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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.
As “austerity,” also known as “deficit reduction,” eats America from the inside, we can look to the euro nations to see our future.
Once Europe was wealthy. Then came the euro, which required each nation to surrender its single, most valuable asset: Their Monetary Sovereignty.
The size of Spain’s banking crisis required a bigger, politically unpalatable bailout from the European policy makers writing the checks.
It’s a recipe for decades of terrible economic conditions. But that seems to be what Europe is cooking up.
The “unpalatable bailout” includes more loans to a nation unable to pay even its current debts, plus austerity: The American Tea/Republican Party’s guaranteed formula for economic disaster.
FRANCE’s ‘AA’ Hollande pays price for kowtowing to EMU deflation madness
By Ambrose Evans-Pritchard
France’s heroic fiscal squeeze of 1.8pc of GDP last year – in order to comply with EMU demands – was at best self-defeating, and arguably destructive. All France got was a double-dip recession. Some 370,000 people have lost their jobs.
There is a near religious belief in Berlin – evangelised by Brussels, and the EMU gang of five – that any let up in austerity, any recourse to stimulus, let alone a new deal, is a gift to shirkers who want to dodge reform.
The EMU gang of five claims that applying leeches is the way to cure anemia — the same believe the U.S. Congress and the President foist on America.
Inspectors from Greece’s bailout creditors have restarted talks on spending reforms that the government is resisting, with Greek officials ruling out any further blanket wage and pension cuts.
The sides are at odds over the size of a 2014 budget gap and whether a plan to cover it will require more austerity measures.
Greek officials insist no additional austerity measures can be implemented, arguing they would be unproductive in an economy that is contracting for a sixth year and with unemployment near 28 percent.
Conservative Prime Minister Antonis Samaras late Monday said Greece was fulfilling its bailout commitments and would cover budget gaps without new blanket pay cuts for wage earners and pensioners.
Austerity = pay cuts for the populace. It’s inevitable, because deficit reduction reduces the economy’s money supply. Less money = less business = fewer jobs = less pay = more poverty.
ITALY signals end of eurozone recession
By Mark Thompson
Italy provided further evidence Tuesday that the eurozone’s prolonged recession may already be over, after data showed its economy shrank by (only) 0.2% quarter-over-quarter, confirming the eurozone’s third-biggest economy has now been stuck in recession for two full years — a post-war record.
An easing of the austerity agenda by Italy’s coalition government, including the cancellation of a planned VAT hike and removal of a property tax on first homes, may already be contributing to a recovery in household spending.
For the Eurozone, success is when the economy shrinks less than expected. And while reducing austerity “may contribute to a recovery,” austerity has been implemented as the cure for recession.
While recognizing that reducing austerity “contributes to a recovery,” the leaders maintain that deficit reduction is beneficial.
But, of course, the euro nations, being monetarily non-sovereign,
cannot create money at will, and so are stuck with austerity. By contrast, the U.S. is Monetarily Sovereign, can create dollars at will, and never needs to cut deficits.
Yet we cut deficits, inflicting grievous harm on ourselves, for no good reason.
IRELAND’s economy forecast to grow 1.7 per cent in 2014
Olli Rehn says the European economy has reach a “turning point”, but it is too early to declare victory.
Gross public debt as a percentage of GDP is expected to decrease from 124.4 per cent in 2013, to 120.8 per cent in 2014 and to 119.1 per cent in 2015.
Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro said “There are increasing signs that the European economy has reached a turning point.
(Unemployment is expected to decrease to 12.3 per cent in 2014 and to 11.7 per cent in 2015.)
That 12.3% unemployment is well above the level the U.S. economy reached during the darkest days of the Great Recession. For the euro nations, 12.3% unemployment is a happy “turning point.”
This “turning point” will be short lived, as a money shortage will make economic growth impossible.
CYPRUS reeling 6 months after EU rescue
By Alanna Petroff, September 26, 2013
25% pay cuts. 40% increase in unemployment.
Six months after Cyprus became the fourth eurozone country to need a bailout, the Mediterranean island’s economy is shrinking rapidly as austerity measures bite, sending unemployment through the roof.
Austerity measures have also been introduced to satisfy bailout conditions, with lawmakers implementing tax hikes and steep salary cuts in the public sector.
“There’s no bright future. Day by day, things get worse.”
The beat goes on. While “austerity,” which is just a synonym for deficit reduction, has ravaged Europe, we in America are subject to — that’s right — austerity.
The question has not been whether to inflict austerity on ourselves, but how much. The Democrats want a little deficit cutting, the Tea/Repulicans want a lot.
Both parties administer repeated doses of the proven-to-be-deadly, deficit-cut poison, while assuring us this will cure our ills.
By definition, a large economy has more money than does a small economy. Therefore, a growing economy requires a growing money supply. QED
The euro nations, being monetarily non-sovereign, do not have a sovereign currency. They cannot create euros at will, so debts are a heavy burden. To survive, long term, they need to acquire euros from beyond their borders.
The only successful euro nations are those with a positive balance of payments. But mathematically, all nations cannot have a positive balance of payments.
The haves take euros from the have-nots. Half of Europe is destined to starve now; the other half destined to starve later.
By contrast, the U.S. is Monetarily Sovereign, so has the unlimited ability to create its sovereign currency, the dollar. Debt never can be a burden.
Because the U.S. cannot run short of dollars, it never needs to ask anyone else for dollars — not you, not me, not China. But, U.S. politicians, media and mainstream professors pretend the U.S. is like the euro nations.
They brainwash the public into believing the U.S. can run short of its sovereign currency. The Tea/Republicans speak of small government, as though the government that provides thousands of benefits to America, actually is a burden on us.
But it is not the government that is a burden. Rather, it is unnecessary taxes — unnecessary because the government can create unlimited dollars — that are the burden.
The Tea/Republicans opt for lower benefits and higher taxes on the middle classes and the poor, so to reduce the deficit (i.e reduce money creation).
It would be easy to ascribe effort to ignorance, and for the American public, that would be true. The public is economically ignorant, relying on its leaders for guidance.
But for the political, media and academic leaders, ignorance is not the problem. They know exactly what they are doing.
The politicians have been bribed by the rich, via political contributions and promises of lucrative employment, later.
The media are owned by the rich.
The universities, and their employees, respond to what their rich donors want.
Because most federal spending benefits the poor more than the rich, it narrows the gap between the rich and the rest. But the rich want the gap widened. It is what makes them rich.
So the rich push America toward the euro disaster, and claim this is prudent.
While the European people drown because of deficit reduction, the American people willingly adopt the same destructive, deficit reduction.
And get angry when you warn them they are marching over a cliff.
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 federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.