Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell
Mitchell’s laws:
●Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
●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.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
Today, October 29, 2014, reader Ian Winograd wrote:
Off topic, but here is something of interest:
http://www.cnbc.com/id/102132053
“Moody’s reported on Wednesday that the U.S. government’s current fiscal position remains healthy but if there aren’t policy changes, there will be long-term risks from social spending that could affect the nation’s credit standing.Spending, especially for Medicare and Social Security programs, will cause a rise in future deficits and debt levels toward the end of the decade, Moody’s said. An aging population will contribute to rising cost and demand for health-care services.
The report called for additional revenue, which could be realized from a higher-than-expected U.S. economic growth rate or policy changes such as an increase in Medicare premiums and co-payments.”
So Moody’s is going to lower the credit rating of a monetary sovereign nation, fearing that the US won’t be able to pay its bills.
This is the same company that gave A+ ratings to mortgages given to people with no jobs, no incomes and no assets.
My response was:
During and after the Great Recession, the credit agencies gave higher ratings to some monetarily non-sovereign euro nations and to many corporations (all of which are monetarily non-sovereign), than they gave to the U.S. government.
These agencies are owned by the rich, and their clients are the rich. The rich hate government spending, because most government spending benefits the middle- and lower-income groups.
And, of course they hate progressive income taxes (but love regressive FICA and sales taxes), because the rich pay “too much.”
In short, the credit agencies are paid to widen the Gap between the rich and the rest. And the management of Moody’s either is ignorant of basic economics, or they are criminals doing the bidding of the rich — and I doubt they are ignorant.
Moody’s is not the only “ignorant or criminal” rating agency. Take Standard & Poors (please):
Standard & Poors rates the following euro nations AAA: Austria, Finland, Germany, Luxembourg. It rates the euro nation, the Netherlands, AA+
All euro nations are monetarily non-sovereign, meaning they have no sovereign currency. They use an “alien” currency, the euro, over which they have no control. They can run short of euros.
They all rely on taxes and net exports to provide sufficient euros. If taxes and/or exports decline, they could be unable to pay their bills.
By contrast, the U.S. government is Monetarily Sovereign. It is sovereign over its currency, the dollar. It never can run short of dollars. It pays all its bills by creating dollars, ad hoc.
Even if all taxes fall to $0, and net exports remained below $0, the federal government will be able to pay its bills forever. Despite recessions, depressions, wars, inflations, stagflations and epidemics, no federal check ever has bounced. There is no need.
S&P rates the federal government AA+, below Austria, Finland, Germany and Luxembourg, and equal with the Netherlands.
Fitch, the 3rd large rating agency, provides equally “ignorant or criminal” ratings.
But, that is not the worst of it.
Here are three corporations (corporations!)rated AAA: Microsoft, Exxon Mobil, Johnson & Johnson. They all are monetarily non-sovereign. They cannot create money, because they have no sovereign currency. The rely on net sales and borrowing, to pay their bills.
Yet, these corporations are rated higher than the U.S. federal government!
Apple, with an AA+ rating, supposedly is as credit-worthy as the United States. And if you believe that, surely you will want to buy my bridge going to Brooklyn.
So what do you think? Ignorance or criminality?
Rodger Malcolm Mitchell
Monetary Sovereignty
===================================================================================
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. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————
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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.
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.
#MONETARYSOVEREIGNTY
#Monetary Sovereignty - Mitchell 
We have a senate candidate out here in Iowa running on our (USA) need to “live within our means.” Lots of people say this. It sounds responsible, down to earth and realistic. What’s good for the all the 300 million geese is good for the USA gander.
I don’t know how long it’ll take for everyone to understand MS, but self limiting thinking based on inadequacy of funding (scarcity) is a big hurdle. We didn’t think much of climate change at first but it’s finally taking hold because it’s effects are visible and solutions are available thanks to solar, wind and hydroelectric “design” alternatives.
Such material technology does not exist to augment or back up the concept of monetary sovereignty. MS is an idea without physical invention “design” capacity. How do we solve this other than plugging away with blogs trying to educate? What can we hang our hat on? What is the MS/MMT widget/design we all can relate to like cars, umbrellas and computers? Is it not just a numbers game?
LikeLike
I wish I knew. I’ve been trying to help people understand the simplicity of Monetary Sovereignty for more than 15 years.
Here’s the “best” I can come up with:
Imagine a game like Monopoly, except call it “Sovereignty.” It has different rules from Monopoly:
Rule #1: I am the banker.
Rule #2: I keep a record of everyone’s money on my computer.
Rule #3: Whenever I want to pay any bill, I am allowed simply to add Sovereignty dollars to my account — as many as I need.
Rule #4: Meanwhile, I periodically deduct dollars from your account. That is called “taxes.”
Now, let’s play!
LikeLike
Non sovereign Kansas is balancing their budget by cutting taxes and spending.
Now according to MMT they are doing the right thing in trying to live within their means. But are they doing it the MMT way?
There is also a US city that has supposedly privatized it’s services, i can’t remember the name, and are claiming excellent results
LikeLike
Kansas is your example?? Yikes!
Read THIS.
Anyway, a monetarily non-sovereign entity, like you and me, has to live within its means.
Kansas cut its income and cut its spending. That is like you deciding to quit your job and live in the street.
LikeLike
Right it’s my example of doing it wrong 🙂 But what’s the MMT way? Is it increasing exports? Making some cuts in spending and raising taxes on the rich? What do you suggest?
Thanks for everyone’s input
LikeLike
Each state has different assets and liabilities. For most states, cuts in spending are self defeating, as they reduce taxes, hurt the economy and punish the poor.
So, tax increases on the rich plus programs to increase income (via tourism) may be necessary.
Of course, the best approach would be for the federal government to give each state a per capita benefit.
LikeLike
Rodger said it best, here:
” the American states, which also are monetarily non-sovereign. While they too, cannot control their money supply, they do have a source of dollars: The federal government.
When the federal government spends dollars domestically, it adds those dollars to the money supply within states (and when people pay taxes to the federal government, this reduces the money supply within states).
The long term survival of any monetarily non-sovereign government requires money coming in from outside its borders. Germany survives by exporting (i.e. importing euros). The American States survive by having a positive balance of payments with the federal government.
The larger the federal domestic deficit, the healthier are the states. The economic formula is: Federal Deficits + Net Exports = Private Saving..”
LikeLike
(Hard to see, but that last line contains a PLUS sign, not a minus sign)
LikeLike
“With public employee unions under attack in states like Wisconsin, and with cities across the country looking to trim budgets, behold a town built almost entirely on a series of public-private partnerships — a system that leaders around here refer to, simply, as “the model.”
Cities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.” Sandy Springs,Ga
This is an example of the wealthy earning money in one city and spending it another.
LikeLike
Just because people are in positions of power doesnt mean they are necessarily intelligent. And even if they are intelligent, their knowledge will be limited (sometimes very much so). For instance, just because Neil Degrasse Tyson is great at astrophysics, doesnt mean he knows shit about economics and accounting (I am a regular listener of his StarTalk Podcast). So the barriers on the knowledge and intelligence front alone are daunting.
Then add in all we know about human psychology, cognitive biases, peer pressure, groupthink etc, and its very understandable why people have so many economic views that are contrary to reality.
And on top of all this, add on the bribery and corruption and the task seems downright insurmountable. Its certainly not all bribery though.
How many otherwise intelligent people nonetheless believe in religion, even though everything about religion is the exact opposite of reality. The conventional household budget thinking of the public is very similar. It can be done, it just takes time.
LikeLike
“Kansas cut its income and cut its spending. That is like you deciding to quit your job and live in the street.” RMM
And who gets to keep the revenue funds that Kansas doesn’t collect? Not sure about you – but I’d sure like to be one of them.
And to think that Liberals are making a big deal of Kansas decrease in revenues… Who would think that would ever happened if you lowered taxes? Genius…
About the rating agencies…
First off, in my opinion – these agencies should not be in business. They are in fact in business because of government regulations. So thank the same government for the same reason.
Further, to say that they are unethical because they are giving the US a low rating is criminal. Keep in mind that these were the same rating agencies that were rating everybody as AAA prior to the 2008 crisis. Lehman and AIG were rated AAA right before the collapse began. Now they are criminal because they lowered the credit rating of the US?
I’ll tell you what’s criminal. It’s criminal to bully the agencies just because you are the government – like the Obama administration and France did. That’s criminal. Giving companies and governments a free pass like they were doing prior to 2008 is criminal.
Or would you prefer the downgrade after the US collapses like Lehman in 2008. And please save this nonsense about sovereignty – you don’t believe that either. The corporations you mentioned have solid businesses in solid industries and have goods/services that will maintain their value irrespective of how much the government destroys the currency. So heck yes they should get a higher rating. The agencies for once are actually doing their jobs.
LikeLike
Ignorance or criminality? If criminal, it’s still legal so it’s really not criminal. If ignorant then ignorance of the law is no excuse. But the agencies aren’t ignorant. They know what they can get a way with. So they’re legally immoral and unethical but not illegally immoral/unethical.
As for corporations rated higher than the U.S. federal government, that’s inconsistent to say the least. I compare the raters (raiders) to judges, a minority with too much inconsistently applied power in a so-called democracy. We the people end up taking the hit by the goal post movers.
LikeLike
‘who gets to keep the revenue funds that Kansas doesn’t collect?
The upper 20% (of Kansas taxpayers) gets to keep the revenue. That was the intent all along. Most of the 2012 Kansas “tax cuts” for the richest Kansans were offset with tax increases for the bottom half of Kansans via the loss of tax credits, the loss of food sales tax rebates and an actual increase in sales tax as a share of income.
Purposeful loss of revenue allows the rich to become richer, by “forcing” reductions in spending on those things that benefit the middle class and poor most-primarily healthcare and education.
Wait a minute! There’s always plenty of money for rich in-state and out-of -state political contributors. (Think KOCH) and their wealth gap increasing pet projects at both the state and national levels.
LikeLike