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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.
Oh woe! Here we go again: The phony trade-deficit hysteria. Seldom has so much Henny-Penny, sky-is-falling BS been packed into one short article.
OpEdNews Op Eds 3/7/2015
Trade Deficit Drops To Enormous, Humongous Level In January
By Dave Johnson
The U.S. Census Bureau reported Friday that the January goods and services trade deficit was $41.8 billion in January, down $3.8 billion from $45.6 billion in December.
Since the neo-liberal “free trade” pro-corporate ideology took hold in the late 1970s the US has consistently run a trade deficit every single year, and it just gets worse. This literally drains our economy, jobs, wages, factories, entire industries and our ability to make a living as a country.
Rep. Alan Grayson Explains Trade Deficit Harm:
“Day after day, month after month, and year after year, Americans are buying goods and services manufactured by foreigners, and those foreigners are not buying goods and services manufactured by Americans.
“We are creating millions — no — tens of millions of jobs in other countries with our purchasing power, and we are losing tens of millions of jobs in our country, because foreigners are not buying our goods and services.
“What are they doing? They’re buying our assets.
“So we lose twice. We lose the jobs, and we are driven deeper and deeper into national debt — and, ultimately, national bankruptcy. That is the end game.
“That’s why we have the most unequal distribution of income [among all industrial nations] in our country, [and] the most unequal distribution of wealth in our history.
“Let’s not only have a trade policy. For once, let’s also have a trade deficit policy.
“Let’s deal with the reality that has robbed the American Middle Class now for decades. Let’s address it, and let’s defeat it. That’s what I’m calling [for], right now.
“Let’s stop digging deeper. Let’s raise ourselves up, let’s climb out of this hole, and rebuild the American Middle Class. Thank you very much.”
First, let us dispense with the notion that a trade deficit is harmful and that a trade surplus would be better. We wrote about this myth way back in 2009:
The China trade deficit myth Thursday, Nov 19 2009
A trade deficit is an example of one country devoting great effort to creating scarce materials for another country in exchange for something that requires no effort by the other country.
In that sense, China is our servant. They work, sweat and strain and use their valuable resources to create and ship to us the things we want, while we, hardly lifting a finger, ship dollars to them.
Who has the better deal?
As readers of this blog know, the federal government creates unlimited dollars at the touch of a computer key. It does so by sending instructions to its creditors’ banks, telling the banks to increase the balances in the creditors’ checking accounts.
That is how the federal government pays its bills.
At the instant the banks comply with these instructions, dollars are created — yes, created from thin air. That is the reality of Monetarily Sovereign finances.
It is possible (and commonplace) for the U.S. to run short of various food items, various ores and various manufactured items. It even is possible for us to run short of labor. But it is absolutely, positively impossible for us to run short of dollars (unless Congress demands “debt limits”).
When we run a so-called “trade deficit,” we receive goods and services that may be in short supply here, and in exchange we send U.S. dollars, which are in infinite supply to us.
When we receive more goods and services than we send, why do we call it a “trade deficit,” when receiving more than we send really is a “trade surplus“?
As for “robbing the American Middle Class,” this is the old, “Blame the opposition for your own crimes” ploy. Nothing has done more to rob the “American Middle Class” than the Congressional programs to cut federal deficit spending.
The vast majority of federal spending benefits the middle and lower income/wealth/power groups. From Social Security to Medicare to Medicaid to all the poverty aids to federal construction projects — federal deficit spending benefits the very people Rep. Grayson pretends to love.
So Congress increases FICA (the most regressive tax in U.S. history), while forcing the states, counties and cities to rely on sales taxes (the 2nd most regressive taxes in U.S. history). Meanwhile, Social Security benefits have decreased and many programs benefiting the poor and middle classes cut — and all the while, Congress proclaims its everlasting affection for the “American Middle Class.”
Does it get any phonier than that?
And as for the loss of dollars involved in a “trade deficit,” here’s a very, simple solution:
Every quarter, the federal government should replace the trade deficit. It should send the amount of the trade deficit to the American consumers, dollar for dollar.
It could be in the form of mailed checks — something resembling the very first stimulus attempt in 2008. The result: Consumers would continue to have spending money, businesses would continue to thrive and hire employees, and at long last, Congress could stop blaming China for its own mistakes.
And as for Rep. Grayson’s “concern” about the loss of jobs, if the above-mentioned checks don’t replace enough lost income, the federal government simply should buy more goods and services from American suppliers.
Spend more on roads, bridges and dams, more on schools and teachers, more on R&D, more on building things, creating things, discovering things. There is no limit to the goods and services the federal government can buy.
Or very simply, begin to institute the “Ten Steps to Prosperity.”
1. The thing we misname “trade deficit” actually is a “trade surplus,” and is a benefit to the U.S.
2. Congressional “cut-the-debt” policies, not the so-called “trade deficit,” are responsible for the loss of jobs and the widening of the Gap between the rich and the rest.
Congress has failed to help the “American Middle Class,” but Congress is very good at two things:
— Spouting the Big Lie
— and pointing fingers of blame.
Rodger Malcolm Mitchell
The 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. Federally funded, 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)
Initiating The Ten Steps sequentially 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.