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●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.
I previously have written about Modern Monetary Theory’s JG (Jobs Guarantee)
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
I won’t repeat the many, many reasons why I believe JG to be a bad idea — or bad ideas, as every time I discuss JG with an adherent, I am treated to a different version, beginning with the fundamental question, “Who is the employer, the government or the private sector?” — and that is but one of my complaints.
I also feel that lack of money, not lack of jobs, is the key problem. There are millions of jobs available. Look in your local newspaper or at such sites as Monster.com, and you’ll see thousands upon thousands of jobs being advertised. Private industry spends millions to find people to fill those jobs.
But they are the wrong jobs from the standpoint of pay, geography, skills needed, time, etc., etc. — and those are exactly the kinds of jobs JG would provide.
No, I don’t think having the government compete with private employment agencies, newspapers and online job searches will benefit the economy.
Given the choice of JG vs GI (Guaranteed Income), I’d lean toward GI. It’s simpler, accomplishes the primary goal of providing money to people who need money, and we already do something in the same genre: Social Security.
Yet GI also has a fundamental problem. If, for instance, everyone were guaranteed an annual income of, say, $10K, who would accept a full-time job paying $12K (assuming GI is a net income guarantee)? In essence, that employee would be working full time for $2K.
So the minimum wage functionally (though not legally) would be at least $20K annually, which would punish many employers, while not adding much to the economy’s money supply.
I suggest the problem(s) facing our economy are two-fold:
1. The economy has too little money.
2. The “not-rich People” (the 99%) have too little money.
So I propose we simply give a monthly Economic Bonus (EB) to every man, woman and child in America, regardless of any other income or wealth they may have. You would receive the same EB as I receive and as Bill Gates receives.
No need to go through the convoluted steps our gigantic tax code demands, to determine what is income, and what kind of income it is, and when you received it and how you received it, etc., etc. If you live in America, and you’re alive, you receive your monthly EB.
The economy benefits by receiving dollars and the 99% also benefit by receiving dollars. The rich benefit, too, but that’s good. It’s just more dollars for the economy, and it costs no one anything.
How much should the EB be? My early thought is $1K per month for everyone above the age of 21, and $500 per month for everyone below that age. You may have a different amount in mind.
The government already has done something similar, though it unnecessarily took into consideration income. In a weak attempt to moderate the Great Recession, the government mailed every taxpayer a check for as much as $500. (Had they sent $5,000 instead, the recession would have ended, but that’s another issue.)
I know that sending money to “lazy” people who don’t work, goes against our Puritan grain, but we should get over that notion. There are many reasons people don’t have enough money, and laziness isn’t anywhere near the top of the list.
Bottom line: Send every man, woman and child in America an Economic Bonus, and we will have solved the vast majority of economic problems facing America.
Or is that solution too easy for those who believe the medicine must be bitter, to be effective?
Rodger Malcolm Mitchell
I guess I’ll have to revise #3, in the “Nine Steps.”
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.