–Why America is losing: Just one cost of austerity

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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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Please go to, and read, the following article. (Here are just a few excerpts):

Grads Remake China Workforce as High-End Threat to U.S.
By David J. Lynch Apr 15, 2014

Close to 7 million Chinese this year will graduate college, up from 1.1 million in 2001. By 2020, China’s college-educated talent pool is expected to number 195 million people — more than the entire U.S. labor force that year.

“We’re going to have to compete with Chinese banks and Chinese insurance companies and Chinese software companies,” said William Overholt, president of the Fung Global Institute in Hong Kong. “We’re not used to thinking of China as a powerhouse in these areas.”

That change is already happening. More than half of China’s $4.2 trillion in trade last year involved significant value added by Chinese workers, while lower-value processing trade fell below one-third of the total, down from almost 39 percent in 2010, according to the Chinese Ministry of Commerce.

Dan Breznitz, co-author of “Run of the Red Queen: Government, Innovation, Globalization and Economic Growth in China,” says China soon will have a surplus of college graduates to devote to research on fields the West is neglecting, such as power grid improvements, and to innovate in the way many goods are produced.

“It’s not necessarily competing head to head,” Breznitz said. “They’re going to outflank us.”

If they do, it will be partly thanks to what globalized Chinese have learned at American universities. China sends roughly 200,000 university students to the U.S. each year, 10 times the number of Americans who study in China.

Then, re-read this article:

Five reasons why we should eliminate school loans

It’s all part of Steps #4 and #5 in the “Nine Steps to Prosperity.”

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)

—–

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

Published by Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

Published

26 thoughts on “–Why America is losing: Just one cost of austerity”

  1. Scary for you and me, but the Feudalists don’t give a fat rat’s patootie. As Masters of the Universe (or, perhaps more correctly, Masters of the Masters of the Universe), they believe they can control educated Chinese as easily as educated ‘Merikans. All the same to them; Chinese, Mexicans, Americans, whomever. They don’t recognize any borders. RE: that last, maybe they’re correct. After all, borders only serve to regulate the flow of labor, not the flow of capital.

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      1. Pat Buchanan is a raving liberal compared to Terence Jeffrey. (Buchanan has mellowed over the years. In the 1980s I referred to him as “pathologically far-right.” Today I agree with much of what he says. It wasn’t me who changed, but Buchanan.)

        Terence Jeffrey, however, remains quite evil: “As more baby boomers retire…the number of TAKERS will inevitably expand. And the number of full-time private-sector workers might also contract.”

        Got that? If you receive any form of government help, then you are a TAKER. Unless you are filthy rich, in which case you are a “maker,” no matter how much you suck from the public teat.

        And in true right-wing fashion, the little Jeffrey bastard tries to stoke enmity between average Americans who receive government benefits, and Americans who don’t.

        XXXX this loser.

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  3. If I interpret you correctly, Rodger, you imply that gratuitous austerity is eroding US competitiveness against China and other nations.

    If that’s what you’re saying, then I have a different perspective. As I see it, there is no such competition, since there are no longer “Chinese people” or “American people.” There are only the rich and the rest. The rich are allied worldwide. Their use of gratuitous austerity to widen the gap is now planetary. That’s what globalism is all about.

    The Bloomberg article says that, “Close to 7 million Chinese this year will graduate college.”

    Yeah? That’s only 1 in 194 Chinese people. They are children of the rich. The rest cannot afford college, or else they take on crippling student loan debt, just like in the USA. And even among those seven million, only a small percentage of graduates will ever find decent jobs. Even Bloomberg admits this: “Too many students fail to find jobs after graduation, potentially imperiling social stability.”

    The reason for this rising unemployment is that China, like the rest of the world, has shifted from industrial capitalism into financial capitalism, i.e. making money from money. That’s why the number of billionaires keeps rising in China, while the wealth gap keeps worsening. China still has sweat-shops, but now the big money is in market speculation. In stocks, commodities, and real estate speculation. Meanwhile China’s real economy is in the doldrums.

    Furthermore, the suggestion that austerity is eroding US competitiveness can be used to rationalize more austerity. “China is beating us because of our national debt and federal deficit. Therefore we need more austerity in order to boost our competitiveness.”

    If there were actually “competition” between China and the West, then the West would do something about it. In reality there are only rich and poor, worldwide. The only real competition I see is in energy. In Africa, for example, the West uses proxy wars and civil wars to continually beat China in the resource grab. But that’s all a side show.

    Evidently no one cared to watch that video I recommended, which shows what it’s REALLY like in China. Nasty place.

    I once spent two days in Shanghai, and two months in Singapore. Parts of each city were clean and ultra-modern, but most of the cities were nightmares of poverty. They were worse than anything I have ever seen in the USA (and yes, I have been to Detroit, where the despair is almost palpable).

    Mumbai (Bombay) was the same. (I lived in India 2.5 years.) Mumbai too has billionaires, along with slums that stretch out endlessly. The worst I have personally seen was Indonesia, which again has billionaires and college graduates, plus 237 million poor people.

    The “enemy” is not China, but global financialization and gratuitous austerity.

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  4. The world is in confusion. War,famine,disease,poverty,ignorance,civil unrest and misery are widespread and growing worse. Where are conditions leading and why? The world is drifting along–sleepy,drunken and oblivious to what lies ahead. The average person has no ideal what the future holds-and many do not care. Few are concerned beyond “tomorrow”-and fewer still remotely suspect what is coming in our time.

    Think back to a darker time in our history 200 years ago and when slavery was going on it was illegal to educate a slave particulary to read and why do you think that.Because when you educate a man you liberate the man

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    1. No particular disagreement with your analysis of the world and the average person. And when you understand that the average person is consumed with meeting the survival needs for his or her and family, there’s not much energy left to be concerned with what the future holds. It’s not that they don’t care; it’s that they don’t have the resources to care, so don’t blame the victims.
      Today, our society is recreating the world of 200 years ago through wage slavery, and destruction of education. This helps create the Aristocratic Feudal society that the wealthy really want.

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  5. Roger:
    Nine Steps to Prosperity should become SIX steps to “equality and justice”.
    :
    1. Eliminate FICA (Click here)
    2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
    3….Not needed ,contained in completion of 1 and 7. …
    ( 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….No.. This is a must have-not because of revenue raising but rather for “gap control of inequality”
    (Eliminate corporate taxes (Click here)
    7. Increase the standard income tax deduction annually ( $100,000 per person)
    8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
    9.NO . Perhaps a slippery slop. Instead _A Central Bank that is separated from the Private For Profit Banks, a bank they will work for the people.
    ( Federal ownership of all banks (Click here)
    SIX step that can all be accomplished with ONE simple change.
    If so, why would you not want prosperity for yourselves and your children?
    Why not challenge or at least ‘due examination’

    Cure for:
    … unemployment.
    ………..inequitable distribution of income and wealth.

    A Central Bank, under full transparency being the sole issuer of the currency. Currency that is owned by the people, currency that the Central Bank is the caretaker and stores while creating lawful transfers of the currency’s redemption value. The total assets of the Central Bank is the total of the redeemable goods and services of the entire sovereignty.This is the “Capital” of the “Capitalistic” sovereign group. In order ” “to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…” the Central Bank must work “For the People” while at the same time without appropriating
    the people’s already owned “goods and service.”
    What better way is there than:
    DO FOR OURSELVES WHAT WE HAD ALLOWED THE CENTRAL BANK TO DO FOR THE BANKS (PFPB) !
    LOAN OUR MONEY AND CHARGE (interest) A TAX ON IT.

    AMEND THE FEDERAL RESERVE CHARTER; TURN THE FED RESERVE INTO THE FEDERAL RESERVE BANK OF AMERICA (FRBA),RESTORE MONETARY POWER BACK TO THE PEOPLE ,OPERATE THE FRBA WITH ABSOLUTE TRANSPARENCY, (“GLINDA,the Good Witch, owns a Great Book of Records that allows her to track everything that goes on in the world from the instant it happens.”_The Road to Oz)

    Form a more perfect “capitalistic monetary ” circle: $100 trillion issued as loans to come back as $200 trillion as payment while at the same time as it returns creates $100 trillion in new loans while spending $100 trillion as Congressional appropriations for the benefit of the people.
    No inflation or deflation for there is zero change in the capital value of the sovereignty. There is zero change on the balance sheet of the Central Bank; a true zero net change. Whatever the amount ‘entrusted’ to the Central Bank remains that exact amount.

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  6. == Off topic ==

    Re. THE BASIC INCOME GUARANTEE

    PBS interviewed London School of Economics professor David Graeber, who wants a basic income guarantee (BIG) for everyone. (Link at bottom.)

    I shall paraphrase…

    Graeber says that under the current system, paper-pushing bureaucrats decide what people are worth, and how much they should receive in government benefits. The bureaucrats themselves contribute nothing to society. Their job is to “make us feel bad about ourselves.”

    With a BIG, people could pursue the work they wanted. Society as a whole would benefit from their scientific breakthroughs and artistic talents. Many gifted artists would produce works of genius, rather than lift boxes or perform some other mundane job as a condition of welfare.

    Right-wingers claim that most people are lazy. The truth is that people do not resist work. They only resist mindless, meaningless, and humiliating work. They resist slavery. Inmates in prison could just sit around all day, but they hate that. They hate it so much that work is a way to reward them. Since inmates are fed, clothed, and sheltered, they regard work as a privilege. Nobody just wants to sit around. It’s boring. Most people want to do productive meaningful work. Most people want to contribute something to the society around them.

    We must get rid of this evil myth that people are lazy, and won’t do anything if they are given a BIG. There may be a few people like that, but most people would be free to do the kind of work that they think is meaningful. Most people are smart enough to know what they have to contribute to the world.

    In England, we used to see incredible bands appear (the Beatles, the Rolling Stones and so on) because they were all on welfare in those days. Since they had basic support, they were free to be creative. All famous British rock bands started on public relief. If you give money to working class kids, a significant number of them will form bands, a few of which will be amazing. This would benefit the country a thousand times more than having all those kids mop floors or lift boxes as a condition of government benefits.

    If people’s basic survival needs were taken care of, then their spending patterns would reflect what they actually want. They could pursue what they think is actually important in life. There would be no need for bureaucracies to dispense government benefits. The market economy would work the way economists claim that it works. If you want a market economy, then you must give everyone equal access to the market. Otherwise markets do not liberate; they enslave. For an authentic free market, slavery is an abomination. When you have a gun to your head, the market doesn’t set the price; the man with the gun does. If you must put a gun to worker’s heads in order to make a profit, then you are a slave master. ANYONE WHO OPPOSES A GUARANTEED BASIC INCOME OPPOSES THE FREE MARKET.

    We only have a true labor market when workers do not fear starvation and homelessness. In that case, prices are set by individuals deciding how much they must be compensated in order to tolerate certain working conditions. With a basic guaranteed income, people will be motivated to achieve, rather than merely survive.

    Without a BIG, workers rent themselves into slavery. Students sell themselves into debt slavery. Throughout most of recorded history, the only people who actually did wage labor were slaves. Even in the American South, many slaves actually had paying jobs. They just had to give their salaries to their owners. Today we falsely think of slavery and wage labor as two different things, but for most of history they were considered variations of the same thing.

    COMMENTS:

    [1] The MMT jobs guarantee is unworkable. Worse, it is merely a tweak of the current slave system. MTT people refuse to see this. They are cement-headed about many topics. I favor a Basic Income Guarantee, plus Rodger’s Nine Steps.

    [2] In the PBS interview, Professor Graeber does not address the Big Lie. Therefore the 1% can always torpedo the Basic Income Guarantee with the question, “How would you pay for it?”

    [3] Some reader comments at the PBS web site are positive. Most are negative. The latter people insist on remaining slaves, so they can whine about being slaves. Their lives are full of hate and despair…which is exactly what the 1% want.

    Source of interview…

    http://www.pbs.org/newshour/making-sense/why-americas-favorite-anarchist-thinks-most-american-workers-are-slaves/

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    1. ” The MMT jobs guarantee is unworkable. ”

      Because there is nothing productive to do?
      No charities that could use free labor?
      How does voluntary jobs program = slavery?

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      1. Any program that creates work that is not inherently meaningful for the worker is, to a greater or lesser degree, wage slavery. Share cropping was a greater degree of wage slavery. Minimum wage jobs are a less but significant degree of wage slavery. Giving prospective employees a choice of jobs that the employee would not find meaningful perpetuates wage slavery. Only the individual can ascertain what work is meaningful for him or her. If MEANINGFUL work could be guaranteed in a guaranteed jobs program…meaningful as determined by the worker, and not some bureaucrat…IMO, that would be acceptable. Anything short of that maintains age old wage slavery.

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        1. Sorry Jeff, but I just can’t agree with your definition of wage slavery. 90% of jobs probably fall under the category of not being inherently meaningful. So we are just going to have to disagree on semantic grounds, I find your definition unworkable in reality.

          How does a voluntary job opportunity = wage slavery?

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      1. Agreed. I like it.

        By the way, regarding the MMT “job guarantee,” Rodger has repeatedly shown that the concept disintegrates as soon as we ask specific questions about it. No one can agree as to what a “jobs guarantee” is, or how any aspect of it would work. And yet, despite the concept’s vagueness (or because of it) many people cling to the idea like a religious faith. They become angry if you question their fanaticism.

        This is pathetic, because they don’t even know what they have faith in. They ignore all details, and they cling to an general buzzword.

        I say that even if the “job guarantee” were somehow workable, then IT WOULD STILL BE SLAVERY.

        Hence we need a guaranteed living income, i.e. universal Social Security.

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        2. @ Autumn barks: How hypocritical can you be? I call for universal Social Security. You, however, cling to your “jobs guarantee,” which you cannot define, nor explain exactly how it would work in the real world. And yet you call ME “intellectually dishonest.”

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        3. More intellectual dishonesty from you.

          ” I call for universal Social Security. You, however, cling to your “jobs guarantee,””

          Please provide quotation where I say I don’t want a BIG. You can’t.

          “which you cannot define, nor explain exactly how it would work in the real world.?”

          There are plenty of MMT JG proposals, just because you are ignorant of them doesn’t mean they don’t exist or can’t work. I’m sure you will continue to misrepresent reality because MMTers are just “pathetic” in your world.

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        4. @Auburn, if the term “voluntary” implies the Hobbesian choice of working or starving, then I would say it IS wage slavery because there is no practical choice and thus the word “voluntary” is just a euphemism.

          If a poet, let’s say, has to build bridges because that’s the only job that society deems is necessary, then the system is substituting the state (Federal govt) for the private sector in offering meaningless work – meaningless for the poet. As far as the poet is concerned, swinging a sledge is no better than flipping hamburgers, and perhaps worse.

          If the Federal govt could offer a job writing poetry along with a living wage, now you have something. If the argument is that our society doesn’t need people writing poetry, and therefore, if you want to work Mr. Poet, you’re going to have to swing a sledge…you have wage slavery.

          You say in another post that 90% of jobs are meaningless, or some words to that effect. That’s not a trivial a problem. Forcing people to either starve or do something that they find unrewarding…sorry. To me that’s a definition of wage slavery.

          This doesn’t mean that socially necessary projects don’t get done. The Federal govt could fund national, state and local programs to rebuild the physical and social infrastructure by competing in the labor market, through wages and benefits, for workers to do that work. Is this what you mean by a job guarantee?

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          1. May I paraphrase, “Job Guarantee means you are given your “right to life”, a standard of living not because you are a member of the sovereignty but rather because of your “sweat of your brow”.

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      2. What if …We had a Federal Reserve as a caretaker of the American sovereign currency with full transparency that worked for the people.
        As for a living income that would fall under: Have the Federal Reserve raise revenue for Congressional appropriations to help establish… “a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”, while at the same time reduce taxes?

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  7. REPUBLICANS AT IT AGAIN

    Oklahoma Governor Mary Fallin (Republican) has signed into law a measure that forbids all cities and counties in Oklahoma from raising the minimum wage any higher than the current $7.25 an hour.

    Further, the law bans all cities and counties from requiring employers to provide sick days or vacation days, either paid or unpaid.

    The measure is a preemptive attack on grassroots efforts in Oklahoma City to put a $10.10 minimum wage on the November ballot.

    http://www.sfgate.com/news/article/Fallin-signs-minimum-wage-hike-ban-in-Oklahoma-5401810.php

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  8. While ignorance grows in Oklahoma, separation of religion from politics disappears: http://www.mustangpaper.com/contentitem/370603/1586/school-district-approves-new-bible-history-course

    School district approves new Bible history course
    4/14/2014

    The Mustang School Board approved a new curriculum that teaches the history of the Bible. (Staff photo by Jon Watje)

    By Jon Watje
    Managing Editor

    The Mustang School Board approved a new curriculum that will teach the history of the Bible.

    The board voted in favor of approving the curriculum entitled ‘The Book, the Bible’s History, Narrative and Impact of the World’s Best selling Book’ at their regular meeting on Monday evening. The course is an elective, meaning it is not required.

    Steve Green, president and CEO of Hobby Lobby, visited the school board in November to tell them of the new curriculum that he worked on.

    Guarantee: Next Noble Prize winner will not come from Oklahoma.

    Funny joke:

    Green is also working on building a national, nonsectarian Bible museum in Washington D.C. to house the collection.

    A “non-sectarian” bible museum?? Will it include an atheist wing?

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