Bloomberg in dreamland: Our wonderful, declining deficit. It’s all so simple.

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.
======================================================================================================================================================================================
According to Bloomberg’s Ian Katz, things are looking great:

Obama’s Shrinking Budget Deficits Silence Foreign Fiscal Critics
By Ian Katz Apr 13, 2014

The Congressional Budget Office is projecting the 2014 deficit will be the lowest in six years and down more than 60 percent from the record $1.4 trillion in 2009. With the annual April 15 tax filing deadline looming, the U.S. has received about $80 billion more in income taxes this fiscal year than it had 12 months earlier.

Translation: Whoopie! That’s an additional $80 billion removed from the economy.

The Treasury’s coffers are swelling as the almost five-year economic expansion gains momentum, generating more corporate and personal income-tax revenue and reducing spending on social services. Stronger growth, in turn, will depend less on government spending to fuel growth than it has in the past.

Translation: Never mind that the U.S. Treasury has no “coffers.” (We all should write to Bloomberg’s Mr. Katz, and ask him, “Exactly how much money is in the Treasury’s ‘coffers’?”)

GDP = Federal Spending + Non-federal Spending – Net Imports. With “more corporate and personal income-tax revenue and reducing spending on social services,” where will the dollars come from the grow the economy? Don’t ask.

Corporate tax revenue may climb further as accelerating growth and declining unemployment boost sales and earnings.

Translation: More dollars will be pulled out of the economy.

(Last October) IMF Managing Director Christine Lagarde warned that failure to lift the (U.S.) debt limit risked triggering a global recession. The administration of Barack Obama and Republicans in Congress eventually agreed to end the 16-day shutdown and suspended the $16.7 trillion limit.

Translation: Er, uh, see it’s like this: Debt and deficits are bad and should be reduced. But failure to allow for more deficits and debt risks “triggering a global recession.” Perfectly illogical.

Now, Michael Darda, chief economist at MKM Partners LLC in Stamford, Connecticut, estimates the U.S. deficit fell to 2.9 percent of gross domestic product in the first quarter from a peak of more than 10 percent in 2009.

Among the reasons, he said in an April 11 note: “a sustained, albeit moderate, economic recovery” and the 2013 automatic spending cuts and tax increases known as sequestration.

Translation: As everyone knows, spending cuts and tax increases grow the economy. If we could cut spending to $0, and increase taxes to 100%, that would grow the economy even faster.

The deficit will shrink to $514 billion this year from $680 billion in 2013, according to the CBO, After that, the deficit will start rising every year, reaching $1 trillion by 2022.

The increase will be driven by “dramatically” rising Medicare and Social Security payments needed to care for an aging society, said Jersey of Credit Suisse.

Translation: To keep filling the non-existent Treasury “coffers,” Medicare and Social Security benefits will need to be reduced — and reduced, and reduced — until those non-existent “coffers” are full. But, of course, since there are no “coffers,” and so we can’t know how much is in them, we never can know how much money needs to flow from the private sector to the Treasury.

The only solution is to keep cutting the private money supply until there is none left.

For now, a slower pace of decline in the budget deficit will provide a tonic for the economy because fiscal “drag” — the contractionary effect of reduced fiscal stimulus — is abating, says Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.

“If the projected declines over the next couple of years were larger as a percentage of GDP, they would be giving rise to more fears about fiscal drag,” he said.

Translation: Its good that the deficit, which we are glad to see decline, will decline less, because the decline causes fiscal drag. In short, we want “fiscal drag” (to fill the Treasury’s “coffers”), but we are glad there will be less fiscal drag.

Simple, huh?

(Treasury Secretary Jacob J.) Lew, in his April 11 statement, said the U.S. expansion “is expected to strengthen further this year as private-sector demand increases, the fiscal drag lessens, and household balance sheets and the housing market continue to improve.”

Translation: It’s kind of like magic. We cut deficits, which puts fewer dollars into the economy. Having fewer dollars causes the private sector to spend more. This makes fiscal drag lessen and the housing market improve.

If we did the opposite, that is, add more dollars to the economy, the private sector would spend less.

It’s all so simple, really. Ask the writer, Mr. Katz.

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

THE RECESSION CLOCK
Monetary Sovereignty Monetary Sovereignty

Vertical gray bars mark recessions.

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

10 thoughts on “Bloomberg in dreamland: Our wonderful, declining deficit. It’s all so simple.

  1. Having fewer dollars causes the private sector to spend more is not our old adage “less is more.” Here “less” is less. Not a less-on, rather a moron.

    Like

  2. Rodger titled the above post, “Bloomberg in Dreamland.”

    The topic of dreams leads me to make the following observation…

    To be seduced by the Big Lie is not merely to be seduced by myths regarding federal government finances. It is to be seduced by madness. The Big Lie is essentially a refusal to think logically about anything at all, not just economics.

    What enslaves the 99% is not the Big Lie, but madness. The Big Lie is but one manifestation of madness. Indeed, the 1% rule by keeping the 99% insane (literally). Symptoms of this insanity include smug denial, willful blindness, and self-contradictions.

    The madness creates a grotesque hall of mirrors. Inside it, austerity is prosperity, slavery is freedom, a depression is a recovery, the 1% are simply “misguided,” all money is physical, deficit reduction is good (but so is deficit expansion), personal finances are the same as federal finances, the financial economy is the same as the real economy, and so on.

    When average people say silly and self-contradictory things about economics, they are not “stupid” per se; they are insane. That is, they live in a DREAM WORLD. Not a hallucinatory world, but a dream world. When we sleep, our dreams sometimes morph from one thing to another with no logical sequence, like a bubbling cauldron, or like a fractal pattern of random thoughts, with wild proportions and warped “reason.” Dreams are often insane. And if we awaken, and we continue to think the way we often dream, then we are insane.

    An example is the Bloomberg article above. (Hence, “Bloomberg in Dreamland.”)

    All political control is based on thought control, i.e. control of the mass mind. And for the 1%, “control” does not ultimately mean management and direction. No, it means keeping the 99% insane. I mean this literally, not metaphorically.

    In connection with this, Mitchell’s Rule #6 says, “The penalty for ignorance is slavery.”

    This ignorance is in fact madness. (That’s the way I see it, anyway.)

    Like

  3. If you’re waiting on the Government to help you, you’re going to end up with the “short” end of the stick yet again. The Government is not on our side. In fact, just like Goldman Sachs, they are betting against us and “shorting us,” as the financial reform process is proving. Our government officials have been bought off and are on the side of the Oligarchs. Do you know your enemy?

    Like

  4. –Off topic —

    AUSTERITY IN CHINA

    Here are some more notes on how rich people in China are using austerity to widen the gap between themselves and the rest.

    China is a pure plutocracy, like any Western nation. The Chinese parliament is the richest legislative body in the world; far richer than the US Congress.

    Because these plutocrats call themselves “communist” (a sick joke), they are internationally known as the “red aristocracy.”

    Ninety-five percent of Chinese billionaires are related to senior government or “Communist Party” officials. And China’s one-party system allows no opposition candidates for Chinese voters to choose from.

    All billionaires worldwide seek to widen the gap between themselves and everyone below. China is no exception. Ten years ago China had no billionaires at all. But then, Chinese politicians and sweat-shop owners discovered the miracle of privatization, deregulation, austerity, and switching from industrial capitalism to finance capitalism. Now the number of billionaires in China (measured in US dollars) reached 251 in 2012, and 315 in 2013, and is expected to reach 500 by the end of 2014. And that is just the billionaires who report their earnings. The top five people saw their wealth double in 2013 alone.

    Many analysts predict that by the end of 2015, China will have more billionaires than the USA has, since the wealth gap in China is widening even faster than in the USA.

    While Chinese billionaires keep getting richer, 1.36 billion regular Chinese people keep falling further into poverty and despair. Universities and most public schools have been privatized, forcing students to take on massive student loan debt they can never pay off. (Sound familiar?) Everywhere there is privatization, deregulation, inequality, and growing unemployment, all of it is designed to widen the gap between the rich and the rest, and to make the financial economy supreme over the real economy.

    China’s money is called the “people’s currency” (renminbi), yet China is no more “communist” than Europe is “socialist,” or the USA is “democratic.” Such words are meaningless labels whose purpose is to keep the masses confused and submissive.

    The IMF claims that China’s per capita income is 17 times higher now than it was in 1980. The IMF conjures this number by combining the total fortune of all those Chinese billionaires, and dividing those trillions by the number of people in China. Voila: instant “prosperity” for all, even though 99% of Chinese people are in poverty. Likewise, American workers get poorer every day, but because the rich keep getting richer, the U.S. “per capita” income has quadrupled over the last 40 years. The higher per-capita GDP supposedly proves that austerity and neo-liberalism help rich and poor alike!

    In November 2013 there was a “third plenum” of the Chinese “Communist” party’s 18th Central Committee. [A plenum is a gathering of all party members. A “quorum” is a gathering of a minimum number of party members needed to conduct the group’s business.] The plenum was a four-day gathering of more than 370 of China’s billionaires and top politicians who celebrated “reforms” that are radically widening China’s wealth gap.

    President Xi Jinping and Party Leader Li Keqiang told an auditorium full of cheering billionaires that deregulation and privatization will continue to expand as never before. Premier Li Keqiang said “the markets” would continue to play a “decisive role” in allocating resources.

    Translation: financial capitalism will continue to eclipse industrial capitalism.

    The two men said they would create a Homeland Security Committee (to keep the increasingly starving masses in line). Indeed the biggest growth industry in China is private security, as the ultra-wealthy hire guards to protect themselves and their vast wealth. In other words, the government will assume more responsibility for protecting the rich and their fortunes, so the rich don’t have to pay for private security. (In China as in everywhere else, the pejorative term “big government” refers to any aspect of government that helps average people. Meanwhile any aspect that helps only rich people is not called “big government,” no matter how huge it grows. It is called “efficiency.”)

    President Xi Jinping and Party Premier Li Keqiang said they would form a “leadership group” answerable to no one but themselves. The group’s mission will be to ram through a whole new level of neo-liberal “reforms” to “unleash market forces.”

    Any time politicians mention the word “reform,” they mean restructure social entities in order to make the rich richer. For example, the rich in China want to “reform” (i.e. destroy) land laws. Traditionally, Chinese laws concerning land ownership do not allow farmers intent on migrating to cities – or already settled there – to sell their land back home, in order to fund their new lives in urban areas. These laws were established in the communist era to protect rural folk from being swindled out of everything when they sought work in the cities. At the Third Plenum (November 2013), Premier Li Keqiang vowed to “reform” these laws (eliminate them) so that the billionaires can swindle the rural folk out of their land. Li Keqiang said, “Farmers should participate equally and enjoy the fruits of modernization.” (That is, farmers deserve to enjoy being cheated out of everything.)

    In the cities, rich speculators fuel a housing bubble that makes the cost of urban living extremely high. (25% of all Chinese billionaires made their fortunes by speculating in China’s land bubble and housing bubble. One of them, a girl, is now the world’s youngest billionaire at age 24.) As money flows to the top, rich owners of housing in the cities increasingly demand that their tenants pay their rent in land deeds, since the tenants have no money. That s, the tenants must give up whatever bits of land they own in the rural areas where they came from. This is called “modernization.” It is called “equal land rights,” and “unleashing the market.” It’s why the rich want the land laws repealed, and why Premier Li Keqiang will do it for them.

    China’s economy is ultra-capitalist, yet the Chinese oligarchs call it a “socialist market economy.” They call their plutocracy “democracy.” They call the shift to pure ideology “making economics scientific.” In short, they use the same lies that oligarchs use all over the world.

    Caps on usury interest rates are being “reformed” (eliminated) in order to make China into an “ownership society.” (Sound familiar?) This is why China is part of the WTO, the global organization dedicated to widening the gap between the rich and the rest.

    Like the rest of the world, China is firing mass numbers of mid-level and lower-level public employees, and replacing them with private contracted companies that have disposable slaves. From 1997 to 2007, the Chinese government reduced the number of public employees by 70 million. Meanwhile state-owned enterprises were halved from 250,000 to fewer than 125,000.

    Workers no longer enjoy an “iron rice bowl.” People’s communes have been abolished, so that peasants are forced to buy seed, water, and fertilizer from the oligarchs. Masses of rural migrants, joined by growing numbers of laid-off state workers, provide an endless supply of cheap labor in the cities. And because of deregulation, there are gas explosions, mine cave-ins, and flooding that kill thousands of people every year.

    Oligarchs have extreme power in China, since it is illegal for their slaves to hold a labor strike, or to organize independent, non-approved unions. Labor leaders are regularly jailed as criminals, and their families are harassed.

    PERHAPS YOU DO NOT BELIEVE ME.

    Perhaps you prefer the lies of the corporate media outlets (owned by the 1%) who claim that China’s neo-liberal “reforms” are wonderful. Perhaps you are confused by the term “Communist” China. Perhaps you think that China’s might is based on manufacturing and exports. Or perhaps you just hope that China is some kind of alternative to the Western model, and that China will one day restore hope to the world.

    Sorry folks, but the financial economy is king in China, just like the rest of the planet. There are still sweat-shops, but manufacturing is disappearing as sweat-shop owners move to other countries, or devote all their profits to speculating in the markets. China’s financial economy is red hot, while its real economy is in a depression. Hence the corporate media claims that everything in China is great (just like the USA).

    China is producing billionaires at an astonishing pace. This can only happen where there is deregulation, privatization, financialization, and some form of Big Lie. It can only happen when all sense of community breaks down, and greed rages out of control.

    America’s Big Lie is that the US government is “broke,” when in fact the government has infinite money. China’s Big Lie is that the government is “communist,” and does everything “for the people.” In reality the Chinese government exists only to help the rich get richer.

    Have you seen photos of all those empty shopping malls in China? Most of them are only half-built. Politician-bureaucrats gave money to rich developers to put up those malls. The developers pocketed most of the loot and walked away, leaving half-finished shells that no one rents, since no one in China has any money except the rich. Average’s people’s pay is consumed by food and rent (and paying debts), with nothing left over to make a consumer economy. It’s all designed to widen the wealth gap. China is the same as everywhere else.

    PERHAPS YOU STILL DO NOT BELIEVE ME.

    Below is an hour-long YouTube video that shows what everyday life is like in China. The video has no narration, and makes no judgments. It merely shows how things really are in China. Long unemployment lines. People in rural areas with nothing. People in urban areas terrified of not being able to find a job, or of being laid off if they do have a job. The only way they can rent an apartment is to share a room with half a dozen other people. Workers are disposable. Urban unemployment keeps climbing because of privatization and the quest for profit. A thousand people wait in line for every job. The stress is nightmarish.

    As the Chinese middle class gets hollowed out, the rich keep getting richer. It’s all part of the global plague. Occasionally the Chinese government engages in “stimulus spending,” but all the money goes to rich people who use it to speculate in real estate, or in the markets, leaving average people poorer than ever. Where did all the billions go? It was used to pay the federal government’s (non-existent) “debt.” (That is, it went straight to the rich, who used it to bribe politicians and widen the wealth gap.)

    Chinese technical schools and vocational schools (almost all of them privatized) send “recruiters” (snake oil salesmen) to rural areas, promising the rural folk that if they come to the city and give all their money to the schools, then the rural folk will attain paradise. It is a hellish lie.

    That same YouTube video (below) shows one of these Chinese “recruiters” travelling the countryside, giving countless presentations, and telling the rural folk that education is the key to their happiness. He knows he is a liar and a scammer. He knows he is destroying families. He admits it openly in the video. He knows he is falsely stoking the hopes of innocent parents, so that they and their children can be cheated out of everything by the shady privatized schools. The schools are fly-by-night operations whose administrators steal all the money and disappear.

    The “recruiter” in the video admits all this, but he doesn’t boast about it. On the contrary, he is plagued by guilt. He despises his job, but it was the only job he could find, and he has a quota of suckers. And he is given no bonuses or incentives. He scams because he is desperate. Welcome to the wonderful world of privatization and “efficiency.”

    In China the “university entrance exams” are all rigged.” If you have any money that can be bilked, you automatically “pass” the exams, so that you will sell all your family’s possessions to pay for tuition, or else take on student loan debt.

    Poor families in the rural areas are innocent and naïve. They sell everything to send their kids to school, only to have everything stolen by the school, with nothing in return. Welcome to neo-liberalism, Chinese style. It’s all in the video.

    This nightmare grips most of the planet, and China is right in the middle of it. Iran has likewise adopted the plague with the election of Hassan Rouhani on 3 Aug 2013. This is why the West suddenly wants to make peace with Iran. It is why Iran is now crawling with Western corporate CEOs.

    If you have an hour, the video below will open your eyes about China. Don’t look for sweatshops and mining disasters. The video is more subtle than that. It is more low-key. And more awful..

    Or you can skip the video and just take my word for all this, so that you don’t become more depressed.

    Somehow we’ve got to kill the Big Lie before it kills us.

    Like

  5. quatloosx
    If it kills us it kills the .1% too. They can’t trim their gardens and trees or replace the roof on their mansions without their servant minions. My question is, how much further down this path do we go until they finally “get it” that the economy is based on inter-dependence, not independence? If they never “get it” then the logical conclusion is they will leave the majority of mankind on the soup line and they will have to cut their own grass and vacuum their own rugs, and you know that aint happening. So they will eventually get it, and when they do they’ll have to yield to MMT/MT or some other abundance based model because trying to tweak scarcity to keep suppression alive will fail.

    Like

    1. @ tetrahedron720: You make good points and ask good questions, as always. May I respond?

      [1] Tetrahedron720 writes: “If it kills us, it kills the .1% too. They can’t trim their gardens and trees or replace the roof on their mansions without their servant minions.”

      Unfortunately for us, the rich have an endless supply of servants. If ten thousand servants die of poverty each day (or disease, or war, or toil-related accidents) then so what? There are millions of other peasants eager to take their place. And with the human population continuing to grow, I don’t see any end to the nightmare. The rich will always let enough peasants survive to bring them food, wipe their noses, and empty their trash.

      The nightmare could only change if random variables were to arise, either naturally (e.g. an asteroid collision) or artificially (e.g. a major world war, or a devastating plague).

      [2] Tetrahedron720 writes: “My question is, how much further down this path do we go until they finally ‘get it’ that the economy is based on inter-dependence, not independence?”

      All economies are already based on inter-dependence. Unfortunately the inter-dependence is itself based on madness. For example, the average person thinks he needs his slave-master as much as the master needs him. This is like claiming that plants need us more than we need plants, even though plants could survive without us, although we could not survive without plants (since we need oxygen). In this analogy the average plant (peasant) thinks he needs the rich. He regards rich slave-masters as “job creators.” He sees them as parents. He begs them for support. This is insane, but like I said before, most peasants are insane (literally). That’s why they are peasants.

      The bottom line is that the rich will never “get it” until the masses “get it.” Many countries have been impoverished for decades, and even centuries. It just goes on and on.

      [3]Tetrahedron720 writes: “If they never ‘get it’ then the logical conclusion is they will leave most of mankind on the soup line and they will have to cut their own grass and vacuum their own rugs, and you know that ain’t happening. So they will eventually get it, and when they do they’ll have to yield to MMT/MT or some other abundance based model because trying to tweak scarcity to keep suppression alive will fail.”

      You imply that eventually the rich will be forced to relent, lest they self-destruct. I am skeptical. Already the rich let us have food stamps, and the elderly have Social Security, so the peasants will not revolt. The rich starve us to maintain the wealth gap, but they allow us just enough to maintain the nightmare.

      I see the entire planet becoming a like, say, India, with stupendously rich people and billions of dirt-poor slaves…forever.

      Sorry to be so hopeless, but if you have proof that I’m wrong, I would very much like to hear it. Save me from my pessimism.

      Like

  6. off topic – to the question of how to get people to wake up, there needs to be a lawsuit against the federal govt/IRS relating to federal taxation. it has been done before, but I doubt under MS. considering the operational realities of MS, and the federal govt’s argument that such taxation funds govt spending, “the people” could possibly have sufficient standing (even eminent domain has limits). don’t know what the particular legal claim would be, but I will……

    Like

  7. Let’s say the US had a balanced budget and paid off all of its “debt”. So there would be $17T in the hands of lenders. What would the interest rates be as all of these lenders reinvest their dollars in fixed income? 0.0001%? Would there even be investments available for all these lenders? Republicans, be careful for what you wish for.

    Like

  8. You need to add a /sarc off sign for the below because people are dumb enough to think you’re not mocking Katz.

    Like

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