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●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
According to the right-wing, giving to the needy, turns them into “takers” and sloths. Thus, unemployment compensation encourages the unemployed not to work, food stamps encourage the poor to remain poor and Medicaid encourages excessive use of medical services.
Many religious organizations support charities for the indigent, which charities presumably encourage further indigence. And where did these religious organizations obtain their money? From your charitable contributions.
If fact, a case can be made for the negative effects of your giving to virtually all charities. Any assistance you give to “those” people has a negative, overall effect, so that is a good excuse not to help them.
I was reminded of this Orwellian “black is white, up is down, good is evil” right-wing belief, when I saw this article in the right-wing Washington Times:
Obama’s stimulus beginning to drag economy down
By Stephen Dinan-The Washington Times Friday, February 21, 2014
President Obama’s stimulus may have boosted the economy when it passed in 2009, but it’s now beginning to take a toll and will soon begin to leave the economy worse off than if it had never passed, according to a new report Friday by the Congressional Budget Office.
Mr. Obama signed the stimulus into law five years ago this week, vowing it would help rescue the economy from its post-Wall Street collapse tailspin, and saying it would save millions of jobs.
The CBO said it (helped) sustain between 700,000 and 3.6 million jobs at its peak in 2010. “In contrast to its positive near-term macroeconomic effects, the American Recovery and Reinvestment Act will reduce output slightly in the long run.”
They said the cause is all of the borrowing for the $830 billion program, which dramatically boosted the federal debt.
“To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital. Each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital,” the CBO estimated.
Where does one begin with an article like this?
First, we have a right-wing newspaper admitting that deficit spending “boosted the economy.” Did you hear that, austerity lovers and deficit Henny Pennys. Deficit spending boosts the economy.
Although, (IMO) the deficit spending was insufficient, it did “sustain between 700,000 and 3.6 million jobs.” So, is that a bad thing, Messrs. Bowles and Simpson, leaders of the disgraceful National Commission on Fiscal Responsibility and Reform (aka the National Commission for sucking the life-blood out of the economy)?
Then the article says, “the cause (of predicted slightly reduced output) is all of the borrowing for the $830 billion . . . “ So, it isn’t the deficit spending that’s the problem. No, it’s the totally unnecessary borrowing that is the problem.
The deficit spending did its job. If debt is the problem, why is a Monetarily Sovereign nation, with the unlimited ability to create its sovereign currency, borrowing that sovereign currency?
And then, “. . .the increased debt tends to reduce the stock of productive private capital.” Again, everyone agrees that deficit spending, by adding dollars to the economy, is stimulative. The question: Does the purchase of T-securities remove dollars from the economy and thereby “reduce the stock of productive capital.”
Apparently, savings (i.e dollars in T-security accounts at the Federal Reserve Bank) are not felt to be productive. But savings are dollars people hold in order to feel free to spend other dollars. If you had zero dollars in savings, would you feel as free to buy goods and services. It’s like saying insurance is not productive.
And finally, “Each dollar of additional debt crowds out about a third of a dollar’s worth of private domestic capital.” I don’t know where this phony statistic came from, or even what it really means, but if one dollar of debt “crowds out” 33 cents worth of capital, doesn’t it follow that one dollar of debt adds 67 cents of capital?
And if that is the case, why would anyone not favor deficit spending?
Anyway, the one, short, right-wing article contains so much illogic, there is no wondering why the public is confused.
Charity is good; charity is bad; spending is good; spending is bad. And the gap benefits us all.
Rodger Malcolm Mitchell
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.