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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,
and the motive is the gap.

What is money? Simple answer: Money is a medium of exchange. After that, things get a bit complex.

Some say money is a store of value, but in the event of inflation, money’s not a very good store. Similarly, money is a comparative measure of value, at any one moment in time, but again, not a very good measure over time.

Historically, money has been whatever a government said it was, because money is backed by the full faith and credit of the issuer, and historically, governments have been the issuers.

But, the times, they are a’changin’.

Modern money has no physical existence. Money is numbers in an account. Think of that seemingly universal explanatory example, the game of Monopoly. It has variously denominated bills that players exchange for properties, rents, fines and rewards. Those bills are not money. They are evidence of money; they are titles to money.

Monopoly easily could be played with a scorekeeper and scorecards instead of bills. Players simply could have their balances increased or decreased, according to the rules of the game. The notations on the scorecards would be money – and not the physical notations, but the “meanings” of the notation symbols. In fact, there is a computer version of Monopoly, in which everything is composed of symbols; nothing is physical.

Money then, is a score. It is wholly symbolic and not at all physical. But who decides what those symbols mean and who keeps score? The answer: Anyone whose full faith and credit is trusted enough. Players of Monopoly trust the game’s rules.

The U.S. government can create dollars, because Americans and foreigners trust the full faith and credit of the U.S. government enough to accept dollars (in accounting notations) in exchange for goods and services.

Banks too, create dollars, because Americans and foreigners trust the full faith and credit of the banks and the banking system, sufficiently to trust the accounting notations telling them how much money (accounting notation) exists in their bank accounts.

So let us change our definition of money: Money is a trusted score that is used as medium of exchange. Without trust, there cannot be money.

And we are not talking about absolute, unconditional trust. That doesn’t exist in this world. We mean the level of trust you have for the central government, for big businesses, for small businesses, for relatives, etc.

Read Understanding Federal Debt. Full faith and credit, where we describe the elements that go into trust, i.e. into full faith and credit.

Central governments and banks are not the only entities that are trusted to keep accurate scores. You trust the electric company. You trust the gas company, the phone company – at least at the level necessary to be the collateral for money.

For instance, many people have trusted the process behind the bitcoin, together with the currency exchange markets such as Mt. Gox. While this trust remained intact, bigcoin functioned as money. Recent problems with Mt. Gox have weakened bitcoin as a trusted currency.

Which brings us to: M-Pesa, a form of money based on the full faith and credit of mobile-phone companies Safaricom, Ltd and Vodacom.

M-Pesa allows mobile-phone users to deposit, withdraw, and transfer money, paybills and purchase airtime. Like all forms of money, M-Pesa is not physical. It is nothing more than an accounting service.

I urge you to read the Wikipedia description:


In 2002, Researchers at Gamos and the Commonwealth Telecommunications Organisation, funded by Department for International Development UK, documented that in Uganda, Botswana and Ghana, people were spontaneously using airtime as a proxy for money transfer. Africans were transferring airtime to their relatives or friends who were then using it or reselling it.

M-Pesa (M for mobile, pesa is Swahili for money) is a mobile-phone based money transfer and microfinancing service for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania

The service allows users to deposit money into an account stored on their cell phones, to send balances using SMS technology to other users (including sellers of goods and services), and to redeem deposits for regular money.

Users are charged a small fee for sending and withdrawing money using the service. M-Pesa has spread quickly, and has become the most successful mobile phone based financial service in the developing world.

One rightly could argue that M-Pesa is not money, but rather a money-transfer service, but the line blurs. The airtime that users of M-Pesa purchase, is itself used as an exchange medium, i.e. as money.

The existence of M-Pesa, a corporate-based money service, evidences two features of Monetary Sovereignty truths:

1. Money is not physical. Money is an agreed-upon record. Those who claim gold or dollar bills or any other physical element to be money, simply are wrong. Vodaphone and Safaricom do not supply anything of a physical nature.

2. Sovereign money is unlimited. It never can run short. Vodaphone will not run short of credits for airtime minutes. Whether or not those minutes ever are used is irrelevant.Some may never be; some not. They simply are exchange units.

Vodaphone neither needs to borrow credits nor to tax users for credits. The terms “deficit” and “debt,” so often wrongly applied to the U.S. dollar, are meaningless when discussing M-Pesa airtime. Vodaphone does not need to borrow credits nor tax users to obtain credits.

Those who believe the federal government can run short of dollars, or have burdensome debts, or need to borrow dollars from another country, simply are wrong. The value of M-Pesa is based on the full faith and credit of the issuers.

But the real value of M-Pesa is the demonstration that money can be the child of any entity having sufficient credit. If you are trusted (and laws permit), you could issue money and have your money accepted.

I for instance could create “mitchells,” and create them out of thin air (just as the federal government does), by sending instructions to your bank, tell the bank to increase the balance in your checking account by an amount equivalent to a certain amount of mitchells.

My money would be of my own design, and would have no physical presence. If the banks trusted my full faith and credit, they would do as they are told, which would create more mitchells.

I never would need to borrow mitchells. I never would need to tax anyone to obtain mitchells. I simply would create it by sending instructions. If anyone paid me in mitchells, I would note the payment, but the mitchells themselves would be destroyed, as they are unneeded and so, have no value to me.

And none of the above has anything to do with gold or anything else that is physical.

Today, many nations supply their sovereign currency, Bitcoin and M-Pesa may be just the forerunners of many moneys provided by many non-government sources. While this may seem to exacerbate an exchange problem, in fact, the problem is trivial for computers, which instantly can make appropriate conversions.

The real problem is the one that exists today: The relative value of each issuer’s full faith and credit.

So what do you think? Are bitcoin and M-Pesa signs of the end of money or the beginning?

Rodger Malcolm Mitchell
Monetary Sovereignty

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

Monetary Sovereignty Monetary Sovereignty

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.