–A tale of two nations: Japan and Greece

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Mitchell’s laws:
●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

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
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. (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.

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 growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.


10 thoughts on “–A tale of two nations: Japan and Greece

    1. Not really, otherwise there would not have been a “a planned sales-tax increase.”

      Ignoring is ignoring, like not paying any attention to.

      Like, not even the least bit concerned about.

      Like what people should do when they hear someone say, “The federal debt is too big, so we have to raise taxes or cut spending..”


    2. Gotcha,

      So Japan has been using your medicine, ignoring the debt, and their deficits have increased about 4 fold – or 400%. With all of that spending, their economies has never increase – with the exception of a few minor spurts. 25 years of more spending later and you still think that more spending is what they need. Speechless….

      What you seem to be getting ready for is a crisis in Japan. I can see now – “see, I told you they should spend – now they have a crisis because they didn’t spend enough”. Yet the truth is that their 25 years of drunken sailor spending is exactly what caused the crisis.

      It’s coming Rodger – and the reason is because of what you prescribe – more deficit spending.


      1. The ever dependable Yeso “thinks” Japan’s economy would have improved with austerity.

        Japan’s problems go much deeper than deficits. They have to do with taxes, banks and bank debt. But I know it will be hopeless to explain it.

        Yeso, please sent me $1,000 for the bridge I will sell you.


          1. No slam on you, Rodger. Thought you were simply mocking “yeso” who continually commits run-on sentences, grammatical errors and numerous typos.


      2. Debt is needed to support savings (we can’t save without someone or the Govt taking on debt). So how does debt compare to Japans savings needs? I would guess well short.


  1. Those who still don’t understand Monetary Sovereignty, QE and the effects of austerity (i.e. the Japanese government), should read this article: Why is Anyone Surprised that Abenomics Failed?

    The whole think is quite simple:

    1. Contrary to popular belief, and what central banks claim, QE does not add any money to an economy. In fact, by reducing the amount of government interest paid into the economy, QE subtracts money from an economy. So QE is recessive.

    2. Taxes subtract money from an economy. So, taxes are recessive.

    3. A Monetarily Sovereign government never can run short of its own sovereign currency, so never needs to tax and never needs to borrow. But if it does foolishly borrow, the (Click) GDP/debt ratio is meaningless.

    4. Japan’s (and America’s) austerity is not the result of ignorance. It is intentional, to widen the gap between the rich and the rest.

    See? Simple.

    Rodger Malcolm Mitchell


  2. Great Post Rodger:

    I’ve been putting it like this lately:

    These forces are all deflationary:
    Population growth
    Productivity growth
    Net Imports

    So the money supply needs to grow at least as fast as these combined forces just to avoid deflation. So all one needs to do is look how Japan scores on these 4 forces to understand whats going on wrt inflation.

    Japan has:
    no population growth
    good average productivity growth
    Is a modest Net Importer
    Which means Japan’s savings desires are off the chart high, there’s nothing wrong with that, it just means a higher Govt deficit than otherwise.


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