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●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
●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.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
Here is a short tale of two nations: Japan and Greece have similar symptoms, different problems, the same cause, and different solutions.
Japan is Monetarily Sovereign but refuses to acknowledge it. Greece is monetarily non-sovereign, and refuses to acknowledge it.
Japan is sovereign over the currency it uses, the yen.
Greece is not sovereign over the currency it uses, the euro.
Here is Japan’s tale:
Japan’s Warning to the World
Bloomberg View Editors
Japan’s renewed descent into recession — its sixth in the past two decades — comes with an urgent if obvious warning to the U.S., Europe and the rest of the developed world: Don’t let this happen to you.
Prime Minister Shinzo Abe was right to postpone a planned sales-tax increase, but there’s only so much that fiscal policy can do in a country with a giant government-debt burden.
It’s not really debt and it’s not a burden. It’s the total of deposits in bond accounts at Bank of Japan (Japan’s central bank).
The so-called “debt” could be paid off tomorrow, simply by transferring yen from bondholders’ bond accounts at the central bank to bondholders’ checking accounts at private banks. No new yen needed. (And even if new yen were needed, Japan could create them at will. It is sovereign over the yen.)
And as for a sales-tax increase to help grow an economy . . . does anyone really accept the Big Lie that tax increases are stimulative or even neutral?
Japan’s ill-timed effort to balance its budget with a consumption-tax increase in 1997 sent the economy into recession . . .
The only people surprised by this are the middle- and lower-income groups, who have bought into the GDP/Debt “problem” being spread by the rich (whose goal it is to widen the gap between the rich and the rest.)
Government spending programs in the U.S. and Europe have fallen short of what the International Monetary Fund says is needed to reinvigorate growth.
Absolutely true, but consider the source. This is the same IMF that preaches reduced deficits (aka “austerity”) as a prevention/cure for recessions.
And now we come to monetarily non-sovereign Greece:
Greek Strike: Thousands Protest Austerity Cuts As Services Shut Down
AP | By ELENA BECATOROS
Services across Greece shut down Wednesday as unions staged a 24-hour general strike and held peaceful demonstrations to protest further austerity cuts in the cash-strapped country.
Greece has been surviving on international rescue loans from the International Monetary Fund and other European countries that use the euro since 2010, after a combination of dismal financial stewardship, loss of investor confidence and the global recession brought it to the brink of bankruptcy.
Successive governments have passed repeated rounds of deep spending cuts and tax hikes to secure 240 billion euros ($324 billion dollars) in bailout loans.
Being monetarily non-sovereign, Greece is just like you and me. It cannot spend more than it has, borrows or earns via trade surpluses. The Greek government cannot create euros.
Like Greece, you are monetarily non-sovereign. If your spending exceeds your earnings, what is your solution? More and more and more borrowing? Any normal person would say that is ridiculous. But the EU and the euro nations are not normal.
Their solution to recession is: Borrow more; tax more; spend less — in short, impoverish the economy.
The strike is taking place as the government holds talks with debt inspectors from the IMF, European Central Bank and European Commission, known collectively as the troika, over what measures are needed to plug a budget gap next year.
At stake is Greece’s next bailout installment of 1 billion euros.
Got it? They need to reduce their debt (by taking euros from the public), so they can borrow more.
Visualize owing a loan-shark $1,000. You can’t afford to pay him and pay your other bills too, so he talks you into borrowing an additional $1,000. Now, you owe him $2,000, which you can’t afford to pay.
That is how the EU and Greece operate.
Japan and Greece have similar symptoms, different problems, the same cause, and different solutions.
Symptoms: The symptoms for both are sick economies.
Problems: The problem for Japan is: Denying its Monetary Sovereignty
The problem for Greece is: Not having Monetary Sovereignty
The cause: The cause for both is the Big Lie told by the rich, to widen the Gap between the rich and the rest.
Solutions: The solution for Japan is to cut taxes, increase spending and ignore the debt.
The solution for Greece is to become Monetarily Sovereign by re-adopting their own sovereign currency, or become part of a financial union like a United States of Euro.
So long as the people of Japan and Greece (and all other nations) are ruled by economic ignorance, they also will be ruled by the rich.
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. (Refer to this.)
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.