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.
======================================================================================================================================================================================
This is the fifth in a series of posts titled, “You never will know what you have lost” (Part I, Part II, Part III and Part IV)
Each post describes the invisible, but real costs of federal deficit reduction, aka “austerity.” The first of the posts contained these paragraphs:
Since austerity never has benefited any Monetarily Sovereign nation that has tried it – 100% record of abject failure, often culminating in economic disaster – it is amazing that people still believe in it. But that is exactly what our own government is trying, now.
The list goes on and on: The lame who might have walked. The blind who might have seen. The children who might have given to America. The tornadoes and hurricanes and earthquakes that might have been foreseen. The money that investors might have saved. The inventions never invented. The recessions and depressions that might have been avoided. The wars that might have been won or prevented. The life-saving drugs that might have been developed. The people who might not have died too soon. The beauty never created. The ideas lost. The better world that might have been.
You never will know.
The income/wealth gap is what makes the rich rich. If there were no gap, no one would be rich, and the wider the gap, the richer and more powerful are the rich. Widening the gap is the single, most important goal of the rich.
The rich have bribed the politicians, the media and the university economists to widen the gap, which is accomplished via reductions in federal deficit spending, most of which benefit the middle and lower classes.
The politicians, media and university economists tell you your children and grandchildren will have to pay for the federal government’s deficits and debts, so deficit reduction protects them. It is The Big Lie.
Our federal government, being Monetarily Sovereign, never can run short of dollars to pay its debts. Even if your children and grandchildren paid $0 taxes, the government could continue deficit spending, forever.
And, being Monetarily Sovereign, the federal government has absolute control over the value of the dollar, meaning it has the absolute ability to control inflation.
So, it is not federal deficit spending and federal debt that threatens your children and grandchildren, but rather The Big Lie and the widening gap.
Here are some examples:
Science News Magazine
Science slowdown
Recent federal shutdown just the latest shock in a deepening funding crisisBY Beth Mole, NOVEMBER 15, 2013
For two weeks in October, the largest maneuverable radio telescope in the world stood still. With the federal government shut down and the employees who control the Green Bank telescope on furlough, the research of astronomers around the world came to an abrupt halt.
Astronomers Sheila Kannappan and David Stark of the University of North Carolina at Chapel Hill had been allotted 80 hours of observing time on the gigantic West Virginia telescope to study how gases flow between galaxies and fuel star formation. Now it’s unclear when, if ever, they will get to complete those observations.
How important is astronomy to your children’s and grandchildren’s future? Are landing on the moon and Mars, exploring the solar system, finding inhabitable planets, understanding the universe important to your children and grandchildren?
They never will know what they have lost.
The recent federal government shutdown, which furloughed more than 800,000 government workers . . . may have cost the nation as much as $24 billion. In just 2 1/2 weeks, experiments were spoiled, careers derailed and proposed reserach initiatives delayed or suspended.
This is just the latest blow to a research community already weakened by funding cuts and fiscal uncertainty.
How important are research, and the scientists who do research, to your children and grandchildren? They never will know what they have lost.
In the last decade, federal funding for basic and biomedical research has stagnated. The budget for the National Institutes of Health has dropped 23% since 2003, after inflation.
Competitors abroad are boosting their research investments. China, for instance, has increased its science funding more than fivefold since 1999.
Is maintaining a lead in scientific research important to your children’s and grandchildren’s futures? They never will know what they have lost.
Just 15 years agao, the NIH awarded funding to more than 30% of all proposals. (Today), some research programs, accept only 10% of grant application.
After some of his funding ran out, Andrew Singson of Rutgers University, had to lay off one of the four postdoctoral researchers working in his lab, which aims to identify genetic components linked to infertility in humans.
When another postdoc in the lab left last summer, Singson was not able to hire a replacement.
Might Singson have made a discovery of benefit to your children and grandchildren? They never will know.
Larry Suva, an orthopedic researcher at the University of Arkansas for Medical Sciences, worries that the current challenges are scaring off the country’s next generation of scientists.
For the first time in his 30-year career, Suva saw one of his graduate students take a job abroad to avoid the U.S. funding climate.
Even a few years ago, the U.S. was the world’s leader in research funding. Now China is poised to surpass the U.S. in science funding and published discoveries.
Is this important to your children and grandchildren? They never will know what they have lost.
Suva’s lab collaborates with researchers at the Arkansas Children’s Nutrition Center to study how bone diseases link to obesity. The experiments involved giving mice daily dietary supplements.
But some of his collaborators were furloughed during the recent shutdown and couldn’t give the mice their supplements.
Could this research have benefited your children and grandchildren? They never will know what they have lost.
The funding cuts, pauses and uncertainty aren’t over. When Congress passed legislation to reopen the government on October 17, it did so only until January 15, at which point another budget battle likely will ensue.
(Professor) Trower of Harvard’s Collaborative on Academic Careers in Higher Education said, “We’ve seen year after year of cut and cut, down to the bone. People are realizing that it’s never going to come back. I don’t like to be gloom and doom, but I don’t think it will.”
So which will hurt your children and grandchildren more — the federal deficit which they will not ever have to repay, and which adds dollars to our economy, or The Big Lie that has put America on a trajectory toward becoming a second rate nation?
Your children and grandchildren never will know what the rich-bribed politicians, media and university economists have cost them.
Will their lives be shorter, their futures dimmer, their existence sadder? Cancer, ALS, Altzheimers, osteoporosis, heart disease, arthritis, stroke, Parkinsons, diseases of the kidneys and liver and brain — will they continue to plague your children and grandchildren because research is lacking?
From where will come the next antibiotic, the next gene therapy, the next heart replacement surgery technique?
Your children and grandchildren will not blame the rich for there lesser futures, though they should. And they won’t blame you, though they should.
For, they never will know what you have cost them. They never will know what they have lost.
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
As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Brilliant piece Rodger! May I cross post it over at Daily Kos with a link back here to the original post?
The reduction in R&D investment over time is a very personal issue to me. Of all the evils of The Big Lie, the needless diminishing of our future that occurs when science isn’t properly funded (the only real source of investment for non-marketable basic research is the public) is by far the worst.
Climate change a problem? Announce that the USA will be 100% renewable in 10 years and we will invest whatever amount of money is necessary to accomplish the goal. There is nothing that a few trillion dollars cant solve.
Pluripotent stem cells potentially one of the most promising lines of medical research ever considered? What discoveries and cures might be found with $50 billion in investment every year?
How many high standard of living jobs would be created by investing our public fiat in science, research, and education?
Its a terrible, terrible waste.
From one secular to another, Merry Christmas to you and your family Mr. Mitchell
LikeLike
Sure.
Thanks. Same to you, and a pleasant, productive future.
LikeLike
It amazes me why medical charities should have to beg for funding in 2013. How can it possibly be a good idea to have qualified medical researchers collecting unemployment or Food Stamps? These organizations (American Cancer Society, American Heart Association, etc.) should have unlimited funding, though there would have to be some oversight to see that the funds are being used properly.
Slightly off topic: Dean Baker said yesterday is his blog while discussing the US Govt printing money to fund SS, Medicare and education in a society where robots perform most of the labor. “The government is just going to print trillions of dollars? That will send inflation through the roof, right? Not in the world where robots are doing all the work it won’t. If we print money it will create more demands for goods and services, which the robots will be happy to supply.” It is good to see these issues being discussed.
LikeLike
Baker’s comment already is being demonstrated. Despite the massive deficit spending to fight the recession (not enough, but still massive), we are nowhere near an inflation that needs fighting. Why?
Increased productivity.
Does that mean people are working harder? Naw. They just have better machines to do the grunt work.
The inflation lie is just part of the arsenal used by the rich to brainwash the masses into accepting austerity.
(Next, I expect to receive messages saying, “What about Wiemar Republic, Zimbabwe and Argentena?” Shows what brainwashing can accomplish.)
LikeLike
QUESTION: “How can it possibly be a good idea to have qualified medical researchers collecting unemployment or Food Stamps?”
ANSWER: It becomes a “good idea” when society manifests an extreme amount of ambient hate and selfishness.
I am not an average person like you. I am “superior.” I am a “maker,” while you and everyone else are “takers” – i.e. lazy parasites that deserve austerity. I want austerity for anyone I don’t like: Blacks, Whites, Hispanics, Muslims, Jews, Catholics, gays, poor people — whatever. They are all “takers” that deserve more austerity (always more).
Being “superior,” I reverse reality. For example, most Food Stamp recipients are white, but I claim that most recipients are blacks, since I hate blacks. And since I also hate rich people, I want austerity for them too (i.e. severe taxes).
My cry is “Austerity for everyone except me!” However, I will accept cuts in my own benefits as long as the cuts hurt those evil blacks (or those evil Mexicans, or Arabs, or whatever). That’s why austerity is constructive and productive.
Your claim that the US government has infinite money is insane. If the US government could create infinite money, then we would have hyper-inflation.
TRANSLATION: I reject anything that might benefit the evil “takers” all around me.
Your claim that the national debt simply represents client deposits at the Fed is insane. We must impose more austerity on the “takers” before it is too late.
TRANSLATION: You claim to have facts and logic, but I have God and moral rectitude on my side. I am “right.”
This hate and selfishness fuels the average person’s cheering for austerity, and his rejection of the facts of Monetary Sovereignty. I’m not referring to the rich and their toadies (pundits, professors, and politicians.) They are sub-human viruses whose nature is to be greedy thieves, liars, and killers.
No, I mean reader comments in blogs, where an average person smugly parrots the Big Lie, while condemning anyone who speaks the truth.
The disease is hate and selfishness. Austerity is one of its symptoms. The 1% use this disease to enslave the 99%.
LikeLike
I’m reminded of the parallel to austerity in Home Health 101: Medicine that doesn’t taste bad can’t be good.
LikeLike
Here’s another useless and harmful homily often overheard in the gym: No pain, no gain.
How many avoidable injuries have been caused by this misconception? It seems like our Calvinistic heritage influences our thinking that anything that comes easy is sinful and must be avoided.
LikeLike
And let’s not forget to biggest “taker” of them all on this Christmas Day: Tiny Tim.
LikeLike
I am always hearing “What about Weimar Republic, Zimbabwe and Argentina?”. My problem is I don’t quite know how to explain this. I do know that the problem with the Weimar Republic was that it was put under so many trading restraints and that is caused inflation.
LikeLike
Shorthand answers:
Weimar Republic: Onerous conditions put on Germany by the allies, following WWI.
Zimbabwe: Robert Mugabe stole farm land from farmers and gave it to people who didn’t know how to farm, resulting in food shortages.
Argentina: Repeated wars, revolutions and coups.
By the way, those who mention these three nations as evidence the U.S. will have hyperinflation, are completely (and probably intentionally) ignorant of the facts, so they just mention country names, thinking this proves their point.
Ask them why the U.S. never has had hyperinflation, despite many wars (including a civil war), recessions and depressions. Not even the Great Depression and WWII led to hyperinflation.
LikeLike
This is one topic in which I disagree with Rodger.
Zimbabwe’s inflation problems were intentionally engineered via severe sanctions that remain in place today. This was easy, since Zimbabwe used the US dollar as its currency. The ongoing Western blockade is in retaliation for Mugabe for having defied the IMF and the transnational corporations. Hence the Western corporate media vilifies Mugabe as an “evil dictator,” just as the media had vilified Idi Amin of Uganda, Gaddafi of Libya, Fidel Castro of Cuba, Hugo Chavez of Venezeula, and anyone else who defies the neo-liberal, plutocratic “new world order.” (And as always, the Western masses believe whatever the corporate media tells them.)
Zimbabwe’s inflation problems ended in April 2009 when the government dropped the US dollar as its official currency, and allowed five different currencies to flow through the economy. Today the crippling Western blockade remains, preventing Zimbabwe’s industrial output from reaching the strength needed to back a new national currency. However inflation remains under control.
Thus, Western sanctions were the main cause of Zimbabwe’s inflation problems, just as Allied sanctions (“war reparations”) were the main cause of Weimar Germany’s inflation problems.
Many Africans revere Mugabe for his defiance and his populism. When Mugabe attended Nelson Mandela’s funeral, he got a standing ovation. If Zimbabwe had as much oil as Libya does, then NATO would probably have destroyed Zimbabwe by now, as NATO did Libya.
LikeLike
Apologies for going off on a tangent.
Rodger’s main point remains 100% correct. For any nation with a strong industry, and whose government has true Monetary Sovereignty, deficit spending never causes hyper-inflation.
NEVER.
Moreover, for such nations (like the USA) the “national debt” is trivial, and the “debt-to-GDP ratio is meaningless.
Hyper-inflation is always associated with some combination of social and governmental instability caused by war, famine, external sanctions, natural catastrophes, and so on. As Rodger says, money-printing is a response to hyper-inflation, not a cause of it.
Put another way, if you want to know the cause of a nation’s hyperinflation, then forget its monetary system and look instead at the nation’s physical and social stability.
For example, it is not possible for the US dollar to “collapse” on its own. The US dollar could only “collapse” if American society and government collapsed first.
BOTTOM LINE:
When a person rejects the truth of MS, and you debunk his nonsense, he invariably says, “Deficit spending will cause hyper-inflation.”
WRONG!
For nations with large economies and authentic Monetary Sovereignty, deficit spending by itself has NEVER caused inflation, anywhere at any time.
++++++++++++++++++++++++++++++++++++++++++++++++++++
CAN I GET A WITNESS?
There are several blogs that deal with MMT, but none of them come close to Rodger’s in terms of color, clarity, poignancy, and succinctness. All the others put me to sleep.
Everyone agreed?
LikeLike
http://www.sjsu.edu/faculty/watkins/brazilinfl.htm
I came across the above link which explains that hyperinflation in Brazil from 1980-1994 was caused by the government funding its operations entirely through new money. Eliminating all taxes and keeping the same level of government spending would likely cause high inflation in the US, though unemployment would not be a problem. Brazil had low unemployment during that period. Nobody is advocating the elimination of taxes. Rodger advocates only the elimination of FICA.
LikeLike
[1] Ian Winograd says: “Eliminating all taxes and keeping the same level of government spending would likely cause high inflation in the US, though unemployment would not be a problem.”
No. As Rodger has often explained, when most people discuss inflation, they only talk about the money supply, while they ignore the demand side of the equation. In reality, there is no inflation as long as long as demand for money, goods, and services increases with the money supply.
There was a time when the US government used federal taxes to control inflation. During World War II, the USA had near 100% employment. Everyone was flush with cash, but with the USA on a war footing (with rationing etc.) there were not enough consumer goods to spend the money on. This led to hoarding, speculating, and other means that caused runaway price increases, i.e. inflation. The US government’s solution during the war was to withhold federal taxes from every paycheck.
Today inflation is the Fed’s concern, and has nothing to do with federal taxes. The only logical purpose for federal taxes is to maintain the singular authority of the dollar. You must pay federal taxes, and you can only do so in dollars.
Of course, the same function could be served by state, county, and muncipal taxes. However federal taxes remain, because they are an easy way to impose austerity on the masses, thereby widening the gap betweeen the rich and the rest. Also, federal taxes make us fear the IRS, i.e. fear federal bureaucrats and politicians. It’s a power thing.
[2] Ian Winograd says: “Nobody is advocating the elimination of taxes. Rodger advocates only the elimination of FICA.”
Actually Rodger and I want the elimination of ALL federal taxes in the USA. That includes taxes on people, on corporations, on transactions, on Social Security, the FICA tax — all of it. The U.S. government has no need or use for tax revenue, and in fact destroys such revenue upon recipt. The act of paying federal taxes literally destroys money.
Notice I said FEDERAL taxes.
If I make $7.50 an hour, and I am lucky enough to work 40 hours a week, then federal taxes (including FICA) take about $216.00 a month from me and destroy it.
Why not let me keep that cash and spend it into the economy so that everyone around me has a job?
Or if that is not permissable, then why not send that $216.00 per month to my state, county, and municipal governments? They need tax revenue. The federal government does not.
Actually the more tax revenue that local governments receive, the less likely they are to sell bonds and get trapped in Wall Street scams that eventually bankrupt the local governments.
LikeLike
LikeLike