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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.
Sometimes a parable can make an idea clearer.
Recently, I read a Bloomberg View article by Jonathan Bernstein, titled: Good Riddance to Taxpayer-Subsidized Conventions
According to Bloomberg:
Bernstein is a Bloomberg View columnist covering U.S. politics. A political scientist, he previously wrote “A Plain Blog About Politics.”
He is co-editor of “The Making of the Presidential Candidates 2012.” Bernstein has also written for the Washington Post, Salon, the American Prospect, Washington Monthly and the New Republic.
After receiving his doctorate at the University of California at Berkeley, he taught at the University of Texas at San Antonio and DePauw University before he began blogging.
The opening paragraph of the article stuck in my mind:
Congress actually got something done this week: It voted to end public financing of the quadrennial national party conventions. The money — $126 million over 10 years — will be shifted to pediatric research at the National Institutes of Health. That’s a wise move.
I don’t know whether it’s sad or frightening that a columnist covering politics, a “political scientist” and a teacher of our young people, could be so clueless about the realities of federal finance and Monetary Sovereignty.
I commented on his article:
The federal government became Monetarily Sovereign on August 15, 1971. Since then, It has had the unlimited ability to create its sovereign currency, the dollar. (See: I just thought you should know: Lunch really can be free)
The federal government now neither needs nor uses tax dollars. In fact, all tax dollars disappear from the money supply, upon receipt. They no longer exist. They are destroyed.
If all federal taxes fell to $0, this would not affect by even one penny, the federal government’s ability to spend. Federal taxes are a relic of the pre-1971 days.
The American public has been brainwashed into believing federal finances are like personal finances. But people (and states, counties, cities, businesses and even euro nations) are monetarily NON-sovereign. We do not have the unlimited ability to create our sovereign currency for one simple reason: We do not have a sovereign currency.
So when the author says the money “. . . will be shifted to pediatric research . . . “ he is wrong, or at least the implication is wrong. The federal government has the unlimited ability to spend dollars on pediatric research or any other initiative.
The government doesn’t “shift” dollars anywhere. It merely decides how much it wishes to spend on something.
I then finished with this short parable:
Visualize you and a friend are sitting on a boat in the middle of one of the world’s largest fresh-water lakes, Lake Michigan.
You both are thirsty.
Would it be correct to say that if you drink less, there will be more available for your friend to drink?
That is the situation with federal financing.
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.