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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.
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Reader Ian Winograd alerted me to the fact that Stephanie Kelton has been chosen to be Chief Economist for Senate Budget Committee. This is great news.
As many of you know, Stephanie is Chair of the Economics Department at the University of Missouri, Kansas City. UMKC is the primary hub for Modern Monetary Theory, the sister of Monetary Sovereignty.
Presumably, Stephanie will have the opportunity to insert some reality into the government’s budgeting process, although she will be constrained by politics. To give you some idea, here are the people with whom she will deal.
This morning, I dropped Stephanie a note:
Hi Stephanie,
Wow! I don’t know how you made it happen, but I’m sure glad you did. Now, you’ll have a bigger, better chance to spread the truth.
Believe this 80-year-old man: It won’t be easy.
Many people go to Washington, filled with knowledge and faith, but then the political birds whisper in their ears — things like “To get along, go along,” and “The people can’t handle the truth,” and “It’s not politically possible,” and the not-so-subtle threat, “You can accomplish more on the inside than on the outside.”
And soon those well-meaning people sip the political drug, and gradually lose their principles, and themselves become part of the Big Lie.
I’m sure every Fed Chairman knows the truth. Some even have hinted at it. But the political birds convinced them to go along politically, and they gave credibility to the Big Lie.
I’m sure Eric Holder knew he should prosecute the banksters, but the political birds convinced him to go along. I’m sure George Bush knew torture is wrong, but the birds swayed him by political expediency. I’m sure at least some Senators know the facts of MMT and Monetary Sovereignty. But, the political birds convince them to stay silent.
There’s a funny thing about surrendering beliefs: It becomes easier every time you do it, and after a while, you barely can remember what your real beliefs are.
Anyway, you’ve fought long and hard to spread the truth. And now the opportunity has arisen and you’ll have a bigger megaphone.
I know you’ll do great things.
Much good luck to you. Let me know if I can be of assistance.
Rodger
Her response:
All good words. Thx, Rodger.
I suspect her job will resemble trying to reverse course on the world’s largest oil tanker, currently in full speed.
But . . . we can hope.
Rodger Malcolm Mitchell
Monetary Sovereignty
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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.
#MONETARYSOVEREIGNTY
#Monetary Sovereignty - Mitchell 
To demonstrate how difficult Stephanie’s job will be, go to the Budget Committee’s own web site, and you’ll see:
Yikes! Written by someone who has no understanding of Monetary Sovereignty.
To make a suggestion to the Committe, go here.
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On presumed new Senate Budget Committee Chairman Mike Enzi (R)-WY: “In addition to crafting the federal government’s budget, Enzi will push for another reform, his Penny Plan, in which he calls for a 1 percent cut of all federal spending to balance the budget in about three years,” his spokesman, Daniel Head, said.
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Of course, and specifically what would he cut? Mostly spending that benefits the 99%, I presume. The rich will do just fine, as always.
By the way, there actually are 2 Budget Committees, one Republican and one Democrat. Stephanie will work for the Democrat (although in truth, they are only a bit worse than the Republicans.)
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While Stephanie probably will not be able to influence politicians towards having free college education, medicare for all, or having Federal ownership of banks, she will be in a position to further the following concept from one of your recent posts:
“Federal spending is not limited by taxes, deficits or by debt. It is limited only by an inflation that cannot be controlled with interest rate increases.”
While I expect that statement would be met with ridicule, my hope is that it at least creates a debate. And in a debate, people will realize that there is no refutation to that factual statement. People can have different opinions, but they can’t have different facts.
Rodger, thanks for another great year of insightful analysis. Have a healthy and happy New Year.
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It’ll be interesting to see how long she lasts in dealing with the so called real world. Could be a good test of what happens when truth meets lie. I’m guessing her motive in taking that job is as Ian Winograd states,
“…in a debate, people will realize that there is no refutation to (the facts).”
She probably has all her ducks in a row and is ready to go nuclear. There’s no compromising, no in between, no gray area, with MS/MMT.
Show ’em yer stuff, Steph and try to be nice as you gently mow ’em down.
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I hope so, but I suspect Stephanie will have it rough. She better be prepared for the inevitable loons that will say, “Stephanie’s ideas will turn the US into a Weimar Republic or Zimbabwe”. She should tactfully deflect those comments and focus on the need for infrastructure spending, medical research and education spending.
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Hey, Ian,
You forgot to include Argentina and inflation. Can’t be a proper debt-nut without mentioning Argentina and inflation. 🙂
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From what I have read, it seems that, Argentina’s hyperinflation from 1975-1990 was caused by Federal spending in excess of what could be controlled by interest rates. The problem there was the country wasn’t able to collect any taxes.
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Dear Stephanie should at least be able to enlighten committee member Bernie Sanders on the superior facts of MMT/MS.
It is so frustrating that even progressive senators are being swayed by debt/deficit hysteria from right-wingers or the nutty claim that federal gov’t “should not be spending money it doesn’t have”.
Warren Mosler, Rodger Mitchell, and Randall Wray should be made economic advisers of president elect Elizabeth Warren.
And we may truly have a Happy New Year by 2017.
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I sure hope the committee does implement every single mmt/ms idea she can muster.
We will finally see mmt and ms for the lie it is. Just dont hold your breath, like keynesians, nothing done is ever enough. Next up, they didnt “spend enough”.
hypocrites….
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Perhaps you prefer: The joy of austerity
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Let me guess,
You can trace all the bad things in the world to reduced spending. Which, by the way, does not mean to spend less than the previous year. The whole “austerity” concept is a scam – this definition of “reduction” only applies to government spending. Humpty dumpty….
In Keynes and MMT/MS world, it just means to reduce the rate of spending, it does not mean the government will spend less than the previous year. So if spending went up by 20% the previous year and up by 15% this year (which means spending went UP) – you are part of the “austerity” club.
It’s amazing how easy it is to con the population to believe in ideas that will screw exactly them in the end. Just describe a world which will some day be paradise and they will bite. Perhaps not for ever, but for a long long long time. After all, Obama won 2 terms, the senate has been mostly democrat, and Stephanie Kelton just got a seat to the budget committee.
How can anyone think this lady’s job will be “hard”, she is a government spending lunatic and the government wants to spend more each year to appease their voters. All while the middle class gets decimated.
May this 2015 bring MMT and MS and the collapse of our economy with it, so we can get over this nonsense.
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With which of the “Ten Steps to Prosperity” do you disagree, and why? (“All of them” is not an answer. Be specific in your reasons.)
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@Yeso/Bum
Both of you couldn’t make a convincing argument against the superior reality and facts of Monetary Sovereignty so I guess your resort to name calling (lunatics, hypocrites) is just the natural impulse of someone who had come short of coherence and clear thinking.
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