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.
======================================================================================================================================================================================
As every right-thinking person knows, there is too much government regulation. The proof: See excerpts from the following article:
HuffPost
House Republicans Just Quietly Passed A Bill Gutting Hazardous Waste Legislation
Kate Sheppard
01/10/2014 3:19 pm ESTWASHINGTON – The House of Representatives passed a bill called the Reducing Excessive Deadline Obligations Act that would remove requirements the EPA periodically update and review solid waste disposal regulations, and would make it harder for the government to require companies that deal with hazardous substances to carry enough insurance to cover cleanup.
The bill would also require more consultation with states before the government imposes cleanup requirements for Superfund sites — places where hazardous waste is located and could be affecting local people or ecosystems.
The bill passed by a vote of 225 to 188, largely along party lines. Four Republicans voted against it, and five Democrats voted for it.
The environmental group Earthjustice has said the bill would “gut” the Superfund program, which was created in 1980 to ensure that polluting industries pay to clean up hazardous sites.
“The bill’s requirements could result in significant site cleanup delays, endangering public health and the environment,” President Obama’s advisers wrote.
Clearly, the House is dominated by right-thinking people.
Washington Post
West Virginia residents cope, with days of water woes still ahead after chemical spill
By Joel Achenbach, Published: January 12“DO NOT USE WATER,” say the signs taped over sinks at the airport, and in the State Capitol the sinks are entirely wrapped in plastic bags.
People line up for free water at the fire stations or buy it at the Dollar General — $1.60 for a 20-ounce Dasani, $39 for a flat of 24 bottles.
A chemical used in coal processing has leaked from an old tank along the Elk River and invaded the water supply, a crisis that has affected nearly 300,000 people in nine counties and effectively closed the largest city in the state. You can’t drink the water, bathe in it or do laundry with it. It’s good only for flushing.
Two state employees tracked the leak to Freedom Industries. Monday will mark the fifth day of the water emergency.
Only five short days (and counting) without water? What are these people complaining about?
The bigger problem is the excessive regulation that an innocent private company like Freedom Industries is forced to endure at the hands of an excessively intrusive government.
An attorney for Freedom Industries provided a reporter with a news article saying that the chemical is not very toxic.
See, it’s not very toxic. Just a little toxic. Nothing to worry about.
I’ll tell you what is toxic. Those excessive regulations that require no poisons in our food and water — they are toxic. And excessive regulations that require food and clothing to be labeled properly and not to contain botulism or other poisons, and excessive regulations against crooked Wall Streeters from stealing your savings, and excessive regulations against retailers who sell you fake Gucci watches at exorbitant price — you know, those kinds of excessive regulations.
Thank goodness we have right-thinking protectors of the rich to defend us from excessive waste disposal and hazardous substance regulations.
A lot of that stuff isn’t very toxic, anyway.
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) Or institute a reverse income tax.
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. Federal deficit growth is absolutely, positively necessary for economic growth. Period.
#MONETARY SOVEREIGNTY
#Monetary Sovereignty - Mitchell 
Private companies are more “efficient” than government, since “efficiency” is all about widening the gap between the rich and the rest, and reducing everything to monetary profit. Those 14 tanks along the Elk River were decades beyond their useful life, but it would have been “inefficient” to repair or replace them. That is, it would have reduced company profits.
The Japanese company Tepco irradiated thousands of US military members, giving them cancer. Tepco knew that radiation was pouring into the air and water from Fukishima, but kept this a secret. When the aircraft carrier USS Ronald Reagan departed from the Fukushima area, it was so radioactive it was refused port entry in Japan, South Korea and Guam. The US cancer victims are barred by law from suing the US government, and Tepco says they have no jurisdiction in Japan.
That’s efficiency.
“Free trade” agreements are all about efficiency (i.e. widening the wealth gap, while letting corporations becomes governments unto themselves, accountable to no one). The Trans-Pacific Partnership will boost “efficiency” to whole new levels.
RIGHT-WING CLAIM: “Since US government agencies don’t have to produce a profit, and are not subject to market competition, they have much less incentive to be cost-efficient in their management and delivery of services. For example, all social programs are wasteful, and should be privatized in the name of efficiency.
TRANSLATION: “The term ‘wasteful’ is irrelevant to the US government, since the government has limitless money. But don’t tell this to anyone. Remember, we’re not increasing the wealth gap; we are reducing waste and bureaucracy.”
RIGHT-WING CLAIM: “We would all be better off if government were run like a business.”
TRANSLATION: “Plutocracy is paradise.”
LikeLike
Yes, Tepco can be trusted to do what’s right. No “excessive government regulation” needed. Here’s why
Watch how hard Tepco fights the lawsuits against it, filed by dying Americans.
LikeLike
In addition to the 300,000 people without useable water in WV, an unknown number may fall ill because the warnings about the poisoned water supply came seven hours after the leak was discovered – and perhaps weeks after it happened. (Neighbors of the plant have been complaining about the local water’s odor since December.)
That’s “corporate efficiency” in action.
On a different note, have any of you seen pictures of West Virginia? I’ve always thought it looked like a blighted wasteland. The state harvested its entire 10 million acres of virgin forest between 1870 and 1920. In the past 50 years, mountaintop-removal mining has made over 300,000 acres of unfit for economically productive use. In the last 25 years, the clean water supply has been systematically reduced by 20%. And now comes this latest example of corporate “efficiency.”
Since most WV coal mines have played out, local politicians have opened their doors to outfits like Freedom Industries. The company’s dangerous stockpiling of 4-Methylcyclohexanemethanol (MCHM) was known to local politicians, but they did nothing. That’s “corporate efficiency” in action.
Obama wants to boost this “efficiency” across the USA via his “promise zones” initiative. He has designated 20 places where he wants corporations to move to. As an incentive, he will pay massive new subsidies to the corporations, and will eliminate local regulations, so that corporations to privatize everything in the “profit zones.” Schools, clinics, fire departments, everything will be privatized.
Obama’s scam excites Republicans (e.g. Sen. Marco Rubio of Florida and Mitch McConnell of Kentucky) because it will shower the nation’s biggest corporations with lavish cash giveaways, while providing an endless source of cheap slave labor to boost future earnings. And if things happen like the WV chemical spill, the public must foot the bill. For example, if a corporation causes a huge fire, then you must pay the privatized fire department to put the fire out.
These corporate-run slave plantations, owned by the rich, are now a global trend. In most countries they are called “special economic zones.” They feature zero regulation, total privatization, and massive government subsidies to the plantation owners.
See http://en.wikipedia.org/wiki/Special_economic_zones
It’s all about “efficiency,” i.e. plutocracy, corporate tyranny, and the ever-widening wealth gap.
LikeLike
‘Deregulation, privatization, and cheap labor; the toxic cocktail that has vaporized the US middle class and wiped out a good portion of the developing world.’-Mike Whitney, ‘Hopeless: Barack Obama and the Politics of Illusion’
LikeLike
But man, has it ever created a vast supply of low-wage laborers! And that’s a real reason for gutting the middle class.
LikeLike
As this blog repeatedly has said, there are no liberal politicians in America any more. They all have been bribed by the upper .1%. Today we have the right wing (the Obama Democrats) and the ultra-right wing (the Tea Republicans).
There is no one to speak for the lower 99.9%, primarily because the lower 99.9% has been brainwashed into rejecting help.
They hate the very people who might wish to help them, thus you read and hear the sneering comments about “liberals” and “socialism.”
Sometimes I feel like tossing in the towel and saying, “O.K., you win. Drown, starve and die, just as you seem to wish.”
But then I think of their children — their innocent children — who don’t deserve the results of their parents stupidity.
And so we soldier on.
LikeLike
Rodger, I’m so glad you soldier on. This “battle” is for one of the most significant human developments in recorded history – economic freedom; not possible before c. 1970.
I can’t contribute significantly to the current discussion – perhaps suggest substituting “parent ignorance” in place of “parent stupidity”. But I could use your help in providing sources for the fact that federal taxes don’t pay for federal spending. I’m involved in a discussion on another blog, and currently don’t have the facts to support this premise.
Thanks.
LikeLike
Federal tax payments go to the U.S. Treasury, not to a bank. Dollars held by the Treasury are not part of the U.S. money supply. Not being part of the U.S. money supply, they cease to exist.
(U.S. Code › Title 26 › Subtitle F › Chapter 80 › Subchapter A › § 7809)
When the federal government pays a bill, it does not send dollars; it sends instructions (in the form of a check or wire).
These instructions tell a creditor’s bank to increase the balance in the creditor’s checking account. At the moment this balance is increased, the U.S. money supply is increased.
Thus, federal taxes destroy dollars, and federal spending creates dollars.
For states, counties and cities, tax payments DO remain in the money supply, as they are deposited in banks, thereby becoming part of M1, M2, M3, MZM or L, depending on the size of the deposit and other factors.
State, county and city spending does not create dollars, as this just transfers dollars from one bank account to another.
LikeLike
Thanks, Rodger. Federal tax payments not being part of the money supply help me understand the concept. But is there an accounting entry on the US Treasury side that reflects the tax payment? Did you tell me before that tax payments are used to reduce the deficit, even though they aren’t part of the money supply?
LikeLike
There is a whole series of internal accounting entries related to tax payments. The Treasury Department’s internal accounting entries are not money.
When the Treasury prints those big sheets of dollar bills, there are accounting entries, but either the entries nor those sheets of dollar bills are money.
LikeLike
To Jeff Rudisill…
What proof do we have that federal taxes don’t pay for federal spending?
The proof is right in front of us. We see it every day, countless times a day.
They key, as Rodger has often noted, is to understand that money has no physical existence. Money is like the points on a sports scoreboard. Just as the points exist only on the scoreboard, so too does money exists only in the computerized accounts of banks. Whether we speak of dollars or points, we speak of accounting notations with no physical existence. Bills and coins represent money, but they are not money. They are currency. Likewise, a car title represents a car, but it is not the car.
Most people have trouble grasping this. They think that money is physical, and therefore limited. However, a few seconds of honest reflection shows that money is not physical.
On a sports scoreboard, we can create 10 points by putting “10” up there. We can destroy those 10 points by changing the score to “0.” Where did the 10 points come from? Nowhere. Where did they go to? Nowhere.
Likewise, your bank account can be credited (digitally added to) or debited (digitally subtracted from). It’s just a question of changing numbers. It’s all digital. None of it is physical. Nothing physically moves. Since money is not physical, and since the US government has Monetary Sovereignty (i.e. the authority to credit bank accounts as much as it likes), the US government has infinite money. All claims that the US government is “broke” and has a “debt crisis” are lies.
When the government issues you $1,000 in Social Security benefits, the government does not physically “send” you $1,000. Instead, the government instructs your bank to increase (i.e. credit) your account numbers by 1,000. This creates $1,000 from thin air. As of April 2013 the government no longer sends Social Security checks. It’s all purely electronic.
When you pay a federal tax, the government instructs your bank to lower (i.e. debit) your account numbers by the amount of your payment. This destroys the tax payment; i.e. “sends” it back into thin air. It’s like changing the points on an electronic scoreboard from “10” to “0.” The ten points were destroyed, but nothing physical moved.
I have two separate accounts with my bank. Sometimes I move money from one account to the other. I do this on my computer at home. Nothing physical “moves.” I simply tell the system to debit one account, and credit the other. The US government does the same.
TAKEAWAY POINT: money is not physical. Money is created from thin air, and is destroyed by dissolving it into thin air. It’s just a question of changing digital numbers. Therefore the US government does not need or use tax revenue, and in fact destroys tax revenue upon receipt.
Remember, all this applies only to the federal government, not state, county, or municipal governments. The former is an issuer of money, and has an infinite supply. The latter are users of money, and have a finite supply.
LikeLike
Thanks, quatloosx. This reinforces my belief that money has transformed from a scarce commodity to an information system.
LikeLike
Actually Jeff, money has always been an information system, from the dawn of history.
Adam Smith (1723-1790) assumed, without proof or evidence, that early economies were based on barter, and that money was later invented to better facilitate the exchange of goods and services. Today we know that Smith’s assumption was false, and that no human economy has ever been based on barter. All societies, regardless of what currency they used, have been based on systems of accounting that served as the first proto-banks.
Thus, in ancient Sumer and Egypt, there were periodic debt jubilees in which the ledgers were wiped clean, so that society could start over. Sometimes when a Roman general wanted to conquer a town, his messengers told the inhabitants that if they surrendered peacefully, the general would erase all their debts by destroying the town’s ledgers. Many towns were taken in this manner.
Then as now, money was not physical. Money consisted entirely of ledger entries. An ancient Roman lira was simply a unit of account. Coins themselves were not money. They were currency. Currency represented ledger entries. They were a convenient way to conduct small transactions without having to go to the keepers of the ledgers. Then as now, the big transactions occurred as ledger entries.
The Romans put the emperor’s head on coins in order to affirm the supremacy of the Roman ledger system, which was the source of Roman power. The army protected and advanced the Roman money system. Once the Romans got everybody in the empire using Roman coins, the Roman leaders became rich, since they were the masters of the ledger system. They used debt to economically enslave their subject states.
Gold became a kind of international currency in Europe, but its value was determined, once again, by the ledger systems of various states and city states. Money (i.e. ledger systems) gave value to gold, and not the other way around. This has always been the case with gold. Money has never been “backed by gold.” On the contrary, gold has always been backed by money (i.e. ledger systems). Without a ledger system that acknowledged gold as a currency, gold was next to worthless. For natives in the New World, gold could only be used for ornaments; nothing more. Gold only had value for the invading Spaniards when the Spaniards took the gold back to Europe with its ledger systems.
In more modern times, the “gold standard” was a convenient way to coordinate the interaction between various ledger systems (i.e. money systems). In any given system, its unit of account was based on a fixed quantity of gold. Different nations chose different quantities, and their decisions worked if the other nation’s systems were agreeable to it. The gold standard caused periodic crises of stability. To handle these crises, nations routinely went on and off the gold standard.
Finally a few nations did away with the gold standard altogether, having decided that the convenience was no longer convenient. West Germany was first. The USA followed soon after, on 15 Aug 1971.
Today the 18 nations of the euro-zone have voluntarily enslaved themselves by surrendering their own ledger systems, and adopting the system maintained by the Troika, especially the ECB in Frankfurt. Rich people and politicians in the slave states champion the euro because it widens the gap between the rich and the rest. The masses cannot help but go ever-further into debt, no matter what they do.
WHAT’S THE POINT OF ALL THIS?
Since money has never been physical, it has always been infinite. However, all societies have had some variant of the Big Lie, in which the rulers maintain their power by falsely telling the peasants that money is physical and limited, and that the government has a “debt crisis.”
The exception is when nations dispense with their Monetary Sovereignty (e.g. the euro-zone). In their case the Troika has infinite money, but falsely claims that it is “broke.” This is the Big Lie that is used to enslave and impoverish the peasants, who not only believe the Big Lie; they defend it with their lives.
LikeLike
@quatloosx, an enlightening historical synopsis of money as an information system. Thank you.
Perceptually, though, with current technology, it now seems more difficult to perpetuate the myth of money as a scarce commodity
LikeLike
Government (Treasury)spends by crediting bank accounts and taxes by debiting them. Government (Treasury) spending takes the form of emitting IOUs while taxes take the form of eliminating those IOUs.
LikeLike
Hi Rodger, If the federal government were properly managed according to the MMT paradigm and recognition of monetary sovereignty, how does the federal government determine how many dollars to create and distribute without causing hyperinflation then? How does it know when to withdraw or destroy dollars from the money system? A common and persistent ignorant criticism of MMT is that if the government can create an unlimited amount of dollars at will, then why don’t we just give everybody a million dollars, then everybody would be rich – but this would devalue (or “debase”) the dollar and then obviously cause hyperinflation. Clearly there are limits to the money supply. (MMT has been derisively called the “Magic Money Tree” theory by critics.)
LikeLike
Sometimes it seems as if all or at least most human suffering is caused by conservative policies. The conservatives are wrong on EVERYTHING. How does that happen? I live in a very conservative part of the US with all conservative relatives and my wife thinks I am crazy when I say things like this. But it is just where the facts have led me. Some of the people you can fool all the time and they are the conservatives.
LikeLike
” . . . how does the federal government determine how many dollars to create and distribute without causing hyperinflation then?”
The answer is part of your question. The federal government can prevent hyper-inflation by watching inflation.
When inflation grows above the government’s goal (usually 2% – 3%), the Fed raises interest rates to make dollars more valuable. That stops the inflation.
In the unlikely event that doesn’t work, the government would have to reduce deficit spending. But . . .
Since the U.S. never has had hyper inflation (despite, wars, recessions, inflations, stagflations, bubbles and depressions), the likelihood of our having a hyperinflation is quite remote.
Yet amazingly, it always seems to a top-of-mind worry for conservative debt hawks. It would be better if they worried about recessions, which we have every five years on average, and which are prevented and cured with increases in deficit spending.
In short, they worry about being hit in the head by a comet, and don’t worry about being killed by a gun. That’s the conservatives for you.
Those who derisively refer to MMT as the “Magic Money Tree” are clueless about how money is created and destroyed.
LikeLike
When the Big Lie is exposed, its champions always report to “Plan B,” which is to invoke the inflation bogeyman.
“Okay, so the US government is not broke after all. Nonetheless, we must have more austerity, or else we will have hyperinflation.”
This bogeyman has power because most people falsely think that inflation is a product of the money supply.
In reality, inflation is a product of the ratio between
(1) The money supply
-and-
(2) The demand for money, and for goods and services.
If the money supply outstrips demand, then the ratio becomes too distorted, and we have inflation.
There are many ways to control the ratio, such as taxation, interest rates, bank regulation, fiscal spending or not spending, government edicts regarding the use of public funds, and so on.
If control of the ratio is lost completely, the result can be hyper-inflation. This is not caused by spending, but by the instability (or breakdown) of the overall social and monetary system, which itself results from war, from external sanctions, from natural catastrophes, and so on.
The government may respond to this breakdown via massive money creation. Thus, (as Rodger has often noted) “money printing” is a response to hyper-inflation, not a cause of it.
If massive “money printing” doesn’t work, then the government can restore stability by switching to a different system with a different currency. Thus, Zimbabwe ended its hyper-inflation by ending its use of the US dollar as its currency. Weimar Germany ended its hyper-inflation by switching from the Reichsmark currency to the Rentenmark currency (15 Oct 1923). This restored a productive ratio between the supply and demand for money. After stability was restored, Weimar Germany switched back to using the Reichsmark.
In 1932 the Weimar government started issuing “Öffa bills,” or promissory notes. This was a system of deferred payment to finance public building initiatives and job creation schemes. Why couldn’t the German government simply print Reichsmarks for this? The answer is that when employment becomes high, and workers are flush with cash, but there are not enough consumer goods to spend the cash on, suppliers start hoarding goods in order to drive up their prices and profits. This causes severe inflation, leading to instability. The “Öffa bills” offset this because they could not be spent immediately. (The US government’s solution to the same problem during WW II was the Current Tax Payment Act of 1943, in which federal taxes were withheld from every worker’s paycheck.)
By the late 1930s, Germany entered the depression when its rich people and their puppet politicians discovered the magic of austerity. By falsely claiming that the government was “broke,” the rich hollowed out the middle class, and dramatically widened the gap between themselves and the masses. This was a global phenomenon, and it caused the 1930s depression. (We are witnesses a repeat today.)
Hitler’s solution, after he became chancellor, was to have his finance minister issue a new kind of “Öffa bill,” called “MEFO bills.” This allowed the German government to go on a massive spending spree without sparking inflation. Germany had taxes, but because there were MEFO bills, the German taxes were far lower than taxes in the UK and USA, for example. There were countless ways for Germans at all levels to defer or negate taxes, as long as they used their money for productive ends such as building hotels, restaurants, factories, etc. It was the same with loans. German couples received a mortgage for a house at a flat 4%. For every child they had, a quarter of the mortgage was erased. This caused average Germans to have a lot of cash, but again, inflation was avoided because new taxes were placed on consumer goods (diapers, toys, clothes, food, etc).
WHAT’S THE POINT?
There are always means whereby everybody can be given decent jobs and live decent lives, while senior citizens can have decent retirements. The issues are never economic. They are always political.
Society can work. It just takes a sufficient number of people to drop their greed, hate, and selfishness.
LikeLike
This guy needs to read this blog:
http://www.johntreed.com/hyperinflationdepression.html
Reed claims to have an MBA from Harvard, but he clearly does not understand fundamental economics. Ignorance of economics in America among the general population is stunning and really unbelievable.
LikeLike
“Ignorance of economics in America among the general population is stunning and really unbelievable.”
That’s because economics is political ideology masquerading as a “science.” There are inviolable formulas, such as the formula or definition of GDP, but the formulas are applied according to politics.
Society’s rulers claim that austerity is prosperity, monopolies are freedom, and plutocracy is democracy. This is not logic or science. It is lies. It is politics.
The public believes the lies, since the lies allow average people to indulge their own hate and selfishness.
Mass brainwashing only works on masses who want to be brainwashed.
LikeLike
Unfortunately, it appears that this guy, John T. Reed, really believes the economic misunderstanding that he blogs about on his website. He actually wrote a self-published book on this hyperinflation hysteria nonsense. Before I discovered MMT and Warren Mosler’s, Randall Wray’s, Stephanie Kelton’s, Mike Norman’s and Rodger’s websites, I actually believed in these economic misconceptions. Thank God I was able to get properly educated and get straightened out.
LikeLike
BJS writes, “It appears that this guy, John T. Reed, really believes the economic misunderstanding that he blogs about on his website.”
His hokum is designed to sell books, and to get paid for speaking engagements.
Gold traders use the same nonsense in order to sell shares in their gold exchanges. (This John T. Reed appears to be a trader in gold certificates, which only have value inside the exchange.)
In all cases, these people are selling something (usually snake oil), with nonsense as their sales pitch. If they admit the truth, they jeopardize their livelihood as hucksters.
Note the hyperbole and the panicked tone in that guy’s web site. It’s like religious preachers claiming that the devil is about to get you, and that the only way to be safe is to send in your money.
LikeLike
more on the West Virginia spill:
LikeLike
So, you’re saying that the politicians’ full court press for deregulation is not based on concerns for the “little guy,” but instead is based on being bribed by the “big guys”?
Hard to believe.
LikeLike