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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.
Gross Domestic Product (GDP) is the most commonly used measure of the economy and economic change. There a several ways GDP is calculated, all arriving and the same total. One is the total of:
1. Personal Consumption Expenditures: A measure of goods and services consumed by individuals.
2. Gross Private Domestic Investment: Spending on residential equipment and buildings, spending by businesses on capital, total change in business inventories.
3. Net Exports of Goods and Services: The difference between imports and exports.
4. Government Consumption Expenditures and Gross Investment: Purchases of goods and services by the three levels of government: Federal, state and local
Here is a graph demonstrating this calculation:
The blue bar is the total of the above 4 categories. The red bar is Gross Domestic Product. As you can see, the bars are identical.
Federal austerity involves a reduction in federal spending and/or an increase in federal taxes.
–A reduction in federal spending, by definition, decreases the violet bar.
–An increase in federal taxes decreases the pale blue bar
–An increase in federal taxes and/or a decrease in federal spending, decreases the green bar.
–An increase in federal taxes and/or a decrease in federal spending has a mixed effect on the black bar. If the net effect were inflationary (the dollar loses value), the black bar could rise, but if the net effect were deflationary (the dollar gains value), the black bar could fall. Historically, net federal spending has had little effect on inflation.
Recently, GDP growth has declined, as shown by the red and blue bars, below. (Note: These bars show growth, not totals):
The recent decreases in the violet, pale blue and green bar growth all can be attributed to austerity (as explained, above).
Even with increases in Net Exports growth (black bar), GDP growth has declined, demonstrating the seriousness of our economic situation and the debilitating effects of our austerity.
Mathematically, austerity ALWAYS decreases GDP. There is no mathematical formula that will demonstrate a decrease in federal spending and/or an increase in federal taxes having a positive effect on GDP.
Politicians, having been bribed by the upper .1% income/power group (via campaign contributions and promises of lucrative employment later), use the Big Lie to brainwash Americans into believing that by some unknown magic, austerity benefits the economy.
There is no mathematical mechanism by which reductions in net federal spending can benefit the economy or the lower 99.9% income/power group. To say otherwise is the Big Lie.
The media, which are owned by the .1% parrot the same Big Lie, and mainstream economists, who work for universities receiving contributions from rich donors, will not contradict their employers.
The next time anyone –a friend, a politician, a media writer or an economist — tells you the federal deficit and debt should be reduced, show him this post, and ask him to explain it.
Be prepared for the Big Lie, and a great deal of obfuscation.
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.