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.

======================================================================================================================================================================================

Over the years, many people have written to this blog, stating their beliefs that the federal government, or the Federal Reserve Bank, or the private banks should not be allowed to create dollars. Instead dollars somehow should be created by “the people.”

There even have been proposals in Congress to eliminate the Fed and to create “debt-free” money, a functional impossibility (Some form of debt is what gives all money its value.)

Nevertheless, while I question most of their arguments, there is a program that should please them: Bitcoin.

Bitcoin are Internet money, neither created by, nor regulated by, any recognized government. They are created by smart computer geeks, the same sort of people who have given us smart phones, video games and the Internet itself (as well as the ACA website).

Bitcoin, being a form of money, need controls — controls over payment and availability. If you pay someone in bitcoin, that person needs to know that you actually own the bitcoin you’re spending, and you need to be able to prove you paid those bitcoin.

The concept is quite clever:

How does Bitcoin work?

Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your addresses to your friends so that they can pay you or vice versa.

The block chain is a shared public ledger on which the entire Bitcoin network relies. All confirmed transactions are included in the block chain. This way, Bitcoin wallets can calculate their spendable balance and new transactions can be verified to be spending bitcoin that are actually owned by the spender.

Every transaction system requires verification. Typically, verification involves a central verifying agency. For instance, the New York Stock Exchange verifies (“clears”) the trades of member organization. The Federal Reserve Bank verifies (“clears”) payments of dollars through member banks.

Bitcoin transactions too, require verification, but this is not done by a central exchange. Rather, computer technology makes it possible for every “member” (i.e. everyone using bitcoin) together to handle verification.

Each bitcoin user is part of the blockchain. And it is the blockchain — all the users together — that verify every exchange of bitcoin.

Mining is a distributed consensus system that is used to confirm waiting transactions by including them in the block chain. It enforces a chronological order in the block chain, protects the neutrality of the network, and allows different computers to agree on the state of the system.

(As an aside, in the same way, stocks could be traded without stock exchanges and dollar payments could be processed without a central clearing agency like the Fed.)

So why use bitcoin? Here are some excerpts from coindesk.com’s “Why use bitcoin?”.

It’s fast
When you pay a cheque from another bank into your bank, the bank will often hold that money for several days, because it can’t trust that the funds are really available. Similarly, international wire transfers can take a relatively long time. Bitcoin transactions are generally far faster. Transactions can be instantaneous [under certain circumstances].

It’s cheap
Your credit card transactions are instantaneous too. But your merchant (and possibly you) pay for that privilege. Bitcoin transaction fees are minimal, or in some cases, free.

Central governments can’t take it away
The (Cyprus) Central Bank wanted to take back uninsured deposits larger than $100,000 to help recapitalize itself.

That can’t happen with bitcoin. Because the currency is decentralized, you own it. No central authority has control, and so a bank can’t take it away from you. For those who find their trust in the traditional banking system unravelling, that’s a big benefit.

I agree that bitcoin are fast and cheap, though not really faster nor cheaper than current dollar alternatives. But that third “advantage” — Central governments can’t take it away — is just plain wrong.

Central government can do anything they please within their borders. If, for whatever reason, the U.S. government unilaterally decided to make bitcoin transactions illegal or taxable, the value of the world’s bitcoin would plummet.

Further, there are guiding hands behind bitcoin, whether the hands of Satoshi Nakamoto, the pseudonymously named inventor(s) of bitcoin, or the hands of whatever group currently is in control. And those hands, by necessity, have the power to change the rules at any time they choose. They, in fact, constitute the “central government” of bitcoin.

There are no chargebacks
Once bitcoin have been sent, they’re gone. This makes it difficult to commit the kind of fraud that we often see with credit cards, in which people make a purchase and then contact the credit card company to make a chargeback, effectively reversing the transaction.

The ability to reverse a transaction is an important consumer protection. A credit card user, who receives a damaged or incorrect product, can stop payment by calling the credit card company. Bitcoin does not allow that protection.

People can’t steal your important information from merchants
Most online purchases today are made via credit cards. Credit cards are insecure. Online forms require you to enter all your secret information (the credit card number, expiry date, and CSV number) into a web form.

Bitcoin transactions don’t require you to give up any secret information. Instead, they use two keys: a public key, and a private one. Anyone can see the public key (which is actually your bitcoin address) but your private key is secret.

In that sense, bitcoin are more secure than credit cards, though credit card users are safe, if they merely look at their monthly statements. Any fraudulent charges can be challenged and deleted. No credit card user should lose money to fraud.

It isn’t inflationary
The problem with regular fiat currency is that governments can print as much of it as they like, and they frequently do. This causes the value of a currency to decrease.

This is called inflation, and it causes the price of goods and services to increase. Inflation can be difficult to control, and can decrease people’s buying power.

Bitcoin was designed to have a maximum number of coins. Only 21 million will ever be created under the original specification. This means that after that, the number of bitcoins won’t grow, so inflation won’t be a problem. In fact, deflation – where the price of goods and services falls – is more likely in the bitcoin world.

Complete nonsense:

First: The value of a dollar is based not only on supply, but also on DEMAND, a fact often forgotten by inflation hawks. That is why there has been no relationship between federal deficit spending and inflation for at least 40 years. (See: Federal deficit spending doesn’t cause inflation; oil does Tuesday, Apr 6 2010)

Second: In the real world, inflation exists. If additional bitcoins are not created, each bitcoin will increase in value, a process known as “deflation.” Most economists decry deflation, because it discourages purchasing today, for fear prices will be lower tomorrow — a recessionary phenomenon.

Third: The exchange value of bitcoin has changed massively in the past year, making bitcoin one of the highest risk investments in recent years.

Fourth: Notice the words “designed to” and “original specification.” If usage of bitcoin grows, is there anyone who believes the invisible hands guiding bitcoin won’t create more bitcoin?

It’s as private as you want it to be
Sometimes, we don’t want people knowing what we have purchased. Unlike conventional bank accounts, no one knows who holds a particular bitcoin address.

And that is why they have been so popular for illegal transactions. They are untraceable by outsiders and by the law. And bitcoin users think sovereign nations won’t step in and force changes to the rules? Really?

You own it
There is no other electronic cash system in which your account isn’t owned by someone else. Take PayPal, for example: if the company decides for some reason that your account has been misused, it has the power to freeze all of the assets held in the account, without consulting you. It is then up to you to jump through whatever hoops necessary to get it cleared so that you can access your funds.

And what exactly do you own? An invisible, secret system that can be changed at a moment’s notice, by the invisible, secret hands that control bitcoin. To whom do you complain when something goes wrong?

You can ‘mine’ bitcoins yourself
You can certainly buy bitcoins on the open market, but you can also mine your own if you have enough computing power. After covering your initial investment in equipment and electricity, mining bitcoins is simply a case of leaving the machine switched on, and the software running. And who wouldn’t like their computer to earn them money while they sleep?

Part of the verification process involves a procedure called “mining,” and “miners” receive bitcoin for their effort. The process, however, requires computer power, with presumably the biggest computers making the most money — a perfect “rich-get-richer” process. (Explain to me again how that is an improvement over today’s money allocation.)

Bottom line, complaints about the dollar usually are related to distrust of the government or of banks. But bitcoin is run by a form of “government,” that is even less accountable to its money users than is the U.S. government (if that’s possible).

Bitcoin may be a temporary solution to the privacy problem, but so far as I can see, that’s about it. And I feel confident governments, wanting taxes and legal control, soon will “correct” that solution.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
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
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