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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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Britain brilliantly did not give up its Monetary Sovereignty to join the euro nations. It kept its sovereign currency, the pound, and as a result, has the unlimited ability to create its money.
The British government never, and I mean NEVER, can run short of pounds to pay its bills.
Compare their situation with that of Greece, Spain, Italy, France, Ireland and the rest of the euro nations, none of which has a sovereign currency.
They all use the euro, the supply over which, they have no control. They are at the mercy of the EU, which is why they are in trouble. They cannot create the money to pay their debts.
So Britain is safe, right?
Yes, they are safe from the EU, but not safe from their own politicians:
December 4, 2013 9:31 pm
Osborne holds out prospect of surplus
By Chris Giles and George ParkerGeorge Osborne will proclaim on Thursday that a budget surplus is in sight for the first time since the millennium, raising Tory hopes of significant tax cuts in the next parliament after nearly a decade of austerity.
The chancellor will deliver his Autumn Statement against a backdrop of sharply rising growth forecasts, which could pave the way for Britain to be back in the black by 2018-19 – almost two years earlier than seemed likely in March.
What does it mean for a Monetarily Sovereign nation to be “in the black”? For Britain, it means more pounds are sucked out of the private sector than flow in.
And who is the private sector? The citizens of Britain.
A government surplus = a private sector deficit. The British citizens are being impoverished.
Although Mr Osborne will say tax cuts should be introduced when the country can afford them, he will also urge Tory MPs not to get carried away by the recent recovery, with austerity far from over.
However the chancellor may struggle to contain the euphoria of Conservative MPs who believe that new growth forecasts from the Office for Budget Responsibility will confirm their view Mr Osborne’s fiscal Plan A has been fully vindicated.
Ah the euphoria of the conservatives, watching the populace starve in economic misery. How wonderful, that the gap between the rich and the rest, grows wider and wider and wider.
It’s what the rich pay the conservatives to do.
Once the government is running a surplus, David Cameron has made it clear he would seek to reduce taxes.
He will reduce taxes primarily on the rich, because after all, they pay the most taxes. And, the rest of Britain’s population will make so little money, they’ll pay little taxes, anyway.
And now for the funniest line of the entire article:
Speaking from China, he said the country needed “to put some money aside”, but added “it is possible to reduce people’s taxes as your economy recovers”.
“Put some money aside”? The British government already has the unlimited ability to create pounds. So where is “aside”?
This surely is one of the nuttiest statements any politician ever has made, perhaps exceeded only by, “Trust me.”
Ed Balls, shadow chancellor, will insist that the recovery is not feeding into household budgets and that working people are £1,600 a year worse off than when David Cameron entered Downing St.
What a surprise. Working people are suffering because of Britain’s austerity. Not to worry. The rich are doing just fine — better than ever.
To address Labour’s successful “cost of living” attack, Mr Osborne is expected to cancel a planned rise in fuel duty as well as confirming a transferable married couples tax allowance and free school meals for all infants.
To help fund those plans – costing about £2.3bn – the chancellor will announce a further cut of £1bn a year from central government spending, a foretaste of much bigger reductions planned for the next parliament in welfare and other spending.
The usual political magic show. “Focus on my hand putting a tiny bit of money in your hand, but pay no attention to my other hand stealing lots of money from your pockets.”
The rich grow richer; the poor grow poorer. And everyone who matters, is happy.
During the bombings of WWII, Britain learned to live down in the tube. They soon may learn to do it, again. So, stiff upper lip; keep calm and carry on.
Conservative George Osborne is the British government’s version of Jack Kevorkian.
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
As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Mr. Mitchell, you impugn the name of Jack Kevorkian 🙂
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My apologies. You’re right. He only assisted a relative handful of suicides. The British government is creating the forced economic suicide (aka economic murder) of millions.
My heart goes out to the British people . . . except we Americans are in a similar position.
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Kevorkian was convicted of second-degree murder in 1999 and served eight years. He was released on parole in 2007 and died in 2011. He assisted in over 130 suicides by his own account. Now, I have no qualms about his sincerity and dedication to reduce the pain, angst and suffering associated with the end of life process, but he was still a convicted killer. Concocting one’s own definition of moral relativity apparently knows no bounds. Strange how we admonish some and not others. By the way, I own a copy of his ‘Very Still Life’ album. Not bad.
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Roger,
Why doesn’t “sovereignty” work in Venezuela? Given that it is a oil producing nation, their inflation is definitely not due to “high” oil prices. Actually, a gallon of gas is a whopping 6 cents. Repeating, 6 cents… So why is inflation rising at over 50% year over year?
http://www.chicagotribune.com/classified/automotive/sns-rt-us-venezuela-cars-20131205,0,1449905.story
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Seriously, you are comparing the productivity of the American economy with a badly run quasi- socialist near third world economy? What is that supposed to prove? Your not making any sort of definitive argument against what you derisively label “sovereignty”. Your not making much of a point about anything really. What does Venezuelan inflation have to do with making a better society in our own country?
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Good question. As Rodger has often explained, severe inflation is NEVER caused by government spending. It is ALWAYS caused by social and political instability (such as wars, natural catastrophes, brutal sanctions imposed by foreigners, and so on).
Venezuela is an example. So was Zimbabwe when its currency was pegged to the US dollar (1999-2009). A severe Western blockade caused Zimbabwe’s hyperinflation. The inflation ended on 12 April 2009 when Zimbabwe stopped pegging its dollar to the US dollar, and started using multiple different currencies. (Zimbabwe could establish its own currency again if industrial output were to improve, but this is difficult while the West maintains its ongoing blockade.)
Venezuela’s inflation was a manifestation of rich people making economic war on poor people, and on the socialist government. Elitists intentionally used hoarding, price fixing, retail price gouging, etc. to cause price increases. This was done in order to sustain black markets, boost profits, spread debt slavery, and foment mass discontent against the government.
However the government is now getting inflation under control.
Let me pause and note that the average inflation rate was much higher when Venezuela was ruled by right-wing, pro-USA dictators. However the corporate media said nothing negative about it. In the 1970s, inflation averaged 20.4%. In the 1980s it averaged 19.4%. By the 1990s it averaged 47.4%.
The resulting economic hardship was one reason why Hugo Chavez first won the presidency on 2 Feb 1999. Chavez used price controls and other means to control inflation.
Up until mid-November 2013, rich Venezuelan elitists intentionally caused inflation (i.e. price increases), and used it as a weapon against the government and the public.
Example…
The high prices were not caused by high domestic inflation, or increasing costs of production. They were only in imported goods sold in retail stores.
Rich merchants obtain US dollars from Venezuela’s government at a preferential price of 6.30 bolívares per dollar. This discount rate (the CADIVI rate) is a subsidy for imports. The government finances the subsidy by selling oil.
Normally in capitalist countries, merchants can reasonably get a 15% a profit by selling the goods they import. However Venezuelan merchants were selling imported goods as if the dollars had cost them the price on the black market, which could be from 60 to 80 bolívares per dollar. In this way they made a profit of up to 4,000%. That’s better than even drug lords get. The result was inflation (i.e. dramatic price increases).
For instance, if a big retail chain paid US $668 (4,200 bolívares at the discount CADIVI rate) to import a washer and dryer, and if the chain marked it up by 15%, then the retail price would properly be $768 (4,830 bolívares). However, big retail chains like Daka were selling a washer and dryer for almost TEN TIMES that at US $7,470! And that was only a 1,100% markup. Some retailers in Caracas were selling appliances as a 4,000 percent markup! Yikes!
Average Venezuelans couldn’t afford such prices, so they took loans from the merchants at horrendous rates of interest. The easy credit (at ruinous rates) in turn caused prices to spiral even higher — just as student loan debt and college tuition spiral upward together in the USA. And since the government spouted socialist rhetoric while the masses suffered, the masses hated the government.
Finally in mid-November 2013, President Maduro sent troops into the street to find hoarded goods in hidden warehouses. They inspected the large commercial houses that obtained government dollars. They established fines and jail terms for price gouging. They enforced the sale of goods at fair prices. They only had to do this with a couple of the big retail chains. The rest of them nationwide (e.g. Traki, EPA, and General Import) immediately cut their prices by 75% or more, so their executives could avoid prison.
For average Venezuelans, it was a gigantic “black Friday” sale, and they converged upon the retailers in droves, with government troops keeping order. President Maduro went overnight from being an unpopular leader to the most popular president in Latin America — even more so than Rafael Correa of Ecuador.
Furthermore, on 4 Dec 2013 Maduro decreed that average Venezuelans could open foreign currency accounts in public Venezuelan banks, with no minimum balance required. Now, average people can purchase cars, appliances, etc directly from overseas, bypassing the greedy middlemen. The very first day the decree was announced, average Venezuelans opened 52,575 dollar accounts at their banks.
Rich elitists caused the severe inflation in Venezuela, yet they blamed it on the government (and so did the corporate media). Now inflation is under control, and purchasing power is increasing.
CONCLUSION
As Rodger says, severe inflation is NEVER caused by government spending. It is ALWAYS caused by social, political, industrial, or economic instability, which itself can have many different causes.
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I can confirm what quatloosx says. I lived and worked there before Hugo came to power. The place was a f**king mess.
The right wing media here is a f**king cancer, looks like they want to recreate the inequality here that they had in Venezuela. Note when a dictator is mentioned it is always a left wing dictator or it is not mentioned at all. Fact is, almost all dictators in the world are right wing dictators.
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Auburn,
Roger’s theory is that if a country is a sovereign and can issue it’s currency, it will prosper. Well, Venezuela is a sovereign, it has it’s own currency and it’s issuing it. Why isn’t this bringing prosperity to Venezuela and why is there hyperinflation instead. Additionally, goods are also becoming scarce day by day.. All this while gas prices are the lowest on planet earth. So why isn’t the government able to control the prices as per Roger’s theory? Sorry, not sure what you mean by “better” but your response does not address the question.
Quatloosx,
Venezuela is not in a war, there hasn’t been any natural disasters in Venezuela. You refer to sanctions, but sanctions are external to the country and per Roger’s own words, external issues should have no impact on the country. I’m not 100% sure I looked at all sanctions for Venezuela, but I think the only sanctions are for oil anyway – and I’m sure Venezuela can find another buyer really easy.
And no, the high inflation in Venezuela has nothing to do with the rich price fixing, it’s a direct consequence of the government’s policies. I can guarantee that instead of being “under control”, they are out of control. You blame this inflation on the rich – give it enough time – there won’t be any rich people left in Venezuela – we’ll see who you blame it at that point.
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[1] Bapoy writes, “Venezuela is not in a war, there hasn’t been any natural disasters in Venezuela. You refer to sanctions ….” And so on.
I said nothing about Venezuela being at war, or hit by sanctions or by natural disasters. If you wish to respond to comments, then I respectfully ask that you first read the comments.
The main point (as Rodger has detailed many times) is that the cause of severe inflation is always some factor that disrupts the government, or the banking system, or consumer society, etc. Monetarily Sovereign government spending NEVER causes disruptions. Hence, MS government spending NEVER causes severe inflation. Hence for MS governments there is no logical justification for austerity.
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[2] Bapoy writes, “The high inflation in Venezuela has nothing to do with the rich price fixing, it’s a direct consequence of the government’s policies.”
Cute. That’s what the corporate media claims, along with elitists, and wannabe elitists, none of which ever provide a shred of evidence for their drivel. No names, numbers, dates, percentages, concrete examples – just the empty chant that “quasi-socialism evil; brutal plutocracy good.”
Put another way: Socialism for the rich is good (e.g. QE, bank bailouts, massive subsidies to farmers and oil companies, etc.). Socialism for the non-rich is evil (e.g. Social Security, Medicare, Food Stamps, etc.)
People like Bapoy praise trillion-dollar handouts to the rich as “the free market,” while they condemn minimal support to the disabled as “unsustainable entitlements.”
Such people want the government to help them alone, and no one else.
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Bapoy,
How often we hear the names, “Wiemar Republic,” “Zimbabwe” and “Venezuela” as evidence that having a sovereign currency doesn’t work. If you are saying that a Monetarily Sovereign nation can have inflation, deflation, stagflation, recession or depression — I agree. The U.S. has had all of those.
Monetary Sovereignty is the single most powerful tool a nation can have for creating prosperity, just as a hammer is the most powerful tool for driving a nail.
But if one has the wrong hammer or uses the tool improperly, the result will be poor.
And just as there are many types of hammers, air hammers, claw hammers, ball peen hammers, sledge hammers, tack hammers, etc., etc., there are many degrees of Monetary Sovereignty. Read: https://mythfighter.com/2013/07/27/i-just-thought-you-should-know-lunch-really-can-be-free/
At minimum, a Monetarily Sovereign nation must have a sovereign currency. The euro nations, the U.S. states, cities and counties do not.
But effective sovereignty also includes the unlimited ability to create that sovereign currency and the unlimited ability to set its value via interest rate manipulation. A Monetarily Sovereign government has the tool to grow its economy and fight inflation. How it uses that tool is the key to its success.
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Hohohohoho…
So Venezuela is now Zimbabwe and it’s Weimer Republic too. I don’t think so… Venezuela doesn’t owe anyone restitution and it’s not kicking out the business class either.
I don’t subscribe to the theory that a government can “create” prosperity. People create prosperity – governments take from those people for better or worst. Most of the times is for worst.
Although I agree that the Euro is an issue for the EU countries – the issue is not that of a “lack of money”. The issue is nations that are responsible have to live with those that are not and suffer the deeds of those irresponsible nations. If Greece dropped the Euro tomorrow – the nation would collapse into oblivion – that’s guaranteed. So the issue is not that of lack of sovereignty – it’s that of having to take from your hard working population (Germany) and fork it over to thieves in France, Greece and the other communist sobs.
The point I was trying to make by pointing out Venezuela is that Sovereignty means nothing – the productivity in the country is what matters. Venezuela can give each citizen 100 million bolivars – there is not enough goods/services for them irrespective of the amount of currency.
GF,
You seriously believe Chavez was a right-wing president? Or Fidel Castro? You really think Venezuela is better now with 50% year over year inflation? The media can say they hate a nation or president – but that 50% inflation number is truth whether you are in Venezuela or not. Let’s stop kidding ourselves.
Maduro is a fool that thinks he can control the world. Like Chavez, he will soon enough find out that he’s a pea in an ocean. And that ocean is going to hit him smack in the face.
What these communists forget is – you can issue as much currency as you want but you can’t make people produce. You can fix prices, but you can’t force people to produce. Either this fool Maduro let’s the markets work or they will find themselves like Cuba – 50 years behind. Let’s just say to buy milk is a challenge in Venezuela already. Anyway, people will be forced to force him out soon enough.
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OK, you convinced me.
The U.S. and Germany are prosperous because our people are naturally superior to those lazy slugs in France, Italy and Greece.
The euro is what keeps Greece from collapsing into oblivion.
Money creation and control means nothing.
Productivity does not require money.
I don’t know why I didn’t think of those brilliant insights. But I do congratulate you for thinking of them.
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Because of your ‘free market’ racketeers, not the Venezuelan government. So, Notyellen, you’ve resumed your ‘international economic affairs’ guise as Bapoy once again? You’re hilarious.
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