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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.
Thank you to reader Ian Winograd for sending us a youtube, 5-minute video about a Canadian court’s ruling that the Canadian government must issue “debt-free” money.
Technically, there never is, and never can be, “debt-free” money, since every form of money is, and must be, a form of debt.
But, that minor semantic caveat aside, the video is important — very important — for two reasons:
1. The Canadian government presumably will issue Canadian dollars without also issuing treasury bonds, notes and bills, i.e. “debt.”
2. The Canadian government wishes to hide this from its citizens.
The Canadian government, like the U.S. government, is Monetarily Sovereign. It has the unlimited, legal ability to create its own sovereign currency, the dollar.
Having that ability, the Canadian government never needs to ask anyone for Canadian dollars. It doesn’t need to collect taxes from its citizens. It doesn’t need to borrow Canadian dollars from foreign nations or from anyone else.
It creates dollars dollars, ad hoc, by paying bills. The Canadian government never can run short of Canadian dollars, with which to pay its bills. Never.
When Canadian dollars were backed by gold, it was possible for the Canadian government to run short of gold, which would have meant the government would have had to borrow dollars or levy taxes, in order to pay its bills.
But Canada went off the gold standard on April 10, 1933, and since then has had the unlimited power to create unlimited dollars, without borrowing or taxing.
The Canadian government, like the U.S. government, hides this fact from its citizens.
It continues to tax. It continues to issue debt instruments (i.e. “borrow). Its leaders continue to pretend Canada is monetarily non-sovereign, just like cities, provinces, businesses, you and me.
This pretense leads to the imposition of austerity, i.e. limiting deficits so as to appear “fiscally prudent.”
Unfortunately, austerity is the exact opposite of fiscal prudence for a Monetarily Sovereign government. Austerity limits economic growth by either increased taxation by reduced federal spending — or by both.
A formula for Gross Domestic Product is:
Gross Domestic Product = Federal Spending + Non-federal Spending
Mathematically, limits on federal spending or tax increases limit GDP growth. But, by pretending federal government finances are like personal finances (where spending must be limited), the government imposes a damaging austerity.
Why would the government pretend austerity is fiscally prudent?
At this point you may be wondering, “Why would the government do that? Why all the battles about debt and deficit?”
It has to do with the question, “To whom does the government answer?” Not to you. Not to me. Not its voters. Every government on earth answers to its very rich: The upper .1% income/wealth/power group.
The word “rich” is not an absolute; it is a comparative. If your total wealth were only $1,000, you would be rich if everyone else on earth had only $100.
You would be very rich, if everyone else had only $1.
It is the Gap, between the rich and the rest, that makes the rich rich, and the wider the Gap, the richer they are. So, the primary goal of the rich is not just to increase their own incomes, but perhaps more easily, to decrease the income of those “below” them.
Most federal deficit spending benefits the non-rich more than the rich. In the U.S., Social Security, Medicare, Medicaid, food stamps, aids to education and housing — even road building and other infrastructure efforts, all benefit the 99.9% more than the .1%
Further, such taxes as FICA and sales taxes, punish the 99.9% far more than the upper .1%.
Austerity hurts the rich much less than it hurts the rest. So, reductions in Federal deficit spending tend to widen the Gap.
If the people were informed that federal government finances are not like personal finances, and federal deficits and debt are neither a threat nor burden, and federal taxes do not fund federal spending, the people would demand more federal deficit spending and the reduction of regressive taxation.
The people would understand how the Gap should be narrowed, and that is something the .1% does not want.
So the politicians are bribed via campaign contributions and promises of lucrative employment later. And the media are controlled by rich ownership. And the university economists are controlled by rich donors to the universities.
All the rich conspire, via control over the politicians, the media and the economists, to brainwash the people into believing that harmful austerity actually is prudent.
Go to any website that discusses the economy, and you will see comment after comment, bemoaning the federal debt and deficits, comment after comment incorrectly referencing Weimar, Zimbabwe and Argentina as “proof” that federal spending, causes not just inflation, but hyper-inflation. (Though the hyperinflations in those nations were not caused by excessive deficits, and despite the fact that the U.S. never has had hyperinflation, despite large deficits.).
In fact, if you even suggest that the deficit be increased, people will pelt you with angry slurs, as though you are trying to steal from them rather than help help them, so brainwashed are they.
Now, Canada may or may not eliminate the ridiculous, harmful issuance of phony “debt,” depending on what its Supreme Court says. I don’t know the makeup of its Court. But if it is like ours — dominated by supporters of the rich — Canada will fall back into its “apply-leeches-to-fight-anemia” austerity, that will continue to widen the Gap.
But in the unlikely event the Court actually agrees with the elimination of “debt-money,” watch the politicians, media and university economists world-wide create a cacophony (with the emphasis on “phony”) of cries about inflation.
It will be their last desperate attempt to keep the 99.9% down and widen the Gap on behalf of 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.