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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.
Readers of this blog, who understand Monetary Sovereignty, are puzzled (disgusted? outraged?) by those who reject the federal spending that benefits the poor and middle income groups.
The repeated calls for less spending and reduced federal deficits seem nonsensical at best, and cruel at worst. After all, the U.S. government never can run short of dollars, and federal taxpayers do not pay for federal spending.
So if helping the poor and middle income groups costs no one anything, why not?
Two problems have been discussed repeatedly in these pages:
1. The rich, who control all sources of information via bribery (of politicians and universities, with contributions and promises of lucrative employment) and ownership (of the media), selfishly wish to reduce social spending, so as to widen the gap between the rich and the rest.
Without the gap, no one would be rich, and the wider the gap, the richer they are.
2. The populace, who are indoctrinated by the above sources of information, accept the lies that: Social spending is unaffordable and paid for by tax money, that government debt is “unsustainable” and “money printing” will cause hyperinflation.
So while this blog disseminates the facts of Monetary Sovereignty and bribery and ownership of information sources, there is in the populace, a deep psychological antipathy to accepting these facts.
One of the most powerful motivations in the psychology of humans (and of many animals, too) is the concept of fairness, which is made complex by three different ideas:
A. Equal: It’s fair when everyone receives the same rewards and the same punishment.
B. Merit: It’s fair when each receives what each deserves, based on some measure, like input or power. (Those who do more should receive more, and those higher up the power structure deserve more.)
C. Need/has: It’s fair when those who have less, receive more, and those who have more, receive less.
Clearly, each description of fairness will result in different outcomes.
In the “Ultimatum Game”, person # “One” determines how to divide a sum of money, and person # “Two” accepts or rejects the division.
Presumably, as a rational person, “Two” would accept any division, even an adverse 99% / 1%, because something is better than nothing.
In actual practice however, the concept of “fairness” is so powerful that person “Two” often rejects divisions more unequal than 66% / 33%, even accepting 0% rather than seeing person “One” receive “too much.” To person “Two”, forcing “One” to receive 0% is more rewarding than receiving an “unfairly” low amount.
This is comparable to person “Two” wanting less unemployment compensation for perceived “slacker, ‘One,'” even though “Two” himself might suffer from the reduced unemployment compensation.
To person “Two,” punishing the “undeserving ‘One'” is more important psychologically than personal reward.
In psychology, however, nothing is simple. If “Two” considers “One” to be deserving in some way, either because of merit (“One” has worked harder; “One” is more important) or because of need (“One” is poor, sick, a child), sympathy and empathy might be even more powerful than fairness, and person “Two” might very well allow an extremely unbalanced division — even 100% – 0%.
This last is the foundation of charity.
Returning to the title of this post, the rich, by owning the sources of information have taught the populace that Monetary Sovereignty does not exist.
But the rich don’t stop with disinformation. They also use the psychology of “fairness.”
Their psychological warfare begins with the fairness notion of “equal” (Idea “A”). They promulgate the belief that everyone should pay the same; the rich should pay no higher a percentage in taxes than do the poor.
This already is true of sales taxes, and the rich want it to be true of income taxes.
They call it “spreading the tax base,” or “tax reform,” and they say the poor should “pay their ‘fair share.'”
Then the rich portray themselves as “makers,” the people who create all the benefits of our economy, while the not-rich are demonized as the “takers,” the people who sit back and accept these benefits, while doing nothing.
The rich propagandize that it isn’t fair for them to produce, while lazy slackers consume. This is the notion of “Merit” (Idea “B”). But it goes further.
They rich convince, even those who are not rich, to resent “takers.” They use the unfairness idea to smear anyone receiving government benefits, so that they deserve no compassion.
Finally, the rich downplay the idea of need (Idea “C”), by saying charity should be personal, and should not be doled out by a powerful, dictatorial “Big Government,” aka the “Leviathan.”
To widen the gap between the rich and the rest, the rich have touched all the bases.
They have combined factual disinformation (taxes pay for federal spending, the federal debt is a danger) with psychological disinformation (“equality,” “makers” vs. “takers” and “Big Government” is a tyrannical Leviathan) to erect a bulletproof fort of deceit.
Yes, to narrow the increased gap between the rich and the rest, requires continual repetition of the economic and financial facts:
–Federal taxes don’t pay for federal spending
–The federal government never will have difficulty paying off its “debts.”
–Deficits are necessary for economic growth
But narrowing the gap also requires continual attention to the psychological facts:
—“Equality” is no more applicable to federal taxing and spending than it is to private wealth. If the rich want benefits and taxes to be equal, they should be prepared for wealth and income equality, i.e. a GINI ratio of 0.
—The rich, with all their tax breaks and sloth, are the real “takers,” while the poor and middle, who work America’s roads and factories, while struggling to support their families and educate their children — they are the real “makers.”
—Federal support for such social benefits as Social Security, Medicare, Medicaid, education and various poverty aids are not indicative of a tyrannical “big government,” but rather of a true friend, who gives freely and requires nothing in return.
To fight the lies, illogic and psychological a warfare of the rich, we must use not only the truth and logic about Monetary Sovereignty and wealthy bribery, but also the psychology of sympathy, empathy and compassion inherent in all of us.
We need to tell the full story.
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 higher, progressive tax rates on all forms of income. (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
Vertical gray bars mark recessions.
As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.