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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A Reuters article in today’s Florida Sun Sentinal, was headlined:
Arizona goverernor kills bill on service to gays.
I wish I could tell you Governor Jan Brewer had a moral epiphany, and realized the proposed law was rank bigotry, and not the phony “freedom of religion” BS the Republicans claimed.
But, morality had nothing to do with it:
Arizon Gov. Jan Brewer vetoed a controversial bill Wednesday that critics see as a license to discriminate against gay in the name of religion, saying the measure could result in “unintended and negative consequences.”
Those “unintended and negative consequences” all were based on money.
A number of major business organizations and some Republicans had urged Brewer to veto the bill.
Question: Do you think even one of those major business organizations and Republicans mentioned anything about morality, bigotry or doing the right thing? Isn’t it more likely all the conversations began like this: “Governor, we’re going to lose a ton of money and you’re going to lose a ton of campaign bucks, if you sign this.”
Critics . . . threatened boycotts and other public-relations retaliation against Arizona unless Brewer vetoed the bill.
SEN. JOHN McCAIN, R-AZ (2/25/2014): This can affect tourism, it can affect our state’s economy and job creation.
JAN CRAWFORD, CBS (2/26/2014): The Arizona Super Bowl Host Committee says it could jeopardize plans for the state to host next year’s game.
Yes, many organizations threatened not to do bu$ine$$ in Arizona. Do you think that may have been “morally” persuasive?
Of course, there is the usual professorial (bought-and-paid-for) defense we have seen so often:
In a four-page letter sent this week to Brewer, 11 constitutional scholars (who?) said the Arizona law had been “egregiously misrepresented by many of its critics.” (How?)
“Some of us are Republicans; some of us are Democrats. Some of us are religious; some of us are not. Some of us oppose same-sex marriage; some of us support it,” the letter said. (How many of each?)
Nine of the signers (which nine?) of the letter said they supported the legislation; two were not sure (“Not sure,” but they signed the letter??). “But all of us believe that many criticisms (Which criticisms?) of the Arizona law are deeply misleading,” (Misleading in what way?) the letter said.
The federal government and 18 states have Religious Freedom Restoration Acts on their books. More than 12 other states have interpreted their state constitutions to provide similar protections to religious individuals.
Under the Religious Freedom Restoration Act, the government is barred from imposing a substantial burden on a person’s exercise of religion unless the government can offer a compelling justification for the burden and then minimize the burden as much as possible.
So you see, helping to put out the fire burning down a home owned by gays, would put a substantial “burden” on a firefighter’s exercise of religion, as would serving a gay person in a restaurant owned by a fundamentalist Christian. Oh, the burdens they are asked to endure.
It goes like this. “According to my interpretation of my religion, blacks marrying whites is a sin, as are the mixed race children of such a marriage. So President Obama, stay out of my restaurant, and if your house is on fire, I’m not going to help put it out, and if you’re being robbed, I won’t stop the robber. You, as a mixed race sinner, will not receive service from me.”
“And as for you women who don’t cover your heads or your faces — if you are being attacked or even raped, don’t expect any help from us Muslim police officers.
“Oh, and you pork eaters, sellers or cooks won’t get any service from us Jews and Muslims. And you Christians who pray to Mary, well we Jews consider that blasphemic idolitry, so don’t expect service from us.”
The Arizona-style bill, based on the kind of “freedom of religion,” which if carried to the fundamentalist logic it advocated, was sure to rip this nation apart.
We are a large nation — a “melting pot.” We all believe different things. We advocate different things; we object to different things. What is the “right” way? Is it the Catholic way? Is it the Protestant way? The Jewish way? (Reformed, conservative or orthodox?) The Muslim way? (Sunni or Shiite?)
If you are Catholic, and do not adhere to the strictures of Sunni Islam, does a Muslim have the legal right to discriminate against you?
Bottom line, we either can be accepting and tolerant of our neighbor’s views, or we can be cruel and divisive if our neighbor doesn’t do everything we believe is correct.
Arizona found the answer. When money talks, money always is correct. Money is the great uniter.
Bucks beat bigots.
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 
http://www.dailykos.com/story/2014/02/26/1280375/-Cartoon-Arizona-discrimination-Leviticus-style?detail=email
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Not sure where to post this, but thought it may be of interest:
http://econintersect.com/b2evolution/blog2.php/2014/02/27/a-not-so-friendly-critical-look-at-mmt
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Hi Roger, I appreciate your articles, have done a lot of reading on the issue and have a pretty good understanding with one exception. Is the US really monetarily sovereign with the Fed Reserve, a privately owned bank controlling our currency & money supply? It seems that the US borrows $$ from the Fed and cannot create it directly. Any help you can provide in clearing this up would be great. I try to explain the concept of monetary sovereignty to anyone who will listen. Thank You! Keep up the great work. Mike
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Dollars are created in two ways and destroyed in two ways:
Created:
When the federal government pays a bill, it sends instructions to the creditor’s bank, telling the bank to increase the balance in the creditor’s checking account. That creates dollars.
When a bank lends money, it increases the balance in the borrower’s checking account. That too creates dollars.
Destroyed:
When federal tax dollars are received by the Treasury, those dollars cease to be part of the money supply. They are destroyed.
When a borrower pays off a loan, dollars are removed from the borrower’s checking account. That destroys money.
The U.S. being Monetarily Sovereign, has the unlimited ability to create its sovereign currency, so does not need to borrow, and in fact, does not borrow. It issues T-securities, though has no need to.
When you purchase T-securities, dollars go from your bank checking account into your T-security account at the Federal Reserve Bank. When T-securities are paid off, the dollars in your T-security account are transferred back into your checking account.
Federal “borrowing,” as you understand the word, does not exist. It is a myth.
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@ awakeincolorado:
Contrary to some people’s opinions, the US government does not borrow its spending money from the Fed, from China, from investors, or from anywhere else. Not one penny. Ever.
In fact, as Rodger has noted, the US government has no money. It creates money by sending instructions to banks to credit people’s accounts.
Banks likewise create money by crediting accounts, but that money is loans. By contrast, money from federal spending is not loans.
NOTE: all money is debt, but not all money is loans. A debt is a claim to ownership. If a bank lends you $100, then you are in debt to the bank. That is, the bank has claim to that $100 (the principal) plus interest.
However, if the government gives you $100, then the entire nation is in debt to you for $100. That is, you have claim to $100 worth of the “full faith and credit of the United States.”
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You’re sure about that? If so, please respond with facts that support your claim. How do you know this? Provide support for your assertions. Please, attempt to keep the reply to under 10,000 words; which might asking quite a bit considering recent reality.
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Thanks for being consistent in your snideness.
I get my information from a web site you might enjoy visiting.
https://mythfighter.com/
Also, I apologize for forcing you to read my comments.
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To me, it’s all about service to other human beings regardless of your indoctrination. You cannot stop being of service because of your religious feelings any more than an umpire calling an in the dirt ball a strike if a minority is up to bat. You practice your religion in church or at home on neutral territory.
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The Christian religious right are the least Christian, least religious people I know.
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Personally I regard all organized religion as mental illness and a moral abomination. But that’s just me. And some religions seem a bit worse than others. I’ve seen many videos on the Internet of Muslim fundamentalists grabbing victims in Syria, Chechnya, and elsewhere, and using a four-inch blade to saw off their heads while they are still alive. When the Spanish invaded the New World, they slaughtered and enslaved millions of natives, all with the blessings of Catholic priests. The Belgians did the same thing in Congo, the Dutch in Indonesia, the British in India, the Japanese in China – the list is endless, and covers all ethnic or racial groups. Humans use religion to justify ANYTHING. It’s amazing that we haven’t (yet) exterminated each other with nuclear weapons in the name of “God.”
From my perspective, religion is a game of, “My imaginary friend is better than your imaginary friend.” As children we believe in Santa Claus. As adults we exchange Santa for Jesus, or Mohammed, or Buddha, or the Great Pumpkin, or whatever. Many people are eager to kill and torture for Santa, or make war for Santa. As they slaughter each other, each side cries out, “For the Motherland and Santa Claus!”
It’s always been this way. Perhaps it always will be.
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Much evil has been done in the name of God, but the fact that religion has been with us for thousands of years indicates it may have some evolutionary advantage.
Many millions of people have died for their religion, but in ways I don’t understand, religion seems to give us a survival edge.
Of course, none of this evil was done by people who actually believe in God. If you thought your every move and every thought is being watched by a supernatural creature, who cannot be fooled and who rewards and punishes according to your actions, no way would you ever hurt anyone.
So by definition, the entire religious right group are phonies, else they would be the kindest, most generous, most tolerant people on earth.
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Sure, anything related to hierarchical support might have evolutionary benefits, since we’re such a social animal, and seem to thrive better with structural order, rather than chaotic anarchy. Undoubtedly, just in the aggregate, because my sanity would be satiated far better without our seemingly blinded adherence to power,order, and leadership. Once again, religion benefits our species survival because it encourages uncritical conformity , fellowship, and bonding, certainly necessary for large cohesion’s. But it may be premature to say this is advantageous, since if we continue to “successfully ” multiply, this might in the end , prove to be quite detrimental to our species long term survival, as well as many other life forms.
The scariest aspect of religion, is its suggestive subjective power. All most trance like in its ability to extricate horrors from otherwise well meaning adherents. The 9-11 terrorists , criminal as they were, were in their own minds heroes, and their supplicants. . Frighteningly they didnt think they were doing anything wrong, but to the contrary, were doing their gods bidding. The whole concept reeks from insanity,and illogically persists every time some uneducated victim blows themselves up for expected martyrdom.
The Christian right in this country are probably liars, as it would be illuminating to give these self appointed evangelical leaders lie detector tests. The Roman Catholic institution is probably less full of themselves than their American copy cats, but non the less are still pulling the wool over many. Today, i think money has displaced God in many conservative factions. But the radicalized Islamist’s do think their fantasia cal god is watching, as well as literally relevant , and who could honestly view them as tolerant and benevolent.
Christopher Hitchins use to ask his debaters if they could think of a moral compunction, only a believer could do,such that a nonbeliever couldn’t do as well. I dont remember any . But there have been many immoral things perpetrated through out history that only a believer would do. Many otherwise moral people have been compounded by their faiths to do some pretty bad things. Sure there are many causes for disgusting behavior, but non as contradictory to there advertised purposes.
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Rodger says, “Of course, none of this evil was done by people who actually believe in God.”
Perhaps they do believe in God. It’s just that God is their personal Santa Claus, created in their minds and tailored to suit their needs.
Unrelated: if there is an afterlife, then why do many people think it will be better than earthly life? Won’t the same people be there as were here? (Rhetorical question, not meant to be answered.)
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PS – forgot to label myself as a recovering agnostic.
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@RMM:
I was just curious, the Roman Catholic church is said to be immensely wealthy – What is the role of the Catholic church in Rome, if any, in influencing global economics and political power? I did not see this issue considered in your blog. Do they fund economics departments at universities? – that would be really interesting.
See:
http://humansarefree.com/2012/03/christian-church-is-biggest-financial.html
I think that the Roman Catholic Church may have actually arose, in part, as a convenient means for acquiring political power, security and wealth for its clergy, priests. What is a better way to keep people in line by promising them a good afterlife if they obeyed and behaved (and gave them tithes and donations) or suffer eternal damnation in hell?
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I think as far as religion being a evolutionary advantage, what is going on here is simply that humans are social animals, humans need one another to survive and prosper – religion helped foster this more or less in early humans. Religion in many ways helps in social cohesion and building a community. Religion has both good and bad components. But do humans really need religion to have morals and ethics? I don’t think so. I’m not very religious but I’m definitely a lot more charitable and caring for others than most Christians that I know. A lot of Christians (especially the right-wing and tea party types it seems) seem to believe that if one is poor or in difficult circumstances, it must be their own fault, thinking they are deserving of it because they are lazy, irresponsible, maybe not being Christian enough or whatever, etc. – I reject this view. Just because a trait or behavior exists or may even persist for a long period in nature does not mean it is always beneficial or even desirable in the long run, it just may need more time to become extinct. Humans have vestigial physical traits that seemingly have no purpose (for example, the appendix, males have nipples) or are actually detrimental to survival, but we still have them, why?
See:
http://www.newscientist.com/article/dn13983-religion-is-a-product-of-evolution-software-suggests.html#.UxMLKNxElfQ
“Sosis previously found that in some populations – kibbutzim in Israel, for instance – more religious people receive more assistance from others than the less faithful. But he notes that the forces that maintain religion in modern humans could be very different from those that promoted its emergence, thousands of years ago.
Palaeolithic humans were probably far more reliant than modern humans on the community they were born into, Sosis says. “[Now] you can be a Lutheran one week and decide the following week you are going to become a Buddhist.””
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http://www.foxnews.com/us/2014/03/02/archbishops-million-dollar-retreat-angers-new-jersey-faithful/
Working for the Roman catholic church can have its perks, it’s also a fairly recession-proof business I think.
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In some religions, certain figures are “religious authority sovereign.” In matters of their bible, they can exert an unlimited amount of religious authority.
They need neither to tax nor to borrow religious authority from anyone. They create authority ad hoc, as they use it.
When they use their authority, it cannot be said they have an “authority debt.” They do not owe more authority when they use it.
I am not an expert regarding Catholicism, but from what I’ve heard, the Pope may be “religious authority sovereign” for Catholics.
Yet, even he is not as sovereign as is the U.S. federal government with regard to the dollar.
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Oh my, oh my. We just had to get into religion, didn’t we :-). Well, I just can’t resist, as religion is one of my motivating concepts, along with science, philosophy, and yes, money.
RE: the original post, for me it’s a simple proposition. If one’s business is open to the public, and, in order to operate that business, you, the owner, must have a business license, then, by the stated or unstated terms of that license, you agree to serve the public without discrimination. If you, the owner, refuse to do so, IMO, you relinquish the privilege to legally serve the public and operate a business. If you, the owner, want to “stay true” to your bigoted beliefs, then practice your business in private, if you can figure out how to do that.
Now, the more interesting (to me) discussion re: religion and its value to humanity. I’m generally inclined to agree with everything written so far: RMM’s observations that, historically, religion has served humanity in the long run – apologies for oversimplification. I also agree with quatloosx that horrible things have been done in the name of religion. I would also point out that the Aztecs were just as brutal to neighboring tribes as the Conquistadors were to them , and, though the priests were complicit and provided moral authority for the heinous crimes committed (by our standard), the big picture wasn’t about Jesus or the Virgin Mary, but about gold and later, silver (ah, the money motive again). For a beautiful rendering of the history of this era for those who aren’t already familiar with this work, I highly recommend Eduardo Galeano’s three-volume history of America, Memories of Fire. Beautiful, inspiring, poetic
The consensus that I’m detecting in this part of the discussion is that fundamentalism, in any religion (and I include the null-religion of Atheism), is antithetical to human life and progress. Here I define fundamentalism as “hey, I know the answers, and if you don’t agree with me, you’re (pick one or more) stupid, going to hell, an idiot, a heretic, an evil person, a moral abomination, mentally ill, etc.” And to this rejection of fundamentalism, I say, “Amen and Blessed Be.”
Let me mention another work for anyone wanting to expand their understanding in this area, Robert Wright’s Evolution of God. Here’s a tease from the NYT book review:
“Wright argues that each of the major Abrahamic faiths has been forced toward moral growth as it found itself interacting with other faiths on a multinational level, and that this expansion of the moral imagination reflects ‘a higher purpose, a transcendent moral order.'”
This is fun. Thanks.
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Personally I regard all organized religion as mental illness and a moral abomination. But that’s just me. I’ve seen many videos on the Internet of Muslim fundamentalists in Syria, Chechnya, and elsewhere, and using a four-inch blade to saw off the heads of their victims while they are still alive. When the Spanish invaded the New World, they slaughtered and enslaved millions of natives, all with the blessings of Catholic priests. The Belgians did the same thing in Congo, the Dutch in Indonesia, the British in India, the Japanese in China – the list is endless, and it includes all ethnic or racial groups. No group is totally blameless. Humans use religion to justify ANYTHING. It’s amazing that we haven’t (yet) exterminated each other with nuclear weapons in the name of “God.”
From my perspective, religion is a game of, “My imaginary friend is better than your imaginary friend.” As children we believe in Santa Claus. As adults we exchange Santa for Jesus, or Mohammed, or Buddha, or the Great Pumpkin, or whatever. Many people are eager to kill and torture for Santa, or make war for Santa. As they slaughter each other, each side cries out, “For the Motherland and Santa Claus!”
It’s always been this way. Perhaps it always will be.
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— Off topic —
Random observations
[1] WHY PROFESSORS LIE
Barry Poulson is a notoriously right-wing professor of economics at the University of Colorado, Boulder. In an article he wrote for Forbes magazine today, Poulson demands a balanced budget amendment for the US Constitution, in order to reduce federal spending (and thereby widen the gap between the rich and the rest).
http://www.forbes.com/sites/realspin/2014/02/27/its-time-for-states-to-call-a-constitutional-convention-and-pass-a-balanced-budget-amendment/
Why do most economics professors so fanatically champion austerity, and a widening of the wealth gap?
They do it in a desperate bid to keep their jobs.
Today, 70 percent of college and university faculties are non-tenured, part-time professors (adjuncts), and the percentage keeps growing. In 2010 their pay for a standard three-credit college course ranged from $2,235 at two-year colleges to $3,400 at four-year doctoral or research universities. That is per semester. At the community college and state college level in a state like Florida, they are paid under $2,000 per class. Thus, teaching eight classes a year yields just $16,000. And of course, adjuncts have no benefits to speak of. They aren’t allowed in departmental meetings, they often live far from campus, and they are forced to teach night classes, juggle side-gigs, and commute to jobs on several campuses. They work far harder than full tenured professors, for a tiny fraction of the pay. Many live on Food Stamps.
As more and more college professors face severe economic hardship, many seek to improve their pay and their job stability by becoming toadies for the rich, i.e. liars-for-hire. (Politicians and media pundits do the same thing.) And as the professors increasingly fear for their jobs, their lies are increasingly brazen.
Since three quarters of all professors are already on very thin ice, they dare not speak much truth, lest they be terminated and forever black-balled. As “contingent faculty,” they can be dismissed at any time, even after their classes begin. Meanwhile presidents of universities make fabulous salaries for maintaining this system.
It is wishful thinking that a Ph.D. is still a mantle to the upper-middle classes. For a shrinking tenured population, that’s still the case, but most professors are at or near minimum wage level, and many have student loan debt.
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[2] ON FEDERAL “TRUST FUNDS”
Obama wants Congress to create $302 billion over the next four years to update roads and railways. Funding for surface transportation programs expires later this year, and Obama says that if the funding is not renewed, then 700,000 jobs could be at risk.
Transportation Secretary Anthony Foxx says that a “transportation cliff is coming in August or September 2014” when the Highway Trust Fund, which finances federal highway and transit projects, is forecast to go broke.
What is this “Highway Trust Fund”? A federal “trust fund” is simply a government account that, depending on the item funded, is maintained by the Fed, or by some private bank, or by a federal agency that is under the US Treasury, or an agency that is independent like the Social Security Administration. The Highway Trust Fund is part of the U.S. Department of Transportation’s account. So, “trust funds” are simply the bank accounts of federal agencies.
Although the US government cannot go broke, a “trust fund” can go broke if the Congress decides to stop putting money into it. However this is not easy, since federal law protects most federal “trust funds” from “going broke” –- that is, from running a negative balance between outlays and incoming tax revenues (even though the tax revenues are destroyed upon receipt). If the U.S. Highway Trust Fund account dips below $4 billion, then Congress can increase taxes, or “transfer money” from the “general fund,” or else the U.S. Department of Transportation can delay payments to states.
A federal “trust fund” account can have myriad sub-accounts. For example, the federal Unemployment “Trust Fund” is composed of 59 accounts in the US Treasury related to unemployment insurance program. There is one account for each state (plus the District of Columbia, Puerto Rico, and the Virgin Islands). There are also 4 federal accounts, and 2 accounts in connection with the Railroad Retirement Board.
One question I do not know the answer to is this: when Congress authorizes, say, $100 billion for the Highway Trust Fund, does the Congress authorize the DOT to create and spend up to $100 billion as needed within a given time frame? Or does the Treasury credit the DOT account with $100 billion up front? I suspect it is the latter, since a “trust fund” is asset held by a trustee (a federal agency) for beneficiaries (the public). Either way it works out to the same thing.
These accounts are simply a way to dispense federal money, and to track the dispersals. All are funded by the “general account,” i.e. funded by the Treasury in accordance with instructions from Congress. All the money is created out of nothing, from thin air. However politicians pretend that it’s all funded by various federal taxes, and by loans from China.
For example, politicians pretend that money for the U.S. Highway Trust Fund comes from a tax on gasoline (18.3 cents per gallon) and on diesel (24.4 cents per gallon) plus excise taxes on the sales of trucks, truck tires, and trailers, plus federal fees for the use of heavy vehicles — and so on. All these federal taxes are unnecessary, and in 2006, federal fuel taxes removed $28.2 billion from the US economy. Fortunately each year the federal government adds $50 billion to the economy by spending on surface transportation programs that support highways, public transportation, and inter-city passenger rail. Ninety-two percent of that $50 billion (all of it created out of thin air) is put into the Highway Trust Fund, whose monies are spent by the US DOT.
The CBO says the Highway Trust Fund became “insolvent” for the first time in 2008, meaning that expenditures exceeded tax revenues. (Not that this is a problem for an MS government.) As a result, the US government has had to create $54 billion money out of thin air to keep the Highway Trust Fund solvent, and to pay for infrastructure maintenance. This creation out of thin air is called “transference from the general fund.” Ultimately ALL federal spending is “transference from the general fund.” However politicians pretend that all these monies are physical and limited. And most people believe it. (“We can’t spend money we don’t have!”)
The political process works like this: Since politicians want to maintain the Big Lie, they claim that the US government is “broke” and “in debt,” and that money to maintain the USA’s transportation infrastructure must come from China and from higher taxes. However politicians generally hesitate to increases taxes, especially if a tax increase might hurt the rich. Therefore politicians stage a “crisis” and a “deadlock.” At the last minute they reach a “compromise” in which they create the money out of thin air, like always, and then they repeat the charade.
Since an increase in federal taxes on gasoline and diesel would hurt rich and poor alike, Congress has not increased these taxes since 1993, when the gasoline tax went from 14.1 cents per gallon to its current level of 18.4 cents per gallon. Meanwhile the price of gasoline has gone up. In 1993 a gallon of gasoline cost an average of $1.05.
Still, many people want higher taxes in order to indulge our nation’s deficit reduction mania. Yesterday, for example, Rep. Dave Camp, R-Mich., chairman of House Ways and Means Committee (which sets federal taxes), announced a corporate tax overhaul plan that would dedicate $126.5 billion in corporate tax revenue to the Highway Trust Fund over the next eight years. Three blue-ribbon commissions have called for raising the gas tax and indexing it to inflation. The American Automobile Association (AAA) wants higher fuel taxes. So does the right-wing US Chamber of Commerce and the left-wing Center for American Progress. The Simpson-Bowles cat-food commission called for increasing the gasoline tax by 15 cents.
All these clowns support the Big Lie. Some by ignorance. Others by malice.
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[3] LIBERALS AND THE BIG LIE
I claim that liberals support the Big Lie as much as conservatives do, in some cases even more so. Conservatives can adapt, while liberals cannot. Conservatives will, if necessary, make any concession as long as the wealth gap remains intact. Liberals, by contrast, will not bend, since they have “right” on their side. They want to punish the rich by raising taxes on them. Their desire for “revenge” is so strong that in order to justify it, liberals cling to the Big Lie that the federal government runs on tax revenue. Thus, they wrongly think that higher taxes on the rich would mean more money for the lower classes.
The two sides have their own respective form of smugness. When you mention the facts of Monetary Sovereignty to a conservative, he laughs at your “foolishness.” If you debunk his claims (which is easy to do by simply asking him questions) he goes silent, or he changes the subject. By contrast, when you explain the facts to a liberal, he doesn’t think you are merely foolish; he thinks you are a demented. He hates you even more than he hates the rich.
Here’s an example of liberalism from the New Yorker magazine…
“In the ongoing debate about rising income inequality, two questions are often raised: one from the left: Is rising inequality impeding economic growth? And the other from the right: Does tackling inequality, which usually involves some form of redistribution, reduce growth?”
Right away with this opening we see the Big Lie. Since the US government supposedly runs on tax revenue, the only way to reduce inequality is to take from the rich. Right?
In reality, the best way for a Monetarily Sovereign government to reduce inequality is to create more money out of thin air and give it to the lower classes, such that the only “penalty” for the rich is that they don’t continue to get richer quite as rapidly.
If you believe the Big Lie, then you will naturally want to reduce inequality by bringing down the rich.
If you see through the Big Lie, then you will want to reduce inequality by bringing up the poor.
The New Yorker article continues…
“Countries that take redistributive measures in order to attenuate inequitable market outcomes do not, on average, tend to grow less rapidly than other countries. Indeed, the contrary is true. They tend to grow a bit more rapidly.”
That’s technical mumbo-jumbo for, “Economies grow more rapidly in countries that take from the rich and give to the poor.”
WRONG! The US government does not need or use tax revenue, and in fact destroys it upon receipt. Therefore, how can taking from the rich (i.e. raising federal taxes on them) help the poor, or boost the economy? It can’t. And where does taxable money come from in the first place? From government spending. Therefore, the solution is to spend more on the poor, who will spend all the money in the real economy, where it’s needed.
Do you see how liberals use “compassion” to sustain the Big Lie? Liberals don’t really care about helping the poor, or about boosting the economy, or reducing inequality. They just want to punish the rich, even if it means leaving the poor in poverty.
(I consider myself a humanitarian leftist, not a liberal. And yes, there is a difference.)
Liberals also fail (or refuse) to distinguish between the financial economy and the real economy. That is, when liberals want to take from the rich and give to the poor, they ignore the difference between finance capitalism and industrial capitalism.
The reality is that highly unequal societies tend to have strong financial economies, but weak real economies. Likewise, societies with more equality tend to have real economies that are stronger than their financial economies. Many countries have extreme poverty and inequality, but have robust financial markets. Indonesia, for example, has horrendous poverty and inequality, but its stock market has finished higher now in six straight sessions, climbing almost 160 points or 4 percent along the way.
When liberals ignore the difference between finance capitalism and industrial capitalism, they leave a financial system that perpetuates inequality, no matter how much they take from the rich and give to the poor. Instead of taxing the rich, why don’t we instead talk about devoting all federal spending to the real economy, and none of it to Wall Street bailouts and so forth?
When liberals fail to distinguish between the financial economy and the real economy, they support the Big Lie, which says that austerity is good, since it raises per-capita GDP (even though it widens the gap between the rich and the rest).
The New Yorker article is based on a paper titled “Redistribution, Inequality, and Growth” from the IMF. Yes, the IMF, global purveyors of austerity and debt bombs. Now THERE’S a source of truth, aye?
The IMF paper says that reducing inequality does not inhibit economic growth. True enough, but if we try to reduce inequality by taxing the rich, we find that inequality remains.
TAKEAWAY POINT: Both liberals and conservatives support the Big Lie. Therefore the best way to counteract right-wing lies is to stop supporting them. It’s like terrorism: the best way to stop terrorism is to stop participating in it.
http://www.newyorker.com/online/blogs/johncassidy/2014/02/does-tackling-inequality-reduce-growth-no.html?mbid=gnep&google_editors_picks=true
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[4] THE AUSTERITY VULTURES
Last Monday, 24 Feb 2014, one day after the coup in Ukraine, the rich oligarchs who took power started warning the masses to prepare for severe austerity (which will widen the gap between the rich and the rest).
Ukraine’s acting President Olexander Turchynov and PM-designate Arseniy Yatsenyuk warned of the need for “unpopular’ steps to help “stabilize” Ukraine’s economy.
Translation: the oligarchs want an IMF loan of $35 billion, with the cash going to the oligarchs and to foreign bond holders, and the debt dumped on the public. Paying oligarchs and bond holders does nothing for average people. If average Ukrainians think they are suffering now, they haven’t seen anything yet.
The IMF has already told Ukraine’s oligarchs that if they want $35 billion, they must impose “structural adjustment” on the masses. That is, the oligarchs must cut social programs, terminate most federal employees, eliminate energy subsidies, deregulate banks and financial markets, and privatize everything.
The oligarchs are notoriously right-wing quite happy to do this, since it will widen the gap between themselves and the masses. (That’s why they mounted their coup in the first place.)
The masses won’t like this, but too bad. Welcome to the Revolution, boys. This is what you rioted for. Meet the new boss. Same (no WORSE) than the old boss. Your democratically elected “dictator” was deposed by power-mad oligarchs, who will now crush you in the name of “democracy.”
The oligarchs will also jump-start their gambling in the financial markets. Poland has twice the per capita GDP that Ukraine does, because Poland has a larger financial economy. (A larger per-capita GDP can mean more industrial development or, more commonly, more financial development, which is useless to the masses.)
What about Putin and Russia? Did they “lose”? That remains to be seen. Russia no longer needs to make good on a promised $15 billion loan to Ukraine, or cut prices for deliveries of natural gas. My guess is that the Russians will quietly wait until reality sets in. In many ways, Russia still has Ukraine by the gonads, e.g. Ukraine’s desperate need for natural gas, most of which comes from Russia.
Russia still has its Black Sea Fleet at Sevastopol, Crimea, in southern Ukraine. Will the oligarchs demand more in rent? Will Russia encourage and support the secession of east and south Ukraine (including Crimea), where ethnic Russians are a majority? We’ll have to wait and see.
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— Off topic —
I AM BRILLIANT.
(Therefore I support the Big Lie.)
The web site at the bottom advocates public banks. I favor public banks (as does Rodger) because they can create loan money out of thin air, and lend at whatever interest rate most benefits the local community. Interest goes to the local bank, and stays in the local community. It does not go to Wall Street. A local public bank eliminates the need for the local community to sell bonds, or have high taxes. A local public bank can suspend mortgage payments from homeowners when there is a flood, hurricane, or some other disaster, as the Bank of North Dakota (BND) has done several times. A local public bank can create student loans, as the BND does. A public bank returns profits to the community, whereas private banks suck profits out of the community and concentrate profits in the hands of the rich. A public bank at the state level can increase the profitability of private banks in the state, as occurs in North Dakota. And so on.
Fine. Great. Now here’s the strange thing…
Although everything above is true, the public banking advocates insist on taking a further step that is erroneous, unnecessary, and counter-productive. That further step is to falsely claim that ALL money in the US economy consists of bank loans, and therefore ALL money is lent by private bankers. Therefore every dollar in your hand is (supposedly) a dollar that you owe to a private banker somewhere, with interest. And of course the US government borrows all its money from those same bankers. The public banking advocates ask why the government can’t just issue money directly (which the US government ALREADY DOES).
Since the public banking people have researched extensively, they are “brilliant” – i.e. utterly cement-headed. They say the fact that US currency has “Federal Reserve Note” printed on it is proof that all dollars are lent by the Fed, or by some other bank.
(In reality, less than 3% of the US money supply consists of notes and coins, and even this is a misnomer, since notes and coins are not money. They are currency, which merely represents money. Money itself is not physical. It only exists as digital notations in bank accounts. Since currency represents money in a bank, currency notes must name some bank, which, logically, is the central bank, or the Fed.)
My point?
Why do they even mention this side topic, when everything else they say is true and valuable? Why don’t they stay silent about it, instead of supporting the Big Lie? By falsely claiming that the US government borrows all its money, and needs tax revenue to pay interest on that borrowed money, they defend the myth that federal finances are the same as private finances. They seek smaller deficits. They defend the “national debt crisis” lie.
Hence they defend austerity, which forces people to beg for loans, which strengthens the private bankers that the public banking people claim to oppose.
Don’t ever try reasoning with these people about Monetary Sovereignty. It is not necessary in the context of public banking. Furthermore they are the most cement-headed people of all. Right-wingers, gold bugs, and so on spout endless self-contradictory gibberish. They are toadies and snake oil salesmen. However the public banking people are even worse when it comes to Monetary Sovereignty…
They are “brilliant.”
http://publicbankinginstitute.org/home.htm
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Amen! awesome rant, couldnt of said it better. The result is an insane world. I have a feeling much of the misunderstanding about modern macroeconomics stems from our traditional puritan work ethic, though helpful as a cause for industriousness, when selfish simple minded folk, especially if successful and established, attempt to reconcile these cultural biases with societies modern technological capabilities, they’re stumped. Maybe its as simple as not wanting peace, prosperity, and happiness for others. Sure it sounds horrible, but utopian ideals are never popular, they are reserved for never never land. . Work and that which defines purposeful living probably needs to be redressed in the modern context and under our current monetary system, .Just isnt going to happen without some civil unrest.
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In reply to your reply, I suggest you expand your horizons. Your dogmatism is reminiscent of the fundamentalist christians who insist that the earth and all of its creatures were created in 6 work days. The fact is the US though it could act as a true monetary sovereign, in reality does not do so. The “household” argument gets tiring and is simply not an all encompassing one when describing those who do not fully agree with the premises made. A wonderful disciple you make, however. Again I ask, provide your evidence.
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I find it a bit bewildering (& irritating) that you continue to attack “disciple” quatloosx, but do not have nerve to respond in the same tone of ridicule to this blog’s author? (They are exactly on the same page when it comes to monetary operations.)
[The United States Treasury has Tax & Lend Accounts at various FRB branches that render it a currency USER. But the US Congress has a singularly unique relationship with the FRB that allows the Federal Reserve to always make good on payments if necessary. Therefore, the US government as a whole should be viewed as a money issuer because of the political unity and symbiotic relationship with the Federal Reserve. This makes the possibility of default exactly nil (assuming no willing default by Congress). There is no such thing as the US Treasury not having a funding source since the Federal Reserve will always serve as the lender of last resort to the government and the primary dealers are required to provide a market in government debt.]
Please, elaborate if you have some other insights, truths, facts, or line of reasoning/thought that counters the above. Good luck, sir.
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As is too often the case in economics, semantics tend to confuse. “Issuer” and “user” are not scientific terms and they mean different things to different people.
Yes, the federal government “uses” dollars, and yes, the federal government “issues” dollars — but you and I “use” dollars, and if we happen to lend dollars and receive a note in return, we “issue” dollars, too.
I’m not sure there is a perfect, unambiguous word to describe the process. Clearly, the federal government is a creator of dollars, as are lenders. And the federal government is a destroyer of dollars, also as are lenders.
That said, the federal government is uniquely sovereign over the dollar. No other entity on earth is sovereign over the dollar. The federal government makes all the laws that make the dollar possible. (Please read: https://mythfighter.com/2013/07/27/i-just-thought-you-should-know-lunch-really-can-be-free/)
The federal government alone decides how the dollar will be created and destroyed. It alone has the unlimited ability to create dollars. It alone never can run short of dollars to pay its bills, because the very act of federal bill paying is the method used to create dollars.
The federal government has the unique power to say, for instance, “From now on, chasfa will create all dollars.” There is absolutely nothing the federal government cannot do with the dollar.
It has absolute, 100% power, which is why taxes and “borrowing” are unnecessary, and deficit and debt are not a burden on the federal government.
Visualize the unlimited power of God, and you will understand the federal government’s power over the dollar. Just as God cannot run short of dollars, neither can the federal government, with or without taxing or borrowing.
I hope that clarifies things.
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Most readers of this blog are humanists like you, Steve. They just want to understand what causes human suffering, and how to reduce it. Unfortunately a few readers are children who refuse to learn anything, since they already know everything. They have no grief, empathy, or sympathy. And since they have no regrets, they have no moral character. Self-centered and self-indulgent, they snidely attack other readers in a desperate (and futile) attempt to seem “clever.” They read something I say and they retort, “Where is your proof?” The proof is in Rodger’s posts, since that’s where I have learned everything about MS — but why read Rodger’s posts when you can have fun sneering at other readers? These fools are exactly the type of people I refer to when I say the masses WANT to be enslaved.
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@RMM: I these questions are off-topic for this blogpost, but I didn’t know where else to post them:
1. The following article states that Norway has zero net debt. Wouldn’t this be considered bad since they are monetarily sovereign and should actually run a deficit and cause a problem for them (I know the article is actually out-of-paradigm regarding understanding modern economics with MMT/MS, but they did make that observation)?
See:
http://www.sovereignman.com/finance/heres-some-hard-data-on-the-safest-fiat-currency-12460/
2. Norway issues its own currency, the kroner, and it is monetarily sovereign as far as I can tell. So, why does it need a Sovereign Wealth fund? Am I missing something here? Isn’t a monetarily sovereign nation having a sovereign wealth fund pointless? What would be the benefit of having such a fund, when they can just issue the kroner that they want, without having the risk exposure that such a fund would have?
See:
http://online.wsj.com/news/articles/SB10001424052702304026804579410483225594214?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702304026804579410483225594214.html
Also, some blog site suggestions:
1. Can you include a suggestion box or something on the side of the blog so that your blog readers can ask questions when they are not relevant to the latest blog article topic?
2. Can you move your search box for the articles for the blog to the TOP of the page rather than the bottom?
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Two answers:
1. Norway has a large, positive balance of trade, so doesn’t need to run a deficit.
2. There is no necessary relationship between deficits and debt. A nation can run a deficit without debt, and can have debt without a deficit.
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Morality, equality and tolerance, right-wing style : http://www.nationalmemo.com/week-crazy-bow-knee-god-gayness-rest-worst-right/
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Newbie: Here is a long billyblog comment that I (Calgacus= Some Guy) wrote that treats some of your questions.
Norwegian fund follies , with lots of links. Michael Hudson, Norwegians Arno Mong Daastøl (quasiMMT/MS economist) & Øystein Stray Spetalen (billionaire) have debated the idiocies of the wealth fund with uhh, idiots like the Norwegian PM, to little avail.
They detail what Norway should do with its oil wealth fund – spend it – rather than waste it on (usually unsuccessful & destructive) gambling on Wall Street. On your question about deficits, one way of thinking of it is that its export surplus in effect is deficit spending – the Norwegian Central Bank creates a lot of kroner to buy the dollars oil & other exports get. So the Norway gets the kroner it needs to run its economy, while the Central Bank & fund get a pile of dollars, which they proceed to gamble away at Wall Street.
The only time a sovereign wealth fund makes sense is if you think there is some catastrophe coming for your country,say Atlantis, like it sinking beneath the ocean. Then the refugee Atlanteans and their descendants will be able to live in style off of it while they reminisce about the old country.
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@Calgacus: Thanks for the response. When I first read about Norways’ Sovereign Wealth fund, I thought surely Norway was monetarily sovereign, so WTF? But, in addition to the Norwegians’ ignorance, somebody is getting some nice management fees for managing such a sizable fund.
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