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, and the motive is the gap.
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First, read what the rich want to do. Then see what the American voter says about it:
Yahoo News
GOP budget slashes spending, aid to poor
Associated Press By ANDREW TAYLOR, April 2, 2014 11:11 PMRep. Paul Ryan’s (R-Wis) plan would wrestle the government’s chronic deficits under control after a decade, relying on deep cuts to Medicaid, highway construction, federal employee pension benefits, food and heating aid to the poor, and Pell Grants for college students from low-income families.
It would eliminate health care coverage under the Affordable Care Act while assuming the government keeps $1 trillion worth of Obamacare’s tax increases, and retains a 10-year, $700 billion cut to Medicare that Democrats drove through in 2010 when passing the health care law.
The plan cuts deeply into the middle and lower classes, while not laying a glove on the upper .1%.
Republicans say such tough cuts are required to take on chronic deficits that threaten to sap the economy of its strength in coming years as government borrowing squeezes out savings and investment and spiraling costs of federal retirement and health care programs promise to swamp taxpayers.
You have just read perfect examples of the BIG LIE. The facts are:
1. Deficits do not “sap the economy of its strength.” By adding dollars, deficits strengthen the economy. Austerity(i.e. deficit reduction) saps the economy, as European euro nations prove every day.
2. Our Monetarily Sovereign government has the unlimited ability to create it sovereign currency, the dollar, so never needs to borrow. Further, federal “borrowing” (a misleading word meaning “issuing T-securities,” is a form of savings and investment, so cannot “squeeze out” savings and investment.
3. “Spiraling costs of retirement and health care programs (Social Security and Medicare) cannot “swamp taxpayers” for the simple reason that unlike state and local taxes, federal taxes do not pay for anything. The federal government creates dollars ad hoc, by spending.
The rich want you to believe that federal finances are like personal finances, so you will accept austerity, which widens the gap between the rich and the rest.
But there’s more:
“Just as a weak economy can drag the budget into the red, a responsible budget can help propel the economy forward,” Ryan said. “If Washington is serious about helping working families — or serious about getting families out of work back to work — then it needs to get serious about the national debt.”
When Ryan says “budget,” he actually is talking about the federal deficit, not the national debt — two completely different measures, but he intentionally wishes to confuse the public.
The formula for Gross Domestic Product, the most common measure of our economy is:
GDP = Federal Spending + Non-federal Spending – Net Imports
Because deficit reduction reduces Federal Spending AND reduces Non-federal Spending, mathematically there is no way that deficit reduction can increase Gross Domestic Product, help working families or get families out of work, back to work.
Quite the opposite. Ryan knows this, but he wants you to participate in widening the gap between the rich and the rest.
More than $700 billion in cuts to Medicaid over 10 years would force hundreds of thousands of seniors from nursing home care, for instance, while $135 billion cut from food stamps and other nutrition aid would increase hunger.
Eliminating a mandatory funding stream for Pell Grants would mean fewer poor kids could dream of college, they said, while cuts to education, scientific research and NASA would harm U.S. competitiveness.
Obviously. Only an extremely ignorant person could fail to understand the truth in the above two paragraphs. And Ryan is not ignorant. He has been bribed by the rich to put forth the BIG LIE.
And speaking of ignorant, here are some verbatim comments by readers of the above article.
G
When I called to turn in my niece for welfare fraud I was told they don’t have enough people to investigate her. She had two kids, two baby daddies and gets food stamps, medicaid, housing, wic, and cash while living with the second baby daddy. He works while she sits home and collects off the taxpayer. I don’t understand why our government doesn’t throw these people off the system. Sick of hearing I got babies and you have to support us. These are the people who need to be cut off. Medicare cuts to the deserving are just offensive! If you don’t love your babies enough to work for them I certainly don’t. Cut them off immediately and we will save billions.RPM
I believe in helping people but its out of control in this country .its time to say NO. If you want to eat get off your #$%$ and get a job get off the couch. my neighbors are 25 and 34 years old both live with their mom get welfare and food stamps (which they trade for drugs ) and have no intention of ever working stay up all night watching t v and sleep all day we have become a welfare society its time to tell the abled body to go to work heres the plan you have 10 days to go see a state doctor and mental health specialist if they say you are physically and mentally able to work your benifits are cut immediately.take that money being spent on welfare and food stamps create a low interst or no interst fund to create or expand business interst free you would be shocked at the outcome in 2 years but for some reason the liberal media and the democrats aren’t smart enough to see this but then again look what the #$%$ did with obamcare people have to start being accountable.Dennis M
Didn’t read the article, gave up on mainstream media and lying leftists years ago. If real facts and news were reported, they would tell you we are on an unsustainable path. If we had truth tellers and not a permanent political class, they would tell you they cut, CUT….700 billion from medicare, and not over 20 years, but immediately, and gave it to Obama care. They would tell you they have no idea how they will pay the 100 trillion in unfunded entitlements such as social security and the rest. They would tell you your standard of living and wealth has dropped, unless you are the super rich, such as they are. They would tell you your kids and grand kids face a very uncertain , troubled, economic future. They would tell you they have taken care of themselves and their families financially. They would tell you a crash is inevitable, because they cannot, and will not stop themselves. They would tell you the facts, but that means admitting truth and truth is an enemy of corruption.
So there you have it. The BIG LIE swallowed completely by an ignorant, compliant middle- and lower-class, determined to vote for their own financial suicide.
In a democracy, the least intelligent have the same vote as the most able. Democracy is not what has made America great. Surviving democracy is what has made America great.
Will we continue to be so fortunate?
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)
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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 
[1] As a right-wing American idiot, I tend to focus my complaints on “welfare.” I hate anyone who gets any form of government assistance. (Except for me. I like my Social Security, my Medicare, my mortgage-based tax deduction, and so on. Indeed, I DESERVE them. Everyone else is a freeloader.)
I focus on “welfare,” because my claims crumble when you use facts to question me about specific programs like Food Stamps.
And when you have demolished all my bullshit, and you have fully exposed my hate, I resume whining about the vague concept of “welfare.”
The vagueness of “welfare” is what makes it a useful hot button.
[2] I sometimes enjoy perusing photos of old Los Angeles where I grew up. Based on countless photographs, I can see that Los Angeles underwent a construction boom after 1900. Not just houses and buildings, but bridges, roads, freeways, sewer systems, flood control, water supplies, and so on. Los Angeles exploded in size and development. Moreover, the things that were built, such as bridges, were very high quality, and are still used today.
My point (and I have repeated this often) is that this all happened in an age when we still had a real economy. Wall Street was a parasite, but not the deadly cancer that it is today. We still had lives. We still had a country. We still tried to better ourselves, rather than survive each day. We had problems (e.g. racial tensions) but they were the real-world problems of people living together.
I’m not waxing nostalgic. In those days we had our own madness, such as the electric chair. Or, (to cite a random example) we had the “rabbit test” for pregnancy, in which a women’s urine was injected into a live rabbit, which was then dissected to see if the rabbit’s ovaries had expanded, thereby showing that the woman was indeed pregnant. We also had world wars. Life in those days was as savage as it is today; in some ways even more so.
However there has been one change. Today there is little or no development. Today the real economy limps along in a permanent depression. Today we exist for only one purpose, which is to make rich people richer, and to increase the paper profits of Wall Street. Today, financial capitalism has totally eclipsed industrial capitalism. Today we have returned to feudalism. Society consists of peasants and lords.
Will things ever get better? Honestly I don’t know.
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I actually don’t consider myself to be right-wing or left-wing, maybe a more appropriate term is humanist, somebody that is civilized, ethical and rational. First, I look at the indisputable facts, like actual money transfer operations as described by Warren Mosler for example. Second, I look at what works, recognizing cause and effect in economics accurately. Third, I look at what is ethical. Fourth, I look at goals, what do we want to achieve and what can be achieved to better society. In America today we have a government and monetary system that can be used to improve society and standard of living immensely – This is really unprecedented in human history. Why more people do not understand MMT and MS is stunning to me.
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Dennis M’s comment is funny…”If we had truth tellers…they would tell you they have no idea how they will pay the 100 trillion in unfunded entitlements.”
Yep Dennis. The US Government has no idea at all. Actually, they had an idea but they had to dismiss it because it would turn the US into Zimbabwe.
Here is another funny one:
http://www.cnbc.com/id/101556214
The headline is “$6 billion missing from the State Department”.
Yikes. Maybe the IRS destroyed it by mistake with the tax money.
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Roger,
And you think we’re ignorant? Believe it or not; the British just sold off the Royal Mail, and the bloody hell, moron of a Prime Minister thinks it’s ducky. Or, at least, that is how I’d say if I were English.
http://news.sky.com/story/1235001/pm-royal-mail-sell-off-good-for-taxpayers
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Actually, it neither costs nor benefits the British taxpayer one farthing. The British government is Monetarily Sovereign, so taxpayers don’t pay for government spending, nor benefit from government income..
Essentially, all that has happened is that the private sector has gained assets, which would be a good thing, except for the probability that the rich will get all the benefits, and many employees will be fired.
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OFF TOPIC
Last night I watched some episodes from the old “Twilight Zone” series.
One episode was titled, “What You Need.”
At the beginning, host Rod Serling says in a voice-over:
“You’re looking at Mr. Fred Renard, who carries on his shoulder a chip the size of the national debt.”
That episode was broadcast almost 55 years ago (25 Dec 1959).
Clearly the Big Lie was as pervasive then as it is today.
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Interesting how we can always find the big money for war and war preparation and post war reparation but nada for taking care of the living. It was about a century ago that Daddy Warbucks was born and remains alive to this day.
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It is impossible to disagree or find fault with almost all of what you say above. However, when you state “that unlike state and local taxes, federal taxes do not pay for anything.” On numerous occasions I have asked the NEP/MMT group and you to provide the facts and evidence which support that particular claim? Is the statement speculative or is it current reality. I personally did some research. To date I haven’t been able to locate factual support. May I ask where I might look to find it?
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The federal government is Monetarily Sovereign, meaning it has the unlimited ability to create its sovereign currency. States and local government have no sovereign currency.
What evidence, that an entity with the unlimited ability to create its own sovereign currency, neither needs nor uses outside sources of its sovereign currency, would satisfy you?
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I understand perfectly the abilities of a Monetary Sovereign to create it’s own currency; in unlimited amounts. The point I have attempted time and again to get across on this site is though our government possesses this ability, de facto it does utilize its sole right to do so. The facts are the banks, though they do not create notes and coinage in circulation, do create about 97% of money, electronically, through debt issuance. Therefore, the US government has ceded its right to create by spending and issuing into circulation 100% of money. So, Rodger, Ian, and especially quanta since you are indeed the pot calling the kettle black when it comes to your board game comment, I require absolutely zero by the way of explanation of MS. So, again I ask, provide the evidence that the US creates all money in circulation and on the electronic books. Though it would be wonderful if the power to do so were taken back and the public good became the benefactor rather than the financial criminals who reap the benefits currently. To the one who acts as a medieval scribe forever copying text, you might consider learning the history behind money and banking; learning the fact that the same issues have been at play since this nations inception. Then you would realize who controls the creation of money controls the nation and its wealth. And why some of our greatest leaders and statesmen continually warned the citizenry about that basic fact. So show me what you have; provide the facts all by yourself.
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You’re inventing your own straw man. I know of no one who says “the US creates ALL money in circulation and on the electronic books.”
The federal government creates, not 3% as you claim, but on average closer to 20% of the dollars in the economy, via deficit spending. The difference between privately created dollars and federally created dollars is this:
Privately created dollars are temporary, and continually must be re-created. NET federally created dollars (after taxes) are permanent, and remain in the economy.
Thus, NET federally created dollars continually grow, a situation that will change only if the federal government runs a surplus (which will cause a recession, thus reducing privately created dollars, too.)
The key point is that the federal government never can run short of dollars, and no amount of deficits can be unsustainable, as the politicians, the media and the economists continually claim.
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Chasfa, think of the game of Monopoly. Does the Bank need to collect taxes in order to pay its players when they pass Go? If the Bank ran out of money, what would be stopping the players from writing “$500” on a pieces of paper to refill the Bank?
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Excellent analogy. 🙂
Of course, the average person’s response would be, “A board game is different from real life.”
But it isn’t different. Not in this case.
Alas, most people smugly refuse to understand. They are limited by their own childishness and petty spite.
They even apply “down” votes to every reader’s comment in this thread, as you can see above.
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@quat: The elegant simplicity and clear simple straight-forward logic of MMT and MS is I think a problem for people – it’s just too simple to work this way they think. People just cannot comprehend that this is how the system works in reality. They wrongly assume that government finances are identical to household finances. They also reject MMT/MS based on ideological grounds thinking that government should not be involved in anything that works (e.g., Austrian Econ.’s, Libertarians, etc.). They think that anything involving government, which is essentially cooperation among people – just as in the private sector, is bad. People have to want to learn. Maybe things would have to get so bad that people would have no choice but to consider alternatives to their way of thinking.
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Who is giving all of the down votes for the comments? There should be a pop-up comment box to make people explain their reasons for giving a down vote for a comment.
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What do you recommend instead of a democracy?
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Ryan advertises his “budget” based on “higher growth” from lower deficits and debt. If you go to the CBO report he cites, you will find that this assertion is based entirely, repeat entirely, on the idea that Treasury sales “crowd out” investment and increase interest rates, thus reducing growth. That is, the entire proposal is build on the foundation of a false premise. Of course, the Dems don’t understand either, so they miss a golden opportunity to attack the proposal’s assumptions, let alone its callousness. I will be writing my congresspeople in this regard. That is, the falsehood is right in front of them- which they could use to great advantage – but no one bothers to even look – let alone understand. Thanks.
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CharlesD-
Google the 1951 Fed-Tsy accord. It was a deal for the Fed to set rates independently of the Tsy and administration gaining its so-called independence.
Before the accord, starting prior to WWII and continuing until 1951 the Fed explicitly set the price of overnight, 5yr, and 10yr rates by offering to buy or sale any amount of bonds at those prices. Effectively proving that that the Fed sets interest rates, not markets and how their is no such thing as “crowding out and driving up interest rates”.
Furthermore, as I mentioned, it was just an accord, not an act of Congress. As is evidenced by QE, the Fed still maintains all that same authority for buying and selling securities as it sees fit to hit whatever its target rate is.
So just ask your congress critter whats legally or statutorily changed between 1951 and today where now the world works theoretically different than the actual real historical evidence, not theory, proves
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Economic ignoramus with no understanding of monetary sovereignty + youtube channel = stupidity.
[Not] Understanding the National Debt and Budget Deficit:
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You state: “The federal government creates, not 3% as you claim, but on average closer to 20% of the dollars in the economy, via deficit spending. The difference between privately created dollars and federally created dollars is this:
Privately created dollars are temporary, and continually must be re-created. NET federally created dollars (after taxes) are permanent, and remain in the economy.
Thus, NET federally created dollars continually grow, a situation that will change only if the federal government runs a surplus (which will cause a recession, thus reducing privately created dollars, too.)”.
There are many sources which dispute your assertion that the federal government creates “closer to 20% of the dollars in the economy”. I ask, even if you are correct, is that close to even half? Is it not a small fraction in comparison? Then you agree the private banks create a vast amount of the money in circulation.
Then you assert that federally created dollars continually grow…and privately created dollars are temporary. Then consider this: I am a wealthy investor. I go to the president of a private bank with who I am quite friendly. I ask if he would consider providing a loan which I intend to invest in an IPO stock whose value I just know somehow will sky rocket upon its release. He agrees to provide me with this loan, especially when I agree to bring him in on the deal, and by keystroke credits my account with the requested funds; which come almost out of thin air. Fractional reserve lending is such a wonderful thing. I also have information that the IPO’s value will drop by half within a short period. I take some of these dollars and purchase a certain number of shares, while at the same time utilizing a portion shorting that same IPO. I make a killing initially, I make a killing with the short, which was the naked sort. I’m feeling really great about myself and my investing prowess, so I decide to reward ME by purchasing a new killer sports car cash (the dealership and salesman get a cut) and taking the wife on a trip to a great little resort I know in Taos (the resort owner gets a cut). While there I see a great piece of art work that I just know will increase in value. I’m spreading the winnings about. Is that money being destroyed? I pay off the loan after 30 days. The bank gets its’ vig; usury. The bank destroys those dollars, as you imply; except that is for the vig. But what about the other cash? My spreading is putting real money in those pockets. It put more than was destroyed in my pocket. With that cash I start all over again. But that money is only temporary? Well, it is sort of, since a portion went to those others I did business with. So, yes RMM, I only had it in my own pocket for a temporary period, right? But wait, some guy at the country club who I showed a picture of the art work I purchased stated he’ll give me double what I paid because his hot girlfriend would just love it. So, why not? Is that new cash I have or just some figment of my imagination? That money sure has a way of continually growing. Damn its growing like bacteria on a dead fish in 100 degree weather. Just another straw man, RMM? Lastly, Reform is more than a notion, sir.
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You became so taken with your excessively long winded creation, that you forgot to ask yourself where the “additional” dollars came from.
Do the math and you will see that all dollars created by the private sector are in the form of loans, and every dollar of those loans eventually is repaid, i.e. destroyed.
The fact that you made money in the market and bought a car did not create a single dollar in the economy. It merely transferred existing dollars from one person to another.
Really chasfa, if you would drop the hubris and devote your efforts to actual thinking, you might be an benefit to this blog.
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So capitalizing on the sale of stocks is a loan? When you make a gain from both ends of the transactions no money is created? All of the electronic money created within so-called shadow banking just ends up evaporating into the atmosphere and cannot be transformed into real things of value? Making a gain by selling for more than was paid for an object creates no dollar money?
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It was purposefully long-winded. Suppose I am an owner of an enterprise which contracts with the federal government? When the treasury credits my account for the service I am contractually obligated to provide are those dollars the result of a loan? When I expropriate the profit made and I utilize a certain amount of that to make another profitable transaction, are those dollars the result of the initial “loan” from treasury?
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” . . . are those dollars the result of a loan.”
No. Those are brand new dollars, created out of thin air.
Now, you will say, “But you said all money is debt.”
That is true. All dollars in circulation are debts of the federal government, which owes you full faith and credit. (See: https://mythfighter.com/2010/02/23/understanding-federal-debt/)
That is why your dollar BILL is a Federal Reserve NOTE. The words “bill” and “note” describe debt.
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“So capitalizing on the sale of stocks is a loan?”
No, it is not a loan. Now think very carefully. Where does the money come from? Answer: From the buyer’s checking account.
“When you make a gain from both ends of the transactions no money is created?”
That is correct. No money is created. It is transferred from one party to another party.
“Making a gain by selling for more than was paid for an object creates no dollar money?”
Correct. It creates no money. The seller’s checking account is increased, and the buyer’s checking account is decreased — by exactly the same amount.
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Here are a couple of other related myths:
Myth #1: When the stock market suffers a huge drop, there are more sellers than buyers.
Truth: There are an equal amount of sellers and buyers, regardless of whether the stock market goes up or down.
Myth #2: When the stock market rises, sideline capital has come into the market.
Truth: No money enters the stock market. That is why it is called the New York Stock Exchange — shares merely trade hands in exchange for dollars. Even in an IPO, one person has given money to another. The economy has the same amount of money.
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