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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Reader “Questioner” sent in this comment:
Canada has a balanced budget and a surplus – will this actually be harmful for their economy since they are Monetarily Sovereign?
The above article includes these comments:
Canada’s Conservative government looks set to comfortably balance its books in 2015 or even sooner, its latest budget showed on Tuesday, with cuts in spending on the public service more than offsetting a series of modest new expenditures.
Finance Minister Jim Flaherty acknowledged the budget would be narrowly balanced this coming year, but said he preferred to have a “nice clean surplus next year”.
The government estimates a bigger-than-expected C$6.4 billion surplus in 2015-16. In the year ending March 31 of this year, the deficit is pegged at C$16.6 billion.
The Conservatives, in power since 2006, plunged into a deep deficit in 2008 as they pumped out stimulus money to deal with the recession after having cut taxes earlier. Previously, the Canadian government had an 11-year string of budget surpluses.
What is a net budget surplus? It is the central government removing more money from the private sector than the government puts back in. This reduces the private sector’s money supply. The private sector is people and businesses. Does anyone really believe it is a good idea to take money from people and businesses? Remember:
Gross Domestic Product = Government Spending + Non-government Spending + Net Exports. By formula, cuts to any of those terms, cuts GDP.
Because a large economy has more money than does a small economy, reducing the money supply makes an economy smaller. This is what the Canadian economists are so proud of.
Notice that when things got tough, the Canadian government ran a “deep deficit” to cure the recession. Why? Because to grow an economy requires growing the money supply. The “deep deficit” worked. It stimulated economic growth.
In fact, the “deep deficit” worked so well, the Canadian government will revert to taking money out of the private sector! Yikes!
But wait, what about that “11-year string of budget surpluses”? Didn’t that reduce the money supply in the Canadian private sector?
There is that one other source of money: Net Exports. For those 11 years (and much more), Canada ran trade surpluses, a positive balance of trade. It’s exports exceeded its imports. Net money was coming in:
Today, Canada no longer is running those surpluses. It has begun to run trade deficits.
Bottom line: Canada’s politicians have decided to turn Canada into an impoverished euro nation. Despite being Monetarily Sovereign, and having the unlimited ability to create its sovereign currency, Canada pretends to be monetarily non-sovereign.
Canada’s politicians spread The Big Lie, that Canada’s finances are like personal finances, and running a surplus (taking money from people and business) is prudent economics.
And the Canadian people, accepting The Big Lie, will suffer greatly, and not understand why.
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. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (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 
And all of that money removed will be moved into the coffers of the 0.01%. Isn’t that the function of our so-called representative democratic form of government? Because the entrepreneurs, job creators, the best among men will through the free market system and through their hard work and brain power elevate us all to a place better than the present. If we just leave them to their own devices. For we all know that they, these rugged individuals, not the inefficient, much too big of scale government are responsible for all that we have. We need more, more and more products to consume. After all that is what we are, correct? Nothing more than consumers. That is what we are to live for; it’s all that matters. More, more, more, more……….
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For as we all know, big business can be trusted to defend us, and state governments are far more law-abiding and competent than the federal government.
I merely need to mention J.P. Morgan Chase and the state of Illinois to make my case.
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Thanks for this post, Rodger. I didn’t know that Canada’s federal government had run a budget surplus for 11 years, but you’re right in saying this could only have happened because Canada enjoyed a foreign trade surplus for ten years (November 1999 to November 2009). This refers to Canada’s trade overall. Some aspects of Canada’s economy have suffered a trade deficit. For example, Canada’s net non-energy exports plunged from $30 billion in 2000 to about negative $60 billion by 2011. That’s a loss of $90 billion in the economy.
Meanwhile Australia’s trade deficit began when America’s did (mid-1970s) and grew progressively worse until mid-2007, when demand from China reversed the trend and almost created a trade surplus for Australia.
Then in 2009, the global depression caused Australia’s current account (i.e. trade balance) to nose-dive like Canada’s. Now both nations have trade deficits.
The solution is to increase federal spending, but both nations’ governments are engaged in radical austerity.
Result: Both Canada and Australia are hurtling toward severe depressions.
Canada’s health care system will be privatized like the UK’s. Both systems will be defunded until the masses beg for relief, even if it means privatization. The Big Lie always wins.
The USA has been in a depression since 2010, because of gratuitous austerity, but the people of Canada and Australia were spared that pain…until now. I predict that they will suddenly have pain, and it will be even worse than the USA’s.
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— Off topic —
WHEN IS AUSERITY NO LONGER AN OPTION?
When it affects the rich. Remember when the sequester caused the FAA to furlough air traffic controllers? The furlough affected even the rich in their private jets. Therefore the US Congress magically found the money to correct that problem immediately
Now comes a much bigger example from England. First, some background…
David Cameron was appointed British Prime Minister in May 2010 by promising the rich that he would widen the gap between themselves and the masses.
This was not a secret. Cameron had publicly vowed that if he became prime minister, he would impose radical austerity on the masses. He would cut Social Security benefits (called “welfare” in the UK), privatize health care, schools and libraries, cut taxes for the rich, raise taxes on the poor, and repeal whatever laws protected workers and the environment. He made these threats repeatedly, knowing they would give the rich an incentive to install him as prime minister, and knowing the British masses would not squawk, since they are brainwashed by the Big Lie.
(At least Cameron was honest. He didn’t do an about-face.)
Forty-six days after Cameron became prime minister, he went to the G-20 summit in Toronto and counseled the other world leaders that the global depression was not a time for worry, but for rejoicing. Instead of fretting about how to boost the economy and help the middle classes, politicians should use the depression as an excuse to wipe out the middle class and destroy the “welfare state.” With a depression, politicians could claim that the government was “broke” and “in debt,” and that austerity was necessary. In this way they could widen the wealth gap to unprecedented levels, and thereby enrich themselves by serving the 1%.
Again, this was not a secret. The corporate media discussed austerity, but made sure to portray it as something that would boost the economy (the exact opposite of the truth).
Every world leader jumped on Cameron’s bandwagon except Obama, who did not fully catch austerity fever until mid-2011, when Obama started talking about “grand bargains” and “fiscal responsibility.”
Today, Cameron’s austerity has forced half a million Britons to rely on food banks, and increased homelessness by 34 percent.
(I have discussed all this in past comments, and in greater detail. I explained that Cameron and his finance minister, George Osborne, have been far more ruthless about imposing austerity than even the worst Republicans in the USA. Meanwhile in the euro-zone, political leaders don’t need to be ruthless. For them, austerity is automatic, since their nations surrendered their Monetary Sovereignty. The most recent country to join the suicide brigade was Latvia on 1 Jan 2014. Next will be Lithuania on 1 Jan 2015. Again, the purpose of all this is to make austerity automatic, so that a widened gap between the rich and the rest becomes automatic.)
Austerity is not only about widening the gap between the rich and the rest. It is also about increasing the supremacy of the financial economy over the real economy. This means that national infrastructures are either privatized or else defunded until they disintegrate. In the UK, infrastructure includes walls, channels, and dredging for flood control. Every ten years or so the UK has massive flooding, especially in cities near the coast, and near major rivers. Because of global climate changes, each episode is worse than the last. The last major floods were in 2007. At that time, David Cameron was a member of parliament, and instead of helping his own Oxfordshire constituency, he took a trip to Africa.
After the UK finally dried out, the government neglected the flood control infrastructure, and finally ignored it altogether when Cameron became PM (May 2010) and launched his austerity mania. In 2013 Cameron defunded the Environment Agency (responsible for flood control) and reduced it to a “quango” (quasi-autonomous non-governmental organization).
Now the UK is experiencing its wettest winter ever, and is suffering the worst flood damage ever. Sewage systems are pouring human waste into people’s homes, with the foul sludge not expected to recede until May.
Normally the mass suffering would delight Cameron and his fellow politicians, who would claim that nothing can be done about it, since the government is “broke” and “in debt.” They would repeat their lie that for the UK government, “There is no magic money tree.” (The British equivalent to “There’s no free lunch.”)
This time, however, the flooding is so severe that it has affected even the estates of the rich. Human waste is oozing into rich people’s mansions and “chases” (the forests and greens where rich people do their fox hunting.)
Therefore David Cameron will temporarily halt his gratuitous austerity. Yesterday (11 Feb 2014) he held his first press conference in eight months, and promised to spend “whatever money is needed” on flood relief, and that “money is no object.”
(Money is only an object with problems that afflict the lower classes, such as homelessness, poverty, unemployment, access to health care, and so on.)
Cameron also asked insurance companies to promptly pay damage claims. (Meaning, “I have infinite money, since the UK government is Monetarily Sovereign. Pay your insurance claims, and I’ll reimburse you 100%. In fact, better than 100%.”)
Because austerity has wiped out the British middle class, some areas that were once middle class are now “gentrified,” i.e. affordable only to the rich. An example is waterfront properties in southern coastal cities. Many of those properties have been heavily damaged or destroyed by storms and giant waves. South and Southwest England are under water. Parts of the London subway system have been shut down. Farther north, snow has crippled many cities.
While I was in England I noticed that the subway system is not a crucial as it is in other cities. There are buses, taxis, and other ways to get around London. What is crucial are rail systems that link the major cities to the rural areas. England consists of big cities surrounded by vast suburbs. Every day, countless people ride trains into and out of the central cities. It’s a depressing sight as countless zombies are packed in like sardines, their noses buried in trashy British tabloids. If the flooding causes the interlink rail systems to shut down, then the UK economy will have a major emergency.
The Financial Times blog is worried that government spending on flood control could dampen the GADR (Golden Age of Deficit Reduction).
“The promise of unlimited government spending on those affected by floods could raise fears of a hefty blank cheque for the Cameron coalition in the future.”
TRANSLATION: “You filthy peasants had better enjoy whatever flood relief you get, because when the crisis is over, we will use this spending on flood relief as an excuse to impose more austerity on you than ever!”
So…is there ever a time when austerity is out of the question?
Yes. If rich people suffer any hardship, then the government forgets austerity and “re-discovers” that it has infinite money to eliminate the hardship.
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A relevant question to all:
– Why does GDP need to grow?
– What is the downside of a stable money supply?
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–Inflation and population growth, for starters.
–Every depression and most recessions immediately followed reduced growth in the money supply. See: #3 at https://mythfighter.com/2009/09/07/introduction/
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Perhaps I’m mis-understanding – are you saying that a stable money supply is inflationary – while one with increasing money supply is not? The below from the link you provided suggests otherwise…
“The entire process neither adds nor subtracts money from the economy (but for interest paid), therefore is inflation-neutral (again, except for interest paid).”
In your own words “inflation-neutral”, this suggest that adding and subtracting would be inflation non-neutral (i.e. inflationary or deflationary). So it seems we believe in the same definition of inflation after all.
Population vs Money Supply Growth:
– US population in 1970 – 204 million people
– US population today – 314 million. (54% growth).
– M’ (M Prime) 1970 – 250 billion
– M’ today – over 3 trillion (1,100% growth)
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The most irritating thing about running a blog, is being misquoted, either by intent or by ignorance.
At no time did I say, infer or hint that a stable money supply is inflationary, while one with increased money supply is not.
I neither know, nor care, what your definition of inflation is, but mine (and a few other people’s) is: A general rise in prices.
If demand stayed level, an increase in the money supply could cause inflation. But of course, demand does not stay level, which is why increases in the money supply have not caused inflation — at least for the past 50 years.
It’s O.K. to disagree, but at least know what you’re being disagreeable about, before you leap in to argue, hoping to score a “gotcha” moment that will prove your genius. Really,is your high school teacher impressed?
As for your fascinating little table, yes the money supply has grown faster than the population. And inflation (general increase in prices) is low. How amazing.
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Why does GDP need to grow? What is the downside of a stable money supply?
These are two separate questions.
First, regarding GDP, many people ask why we can’t aim for sustainability, instead of growth-growth-growth. The reason is that a universal law applies to all nations and empires: namely their GDP is either growing or shrinking. No nation ever truly stands still or treads water. So it is with most companies. Their profits must keep growing if they are to keep even with their bills. That’s just the way the world works.
We could manage a nation based on renewable resources, but we would have to continue growing in other ways, e.g. in technology or imperialism or manufacturing, etc, etc.
Second, regarding the money supply, if GDP is to grow, then the money supply must grow. In late 2006 the USA’s trade deficit was $220 billion per year, meaning $220 billion per year flowed out of the US economy. Thus, the US government had to create at least $220 billion in new money, just to break even. (The USA’s trade deficit is now only about $90 billion per year, because of the depression in the global real economy.)
Meanwhile domestically there are various forms of unspent income, which create what MMT people call “demand leakages.” There are tax advantages for non-government sectors when they don’t spend all their income, and instead put money into pensions, IRA’s, corporate reserves, and so on. These “leakages” don’t lessen the money supply, but they do lessen the velocity of money, and require the US government to keep creating new money to keep the economy going.
Bottom line: in the real world, if the money supply becomes stable, and does not continue growing, the result is a depression. That’s where much of the world is now headed in this, the Golden Age of Deficit Reduction.
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If you believe that numbers is what’s important, than your points are valid. If you are interested in the real GDP – you have to remove the numbers. Meaning, I can say my orange is worth 1 trillion bucks. Would the orange change if I say it’s worth 15 cents?
Imports do not remove money from the economy, corporations receiving those dollars would either sell those dollars for local currency – to someone in the economy or would deposit the money in a US dollar bank account.
Demand leakages? Money velocity and increasing money supply (inflation) do not conflate. Wouldn’t people delay purchases if prices are too high?
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“Imports do not remove money from the economy. . . ”
How fascinating. A whole new economics has been created. Does the above also mean that exports do not add money to the economy?
Just asking.
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Neither imports not exports alter the amount of of a particular money in the economy. It may alter the amount circulating if the new owner of the money decides to save.
For imports to work there are two chains. The first chain is the physical supply – getting product from A to B. The second is the financial chain – say B wants to pay in $s and A wants to receive in £s. If either of those chains fail to complete then the transaction simply cannot happen.
When you analyse foreign exchange what actually happens is that B’s $s actually buy some $ exports, and some £s from £ exports actual buy A’s imports. Then the real exports and imports effectively become the subject of a swap transaction and everybody gets what they want. It’s a marvel of modern financial engineering.
That’s a clean exchange. It gets a little more messy when you make the process asynchronous – and the financial system starts to use buffer stocks of $s and £s to allow exports to happen when there aren’t any matching imports (and vice versa). Elements within the world economy then start to save in aggregate in the different currencies and that is what allows differential trade deficits and surpluses to arise.
The accounting of the external sector is really a bit of an accounting trick to enforce an artificial dividing line on a map. People come into and leave the $ currency area from the rest of the world all the time.
IMV the external sector focus on ‘national accounting’ can warp the view of what is actually happening on the ground – where people from the rest of the world come into and leave the $ currency area all the time.
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“Neither imports not exports alter the amount of of a particular money in the economy.”
Fascinating. I feel bad for those foreigners who send us their goods, but don’t receive any money in return. But, I am happy for Americans who receive those goods from abroad, but don’t have to send any money abroad.
I wonder why those folks sell us anything, if they don’t receive money. It’s a puzzle.
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It’s certainly a puzzle if you refuse to think about it and adopt an entirely US view of the world. Change your viewpoint a little though and it becomes clear. Track the path of the individual serial number of a dollar through the transaction sequence (let’s pretend we’re using cash for this exercise).
US dollars cannot be destroyed, but they are near useless outside the US. Certainly I can’t pay my staff with them. They want good old British Pounds that they can use at Tesco to buy bread.
But my US customer wants to pay using US dollars, and I need to sell stuff because I’m in business. So I first need to find somebody who will take the US dollars and give me GBP. Then we have a deal, I have a reason to make stuff and I can continue to employ my staff.
So I match with a US business that has the opposite problem. Their UK customer wants to buy with GBP, but that’s useless to the US business who needs to pay US dollars to their staff so they can use them to buy bread at Walmart.
I give the US dollars I receive to the US business and they give me the GBP they receive to me. That exchange means that the GBP customer of the US business effectively paid me GBP for goods I gave to the US customer. And my US customer effectively paid the US business for goods they give to the GBP customer.
That way the US dollars stay with people that find them useful, and the GBP stays with people that find them useful, and the real exchange of goods happened. Everybody wins.
Exporters don’t hold onto US dollars. They are generally a useless asset to them and they plan to get rid of them for their own currency *as part of the process of selling goods/services*. If they can’t get rid of them then the deal *simply won’t happen*.
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To clarify, are you saying a nation that imports more than it exports does not have a reduction in its domestic money supply?
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From my comment above:
“Neither imports not exports alter the amount of of a particular money in the economy. It may alter the amount circulating if the new owner of the money decides to save.”
Domestic or foreign ownership is largely an irrelevant distinction.
If the owners of a money save it, then you reduce the amount of money in circulation and reduce the number of productive transactions in that currency area.
It’s the choice not to spend that matters, not in which jurisdiction an owner lives. The buffering power of bank balance sheets in a monetary economy allow that choice to stick.
Better make sure there’s enough new money going into the economy to avoid deflation.
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You said, “Domestic or foreign ownership is largely an irrelevant distinction.”
And yet, GDP = Federal and Non-federal Spending + Net Exports So it is a distinction in the calculation of GDP.
You said, “If the owners of a money save it, then you reduce the amount of money in circulation.”
What types of saving reduce the amount of money in circulation? Perhaps it depends on which definitions of “saving” and “circulation” you wish to use. One of the biggest problems in economics is semantics, where “debt” doesn’t mean “debt,” “saving” may not mean “saving,” and “deficit” may not mean “deficit.”
Putting money in the bank is the most common form of “saving.” That money remains in circulation. Buying T-securities (i.e. depositing in a T-security account at the FRB is another form of saving. That money may not remain in circulation. “Investing” is another form of saving that is not usually counted as saving. So if you “save” by buying stock, real estate or gold, which of those (if any) is “saving”?
The imprecision of economic terms is partly to blame for the success of the Big Lie.
Bottom line, “excessive” imports can impoverish and economy, unless the Monetarily Sovereign government compensates by deficit spending.
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World trade occurs mostly on US dollar based accounts – with an FX (foreign exchange) deal attached to it. The importer will sell the US dollars for local currency. Since there is a huge and very liquid market for currencies – there is a buyer (likely those wanting to do other FX deals or whatever) for every seller.
Saving in securities, stocks, t-securities, bonds, etc – also leaves the currency in circulation – investing by definition means a transfer of funds. You want to create a business, I lend you money to do so (at a profit), you use the funds.
Savings in savings account remain in the money supply – savings accounts by design are a loan to the bank for interest. Hence, the bank will re-lend the money to make a cut as well. Demand deposits (checking) accounts are swept nightly – so that money is also re-lent (withdrawals are funded on forecast). And it doesn’t stop there. Since we are on a fractional reserve lending system – the same money gets re-lent time and time again. Forget about this money velocity thing and money not being spent in savings account, the money is not only being spent – it’s being spent time and time again.
Socialists have it backwards, Austrians have it right with the exception of how credit behaves (is spent like currency and is destroyed with defaults).
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As to why GDP includes exports, how else would we calculate how much the economy produced than by: including what privates purchased plus what was exported plus what the gov purchased (much via deficit spending). Does it mean that production would be less if the gov reduced spending? No
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Federal Spending + Non-federal Spending + Net Exports = GDP
(Federal Spending -1) + Non-federal Spending + Net Exports = GDP – 1
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Last Tuesday (11 Feb 2014), Canadian finance minister Jim Flaherty released Canada’s federal budget for fiscal year 2014, which begins on 1 April 2014. Flaherty’s budget continues to impose severe austerity on the Canadian masses. Canada’s Global Post newspaper says that it, “All but balances the books this fiscal year (2014), leaving a negligible $2.9-billion shortfall heading into the 2015-16 election year — when Prime Minister Stephen Harper will go to the electorate sporting a surplus that could exceed $6 billion.”
Sweet! The next federal elections will be on 19 Oct 2015. Stephen Harper and his Conservatives (i.e. “Tories”) will say, “Vote for us! We drained $6 billion more out of the economy at a time when Canada’s trade deficit continues to explode!”
The Canadian masses will cheer for this surplus as they fall ever-deeper into a depression. They keep shifting farther and farther to the right, especially in macho “cowboy” areas like Alberta and New Brunswick. The more they suffer from poverty and inequality, the more they vote for more poverty and inequality. On 2 May 2011 the Liberal Party (the “Grits”) lost its majority in Canada’s parliament for the first time ever. They had brought universal health care to Canada in 1968 (which is now being eroded step-by-step; already 30% of Canadian healthcare expenditure comes from private payments).
The Conservatives now have by far the most seats in parliament, including both the Senate and the House of Commons. They correspond to Republicans in the USA.
The second biggest party, in terms of seats, is the New Democrats, which correspond to Democrats in the USA. BOTH SIDES FAVOR MORE AUSTERITY. (Always more.) The New Democrats call themselves “socialist,” yet they are more anti-socialist than Republicans in the USA, as are the “socialist” parties in Europe.
Flaherty’s FY 2014 budget will reduce its deficit by another $2 billion. Plus, there is an additional $700 million in new tobacco taxes. That revenue could be used for anti-smoking campaigns, but it will be destroyed. Flaherty says, “Some people will say this budget is boring; I consider that a compliment.”
Boring? A severe depression is boring? Flaherty means there is “No flashy new spending.”
Mary Webb, senior economist at Scotiabank of Nova Scotia, praises the austerity mania (because doing so is in her job description). “Is there a lot of pain and dislocation? Of course. Austerity is never easy.” But, she says, austerity is necessary to put the Canadian government’s finances on a “sustainable path.”
Evidently the Canadian masses believe it. This from the Global Post:
“A new poll from Harris-Decima shows an overwhelming Canadian consensus (57 –to–34) in favor of clearing up the deficit before any new spending occurs. The telephone survey of 1,008 respondents found the consensus crossed regional and party lines.”
So yes, the Canadian masses are fanatical devotees of the Big Lie.
As they fall deeper into poverty, they will blame everything and everyone except politicians and austerity. They will blame immigrants, poor people, China, homosexuals, UFOs, “the Illuminati” – whatever.
http://www.globalpost.com/dispatch/news/the-canadian-press/140211/budget-squeeze-continues-federal-deficit-all-gone-year-flahe
Here’s a bit of irony…
The Canadian government is even more austerity-manic than is the U.S. government. Canadian economists who work for banks are also austerity-manic.
However Canadian economics professors are less austerity-manic than are U.S. economics professors.
Last Tuesday (11 Feb 2014), seventy-four economists signed a letter to finance minister Flaherty, asking him to focus on job creation instead of balancing the federal budget. They call themselves Canadian Economists Against Austerity.
(Flaherty ignored them.)
Perhaps those Canadian professors thought there was safety in numbers. With seventy-four of them signing the letter, perhaps they thought they would be safe from being fired. Many will soon discover that they were sadly mistaken. Universities depend on money from rich people and politicians who do not take kindly to any questioning of austerity and the Big Lie.
(Even the pro-MMT professors at the UMKC don’t dare speak as plainly and honestly as Rodger does.)
http://www.thestar.com/opinion/commentary/2014/02/11/worried_economists_tell_flaherty_to_stop_starving_the_economy_goar.html
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The UMKC professors are good people who tell the anti-Big Lie story. But they cannot bring themselves to point the finger at the bribery of politicians, media and mainstream economists.
They prefer to ascribe it all to “ignorance of the facts,” So they devise ever simpler explanations of the truth, as though a clear explanation would make the politicians/media/economists exclaim, “Aha. Now I understand.”
Does anyone really believe it’s possible for not one of the 535 members of Congress, the President, the entire Counsel of Economic Advisers, the entire Federal Reserve, every university economics department (but one), and nearly all of the media to be ignorant of the facts?
C’mon. gimme a break! They know the facts, but they are well-paid whores.
Was it Nixon’s people who first said, “When you’ve got ’em by the balls, their hearts and minds will follow”? I prefer, “When you’ve got ’em by their wallets, their hearts and minds will follow.
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Yes the UMKC professors are very charitable to politicians, media people, and mainstream economists. Perhaps the UMKC professors fear that if they expose the Big Lie too plainly, they will be fired, or they will not be respected as “scholars.” (I have never seen an NEP blog post that wasn’t needlessly wordy and abstruse. Most are unreadable.)
When the UMKC professors claim that the 1% and their toadies are simply “misinformed,” they violate Mitchell’s rule #7: Everything in economics devolves to motive. They deny the fact that the 1% and their toadies have an incentive to lie. They ignore the fact that politicians claim that federal social programs are “unsustainable,” but politicians find infinite money to pay for whatever widens the wealth gap (e.g. trillions in Wall Street bailouts). They agree that politicians lie, but not about federal finances. This is insulting.
The Big Lie is like sewage. UMKC nonsense is like sugar. No matter how much you sprinkle, it doesn’t make the sewage sweeter. Put another way, if you add a cup of water to a barrel of sewage, you have sewage. On the other hand, if you add a cup of sewage to a barrel of water, you have…sewage. So why prevaricate? Why not speak honesty? Sugar-coating the truth is useless and unwarranted. It also helps to sustain the Big Lie, which is maintained by everyone on all sides.
In December 2009 two authors published a book titled, “The Spirit Level: Why Greater Equality Makes Societies Stronger.” The book was so popular and influential that Fox News went out of its way to blast it. The two authors make several suggestions on how to reduce inequality. One of those suggestions is to increase federal taxes on the rich to pay for social programs. The authors even claim (falsely) that when countries want to reduce inequality, they always increase taxes on the rich. That’s the Big Lie in action. It’s a plague that infects liberals and conservatives alike. Conservatives hate paying taxes because they too believe the Big Lie that tax revenue pays for social programs.
Given the pervasiveness and perniciousness of the Big Lie, there is no room for UMKC-style silliness.
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I don’t think that the UMKC people are bent on ignoring anything, they are disciplined researchers and academics after all, not hysteria-prone, conspiracy theorizing fear mongers – they need concrete proof that a cabal of super-rich people meeting in their hollowed-out volcano headquarters on some remote tropical island like some James Bond villains are using their money to manipulate and deceive the masses to increase their own wealth and control the world. Where is the smoking gun of evidence? Are there any revealing telephone recordings or stolen meeting transcripts? (…maybe the NSA can fill in the details here?). I do tend to agree with RMM though that this is what is indeed occurring, but it seems incredulous when explaining it to people not familiar with MMT/MS when they are indoctrinated in all of the current economic misconceptions. Also, maybe it is just me, but MMT/MS seems “science-fictiony and magical” when you contemplate just how powerful this understanding can be for improving society.
Before I learned about MMT/MS, I was essentially a right-winger when it came to economics: Being responsible by having a balanced budget, reduced federal government spending and debt, etc., sounded logical, like common sense and reasonable, and the right thing to do (I’m sure I cannot be alone with some other blog readers here). I actually believed in equating federal government funding with personal and household funding – which is clearly wrong. What if all (or least most) of the super-rich and their sycophant politicians are indeed moronic economic ignoramuses?
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@Questioner: I say the rich and their toadies do everything possible to widen the gap between themselves and the lower classes. In your mind, my assertion becomes, “The rich hold secret meetings inside volcanoes.”
Strange.
As for the UMKC crowd refusing to admit the facts, this is not caution or prudence. It is dishonesty.
Regarding “smoking guns,” I could list a thousand of them, but the topic of the 1% bribing politicians, owning the media, and controlling academia is like the Big Lie itself. Until you grasp the truth, no evidence is sufficient. Once you grasp the truth, no more evidence is necessary.
You ask, “What if all (or least most) of the super-rich and their sycophant politicians are indeed moronic economic ignoramuses?”
Please explain how this could logically be possible.
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http://www.dailymail.co.uk/money/news/article-2559441/IFS-More-one-million-public-sector-jobs-face-axe.html
The UK is going to have a rough time with austerity.
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This article supports the UK government’s campaign to privatize UK health care. It cites a “study” by the Institute for Fiscal Studies (IFS) which is a right-wing neo-liberal propaganda mill that is dedicated to austerity and to widening the gap between the rich and the rest.
The IFS claims that education and health care are “ringfenced” (protected) from job cuts. Therefore health and education will swell from 42 per cent of the public sector workforce to more than 70 per cent by 2018. Meanwhile over a million police officers and soldiers must be laid off.
I call bullshit.
First, education and healthcare are not “ringfenced.” They are both being increasingly defunded and privatized. Both have already suffered massive and growing job losses.
Second, the rich will never throw cops and soldiers under the bus. The rich need them to control the increasingly starving and desperate peasants.
The article and the IFS “study” are a typical example of how lies are used to make the masses envy and hate one another, and therefore support more austerity.
“Worthless teachers and nurses will keep their jobs, while your friendly neighborhood bobby faces the axe!”
Even Nick Clegg, the deputy Prime Minister, admits that the IFS churns out “distorted nonsense.” (His words.)
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The “poor” rich feel discriminated against:
I’d say, if you are rich and you’ve paid 75% of your life’s earnings to the government, you had better get yourself a new accountant.
But this is one part of the Big Lie the rich use to justify widening the gap further and further.
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