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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.
Robert Bostick just published in OpEd News, an article that truly has stunned me: Here are a few excerpts:
In late Dec, 2014 House Speaker John Boehner and the troubled Majority Whip and other House leaders met behind closed doors with a delegation from the U.S. Chamber of Commerce and to lay out what should and should not happen during the upcoming 114 th Congress.
While they provided key talking points to the media for CYA purposes, there was a major discussion on budget, monetary and fiscal policy and only a small portion was released for public consumption; no more budget ceiling games by far right proponents of ideologically foolish obstructionism..
“Our No. 1 focus is to make sure, when it comes to the House and Senate, that we have no loser candidates,” said Scott Reed, the top political strategist for the U.S. Chamber of Commerce, told the Wall Street Journal. “That will be our mantra: No fools on our ticket.”
Now that would be refreshing, but bad news for Louis Gomert, John Boehner, Steve Scalise and the rest of the right wing idiot patrol.
And that doesn’t even get into all the FOX news crazies, the Republican governors who refused the Medicaid upgrade that would have pumped billions into their states, and on and on and on. The party is loaded with fools. (See: This Week In Crazy.)
“The Speaker, and the entire leadership team, urged all House Republicans to support the [budget] agreement, which ignores the deficit and eschews raising taxes,” said Boehner’s spokesman, Michael Steel.
This sharp turnaround is notable, first, because it signals to the rest of Washington that Republicans have spent too much time on ideology instead of legislation. Second, they have something else brewing, since they’ve written off whining about deficits and spending.
That ‘something else’ is contained in a brief prepared by the COC informing the House leadership that continuing to harp on the need for spending cuts during a recession will have serious consequences for campaign strategy leading to the 2016 elections.
Remember that despite its government-sounding name, the U.S. Chamber of Congress is, and has been, the mouthpiece for the rich, right wingers. This is the same COC that published on the COC website the following:
“It is the role of the government to responsibly manage our nation’s finances so that: we have the resources to invest in priorities that are essential to our national security and competitiveness; we can provide a sustainable safety net for the sick, elderly, and poor without depleting all of our other financial resources; and we can ensure that future generations aren’t saddled with debt they didn’t incur.
“In order to meet those obligations, the Chamber is calling for government reforms that will address the looming crisis of unsustainable entitlement programs, keep deficit spending low for the long-term, and rein in our growing debt.”
That was then. This is now. Everything has changed. According to the Bostick article:
The COC, warned that there are elements in the public prepared to totally discredit any candidate who continues to deny the need for Federal Public Sector spending when consumer demand is now marginal and which would alleviate deteriorating economic and social conditions for more than one third of Americans.
WHAT??! Suddenly the people who want to “keep deficit spending low” and “rein in our growing debt,” have become aware of the “need for public sector spending?
And these right wingers, formerly concerned about the phony “problem of “future generations saddle with debt, now are more worried about deteriorating economic and social conditions for more than one third of Americans.”
Can you believe it? Why the change? If you wonder why, it’s because those “elements in the public” finally might learn that all these years, the Republicans have been lying, lying lying — the Big Lie.
COC warns that ” .. soon, Republicans will be challenged to explain why they insist on telling America that it can’t afford to spend when it knows that there are no real constraints when inflation is low and unemployment so high …”
Buried in the document was this, “More and more academics on both sides of the political divide have grudgingly, accepted the fact that the Federal Government can no longer operate as it did under the gold standard. Fiat currency is here to stay and because it can be spent without reference to revenues, Congress will be blamed for not appropriating to serve the needs of all Americans.”
OH MY GOD! The Republican Party suddenly has joined the Monetary Sovereignty school of thought.
Their fear is that economic facts will trump religious, right-wing, economic myth, and the people will find out.
It continued, “Ironically, if Congressional leaders publicly acknowledge this fact, the public will question the need for Federal tax revenue.
Any response will need to be truthful but carefully parsed to avoid outcries of misleading the public and indeed distorting the facts on the need for austerity.
Yes, indeed. The public will question the need for Federal tax revenue — as in: There is no need for Federal tax revenue. Ah, what a revelation.
And here is the best part of all. I hope you’re sitting down before you read this. COC said:
“We advise all members to become familiar with the concept of Monetary Sovereignty, so that they can begin to develop appropriate responses for media and constituents.”
As Victor Hugo said: “Nothing is stronger than an idea whose time has come.”
The time for Monetary Sovereignty has come.
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.
21 thoughts on “–It takes a lot to stun me . . . but I’m stunned. And you will be, too. Really.”
I wonder who got through to them that they were all wrong about economics?
Some influential people have seen what you write and as we know Stephanie Kelton has just been appointed to chair a budget Committee related to Congress.
I expect now we might be lucky and get a domino effect across the world. God knows Europe could do with it as well as the clowns in charge here in Australia, a mob of economic idiots if ever there were.
Lets hope someone isn’t pulling your leg!
Hi Roger, I hate to break it to you but this is a satirical article. Robert Bostick is an MMTer-Sorry 🙂
No wonder I was stunned. Perhaps it was a case of wishful thinking. Actually, I tried to contact him, but couldn’t find any contact info. I should have worked harder.
The problem with satire: It’s only funny when written by a pro. Amateurs simply post wrong information and later claim it’s “satire.”
I’ll keep Robert’s penchant for “satire” in mind, the next time I see his name on an article.
Hey, maybe I can claim my post is satire: Think that would work?
There are a few giveaways that the document is fiction. First it is referred to as “closely held, leaked.” That means one could not find it on the internet. Also, the sentence, “there are no real constraints when inflation is low and unemployment so high”. That phrase would not be used with the unemployment rate at 5.8%. And no politician would say there are “no real constraints”. Perhaps one might say that there are fewer constraints.
So illogic is evidence of satire? That makes Congress and the President the funniest people on earth.
Not satire, “fiction” – and not that, either, literally. It’s a lie, and illogic is a clue to that, as I’m sure you will agree.
Well, lets see if it can be made to work! Contact Mr Steel and the COC for comment and tell them what marvellous news it is [or would be] and how it would provide a platform for elimination of all corporate taxes. They would love that! Hide that it’s satire for now.
The article may be wishful thinking but it’s not satire. RB has other articles demonstrating a genuine understanding.
“Think about this!
For 41 years we have believed, and our “leaders” have led us knowingly or unknowingly to accept, the road signs proclaiming, “Your Federal Taxes at Work.”
If you could create all the currency you needed to fund whatever you needed, why would you have to raise revenue through taxation? You wouldn’t. Moreover, you’d have to spend your currency/dollars first, before you could tax or borrow.
So why does the Federal government tax? It taxes to manage spending, in other words to control inflation and deflation. That’s it. It borrows for the same reason. They’re automatic stabilizers. However, there’s a real downside during recessions which our erstwhile leaders don’t understand. The more they tax the more likely the economy will fall into recession and deflation. However, once full employment is achieved it may be necessary to resume income taxation to cool off a hot economy.”
It’s not humorous, so, if it’s an attempt at satire, it’s a weak one. Time will tell us what it is.
There are serious problems with using taxes to control inflation:
1. Too slow. Visualize waiting for Congress to decide on which taxes to raise, if were beginning to have inflation. Congress and the President would dither for months, while inflation ran rampant.
2. Too imprecise. Whose taxes would one raise and by how much? This is all political, not economic.
By contrast, the Fed can raise interest rates instantly, in large or small increments as needed, and without political interference.
There are answers to both your objections.
First, Congress should delegate the power to adjust the tax, as they have delegated the power to control interest rates, to a board that operates similarly to the Fed, meeting periodically and adjusting the tax rate or not.
Second, the tax to be adjusted should be a low-rate tax on business gross receipts. Since it is demand (spending) to be controlled, that is what should be taxed. This tax at about 6% could replace both corporate income taxes and FICA.
In the unlikely event the rich would allow an unbribable body to adjust business taxes, how would that work? I.e., would an increase in business taxes be anti-inflationary or recessionary?
They are markedly different, as the existence of stagflations has demonstrated.
Stagflation is difficult under any policy regime. It only happened in the US during the oil supply constraint, so based on that I would lower the tax, not raise it. High oil prices are the cure for high oil prices, most especially now.
Interest rate increases raise the deficit which is inflationary. Depending on the amount of outstanding TSY securities, it could significantly increase the deficit.
The tax response is simple. Have a low, flat tax on wages (like FICA), and adjust quarterly if necessary. Much more direct and powerful than the weak and complex interest channel.
“Interest rate increases raise the deficit which is inflationary.”
The Fed successfully has controlled and cured inflation by raising interest rates.
Raising interest rates “strengthens” the dollar, by increasing the demand for the dollar — proven to be anti-inflationary.
A flat tax on wages is about as recessive a tax as one could imagine. Do you propose widening the Gap between the rich? That’s what a flat tax (like FICA) does.
You have no evidence for the belief the Fed controls and cures inflation using interest rates. Demand for dollars is infinite, money is not like every other commodity.
If outstanding TSY securities were 300% of GDP ($50 Trillion), a 5% increase in the FFR would eventually lead to a $1.5 trillion increase (almost 10% of GDP) in deficit spending. Its actually silly that you think interest rate increases always combat in flation.
Yes, rodger broad based taxes on wages are the only way to combat inflation from too much spending. No I dont propose widening the gap.
Dollar vs. interest rates
Auburn, what about treasury securities owned by the Fed? How does interest paid on them, and refunded to the Treasury at the end of the year, affect the economy? Why do you assume that all of that 300% are not owned by the Fed, when a considerable portion of the existing 100% is owned by the FED?
Rising interest rates don’t affect interest payments on outstanding treasuries, only new issues.
The tax should be on spending, not income (production). FICA is an abomination, and should be repealed. It is never a good idea to discourage employment by taxing it. A 6% or so tax on business gross receipts should replace FICA and the corporate income tax.
Did the rich cease to exist? Are they no longer interested in controlling politicians to lie to the public?
I mean, Republicans are now on board and even people like Kelton are getting into high ranking positions…
Something tells me that the MS story is the lie, but time will tell. The truth is that federal spending = higher taxes. No, not the payroll tax you are so used to, the devaluation tax you can’t see. But not to worry, we will come crashing to earth soon. See you here suckers….
“The truth is that federal spending = higher taxes.”
Please refer us to your historical evidence for this claim (knowing you have no evidence and will not answer the request).
The historical record is that both have risen more or less monotonically at least since the end of WWII.
And the theoretical story is that more spending gooses the economy, leading to higher tax collections.