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●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive, and the motive is the gap.
[The single most important problem facing our economy is the growing GAPs, between the various income/power levels, particularly the GAPs separating the upper .1% from the rest of us. These GAPs have changed U.S. and world economies.]
TROPHIC CASCADE: An ecological process by which the top of the food chain affects all levels, down to the base. It changes an entire ecosystem
All animals and plants compete for food and space, and in competing, they affect other animals and plants.
A trophic cascade can occur when top predators are strengthened or weakened. Strengthening top preditors can reduce the abundance of, and/or change the behavior of, their prey. This, in turn, can reduce the abundance of, and/or change the behavior of their prey, and so on down the line.
Weaker top predators can allow prey immediately below them to grow, often to the detriment of succeeding ecological layers.
A trophic cascade can have unexpected results. For example, trophic cascades in Yellowstone National Park changed the abundance of wildlife, of plant life and even changed the course of Yellowstone’s rivers.
The first trophic cascade lasted for centuries, as U.S. farmers and ranchers (two of our more ecologically destructive business groups), killed gray wolves for sport and to protect livestock.
This killing was so effective that by 1920, gray wolves, the area’s top predator, essentially vanished from Yellowstone.
With the top predator gone, deer and elk overpopulated and overgrazed. Grasses and trees began to disappear, and with them went smaller mammals, bears, beavers, bison, birds, reptiles and many species of fish.
Yellowstone began to die from the absence of its top predator.
Then, in 1995, a second trophic cascade began. Wolves were reintroduced to the Park.
Despite their small number, the wolves benefited the other animals, plants and the land itself. Not only did wolves seeking sustenance, cull the deer, but the threat posed by wolves changed the habits of their prey. The deer began to avoid valleys, where they could be trapped by wolf packs.
This allowed the valley grasses and trees to return and flourish. Small rodents returned, which attracted hawks and eagles. The trees attracted beavers, whose dams created ponds for fish, which in turn attracted many fish-eating animals. The trees produced berries, which attracted bears. Several species of songbirds returned. The roots of the flora stabilized river banks, creating even more ponds for fish.
In turn, the avoidance actions of the deer steered the wolves, which followed wherever their prey led.
[At this point, I urge you to watch: a wonderful 4 ½ minite video describing how trophic cascade changed Yellowstone.]
In American economics, the “top of the ‘food chain,’” is occupied by the U.S. government. The government is the top predator. Like wolves, the government’s existence, direction and sustenance depends upon and guides the desires, actions and motivations of the layers below.
The “next layer below,” and providing the most sustenance to the government, are the billionaires – the wealthiest individuals and largest corporations. They are the big political contributors, made even bigger by recent Supreme Court decisions. Like the wolves following the deer, the government follows where the upper .1% leads.
And below the .1% are all the rest of us – the less rich classes, the upper middle classes, the middle-classes, the medium-to-small businesses, the lower classes and the impoverished.
As the top “predator,” the government not only derives its nourishment from the .1%, but through its actions, controls the entire economic food chain.
And just as the absence of wolves allowed the deer to overgraze – much to the detriment of the entire Park – the lack of government “predation” (i.e. laws restricting the .1%) allows the billionaire individuals and corporations to “overgraze,” (i.e. take too many economic resources for themselves) which is destructive to the rest of the “food chain” (i.e. the entire economy.)
Until now, I had believed and preached that closing the GAP, between the rich and the rest, required lifting the rest, while not punishing the rich. I preached against a “Robin Hood” approach, but rather encouraged increased federal spending, a “high tide lifts all boats” plan.
A proposed “Nine Steps to Prosperity” was created in that vein. Nearly all steps involve direct benefits to the “not-rich,” the so-called 99.9%, with only step #9 (federal ownership of all banks), providing some control of the billionaires.
In ecological terms, this would be tantamount to continually re-planting grasses and shrubs and repeatedly laying out food for the deer and all the remaining animals, while not re-instating the wolves. .
I now believe I was wrong.
I disagree with the right wing’s claims that the rich (the so-called “makers”) should be pampered and allowed to run free without restriction, because “they are the ones who create then jobs.”
Unless the population of “deer,” (the billionaires and billionaire companies), is controlled, our economy cannot fully recover. There always would be far too few resources, causing far too many impoverished, for economic health.
How then are the billionaires to be controlled? Here are some initial thoughts. I invite you to suggest others:
I. All banks should be owned and operated by the federal government (Step #9). No private banking. For the rational, see Step 9: Federal ownership of banks
II. Increase federal taxes on inheritances. Large inheritances widen and perpetuate the GAP. I suggest a progressive tax as much as 77% (See III) on total inheritances, adjusted for future inflations.
III. Progressively higher federal income taxes on high incomes, while eliminating federal taxes on lower incomes. Step 7, in the “Nine Steps to Prosperity” reads, “Increase the standard income tax deduction annually.
Additionally, the progressive income tax top rate should rise again. We might consider something along the lines of 1964 tax rates, where the highest income bracket was about $3 million and taxed at 77%.
Further, all income – salaries, capital gains, gifts, inheritances, etc., should be taxed at the same rate.
Ultimately, those earning up to $500K annually would pay no federal taxes, and those above that level would pay 60%+, adjusted for inflation.
IV. Minimum / maximum wage relationship. In any organization, the highest paid could receive no more than 50x the lowest full-time worker, or be taxed at 100%..
WHAT ARE THE PROBLEMS WITH THESE APPROACHES?
1. All federal taxes remove dollars from the economy, which is recessionary.
However, if deficit spending on social benefits continues to increase, more dollars will be pumped into the economy than removed, which will narrow the GAP..
2. Taxes on the rich could reduce motivation for accomplishment.
This type of response understandably might be given by the very rich. However, it is improbable that being taxed on $500K annual income, gifts, inheritances, etc., would reduce the motivation to earn and to be productive.
On the contrary, to paraphrase Paul Ryan, excessive compensation can become, “a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.” (He actually was talking about aid to the poor, but in reality, the statement applies far more accurately to aiding the rich.)
3. There are many devils in the details. The very rich are adept at finding ways to circumvent the law, just as the deer have evolved to become more adept at hiding from, or outrunning, the wolves.
This would be true of all laws that attempt to narrow the GAP. That said, we must persist in our efforts.
Bottom line: The deer (i.e. the very rich) are out of control. The wolf (the U.S. government) not only has been absent, but has been feeding the deer and encouraging them to breed. The very rich are “overgrazing the economy,” leaving too little for the rest of us.
As a result, our American economy is dying.
On balance, weakening the rich and powerful, while increasing benefits to the 99.9% would benefit the entire nation.
For that reason, I am adding a simple #10 to what now will be called, “The 10 Steps to Prosperity”:
10. Tax the very rich (.1%) more, with much higher, progressive tax rates on all forms of income.
Rodger Malcolm Mitchell
Ten 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. Tax the very rich (.1%) more, with much higher, progressive tax rates on all forms of income.
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
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.