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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Recently, someone asked me, “What’s wrong with the economy”?
I’ve been at this for almost 20 years, and that little, five-word question, stopped me. I’ve written two books and almost 1200 posts on this blog, given talks, argued, discussed — all trying to answer that question. And now I was fumbling for a succinct answer.
You know how sometimes a long story can be summarized in a single great line? I was looking for that great line.
The ethic of reciprocity (aka the “Golden Rule”) is the basis for most religions. (In 100 BC, Hillel the Elder said, “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is the explanation.“) The Golden Rule is a great line.
When General Sherman said, “War is hell,” he told the entire story of war. Everything else is the details.
Abraham Lincoln said, “If slavery is not wrong, nothing is wrong,” which says all one needs to know about slavery and slave holders.
A personal favorite is, “Happy wife; happy life,” which is the shortest formula I know, for a successful marriage.
And then came John Boehner who, in December, 2012 said these five little words: “Let’s be honest. We’re broke.”
The irony of John Boehner mouthing the words “Let’s be honest,” cannot be improved upon, except when followed by the Big Lie, “We’re broke” — what a perfect description of the fall of the American middle class and the increased gap between the rich and the rest.
“Let’s be honest,” meaning, “All this time I haven’t been honest, but at long last I’m going to be honest,” only to be followed by yet another lie. And the public again believes it.
Think of Lucy repeatedly pulling the football away, just as Charlie Brown tries to kick it. Charlie never learns. The American public never learns, in fact, refuses to learn.
Five little words tell of bribed politicians, smug in their confidence they can lie and lie and lie, knowing there will be no punishment — knowing they will be rewarded by their real constituency, the super-rich.
Five little words speak of a media, bought, paid for and owned by the super rich — a media that long ago has forgotten they exist to inform, and now believes they exist only to make money.
Five little words tell of scientists — university and media economists — so cowed from top to bottom, they can’t bring themselves to fight the “company” line. University and media economists so slavishly act as mouthpieces for the rich, they refuse to rise up and tell the truth.
The truth: Our Monetarily Sovereign U.S. government is not “broke,” cannot be “broke,” and never will be “broke.” Its finances are not at all like your finances. The U.S. government, unlike Greece, Italy and local governments, has the infinite ability to pay its bills, and even could do so without collecting a penny of tax from you or from your grandchildren, or by borrowing a penny from China. Austerity is the way to widen the gap between the rich and the rest. That is the truth.
But, in a second irony, if “broke” means “broken,” Boehner actually would be correct. The government has been broken by the rich, the likes of the Koch brothers, Pete Peterson et al, who bribe the media, the politicians and the universities. The government has been twisted and broken by a dishonest Supreme Court, which long ago gave up any pretense of following law, but rather invents law to widen the gap between the rich and the rest.
And then, in yet a final irony, “We’re broke” comes around as the truth, only now the “we’re” doesn’t refer to the government, as Boehner intended, but rather refers to the American people.
We the American people are broke. Lucy continues to pull the football away, and we continue to fall for it. Our wealth has been taken from us. We no longer resist. The Big Lie has taken its toll. We have no strength. We accept our fate.
Let’s be honest. We’re broke.
Rodger Malcolm Mitchell
Monetary Sovereignty
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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded 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 
Rodger, there’s not much here that I can disagree with, but perhaps to add a message of encouragement that we can change the “lie”, in spite of the difficulty in doing so. I believe the only alternative is to continue the vicious circle into chaos and the demise of life on earth as we know it. The stakes are that high.
I believe the greatest challenge is the neo-Malthusian mindset that most humans have that there’s not enough to go around. Correct me if I’m wrong, but I believe this has been the historic basis of all monetary systems, before the understanding of monetary sovereignty. To uses Maslow’s model of human needs, if humans had their physical and security needs met, they would have the economic freedom to pursue their higher level needs. Though I can’t substantiate it with numbers, I am of the belief that there are sufficient resources to meet these two lower level needs for all.
I’m also of the opinion that the need for monetary reform is being recognized more and more. I sense that this “movement” is quite fragmented, and would benefit from more cohesiveness and, of course, an effective marketing plan. To address these challenges, I have no insights, but wonder, if cast in the terms of “Economic Discrimination”, would the issue of wealth and income income inequality have more traction? Americans have, over the long term, been fairly (but not completely) successful with issues cast as discrimination.
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Excellent article: Bill Moyers: The Great American Class War, Plutocracy Versus Democracy
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Yes we are broke. We are broke in spirit and hope; in courage and morale. Does any adult in the 99% believe that his or her personal future will be materially better than today? I doubt it.
People of the 1950s and 60s thought that by the year 2000 we’d be like George Jetson in the cartoon, with our feet up on our desks, pushing buttons all day. They thought that we’d be colonizing outer space. They thought that only a nuclear war could bring about a dystopia. They did not foresee that most of mankind would be reduced to slavery, and that everything and everyone would exist to widen the gap between the rich and the rest. They did not foresee that the financial economy (“the markets”) would become separate from (and a deadly parasite on) the real economy. They did not foresee that Orwell’s “1984” would actually become true, in which war is peace, freedom is slavery, lies are truth, austerity is prosperity, and plutocracy is democracy.
Today even China is madly working to widen the gap between the rich and the rest, via deregulation, privatization and austerity. Even Iran is now doing this. (The 1979 Revolution is being reversed. Iran has fallen. Hence the P5+1 deal on 24 Nov 2013. I could document this if challenged, but my explanation would be lengthy. So far, not even the most astute bloggers have grasped the facts.)
It amazes me that the masses never learn. Plato noted that societies almost always go from democracy to oligarchy to plutocracy, to brutal tyranny, followed by collapse. Four centuries later, Plutarch (45-120 AD) wrote of ancient Rome: “The abuse of buying and selling votes crept in. Money determined elections. Corruption spread in the law courts, and to the army. Finally, when even the sword became enslaved by the power of gold, the republic was subjected to the rule of emperors.”
Marx said that always and everywhere, the central struggle is between the rich and the poor. From the time of the first great civilizations, history has consisted not of conflict between tribes, nations, races, or religions, but between socioeconomic classes. Everything else is camouflage for this battle, which continues because the masses refuse to learn.
This is the problem in a nutshell. As Rodger writes above, “The American public never learns, in fact, refuses to learn.”
Only two minutes ago I read an article in a “progressive” blog whose author claimed that we must have austerity because the rich do not pay enough taxes. Such “progressives” never stop to ask where money comes from in the first place. They assume it comes from banks, or from China, or wherever.
QUESTION: “What’s wrong with the economy?”
MY (five word) ANSWER: The masses refuse to learn.
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Even China? Even Iran?
Oh yeah – I was forgetting – those are the leading proponents of freedom. Unlike the US, this has to be a joke.
The reason there is a struggle has nothing to do with the rich. The problem are a large subset of the same poor and the same middle class that has this mentality that there is a “free lunch”. Those are the ones consuming what the real poor could be consuming. Those are the ones driving prices up on the middle class – to the point that many have difficulty putting food on the table.
This “warfare between the rich and the poor” you talk about is the camouflage – there is no such thing – there are those that produce and those who consume. The less producers and the more consumers – the worst off we are. There is your warfare.
The issue with the masses is not that they refuse to learn – it’s that those in academia and in power are there to con them. It’s all about living off others and the power.
I’m not sure which academics you follow Roger – the ones I do are almost 100% socialists/marxists/communists. Same difference.
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@Baypoy, from your responses, I would assume you ascribe to the Objectivist philosophies of Ayn Rand. I too was an Objectivist and ardent fan of her novels. But I may be mistaken. What is your opinion of her works, if you are familiar with them?
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I’ve heard of Aynd (recently) but am not familiar with her work. I follow economists more so than novelists; such as, Irving Fisher, Murray Rothbard, the Austrian school. America had some of the best economic minds in history, yet we ignored all of them and went with the theories of a British. Even Milton Friedman (a non-Austrian) had a lot of the right ideas and could immediately shut down any liberal/progressive ideas.
Progressive ideas will never work, but in the minds of liberals they will never fail either. See, if you do it and the results are not what they expected, it’s very easy to say we are not doing enough (Krugman, Bernanke, Keynesians). Venezuela is a prime example of how MS would work – do you see MMTers/MSers throwing in the towel?
Putting Iran and China as examples should speak volume to other folks – it doesn’t. I see progressives in the far right as folks who do not understand economics (but think they do) or do understand it and lie because they have an agenda. I dare any top progressive economist (Krugman, Kelton) to argue the points that Fisher and Rothbard made.
I am not an economist, but took various courses in college (very recent). All, except 1 Indian professor (even though India is more progressive than the US), were either Keynesians or some other faction of the progressive movement. Needless to say, by the end of my college career -I was not well liked.
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@Bapoy, thanks for your response. It makes clear why I perceived that you ascribe to the Objectivist philosophies of Ayn Rand. Von Mises and Murray Rothbard were fans of her ideas, and very influential in her movement. Both wrote letters of high praise to her.
If you enjoy reading novels at all, I highly recommend her Atlas Shrugged and The Fountainhead. They clearly portray your line of thinking.
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‘Those are the ones consuming what the real poor could be consuming. Those are the ones driving prices up on the middle class ..’
It’s not the tax policies that PAY our companies to move operations overseas.
It’s not the trade policies that do the same.
It’s not that virtually all of the income and wealth since the 80’s going to the top 1% has left nothing for anyone else.
It’s not that medical costs have increased by 100% since 1980 while incomes have flatlined.
It’s not that college costs have increased by over 100% since 1980 while incomes have flatlined.
It’s not the deregulation of the commodities market which has driven up the the price of basic need items while incomes have flatlined.
It’s not the attack on labor itself as a co-equal piece of the production stool driving down wages for every worker.
It’s not the biggest financial downturn in nearly 100 years, of which the residue STILL remains .
No, no way-it’s just f@$king poor people who are to blame.
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– Thank the government selected by the same middle class and poor people for the jobs going overseas. The policies you should be against are those that 1) no longer force China to settle with the US (fiat currency implemented in 1971) and 2) increase the labor costs of corporations to a point it’s no longer profitable to stay at home. These are government policies.
– If you are referring to free trade agreements, you are not looking at it from the right perspective. We benefit from cheap goods from China, I agree that we do NOT benefit when China just sells to the US and buys nothing in return. Thank our fiat currency implemented in 1971 for that. More government policies.
– I’ve pointed out why the poor and middle class are not getting their rightful incomes – they are getting incomes paid in fiat currency (and devalued over time). Since there is no settlement, incomes are replaced with debt. Again, another government policy mess.
– Think everyone agrees there is a healthcare monopoly. Who makes and who enforces the laws? Instead, ACA (which does not even get close to addressing the monopoly issue) is pushed down people’s throat. Another government policy mess.
– What do you think happens to prices when you go from having a few percent of the population attending college to having just about everyone getting student loans and subsidized education. 1) The demand for education skyrockets 2) The prices will reflect that demand. Another one in the government’s coffers.
– Just like ACA above, you are looking at the wrong solution. There is nothing wrong with banks and people using various instruments (derivatives) to trade. What has been wrong are bailout of banks (the wealth you so much hate) during every single major crisis (S&L, Tech, Housing). A precedent has been set. Another point for the government.
– What people don’t like is the discrimination of tax payers at the expense of the union. Why are public unions getting special treatment when the rest cannot have the same? The bottom line is this – the government should not be protecting a tiny section of the population at the expense of the rest. That’s called slavery anywhere. Another government policy issue. It’s not the lack of unions driving down wages – it’s worldwide competition of labor.
– Crisis will always happen, to the extent of 2008 – it happens because of fractional reserve lending. This residual will not go away for years, not when prices are not allowed to drop to a level the people can manage.
The poor and the middle class (<$100k) make up the bulk of the voters. The poor and the middle class are the ones in power, NOT the rich. How much more food, more car, more home does a rich consumer? If it's demand that drives prices – is it not the same people via government programs creating the higher demand and driving up prices? Unless Bill Gates goes out next month and buys 40% of the world's food supply – how can you blame the rich?
Every single point you made has to do with government policies, yet, you (and the majority of people) give the government a free pass and blame it on the rich. That's exactly why I said what I said and will keep saying it. We voted for the people the made those laws and we are asking them to continue making similar laws. Why aren't the poor and middle class folks showing up in Washington to give the politicians a hint. Instead, you have OWS in NYC, California, Seattle and every other place that does not matter. Fools…
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What is your recommended solution to each of the problems you describe?
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– Get rid of the central bank, get rid of fractional reserve lending, return to the gold standard, implement free market policies and reduce the size of the government. This means banks and all institutions are allowed to fail, home and all other prices are allowed to rise as well as drop. The market determine the risk and the rate of interest to cover against such risks (the cause of the bubbles).
With a gold standard, the US will have to either fork over the gold or force other countries will have to buy from the US, which in turns means jobs will return to supply the demand of those countries.
– Same applies to number 2.
– The income issue goes away in a non-fractional reserve system. Incomes are not replaced by debt, as seen prior to 1971 (even with central bank controlled system in place).
– Free market policies means that healthcare providers are bound to the same laws as everyone else (anti monopoly). The geniuses in government know this already, but the masses are too busy watching American idol. The only thing that has to be done is force the providers to compete – like everyone else. Post the prices, like everyone else. This is the single biggest issue in terms of budget – the people should be up in arms as their purchasing power is being destroyed to hand it over to these thieves.
– Stop the subsidies – universities will either have to drop their tuition or go out of business. Like in banking, more due diligence will be done to ensure that the right candidates go to school, instead of millions who attend every year, amassing huge debt levels, to work in a job that doesn’t require a degree.
– As said above, let the banks fail. The world did not end in 2008, and it would not have ended if a few banks went under. I’ve seen various banks that were in excellent shape before, during and after the crisis. This will set a precedence that the US tax payer will not be the backstop of irresponsible risky behavior, and ensure that banks perform their risk management due diligence going forward.
– Kill collective bargaining and let public employees work and compete like the rest, the 96%. End defined benefit pension plans. End right to strike for all public safety workers, end prevailing wage laws. If you are a non-union tax payer (96%) and you don’t agree with these, you are a fool.
– As I said on the previous post, let banks fail. Stop manipulations of the markets; such as lowering rates to prop up home and stock market prices. The market will clear out these issues on it’s own.
All these points will resolve the biggest issues we have – the banking system (which basically runs on trust), the healthcare system, employment, city and state budgets, and education. The military will find it very difficult to appropriate unlimited funds that no-one knows where they end up as well. And people will return to work as oppose to waste a lifetime watching American idol and consuming what the poor could be consuming (thereby making the poor’s quality of life worst).
Only the government can change all these things and as I said previously, the poor and the middle class is the bulk of the votes. These folks are so con’ed and dumb down that they no longer understand basic mathematics. 2+ 2 is 4 and to eat a piece of bread, someone still has to produce it.
On a separate but related note – have you seen the protests in Italy, Spain, Greece and the southern periphery? Get this – the people are mad because they are not in on the theft (to themselves). This is how messed up the world is today. You would think they would be protesting government spending, instead, they are protesting because they are not getting enough from the government. Amazing….
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@quatloosx, your observations are understandable and justifiable. I especially appreciate your quote from Plutarch. It seems as though the US is on the same historical trajectory. But there are some differences between the ancient Greek and Roman societies and our current situation, I would note, that gives me hope for our future. First, failures of their early societies were not global failures, and their contributions continued to influence human development. Today, it’s too easy to think that a failure of American society would just be another empire that succumbed to the arrogance of the wealthy. I think the stakes are much higher. Today the stakes, and the issues, are global, not local/empire.
BUT…because of the human capacity to develop morally, and accept the “other” through enlightened self-interest; that is, to understand and successfully engage in non-zero sum interactions, we, as a species, have developed to where we are today, in spite of the have-have not divide. Can we, as a species, continue upward to whatever destiny is in our stars, or will scarity-driven-greed doom us all?
Another difference between the ancient Greek/Roman societies and today is the fact that, because of human ingenuity and technological development, we can support the physical and security needs of all humans. No need for scarcity driven greed (sociopathic greed is a different story).
I’m encouraged by the growing awareness of the income and wealth inequality issue. I’m starting to see evidence of this awareness in 1) articles such as the Atlantic’s report on decisions by those in poverty, and the implied resolution of government action to eliminate poverty; 2) books by major Economists such as Jeffrey Sach’s new book, The End of Poverty: Economic Possibilities for Our Time; 3) anti-poverty social programs such as Brazil’s Bolsa Familia. Though the issue of poverty does not directly address monetary reform, it forces the issue: “we can’t afford to do this!” But of course, we can.
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>>Jeff Rudisill writes: “Today, it’s too easy to think that a failure of American society would just be another empire that succumbed to the arrogance of the wealthy. I think the stakes are much higher. Today the stakes, and the issues, are global, not local/empire.”
Agreed. The drive to widen the gap between rich and the rest is global. There are some exceptions, but they are under pressure from the rest of the world to submit to neo-liberalism. Some have already fallen (e.g. Libya and Iran). Some remain under assault (e.g. Syria, Cuba, Myanmar, Zimbabwe, Venezuela, Bolivia, Ecuador). China is rushing into the neo-liberal camp with massive “reforms” (austerity, privatization, deregulation, etc.) in order to widen the wealth gap. Russia is not socialist, but at least its government does not allow the participation of oligarchs.
However, the pattern of history remains unchanged. The real conflict underlying all others is always between the rich and the rest. That’s my opinion, anyway.
>>Jeff Rudisill writes: “Can we, as a species, continue upward to whatever destiny is in our stars, or will scarcity-driven-greed doom us all?”
I’m not overly optimistic. Our current path is toward global feudalism, where the rich live in gated communities, while the rest live in hunger and squalor. I blame the masses for this as much as I blame the rich.
>>Jeff Rudisill writes: “Another difference between the ancient Greek/Roman societies and today is the fact that we can support the physical and security needs of all humans. No need for scarcity driven greed (sociopathic greed is a different story).”
The rich have always sought to widen the gap for its own sake, whether or not there were shortages. This never changes. There have been experiments in alternative structures (e.g. communism), but they were temporary.
Jeff Rudisill writes: “I’m encouraged by the growing awareness of the income and wealth inequality issue.”
Unfortunately this awareness has not weakened the lies, which everyone uses for his own ends. The rich and their toadies (pundits, professors, and politicians) falsely claim that the US government is “broke.”
So-called “progressives” agree with this lie, but they say the US government is “broke” because of the wars, or because the rich do not pay federal taxes, or because China “owns us,” and so on.
Since everyone agrees with the core lies, everyone helps to widen the gap between the rich and the rest.
Today and throughout history the real problem has been that the public refuses to learn. The penalty for ignorance is slavery. (Mitchell’s Law #6.)
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And there is a prime example of what I said on my previous post:
“There have been experiments in alternative structures (e.g. communism), but they were temporary.”
Of course they were temporary – the system failed. It does NOT work. But in the minds of progressives – it was not long enough. Communism was temporary in Cuba? Or Russia? Or China? Is 60 years temporary?
Is anyone really believing this? This is a prime example of someone that knows the truth but is willing to lie to save the face of their agenda.
Find me 1 person that is willing to work for free anywhere… Because once you do, I will agree that there is a free lunch. I won’t be holding my breath, that’s for sure.
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Volunteers work all the time for free and many institutions could not continue operating without them.
For sure the need for monetary reform is being recognized more but don’t expect a package of monetary sovereign reform under the Christmas tree. The most we’ll get out of these tight wads is an unemployment compensation extension.
One point that needs to be emphasized more when it comes to MS is the concept of “money out of free electrons” and the fact that created money comes into existence in this way by keystrokes, not from another existing account as does non monetarily sovereign money. People can, I think, must grasp that before they can understand how it is we aren’t broke, don’t need to borrow or tax, and can afford any size U.S. budget, 4t, or 40t.
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Tetra,
You are making the same mistake the Administration did with ACA. We have healthcare monopolies in this nation – how is spreading the cost going to fix the monopoly? It won’t.
We have an 2 economic issues in this nation. 1) People don’t have jobs and 2) people can’t afford basic necessities. The root cause of both issues is: the federal reserve and fractional reserve lending
1) Jobs will not return until we force countries around the world (China, Brazil, etc) to buy from us like we buy from them. This will not be possible so long as we remain on a fiat currency, which does not force those countries to settle with us. Either force settlement with a fiat (don’t hold your breath) otherwise – it’s a mute point.
2) Giving people money will not bring more goods and services to the marketplace, guaranteed. It is my opinion, that creating this money out of free electrons will cause people like me, laborers, to ditch working. I have actually seen a few people that have fallen off the labor force because they feel it’s more beneficial for them not to be part of it. Not only are these people consuming (what real poor people should be), they are not producing anything in return. It’s a double whammy. It is a fact that the more you push these programs, the more people will grab on to them and the smaller your labor force and your output will become. How good does a billion electron buck do you if you don’t have anything to purchase with it?
Relatively speaking, the US is actually in very decent shape in comparison to other developed nations. The majority, such as Europe, are full of socialist fools. Emerging nations, India, China, Brazil, Mexico are basket cases of socialism and will continue to struggle until the people see reality. Venezuela has enough wealth to be a completely developed nation, yet it’s a slum. I cringe when I hear liberals blame capitalism for the issues in Europe – what capitalism are they talking about? When was there ever capitalism on those nations? Fools…
I am extremely confused as to how the US was able to see this hundreds of years ago, proved that it works – and after all the proof – we are now reverting to “solutions” that have made once great nations third world countries. We are now becoming the next fools in line.
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@Bapoy and @tetraheadron720, I’d like to bring a slightly different, non-economic, somewhat philosophical perspective to the discussion: human rights. Yea, I know… that Liberal/Progressive battle cry. But tying human rights to “life, liberty, and the pursuit of happiness”, I believe that we all
*have a right a safe place to live;
*access to healthy food, clean air and water; and
*access to effective healthcare
as declared in the UN Universal Declaration of Human Rights, Articles 22-25. Any disagreement on this principle, even if you don’t recognize the validity of the UN?
I also believe that human productivity, because of entrepreneurial and technological progress, is currently more than sufficient to assure these rights for all humans. But our outdated, 500+ year old financial system continues to distribute the wealth of that productivity to the “rentier”, or “aristocratic” class, as it has from time immemorial. It is time to recognize the imperative for “new thinking” on economic systems, wealth and money… thinking that serves the 21st Century human, and to let go of thinking tied to labels such as capitalism, communism, socialism, which are all based on neo-Malthusian philosophies of scarcity.
One major relatively recent breakthrough is monetary sovereignty, which recognizes that productive wealth is no longer tied to a scarce commodity, such as gold. This is a model based on the reality of abundance. So now the challenge, IMO, is how to structure new economies based on 1) the increase in human productivity and resultant wealth created; 2) the human rights expressed above, and 3) the survival needs of the planet. Economics should serve humans, not the other way around. Corporations should redirect their missions toward providing effective and efficient products and services, and away from their quarterly statements. And, perhaps, the stock exchanges should be taxed heavily, like any other gambling institution – only half serious on this last one.
Bopoy writes: “Giving people money will not bring more goods and services to the marketplace, guaranteed.”
But it will guarantee peoples’ physical and survival needs are met, as human rights. I propose a “Citizens Dividend” equivalent to $25K per adult, per year, plus an increment per child, in the form of food and housing subsidies. This is in addition to Universal Health care. Let’s do away with poverty, and create the economic freedom for everyone to pursue happiness in the form of defining and developing work that is meaningful for her or him.
Bopoy also writes: “It is my opinion, that creating this money out of free electrons will cause people like me, laborers, to ditch working.”
Or, expressed another way, it will free people from being wage slaves and allow them the economic freedom to pursue a meaningful existence by “following their dreams”, if you’ll permit the cliche’. Imagine, what would WalMart and MacDonalds do if their labor pool consisted of people who had their physical and survival needs met by the “productivity of the people of the US” because of Monetary Sovereignty? Outsource?
Here, I concur with Tetra, that voluntarism is necessary and valuable work. Recently, I was one who “worked for free” as an audio producer for a local Internet radio station. Was this valuable work? I would like to think so. Was this meaningful work? Absolutely. Was this rewarded financially? No. See what I’m getting at here?
Bopoy writes: “We have an 2 economic issues in this nation. 1) People don’t have jobs and 2) people can’t afford basic necessities. The root cause of both issues is: the federal reserve and fractional reserve lending”
Assuming “basic necessities” is equivalent to the physical and security needs I talk about above, a “Citizens Dividend” would eliminate that issue. The issue of jobs…well, let’s face it. “Jobs”, as we know them today, are very much in flux, and it’s necessary to redefine “meaningful” work. Automation and Creative Destruction will continue to eliminate jobs on an ever accelerating basis. For example, security robots will replace most humans in the security workforce in the not-too-distant future. (http://www.gizmag.com/knightscope-k5-k10-robot-security-guard/30024/) – just one of many examples. And this is NOT bad! Technological developments that free humans from mundane and boring jobs permit humans to pursue their higher level needs; i.e., friendship, family, self-esteem, achievement…(see Maslow’s hierarchy of needs), and contribute the the overall progress and development of humanity.
Under the prevailing economic model, the “wealth” attributed to technological development, resulting in the loss of jobs, would accrue to the “rentier/financially aristocratic” class of people – the 0.01%. How, in today’s world, does anyone justify this, except by the rules of the “Monopoly” game we all play.
I look forward to your considered response.
Jeff
PS – I understand this blog has its basis in economics. I would hope that economics oriented folk can consider other human imperatives in considering the impact of economic policies on survival.
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Jeff,
Unfortunately, the UN is not a sovereign and has no power of enforcing any of these rights. It’s kind of like me saying we all have “rights”. I glanced at the preamble on the UN site and it’s more of a standard for countries to follow, see below:
“Now, Therefore THE GENERAL ASSEMBLY proclaims THIS UNIVERSAL DECLARATION OF HUMAN RIGHTS as a common standard of achievement for all peoples and all nations……”
Irrespective of what the UN says, we have a constitution that says the following:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Inalienable means it has been given to us by our creator, not by the government. These are right to life, liberty and to pursue happiness. Given that the government did not give these to us, it can in no way shape or form remove them from us. I think the reason our government has remained the most efficient in the world is because of the constitution. Note that neither housing, nor food nor healthcare nor any other good or asset is included in the sentence. So you have no “right” to any of these, you have the right to work and provide for your self though.
In my opinion, you are using the wrong tool to achieve this nirvana you dream of. You say we all should have right to a safe place, healthy food and healthcare and your solution to all this is money, as in fiat money. The issue should be easy to spot, but I will clarify. Forget about the money for a minute.
You need laborers to create the home, you need laborers to keep it safe, you need farmers to grow the food, logistics companies to deliver it to a local distributor, supermarkets. You need doctors, nurses, hospitals, medicine and continued medical advancements. You need folks producing raw materials to build homes, planes, cars, clothing. You need research and development to develop medicine that will cure diseases, etc..
Now – in one sentence you say we have enough productivity to supply all these. But in a few sentences later you take the opposite view, we have a lack of these (safe place, food, healthcare) and we need more money to fix it. There is no consistency in this argument.
In my opinion, we don’t have enough for the simple fact that if we did – there wouldn’t be any hungry people, any destitute people, people living in the streets, and poor and middle income families would not be struggling.
Here is the cold truth that cannot be refuted: You need other humans to produce for you to survive and other humans need what you produce to survive. The more the balance is tilted to the producing side, the better your quality of life. The more the balance is tilted to the consuming side (today), the lower the quality of life. The issues in communist countries has been exactly this. They dream up how this nirvana will work, everyone lines up to consume the output and nobody shows up to produce it (because after all, it’s a right and “free”). It doesn’t add up…
Just about everyone I’ve ever met worked – so I don’t see working as the issue. People are willing to work. The problem we have is that the laborers purchasing power is being stolen via the fractional reserve system. The purchasing power is than re-distributed to the same people it was taken from – it’s about power for the government – it helps nobody. The points I made on my response to Roger leaves the purchasing power in the hands of the people, so the people don’t need the government to give them anything. It’s ridiculous that the people are producing the wealth – only to have a government take it from them – and give it back to them. More money does not mean more wealth – creating more money actually removes your purchasing power from your pockets. The amount of money has little to do with real economic growth, as goods and services are settled on prices vs currency.
The hate of the wealthy is misplaced. As humans, we can only consume so much food, clothing, housing, cars – what do you think having 1 trillion will do anyone? I bet it won’t help anyone consume more than they do today? This thing you call wealth is completely a mirage. Us humans are born, we eat, we sleep, work, reproduce and than we are gone. The biggest thing you can do as a human is to help others survive, which means creating the most output possible before you go. That’s it. What should be feared is the lack of pressure on politicians that we, the poor and middle class, select – which sell their souls to crooked wealthy people. Pressure means showing up in DC to show them who is boss.
The last point is that nobody, not 1 person, will ever work for free, aside from volunteers (tiny fraction of the population). This means that nobody is going to give you a safe place, healthy food, healthcare – unless you give them something in return. Any economist putting out theories that supposedly create the proverbial free lunch will never be able to overcome this truth. So basically, money is nothing without the country’s output. Dollars are like Chuckee Cheese’s tokens, they are essentially worthless without the games.
What you want to do is increase productivity – and you will have the opposite result if you print money (new money steals from the producers/laborers). If so, you want to leave purchasing power to those who earned it, which means little or no growth of the money supply.
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@Bapoy, it seems we agree on at least one thing: the importance of productivity. I believe that productivity is the only source of wealth. Money, and what money buys, are a “yardstick” to measure that productivity. Sadly, our 500+ year old economic system has structured the “game” so that the financially aristocratic class receives most all of the measure of that productivity. My perspective.
You are correct that the UN has no power to enforce their Declaration of Human Rights, but that, in and of itself, does not invalidate these rights. I would further argue that the rights to “life, liberty and the pursuit of happiness” subsume the rights to a safe place to live, access to quality food, and access to healthcare, as the later are necessary to secure the former. Also, I think you mistake the Constitution with the Declaration of Independence. And though the Declaration does mention “Creator”, a more contemporary translation of “unalienable” would be “un-” => “NOT”; “alien”, from L. alienus => “belonging to another”; “-able” => “capable”: thus, “not able to be denied”. Further, these rights are “self-evident” and require no “Creator”. I agree that no government can take these unalienable rights away, but rather insist that it is the government’s duty, under the Constitution, to “promote the general Welfare”. It is the government’s duty to secure these unalienable rights for the general welfare.
You also misconstrue my statement that there are enough resources to provide basic needs (physical and security needs) for all, with the fact that these resources are being apportioned to the “financial aristocracy” instead of distributed to the actual producers – the farmers that grow the crops, vis a vis Monsanto executives, or US legislators who benefit from Big Ag subsidies: to the Nurses and caretakers who provide productive services, vis a vis the Executives at Aetna, or Administrators at for profit hospitals. Bopoy, the game is rigged in favor of the wealthy BECAUSE of the mind-set that there is not enough to go around. There is MORE than enough to meet these basic needs, and, since we don’t want the “rich” to pay for it, what better way than a monetarily sovereign government that is charged, by the US Constitution, to “promote the general Welfare”?
You and I agree on another point: most everyone wants to work. Most everyone wants to do something meaningful in life. However, MANY people take boring, repetitive, unfullfiling work to meet their physical and security needs. Many people take more than ONE boring, repetitive job to put food on the table and a roof over their heads. These are the wage slaves, much like the share-croppers in the post Reconstruction South. They work to live, not live to work. I contend, given the opportunity, most of these folk would rather do something more meaningful with their lives, including taking care of those who need care; advancing the condition of the human race. Which is yet another issue that you and I agree on:
“The biggest thing you can do as a human is to help others survive, which means creating the most output possible before you go.”
The caveat I would add would be the quality of productivity. Does it serve to benefit the corporate elite, or serve to benefit others’ survival?
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Jeff,
Revert back to my previous post. How much can the wealthy consume?
If it ain’t a lot more than you and I, than anything people produce serves the poor and the middle class more so than the wealthy – because more than likely – the poor and the middle class will consume it. The wealthy do not consume much more than we do (they are only 1%), the poor and middle class do.
What you refer to when you say “serve the elite” is the insurance policy they’ve amassed (which people like Bill Gates will not use, nor will his children’s children’s children’s children). Are these billionaires going to go out and buy 40 billion worth of food driving up prices for folks like us? Not a chance… Will they be able to purchasing things for the next 300 – 400 years? sure
If productivity was, say 1000 times greater, we would all be living like today’s millionaires. Of course, this means power to the people – something the government doesn’t want. You see, the government is more powerful when the people are destitute. If you were a business man and were in government – you would also want more people taking handouts and less working. Sad, but true, and the people support it – not knowing.
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Bapoy, we seem to be talking at cross purposes, but that’s not surprising.
I understand and agree that there’s a limit to what the 1% can consume. There are only so many $450K Rolex GMT Master II watches that a person can wear (snark). However, your opinion that increased productivity would benefit the poor isn’t born out by the facts on the ground. Productivity has increased tremendously since 2001, while wages have remained flat (buying power actually decreasing). The “wealth” from that increased productivity has gone to increase the “insurance” policy of the 1%, so now they’ll have to live 500 years to consume all of that wealth. This is because of the rules of the financial game we’re playing. Sources are readily available on the internet. The only exception I’ve found to this fact is the article by James Sherk of the Heritage Foundation. He claims that wages have kept up with productivity in part because of increased worker benefits. Unbelievable.
Bapoy, we are not going to change each other’s perspectives. However, I have appreciated the opportunity to discuss the differences. To summarize my perspective: 1) humans have advanced to the level where physical and security needs can be met for all, yet; 2) because we are living with a 500+ year old financial system, based on neo-Malthusian scarcity, the benefits of this increase in the human condition have accrued to the HAVES (rentier class), and what is needed is; 3) recognition that money is now an information system, no longer based on a scarce commodity, therefore; 4) a monetarily sovereign nation can spend, debt free through a national currency, on the physical and social infrastructure to “promote the general Welfare”. We need to stop economic discrimination.
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Define “fellow”
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Ask Hillel the Elder.
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Tea Party Tim and Plutocrat Pete
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Bapoy,
Roger asked you what your recommended solutions were, but you need to provide one more solution: How do you nonviolently break the history long bond between the elite, unelected, invisible power structure and their puppets–the visible power structure we call our “representatives?”
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Tetra,
The people have the power to vote for government representatives and they have the right to show up in DC. Further details lie in the declaration of independence:
“That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness”.
Silence is consent….
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tetraheadron720, I’m sure Bapoy has his own opinions, but I can’t resist weighing in on this one. For me, the solution is straightforward: remove money and political parties from the selection process. Choose our Representatives (not our Senators) by lottery. Citizens who wish to serve, say, register as a candidate. Perhaps there would be a necessary collection of signatures attesting to the candidates’ qualifications, and the Representative would then be chosen by lottery. Want to retain the power of elections? Choose three candidates by lottery and have an election determine the Representative. Perhaps extend the term for six years to provide time to accomplish meaningful legislation. No more spending over half the Representatives’ terms raising funds for re-election. No more loyalty to party instead of what’s best for the country and its people.
Wouldn’t it be wonderful to have teachers, dentists, office workers, auto mechanics – you know, WE the PEOPLE – representing us instead of professional politicians?
Yeah, yeah, I know. Impossible to make changes that drastic. But it’s this kind of drastic change we need.
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Bapoy is correct in theory. In practice we know that it is not true that the people have the power to change their circumstances by political means.
We can change the name or the face, but not the military-industrial complex, the favoritism toward the wealthy, the tendency toward war, the continuation of poverty, warming of the planet, etc.
The “new deal” was nothing more than a reshuffling of the same old deck of cards, and Johnson’s Great Society sounded wonderful, but take a look around you. Handing out money is a start but not a finish.
Ultimately I feel we need a balance of money (demand) and technology (supply). The more important of the two is technology, because it represents knowhow — real wealth. Money is only financial wealth. The words ‘solution and solve’ (solvent) come from science, not economics. To wit: science makes pro-gress daily while politics is con-gress.
Until economics drops its association with scarcity and politics, it will remain a mess. If and when it is finally allied to science and abundance, it will make both sense and cents. I feel economics, at its most advanced stage, will become an accurate and predictable, computer controlled, time/energy measure of our total wealth-knowhow incorporated into a single currency standard.
Exactly how that quantum leap will happen I don’t know, but Monetary Sovereignty is headed in the right direction because, like science, it’s underpinned by truth, such as, there really is no debt (we made it up). The shortfall we call deficit is remedied by turning on the sovereign spigot. The economic system is broken only mentally. The idling technology we have invented is merely waiting for the “green” light.
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