax and spending down, none of those will make have fundamental effects on the economy (other than the aforementioned multiplier effects) since the net addition of new financial assets (money), would be constant.

      GDP = Govt spending + Consumer spending + Investment spending + Net exports

      Cutting govt spending hurts everything as thats income to the private sector, raising taxes hurts consumer and investment spending.

      Maybe the classic faucet analogy would be useful? Imagine the economy as sink with the water flowing in through the faucet Govt spending and the drain representing taxation. If you open the faucet by a factor 5 while also opening the drain by a factor of 5, the level of water stays the same. The key is to have the faucet open more than the drain. The water doesn’t overflow generally because the size of the sink (the economy) is constantly growing with productivity and population increases.

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  2. What happens in a depression? The richest .1% of our population does just fine, because the rest become so desperate for money, you will accept slave-labor jobs.

    You become the servants of the rich, begging them for whatever handouts they wish to give you.

    If you’re only used to recessions – the rich don’t do sooo great then – and they don’t like them. But depressions: paradise for the .1%. I always loved the movies of the golden age of Hollywood, the 30s and 40s. The Great Depression. But you don’t understand them – they seem to wildly take literary license to paint an unrealistic picture of the gap between rich and poor – in particular how blithely, how wonderfully well the rich do while everyone else suffers – until you’ve lived through an era of depression economics yourself.

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  3. Mr. Parks thank you very much for responding. Your comments were helpful to me. Your example was a good one. That is, assume the $10 million in higher taxes on the rich person does not reduce that person’s spending. It will, however, reduce his or her savings by $10 million. Assume the $10 million spent on poor people gets spent. Thus, overall, private sector spending goes up by $10 million, increasing aggregate demand, jobs, GDP, etc. This $10 million of spending also ultimately becomes a business revenue.and business profit (since business costs have not changed).
    Business profits are private sector savings. So the helpful insight for me was that GDP went up without an increase in the deficit, due to multiplier
    effects. At the same time, the equation deficit = net private savings (holding
    the external sector constant) was not violated. The deficit is this example was unchanged. Private sector savings was unchanged (profits were up by
    $10 million but the rich person’s private savings went down by $10 million).
    Overall, the helpful insight to me was that while the change in the deficit equates to changes in private sector incomes, it does not necessarily equate to changes in private sector spending – and it is the latter which impacts GDP, jobs, etc. Thank you for your thoughts and time.

    Like

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