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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Here is an interesting site: What we pay for
I can’t testify as to the accuracy, but it purports to break down federal spending for any year from 1985 through 2014. (The blue box on the left.)
It also contains a red box on the right which supposedly shows “how much you pay in taxes” for each element of federal spending. Of course, this is wrong. Your tax money does not support federal spending.
All the red box does is estimate your federal taxes (not including FICA) according to your income and marital status, then divide those taxes by the amount the federal government spends.
(It would be just as meaningful to divide total federal spending by the number of albino cats in France.)
The red box does have a function, however. Click on any link in the blue box, and the red box will add detail to the spending distribution of that link.
Although the red box would mislead (or perhaps is designed to mislead) the financially ignorant, you who understand Monetary Sovereignty, and understand what the red box really shows, might enjoy playing around with both boxes.
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)
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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 
Rodger, something in this chart confuses me. I have many questions that all stem from one central question: Is this accounting jargon, and government sleight-of-hand? Or do I misunderstand the chart?
Consider the “Net Interest” notation in the left box (the blue box). If we click it, we get a breakdown into various categories that show what the US government pays and receives in “interest.”
Four of the categories are in the negative.
For FY 2014 the aggregate total of these four negatives is minus $299.9 billion. I presume that this is “interest” paid to the US government. (74% of it is yielded by “on-budget trust funds” and “off-budget trust funds.”)
If so, that means $299.9 billion was removed from the economy, yes? Or perhaps I misunderstand the chart.
I would like to study these “trust funds” and other means by which the US government collects “interest.” The term “interest” itself seems dubious, since it implies that the government makes loans. There are government-backed loans, but this is not the same thing as lending. There are monies collected by the government (e.g. from the sale of assets), but this is not lending.
Anyway, I’m confused. Consider the “trust funds” noted above. “Trust funds” mean government accounts, or government-backed accounts. Therefore it seems to me that $220.7 billion of the negative values is money that the government will pay itself in FY 2014.
Or consider two other negative values in the blue box: [1] Commerce and Housing Credit, and [2] Undistributed Offsetting Receipts.
“Offsetting” means receipts that are not recorded as receipts, but as “negative outlays,” since they involve intra-governmental payments (e.g. an agency’s payments to its employees’ retirement fund). Again, this seems like the government paying itself.
“Offsetting receipts” also include monies paid to the US government when someone buys a government asset. (Physical or financial asset.) It is “offsetting” because the sale of the asset deprives the government of future income from the asset. Still other “offsetting receipts” include monies paid to the US government from “businesslike transactions” (as the GAO phrases it).
I don’t understand all this, but it all seems like accounting argot. (Just like the “national debt.”)
What do you think? Does a lot of it come down to mere accounting sleight-of-hand? Often the GAO considers the movement of funds from one government account to another as an “expenditure” (i.e. government “spending”), reardless of the nature of the transaction. This seems to me like more accounting mumbo-jumbo.
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— Off topic —
For (grim) amusement…
[1] Last week the US Congress voted to raise the government’s borrowing limit until March 2015 without any conditions.
Obama signed it on Saturday (15 Feb 2014) at his Sunnylands retreat, which is a mansion in the middle of a huge private golf course. (For those of you who are freezing, the temperate at Sunnylands is 85 degrees.)
The “Fix the Debt” clowns haven’t said anything about this. Most of them are extremely wealthy CEOs who demand austerity in order to widen the gap between themselves and you.
A leading member of “Fix the Debt” is Lloyd Blankfein, CEO of Goldman Sachs. Blankfein constantly claims that the US government has a “national debt crisis,” that “entitlements” are a “ticking bomb,” that the US government “can’t afford” Social Security, and that average Americans must learn to “make do with less.”
Blankfein and the other “Fix the Debt” creeps want to widen tax haven loopholes that would benefit their corporations, such as a “territorial” tax system. Corporate profits made outside the USA are not taxed until they are “repatriated,” or brought back to the USA. For example, General Electric reports overseas earnings of $108 billion. The new loopholes would net $173 billion in windfalls for 59 corporations headed by the “Fix the Debt” CEOs. (So says the Institute for Policy Studies in Washington DC.)
The point?
I favor zero federal taxes for corporations, but it is obvious that these CEOs of banks and financial firms have incentives to lie.
Nonetheless, many people insist that the CEOs don’t lie. They say that when it comes to federal finances, the CEOs simply “don’t get it.” (!!!)
Wall Street firms like Goldman Sachs give mountains of money to politicians, and yet many people claim that there is “no evidence” that the rich pay politicians to impose austerity.
Pete Peterson pays Maya MacGuineas $370,419 a year to lead Peterson’s “bi-partisan” (i.e. pro-austerity) Committee for a Responsible Federal Budget. And yet, many people claim there is “no smoking gun” to prove that people like Ms. MacGuineas are paid to lie.
Denial, folks. It isn’t just a river in Egypt.
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[2] Last Monday (17 Feb 2014) was the five-year anniversary of the American Recovery and Reinvestment Act (the $831 billion stimulus bill).
Republicans and right-wing creeps commented on this, saying the continued depression proves that stimulus spending doesn’t work, and that more austerity is the only thing that will. They also claim that all stimulus money is “borrowed,” and therefore increases the “national debt.”
Democrats responded that the depression would be even worse if there had been no stimulus.
NOTE: Neither Republicans nor Democrats admit that the cause of the depression is austerity, since both groups favor austerity.
Here is the Republican reasoning process…
The patient has anemia.
The patient is given a blood transfusion (stimulus spending), but not nearly enough to cure the anemia.
The patient is then subjected to leeches (austerity) for four years, which causes the anemia to become much worse.
This proves that blood transfusions (stimulus spending) do not work, and that the cure is more leeches.
And now the Democrat reasoning process…
Yes, we must apply more leeches, but the anemia would have been worse without that first blood infusion (long since drained away).
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[3] Flood damage continues to worsen in the UK. So does fallout from PM David Cameron’s declaration that “money is no object” when it comes to addressing the crisis.
If “money is no object,” then will Cameron reconsider his plan to lay off 550 employees of the Environment Agency flood staff? (Cameron has been asked this repeatedly, but he always changes the subject.)
Why can’t money be “no object” for job creation, social programs, and other things that help average people?
Why did Cameron mention money in the first place? I thought “the market” was the solution to everything. I thought “the market” would pump out his people’s homes, drain the fields, and rebuild battered walls and fences.
In that same speech, Cameron said, “We are a wealthy country.” And I thought the UK government was “broke” and “in debt.” Silly me.
Scotland is also flooded, and is wondering if it will get any disaster relief under the “Barnett formula” (an arbitrary means whereby the UK Treasury decides how much money it will allocate to Scotland, Wales, and Northern Ireland.) So far the UK Government has said nothing about disaster relief money for Scotland.
Some UK tabloids (e.g. the UK Mail Online) say that no disaster is reason for the UK government to go further “into debt” by spending “recklessly” on disaster relief. The UK Telegraph says that average Britons who think they deserve disaster relief should keep a “sense of proportion,” since “only” 7,000 homes have been flooded so far.
(No disaster can be allowed to slow the widening of the gap between the rich and the rest.)
On 11 Feb 2014, Patrick McLoughlin (Secretary of Transportation) gave a press conference to correct Mr. Cameron and say there will be no “blank check” for flood relief after all.
Instead, McLoughlin will charge people for sandbags to defend their homes, and for repair bills when the waters finally recede in May or June.
McLoughlin also claims that he is thinking of asking the European Union for loans to deal with the flooding. (!!!) The UK Mail claims that senior ministers are “exploring all avenues to raise cash.” (!!!!)
(Politicians and the corporate media go to any length to maintain the Big Lie.)
David Cameron himself now says that no new money will be made available, and that any extra funding for disaster relief will come from “contingency budgets.”
(The Big Lie is that the federal government is “broke” and “in debt,” and needs tax revenue. The UK Treasury maintains the Big Lie by claiming that it is dipping into “contingency budgets.” Meanwhile the US Treasury maintains the Big Lie by claiming that it is resorting to “extraordinary measures.” Both terms mean “business as usual,” – i.e. the Treasury continues to create money out of thin air as always.)
UK politicians keep saying that average people must learn to “make do with less.’ Meanwhile the politicians themselves will get a pay raise from their current £66,396 ($111,186) to £74,000 ($123,920).
(And you think politicians aren’t paid by the rich to maintain the Big Lie, and to impose austerity?)
However, in order to lessen public anger, the pay raises will not go into effect until 8 May 2015, the day after the next parliamentary elections.
Meanwhile the austerity will continue. An example is the Welfare “Reform” Act of 2012 – a.k.a. the “bedroom tax,” which the UK government started imposing in April 2013.
(I put “reform” in scare-quotes to emphasize that for bankers or politicians, “reform,” always means some new trick to widen the gap between the rich and the rest. Social Security must be “reformed.” Food Stamps must be “reformed.” Labor laws must be “reformed.” Whatever helps average people must be “reformed.” Whatever makes the world a nicer place must be “reformed.”)
The “bedroom tax” was written by Iain Duncan Smith, who is David Cameron’s Secretary of State for Work and Pensions, and who is extremely right wing. The “tax” is not a tax, but a reduction in “welfare” (the UK equivalent to Social Security and Food Stamps). Mr. Smith cuts your welfare if he think that the property you are renting has more space than you need (e.g. it has an empty bedroom).
The bedroom “tax” penalizes 660,000 people. Many victims want to move into smaller apartments to avoid having Mr. Smith cut their benefits. However no apartments are available. Further, at least 50,000 people have been wrongly penalized because of “drafting errors.”
Mr. Smith defends his gratuitous austerity by saying it will “save the government money.”
That’s part of the Big Lie, and it appeals to average Britons, since they love to suffer. The more miserable they are, the happier they are. If you doubt this, then check out reader comments in British media outlets. See how the average reader attacks anyone who even remotely questions the Big Lie.
Yes folks, the Big Lie never sleeps, and the masses never wake up. Hence the endless nightmare.
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[4] Speaking of mass stupidity, on 18 September 2014 Scotland will have a referendum on full independence from England. If the Scottish people for independence, then the new government should establish its own currency (assuming the Scottish government does not adopt the Big Lie). However average Scots don’t want this. They want to keep using the British pound, even when they are independent. Scotland’s First Minister, Alex Salmond, also wants the pound.
Therefore an independent Scotland will have no Monetary Sovereignty. Thus, Scotland’s depression will worsen.
Britain’s finance minster George Osborne doesn’t want Scotland to have independence. He uses reverse psychology, saying that if Scotland votes for independence, then Osborne will not let Scotland have the British pound as its currency.
“If Scotland leaves, then we will no longer apply leeches for Scotland’s anemia.”
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[5] Britain’s most senior Roman Catholic cleric, Cardinal-designate Vincent Nicholas, says the UK government’s austerity program is a “disgrace.”
“This is a crisis. The basic safety net has been torn apart. The administration of social assistance has become more and more punitive. If applicants don’t get it right, then they must wait for 10 days or two weeks with nothing.”
The Catholic Church almost always sides with the rich against the lower classes, but the Church is a bit more charitable in England, since it is an underdog to the Church of England, which is Protestant.
Speaking of the Church of England, its previous head, Rowan Williams, angered the rich by criticizing austerity mania, plus the greed of bankers, and the invasion of Iraq.
Therefore the 1% had Mr. Williams replaced on 12 Sep 2012 by Justin Welby, a rich oil executive and member of the House of Lords.
The “Right Reverend” Mr. Welby, a plutocrat, is all for austerity. Hence his meteoric rise to the top. He is now the Archbishop of Canterbury.
On 10 Nov 2013 Welby attended the billionaires’ ball in the Guildhall, London, where David Cameron stood before the cheering crowd (900 people) and vowed to make austerity permanent.
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[6] Remember the husband and wife team of Carmen Reinhart and Ken Rogoff, who secured professorships at Harvard by promoting austerity?
In May 2010 (a month before austerity became a global plague) they published their now-infamous paper, “Growth In a Time of Debt,” which claimed that “national debt crises” necessitated austerity.
Countless politicians used this paper to justify their campaign to widen the gap between the rich and the rest.
Now the IMF has issued a paper that once again exposes Reinhart’s and Rogoff’s lies.
Titled, “Debt and Growth: Is There a Magic Threshold?” the IMF paper says there is no evidence that any particular “national debt” threshold creates a drag on an economy. The paper says that countries with debt ratios as high as 130%-140% have experienced solid growth.
(Actually this only applies to nations that have Monetary Sovereignty, for which the “national debt” is trivial, and the “debt-to-GDP” ratio is meaningless.)
http://www.ibtimes.co.uk/uk-austerity-measures-scrutinised-imf-debunks-carmen-reinhart-kenneth-rogoff-study-1436478
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Fair enough – the government doesn’t use tax dollars. The things that the government buys with those non-tax dollars – are those also created out of thin air?
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To pay a bill, the federal government sends instructions (not money) to the creditor’s bank, telling the bank to increase the balance in the creditor’s checking account.
These instructions can be in the form of a check or a wire.
When the bank obeys the instructions, dollars are created. Tax collections have nothing to do with bill paying. The government sends instructions to pay bills, regardless of any tax collections.
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sucesofinanciero actually meant “things” (goods and services), created out of thin air and not dollars created out of thin air. Perhaps it is just an off-handed remark to once again inject that productivity fixation she’s continually harping on about?
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As a society, we use money to measure, store, and exchange wealth. When austerity sucks money out of the economy, we have no money to exchange with each other. Thus, productivity goes down, even though there are plenty of materials, plenty of work to be done, and plenty of people to do the work.
Some people, however, ignore the money part of the equation. They claim that productivity is down because, well….it just is. They say we should forget about money until we can get people working again, and being productive (without paying them anything).
Such people cannot be swayed by facts or logic.
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Yes, yes, yes, the federal gov’t is monetarily sovereign.
But instead of using that sovereignty to fund projects and programs for common good, it’s the Wall Street banks who are getting the funds.
Prosperity for the bankers, austerity for the rest of us.
“Give me control over a nations currency, and I care not who makes its laws.”
– Baron M.A. Rothschild
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Zen writes: “Yes, yes, yes, the federal gov’t is monetarily sovereign. But instead of using that sovereignty to fund projects and programs for common good, it’s the Wall Street banks who are getting the funds. Prosperity for the bankers, austerity for the rest of us.”
Agreed. And one of the major reasons why this happens is that most people are hostile to the facts of Monetary Sovereignty.
Another reason is that most people are selfish. Most people, rich or poor, want to widen the wealth gap between themselves and those below. The aggregate result of this is that the higher we go on the social ladder, the wider the gap become between levels.
Perhaps the problem is not selfishness, but a breakdown in the sense of “community,” such that people think money is the only thing with value. Hence the money masters rule. This delusion (that only money has value) is very powerful, but it vanishes when we have a serious illness. Then we see that “health is wealth.”
Zen quotes Baron M.A. Rothschild: “Give me control over a nation’s currency, and I care not who makes its laws.”
Rothschild was a banker. Bankers can make loans, but they cannot create (non-loan) money out of thin air. Because bankers can manipulate interest rates, they have some monetary authority, but not true Monetarily Sovereignty. Only national governments have Monetarily Sovereignty, unless they surrender it as the euro-zone nations have.
As a banker, Mr. Rothschild used debt to gain power. This was by consent of the rich and of politicians, who always seek to widen the gap between themselves and their “inferiors.”
Bankers, politicians, and rich people share power. Their oppression continues because the public refuses (not fails; REFUSES) to understand the facts. Every time a person smugly rejects the facts, he adds to the overall misery. One person’s smugness is negligible, but when most people are smug, the result is mass slavery.
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@quatloosx, I’m sorry I can’t understand your frustration with people who don’t understand “the facts.” I don’t consider myself to be unpliable, yet it has taken me 70 years and a considered effort to un-tease the Big Lie, and I’m still working on it.
We are at a change-point in human evolution, akin to the Copernican Revolution. Please don’t blame the serfs for the errors of their masters. Know that it’s the dedicated few who will institute the change, not the masses. The masses will follow.
Stay strong, my friend.
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Thanks for your thoughtful comment, Jeff. You write, “I can’t understand your frustration with people who don’t understand ‘the facts’.”
I have no problem with people who do not understand. Each of us is ignorant in our own way. This is unavoidable. I can even excuse people who are apathetic. For most of us it takes all our energy just to get through each day.
My problem is with people who smugly refuse to consider the facts (and yes, they are FACTS). Such people obviously don’t care about anyone but themselves. Their hate and their selfishness disgust me. It is they who keep poverty and inequality going. They are traitors, whereas the rich and their toadies (professors, politicians, and media pundits) are merely our enemy.
I’ve often delved into this in my comments, examining it from various angles, showing that the engine of this type of ignorance is hate, and that the failure is not one of intellect, but of moral character. I know I should be more patient, but the hatred causes so much poverty and suffering for so many people.
Jeff writes: “We are at a change-point in human evolution, akin to the Copernican Revolution.”
I hope you’re right. I see no evidence of this, but anything can happen.
Jeff writes: “Please don’t blame the serfs for the errors of their masters.”
I say the errors lie with both the serfs and the masters. I say the 1% rule the 99% because the 99% do and think things that keep them enslaved. Of course, the 1% have special guilt because they have the power to change things for the better. They have the power to alter the mass mind in positive ways. (Sometimes they actually do it.)
Jeff writes: “Know that it’s the dedicated few who will institute the change, not the masses. The masses will follow.”
Good point. Well said.
Jeff writes: “Stay strong, my friend.”
🙂 That reminds me of those TV commercials for Dos Equis beer with “the world’s most interesting man” (stay thirsty, my friends). Have you ever seen those? I think they’re cute.
His personality is so magnetic, he cannot carry credit cards.
Is a past life he was…himself.
He once had an awkward moment, just to see how it felt.
He can cure narcolepsy just by walking into the room.
Even his enemies list him as their emergency contact.
If he were to punch you in the face, you would have to fight off the strong urge to thank him.
If he were to mail a latter without postage, it would still get there.
If he patted you on the back, you would want to list it on your resume.
His beard alone has experienced more than a lesser man’s entire body.
His charm is so contagious that vaccines have been created for it.
He has never had to say, “My bad.”
He once got into a four-hour staring contest with his reflection…and won.
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Where is the proof that the federal government does not use federal taxes? Are these procedures written in a manual somewhere?
I think I’m pro-MMT, but when I try to explain MMT to others, they just look at me like I’m a kook or delusional conspiracy-theorist.
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The proof is in the process. Here is how the federal government pays its bills:
The Treasury sends instructions (in the form of checks or wires) to creditors’ banks, telling those banks to increase the balances in creditors’ checking accounts.
When the banks comply, this is what creates dollars. The banks then forward these instructions to the Federal Reserve, which always clears them.
Taxes received are not part of the process. If all taxes received were $0, the Federal Reserve still would clear all Treasury checks and wires. No Treasury check or wire ever has bounced.
(The compares with state and local payments, where checks can bounce if the state’s bank account is insufficient.)
Meanwhile, the moment taxes are received by the Treasury, they cease to be part of the money supply. They are destroyed.
All dollars in the money supply are in the private sector. No dollars in the money supply are held by the federal government. The government has no dollars.
The reason people have trouble understanding MS is because they have been taught to believe that federal finances are the same as personal finances.
They have been taught that federal taxes are just like state and local taxes, and the the federal government needs income to pay its bills, just as you and I need income to pay our bills.
In short, they don’t understand the differences between Monetary Sovereignty and monetary non-sovereignty.
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Rodger says: “The reason people have trouble understanding MS is because they have been taught to believe that federal finances are the same as personal finances.”
Yes. That’s the Big Lie in a nutshell.
Another reason is that most people think of money as solid and physical, when in fact money is non-physical units of account on ledgers, like points on a scoreboard.
On a scoreboard, when “0” points are changed to “100,” then 100 points are created.
When “100” points are changed to “0” then 100 points are destroyed.
Dollars are the same as points. Bank ledgers are society’s monetary scoreboards. And since society bases its operations on the scoreboard, the status of non-physical points has physical consequences – just as a physical sports team struggles to get more (non-physical) points.
Money is not physical. Until you accept this simple fact, you will keep asking for “proof” and “smoking guns” that federal tax revenue is destroyed upon receipt. This is like asking for “proof” that 100 points are destroyed when a scoreboard changes 100 to 0 points.
The monetary ledgers exist in the Federal Reserve, or some other bank. Banks are essentially keepers of ledgers. (Criminal banksters gain physical wealth by manipulating the non-physical numbers in ledgers.)
Banks create loans by making entries in their ledgers. (Fractional reserve banking is extinct. Banks have capital requirements, but this is not the same thing.)
The federal government has no money, but it alone has the power to create infinite money by sending instructions to banks to change their ledgers. (This is money, not loans.)
It is bank ledgers that give monetary value to precious metals (e.g. gold), and not the other way around. Because precious metals are scarce, they are accorded more points in the bank ledgers. This is by social agreement, nothing more. If there were no banks and governments, then gold would have no monetary value, and no utilitarian value except as ornaments or electrical wire. The Spanish conquistadors had gold fever, because Europe had a network of banking systems, but the Native Americans saw no value in gold, other than as jewelry.
When gold hucksters claim that gold is the only thing with innate wealth, they are lying. When they claim that “the dollar is about to collapse,” they mean USA as a nation is about to collapse. Since the dollar has no physical existence, it can only “collapse” if physical American society collapses.
One last thing: When people erroneously think of money as physical, they note that in $20 bills, a million dollars would weigh 106 pounds and be 16.6 feet high. Therefore the $17 trillion “national debt” weighs 901,000 tons. Therefore we must have austerity.
If you ask to see these 901,000 tons, they repeat that we must have austerity. Then they change the subject.
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What is frustrating is that even Universities are still perpetuating economic ignorance, with the exception of the econ. department at UMKC. Are there any other schools, anywhere on Earth, that actually teach MMT and MS?, or at least acknowledge MMT (maybe at least one faculty working this area?)?
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off topic – how about those ukrainians just dying (pun intended) to get into the eurozone. dont they have a sovereign currency? (rhetorical)…….
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Great question, I don’t see it as rhetorical at all. If they don’t, why not? And what defines, or determines, a viable sovereign money?
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rhetorical in the sense that they do have a sovereign currency. i suppose the viability is only limited by the value people give to the particular currency.
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Random observations:
[1] Admitting the truth – by accident
Rodger sometimes writes posts that expose how some politician, bureaucrat, or media moron accidentally admits the truth about US government finances.
Yesterday the Washington Post had an example of this.
The article complains that the US Congress has cancelled all “debt ceiling” charades until 16 March 2015, thereby giving Obama a “blank check” to increase spending (even though it is Congress, not Obama, that sets the budget).
According to the article, “Experts estimate that by next March, the national debt will increase by $1 trillion. But there is no actual limit on the amount of debt the Treasury can issue.”
WHAT? The Treasury ISSUES DEBT? (Yes, by selling T-securities)? Who’da thunk it?
So if there is a “national debt crisis,” then the Treasury can fix the “crisis” by issuing less “debt” (i.e. by selling fewer T-securities). Right?
Er, ah, well, um, yeah. Right. I mean no. I mean yes, but no. I mean…whatever. We need more austerity!
Ed Lorenzen is a “congressional budget expert” who is senior adviser to Pete Peterson’s Committee for a Responsible Budget. Mr. Lorensen says that suspending the debt ceiling means removing restrictions on the ISSUANCE OF DEBT.
So does the Treasury issue debt? Or does it borrow from China?
I, ah, um, both and neither. I mean…whatever. We need more austerity!
http://www.washingtonpost.com/blogs/fact-checker/wp/2014/02/19/is-suspending-the-debt-limit-a-blank-check-for-obama/
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[2] “The Nation” magazine has an article titled, “How Pro-Austerity Groups Lost the Deficit Wars.”
It describes how the “Fix the Debt” clowns were thwarted by various groups that exposed them from all angles.
The article ends with this:
“The question now is whether Obama will recognize this turning point as he puts the finishing touches on his new budget, and whether Democrats will abandon austerity talking points and focus on an agenda that begins with an expansion of the programs that aid and grow America’s middle class.”
I’m sorry folks, but this is just a brief lull in the storm. Austerity and the “Fix the Debt” dimwits will always increase their power. Inequality will continue to worsen. Poverty will continue to deepen. The drive to privatize Social Security and Medicare will continue to strengthen. The end is not near; it is here.
Why?
Because everyone (including “The Nation” magazine) continues to believe the Big Lie.
http://www.thenation.com/article/178451/how-pro-austerity-groups-lost-deficit-wars
By the way, didn’t Democrats recently agree to cut Food Stamps (again)? Didn’t they recently refuse to fight for an extension of unemployment benefits?
Here’s how the process works…
DEMOCRAT: How much can get away with cutting benefits right now?
REPUBLICAN: Twenty-five percent.
DEMOCRAT: Okay, you demand fifty percent, and we’ll fight for ten percent. Then we’ll compromise at twenty-five percent. That way we’ll get the cuts we both want.
REPUBLICAN: Done!
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[3] A new political party in Ireland calls itself the Anti-Austerity Alliance. It has launched a local election campaign by pledging to oppose water charges and to fight cutbacks at council level.
The party is running 41 candidates across Ireland. It is made up of Socialist Party members and independent campaigners. They advocate a wealth tax and an increase in corporate tax.
The group will either fail, or will become as corrupt as all other political groups.
Reason: they do not address the euro and Monetary Sovereignty.
http://www.rte.ie/news/2014/0220/505598-anti-austerity-alliance/
By the way, when it comes to imposing gratuitous austerity, England is the champion, but when it comes to claiming that the worsening depression is a “recovery,” the Irish government is #1.
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[4] Michael Strain of the right-wing American enterprise institute has an idea for getting people back to work: lower the minimum wage to $4 per hour, but expand government benefits.
“Of course, we can’t leave it at that. Society must have as a goal that no one who works full time and heads a household lives in poverty. This policy would have to be paired with an expanded earned-income tax credit, or with more straightforward wage subsidies — federal transfer programs that supplement a worker’s labor market earnings with tax dollars.”
Okay, the “tax dollars” part was garbage, but the rest of it sounds like a move toward a GUARANTEED INCOME. Why can’t the government lower the minimum wage to $4 per hour, but give people money to make up for it?
Oh that’s right.
The US government is “broke” and “in debt.” And average Americans don’t want their “tax dollars” supporting other “losers” who only make $4 per hour.
http://www.bloomberg.com/news/2014-02-13/a-4-minimum-wage-can-get-people-back-to-work.html
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[5] From Fox News (the only source of Truth)…
“The Portuguese are less than three months away from their big day — May 17 — when they expect to get financial sovereignty back after three years of being told what to do by foreign bailout creditors.”
Financial sovereignty? Will Portugal finally dump the euro?
No, of course not. In May, Portugal must restructure its 78 billion-euro ($107 billion) debt, which means that Portugal must have austerity and more loans (i.e. more debt).
Fox News claims that “Europe’s financial storm is clearing.”
Next month, Fox News will report that such-and-such “expert” says the “recovery” is “not as strong as predicted.”
Incredibly, the depression continues to worsen, and the corporate media says it is a “recovery,” or that prosperity is just around the corner.
The corporate media could say this for centuries. And they would get away with it.
http://www.foxnews.com/world/2014/02/20/portugal-nears-end-painful-3-year-bailout-program-but-more-austerity-and/
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[6] Finland’s economy is dying. Finnish politicians had years of fun in self-righteously condemning Greece and Spain for “profligacy.” Finnish politicians could do this because Finnish companies like Nokia dominated their respective markets, such that Finland had a trade surplus. From 1998 to 2012, Nokia was the world’s largest vendor of mobile phones. But in 2013, Finnish companies failed to keep up with changes in technology (e.g. the mass switch to “smart-phones”). Now they are a mere shadow of what they once were, and Finland in a single year (2013) went from having a sizeable trade surplus to have a whopping trade deficit.
Oops.
Prime Minister Jyrki Katainen and his Finance Minister Jutta Urpilainen say they can no longer commit to halting the growth of the national debt. (Naturally, since Finland uses the euro, and has a huge trade deficit.)
Finland has the euro area’s only remaining stable AAA credit rating. The Finnish government is imposing severe austerity in a desperate and futile attempt to keep that AAA rating. The AAA rating is doomed, no matter how much the Finnish masses suffer. Reason: austerity only worsens the depression, and the depression increases the national debt in nations that do not have MS.
Plus, Finland now has a trade deficit. For nations that do not have MS, a trade deficit can be lethal.
http://www.helsinkitimes.fi/business/9456-finland-drops-debt-target-amid-austerity-backlash-2.html
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[7] Senator Kelly Ayotte (Republican, New Hampshire) is a practicing Catholic (i.e. a hater of the poor) and is very ambitious. Before being elected to the US Senate in 2010, she was New Hampshire’s first female attorney general (i.e. the top prosecutor).
Now at age 45, Ms. Ayotte is the youngest of the 20 female Senators, and she is hoping to rise in the Senate by harping on the (fictitious) “national debt crisis.” To this end she gives “town hall meetings” in which she uses graphs and pie charts to illustrate the (false) “crisis.”
She claims that the US government is more than $17 trillion “in debt,” and this “debt” could rise by another $10 trillion in the next decade. She says, “It took two parties to get us this far in debt, and it’s going to take two parties to get us out of this debt.”
That means more austerity. (Always more.) Otherwise we will hand this (fictitious) “debt” to the next generation.
Ms. Ayotte says that nearly half of the government’s “debt” is foreign-owned, and that even a slight increase in interest rates will boost the amount the nation owes significantly. She says “We’ve got to get our fiscal house in order.” She says that Medicare and Social Security are headed for “insolvency” because there is not enough money being paid into the programs to support long-term benefit needs.
QUESTION: Why do these clowns never get tired of repeating the EXACT SAME LIES?
ANSWER: Because their victims NEVER GET TIRED OF HEARING THEM.
(Remember when many people seriously considered the idea of minting trillion-dollar platinum coins to avoid the “debt limit” charade? That was in late 2012. In January 2013 the Fed and the US government said they would mint no such coin…and the masses went back to sleep.)
Ms. Ayotee wants a balanced-budget amendment to the US Constitution. “Pretty much every state in the nation, including New Hampshire, has a legal requirement to balance its budget. The federal government doesn’t have any requirements like that.” (Because the federal government has MS.)
Senator Ayotee serves on the Armed Services Committee. She wants to reduce “waste” in the defense budget (i.e. she wants get more defense contractor kickbacks for herself, and more defense contractor jobs for New Hampshire.)
“One of my favorites I dubbed the ‘missile to nowhere.’ It’s called the medium extended air-defense system. It’s a missile system that we were developing with Europe that we never got a product out of. Thankfully, we’re not spending on the missile system anymore, but we wasted a lot of money — billions of dollars — on that program.”
Ms. Ayotee is correct that the missile system was non-functional, but the US government is still spending money on it. So are Italy and Germany. The cash goes to a Lockheed Martin facility in Orlando Florida. Its contract is due to expire this year, but the contract will no doubt be renewed.
Far more profligate (in terms of money spent on non-functional items) is the Ground-Based Midcourse Defense system, the follow-on to Reagan’s “Star Wars” fantasy. These are the missiles that sit in silos in Alaska and California for defense against “rogue states.” They have never passed any performance test. Not once. (When a test is labeled a “success,” independent reviewers always find that the numbers were fudged.)
These missiles are projected to cost $40 billion by 2017. So far they have consumed an average of $892 million per year. Obama wants 14 more of them. Perhaps Ms. Ayotee doesn’t know about this.
http://www.reformer.com/localnews/ci_25185529/national-debt-worries-new-hampshire-senator
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This could be America’s future with austerity:
http://finnisheconomyoverrated.wordpress.com
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Good catch. I had not seen that web site. It proves I was correct when I said (above) that Finland’s economy is dying.
Unfortunately none of the articles in the web site mention the single factor that most contributes to Finland’s woes, namely the euro currency and Finland’s surrender of Monetary Sovereignty.
One of the loudest champions of the euro currency (and therefore of austerity) is Olli Ilmari Rehn from Finland. Mr. Rehn’s job is to make sure that no country in the euro-zone recovers its Monetary Sovereignty. He is a Vice-President of the European Commission, and is the European Commissioner for Economic and Monetary Affairs and the Euro.
This clown is a real self righteous #$@%+#. When he scolds Greece or Portugal or France for their economies, someone should tell him, “Hey, what about your own country of Finland?”
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I actually think that America has favorable demographics and immigration – at the very least, we are in a least worst situation regarding these issues compared to other Western developed countries. People who want to come to America want to better themselves and I think they would be intent on improving themselves and thereby American society – People from less developed countries (like Mexicans for example, which the right-wing incessantly complain about and apparently fear) are no exception.
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Newbie,
I know of a couple non-UMKC professors who teach MMT. A professor in Australia named Bill Mitchell (no relation) publishes a blog called Billy Blog, that is MMT. It’s not for lay people however.
James Galbraith, a professor at the University of Texas often writes about MMT, and his writings are more lay-friendly.
There probably are others.
A big problems are (as usual) semantics and complexity. There are Keynesians, Neo-Keyensians, New-Kenseyians, Post-Keynesians and heaven knows what else.
Everyone gets labeled a “Keynesian” by anyone who is clueless about economics, but has heard the name “Keynes.”
Further, economics is one part psychology, one part mathematics, one part politics and one part history. That complexity makes everyone an expert and everyone a fool — simultaneously.
MS exists because UMKC has attached MMT’s foundation to a “full employment” proposition. So while UMKC’s MMT gives an accurate description of the economy, its solution for economic woes is full employment.
MS focuses on human well-being, with reducing the income/wealth gap and growing the economy being the means.
Employment is becoming an ever-more-obsolete means to money acquisition, and not to human well-being. (I see a future where very few of us labor more than a couple hours a week — perhaps even less.)
MS and MMT agree on the underlying facts; we agree on the Big Lie; but we argue about the solutions.
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steve keen, another Australian, is MMT, and definitely not lay friendly. reading his book, “debunking economics” felt like eating rocks…..
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Rodger says: “A big problems are (as usual) semantics and complexity. There are Keynesians, Neo-Keyensians, New-Kenseyians, Post-Keynesians and heaven knows what else.”
They are all the same, every single economist, save the Austrians and the Chicago school, believes in the proverbial free lunch. See my previous question and the answers following it, horrendous. MMT and MS cannot answer simple questions like those – logically. The answer normally borders around, “because you are stupid, dumb, an idiot, someone I’d like to beat up in an alley, etc…”
It makes perfect political sense that Keynesian economics was implemented – it expands the state’s grip and is somewhat more stable than full socialism. If politicians are smart – they will keep the current system as is.
A few politicians around the world have tried to get “too smart” and ended where Argentina and Venezuela are headed. 99% of politicians are economic illiterate. I don’t see how an economic theory that applies the law of supply and demand (the most basic) can be implemented. I’m sure many thought the same about Keynesian economics before it was implemented.
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***that ignores supply and demand***
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Sucesofinanciero:The things that the government buys with those non-tax dollars – are those also created out of thin air?
That question is easy to answer simply. Of course not.
But it is harder to answer more fully and correctly – which requires asking another question and then another.
In a modern society using money, and any human society, does the creation, the production of those real goods and services, which are NOT “created out of nothing”, (almost always) require something else which IS “created out of nothing”?
This question also has an easy answer: Of course, Yes!
What is this something else?
The immaterial relation called credit/debt. Money – all money, everywhere and at all times is a particular type of this relation. Money is not and never was a commodity, a thing. As quatloosx explains above, gold is/was valuable because you could get money for it, not vice versa.
Why? How?
The answer is the division of labor. Almost every good or service involves the division of labor. The division of labor necessarily involves a creditary relationship. The “almost” always is to exclude the Robinson Crusoe case of somebody who lives completely alone and does everything, produces everything himself (I guess he is his own father & mother too) It is of no economic importance.
Try as you might, you cannot divide up the work of two or more people doing anything whatsoever without having one owe the other for some time. One guy has to trust, believe (the etymological source of “credit”) that the other guy will do his part of the production process in the future. The value of money always involves the future. If you knew the future, or knew the world would end tomorrow, what use would saving money beyond your consumption needs be?
And that is the function of money, whose basic form has always been state debt. By issuing money, and by receiving it for taxation, states direct / instruct the division of labor in the society they govern. They can do it better or worse, but that is what they are doing.
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Well thank you Calgacus for making it clear to me that we are slaves of our government. Foolish me, thinking slavery had ended long ago.
You said the government or government beneficiaries cannot purchase goods and services without them getting produced first. With that said, you agree that nothing in life is free – because it is 100% fact that to make them cost labor, energy and wealth.
You said: “In a modern society using money, and any human society, does the creation, the production of those real goods and services, which are NOT “created out of nothing”, (almost always) require something else which IS “created out of nothing”?”
Through history, the majority of currencies were non-fractional based – that includes gold. In fact, the amount of debt in a gold standard is extremely low – to the point the government would have difficulty selling bonds.
You said: “The immaterial relation called credit/debt. Money – all money, everywhere and at all times is a particular type of this relation. Money is not and never was a commodity, a thing. As quatloosx explains above, gold is/was valuable because you could get money for it, not vice versa.”
What do you mean by “relation”? A “relation” to what? With regards to gold – are you saying that the food you eat, the clothes you wear, the house you live in, the car you drive are valuable because you could get money for them? Puleeze…. The logic does not pass the smoke test
You said: “Why? How?”
I hope you agree here, you don’t have to owe me anything for me to grow apples – all I need is “need”, not debt. That’s right, the first need is to feed myself and my family. Whatever is left I will sell – and only if I get something of equal value in return – and we do the transaction using dollars as a medium (although technically we don’t have to). 100% of the transactions are settled online (instantaneously) in cash. When you say debt, you are referring to the banking system – in which the same money is lent to multiple businesses and people. The borrowed credit pulls forward demand from the future – the seller is aware that there is a risk of default – there is no trust – it’s a gamble by the creditor.
What would I do with savings if the world ended tomorrow? What would I do tomorrow if I lost my job? is a better question. And it is nobody’s business how I spend or save my money (unless we are slaves). Or are you suggesting we look at everyone’s account and take money that’s “not being used”?
You said: “And that is the function of money, whose basic form has always been state debt.”
Do you know why communism appears to work for some time? Because it fools some of the people and benefits some others for some time. So as per your own words, it’s all ok – as long as I’m not one of the ones getting robbed. It’s clear that there is no relation, there is theft – or whatever you want to call it
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What about Michael Hudson? Is he MMT?
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yes, and down with umkc
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Is Michael Hudson MMT?
Yes, but he rarely mentions the topic directly. He does, however, have a keen understanding of the history of money and monetary systems. This is where Hudson most overlaps with MMT. I might almost call him a “monetary anthropologist.” For example, Hudson has given talks in which he explains why no society has ever been based on barter. Instead, there has always been some kind of accounting system that is, in effect, a monetary system, whether or not a society had currency.
The upshot is that there have been many currencies, but money itself is not physical, and never has been. Money is an accounting system. This is a cornerstone of MMT / MS. (Gold is not money, and never has been.)
Hudson doesn’t teach classes, or regularly mingle with the other faculty members at the UMKC. As a “research professor,” he sometimes visits Europe to study the economics disasters there.
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Why is there such an immense (and I also think highly irrational) fear of fiat paper money? When I discuss this topic with libertarian, Austrian Economics-types, they have a conniption-fit, exclaiming that all fiat money in history, usually not being “backed” by anything has failed, etc. (I have no idea if this is true). They proclaim that only gold or silver can be money. Why does fiat money have to be backed by anything, like gold, to be worth anything? It appears to me that dollars are just like an accounting or point system. Dollars are like a record keeping system? We use dollars to exchange them for stuff, since bartering would be harder and inconvenient.
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All money is fiat, and all money is backed by something. The U.S. dollar (which is not paper money, as there is no paper money — it is accounting money) is backed by the full faith and credit of the U.S. government.
Gold and silver (and aluminum, brass, bronze, iron, uranium etc.) are backed only by the market, not by any nation, which is why the price of gold has fluctuated so dramatically.
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Is MMT also called post-Keynesian Economics?
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MMT is a form of post-Keynesian economics, but I never use that term “post-Keynesian economics.”
Reason: everyone has his own definition of “post-Keynesian economics,” all of which conflict with each other, and none of which make any sense to me.
By contrast, MMT is based on objective facts (e.g. the government’s deficit is the private sector’s surplus, and the government’s surplus is the private sector’s deficit).
The only people who dispute MMT facts are people with an ideological motive to deny reality.
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This site would be much better off if if Mitchell’s Laws, Nine Steps to Prosperity and 10 Steps to misery were in side bars. Scrolling thru the above to get to the meat, while informative, is tiresome.
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