–The Detroit solution is the answer for all of America

Twitter: @rodgermitchell; Search #monetarysovereignty
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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.
==================================================================================================================================================================

The Detroit we now know, is melting, melting away. There is a solution.

The Continuing Depopulation of Detroit

The latest perversity Detroit officials are inflicting on city residents: the potential eviction of tens of thousands, possibly as many as 100,000 people, all at precisely the same time.

Those (residents who didn’t pay their past due property taxes), the city warned, would lose their homes to tax foreclosure, the process by which a local government repossesses a house because of unpaid property taxes.

Just over 60,000 homes, about half of them occupied, are slated for the auction block.

Mary Crenshaw had come to save her family home in Highland Park, a small city enclosed by Detroit whose once occupied homes sported oak floors and beveled glass windows.

Now, more than half of them are empty, lawns overgrown, windows boarded up, the former homeowners having already ridden earlier foreclosure conveyor belts out of the neighborhood.

This current tax foreclosure crisis comes right on the heels of the city’s last great displacement: the 2008 housing crash, which descended on Detroit like a tidal wave, sweeping nearly a quarter of a million people out of the city and leaving in its wake tens of thousands of vacant properties.

The fact that the city is now threatening to evict a seventh of its remaining inhabitants in a single year, all because of unpaid property taxes, seems like an absurd proposition until you begin to connect the dots: the mass water shutoffs, the shuttering of dozens of public schools, the neglect of fire hydrants in particular neighborhoods, and now this deluge of foreclosures.

For the city’s low-income, black, and elderly residents, Detroit isn’t a city on the rise, but one under siege.

As always, it is the poor and politically weak, on whose backs fall the burdens of recession, local or national or worldwide, while the rich swoop in to gather the belongings left behind.

Like the good Germans who stole the homes of their neighbors (away travelling to Auschwitz), the rich will bid pennies on the dollar for the homes of the Detroit poor and politically weak, sowing great misery and reaping great profit.

There is a solution.

Think of Detroit as an unemployed person. Like all persons, Detroit is what is known as “monetarily non-sovereign.” It owns no sovereign currency.

While it uses the dollar, it cannot create dollars at will (unlike the federal government, which is Monetarily Sovereign and does create dollars at will).

So while the federal government always can avoid running short of dollars (merely by creating more dollars), Detroit can and has run short of dollars.

To survive long–term, you require net income — income at least equaling your spending. Similarly, every business, every city, county and state — all being monetarily non-sovereign — require net income to exceed spending.

No state, county or city can survive on it own internal taxes alone, for that would be like a person surviving by eating his own hand for sustenance. Eventually, one runs short of hands.

What kind of net income? Suburban towns receive income from residents who work outside the town, perhaps in a big city, but spend in the town. This transfers dollars from the big city to the suburb.

Big cities may receive income from their state or from tourism and net exports. States receive income from tourism, net exports and from the federal government. (Most states have a positive cash flow from the federal government.)

Detroit does not receive enough income from tourism, net exports or from the State of Michigan to pay its bills, and presumably, Michigan is unwilling or unable to help Detroit sufficiently.

Consider the cash flows of the thousands of governments, large and small, throughout the U.S. Mathematically, it would be improbable for all to have positive cash flows, so today, as you read this, many monetarily non-sovereign governments struggle with debts they cannot pay.

The long-term survival of every financial entity requires that income at least equal outgo. The federal government uniquely solves this problem by creating dollars ad hoc, when it pays bills, i.e. when it runs deficits.

The U.S. could not financially survive long term unless it ran the deficits that create dollars. And in fact:

U.S. depressions tend to come on the heels of federal surpluses.
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

And therein lies the weakness of world finance, for relatively few entities are Monetarily Sovereign. The U.S., UK, China, Canada, Australia and various other nations are. But France, Italy, Germany and the other euro nations are not.

They use the euro, over which they are not sovereign. This is the primary reason the euro nations are in financial trouble. They are short of euros.

Returning to the United States, how are our cities, counties and states expected to survive long term? How are they all expected to have positive dollar flows?

There is but one way for U.S. cities, counties and states to have positive dollar flows, and that is for the federal government to cut federal taxes and/or to increase federal spending, that is, to run significant deficits.

Federal taxes remove dollars from the cities, counties and states by removing dollars from the citizenry, and federal spending adds dollars.

There is a solution:

Implement Steps #1-#7 and #10 of the Ten Steps to Prosperity (below). It is the answer for Detroit. It is the answer for all of America.

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
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
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.

#MONETARYSOVEREIGNTY

12 thoughts on “–The Detroit solution is the answer for all of America

  1. The connection between spending and taxation is strong. The old slogan “tax and spend” won’t go away. I don’t see Debtroit getting out of trouble any time soon. There may be some minor investing going on but nothing on a scale that’ll bring back the 50’s. Urban areas seem to be, or at least should be, moving toward becoming areas of quiet cultural interest, entertainment and higher education rather than the once dominant factories, noise and filth.

    On a larger scale, the Euro model’s success or failure may be inversely related to the acceptance of MS. If the Euro succeeds then MS fails and vice versa. Greece, Italy, and Ireland are a bunch of Debtroits. I predict these and all pockets of poverty will ultimately force a showdown between old world debt and doubt, and new world hope and finance, i.e. painful complexity or painless simplicity.

    By the way, what ever became of Quasltx?

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    1. Actually, MS cannot “fail.” MS merely is a description of what is.

      The Euro only can succeed if additional euros are created and/or all the euro nations somehow achieve a positive balance of payments, giving them more non-euro money.

      Both are possible.

      The EU or IMF or Germany could decide to forgive outstanding loans or to lend further, with no (or distant) payback expected.

      Or the EU it could reduce the exchange value of the euro, so that exports increase.

      But there is no MS hypothesis to fail or succeed, unless GDP growth does not matter any more.

      Remember: GDP = Government Spending + Non-government spending + Net Exports.

      For GDP to grow, one of the three above factors must increase, providing more euros to the economy.

      Like

  2. Short of dollars hey? What a sack of crap…

    Perhaps you can explain how no 2 countries have the same amount of money and how some have little while others have much much more. And perhaps you can also throw in there, how the amount of currency does not matter an iota.

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  3. It strikes me that our Monetary Sovereignty was STOLEN from us the same day Nixon abandoned the gold standard (international). The Economic Royalists, Peterson, et al who were present on 8/15/1971, at the Camp David “Nixon Surprise” knew that with taxes no longer needed to provide support for a lower deficit and a stronger dollar they could and did press for reductions in their marginal rates.

    Flush with surplus cash they began the financialization of America. The fact that taxes for revenue were obsolete never got transmitted to the 99%.

    The 1% stole our Monetary Sovereignty and will never give it back until they are exposed as liars & thieves, traitors & anti-Americans that they are.

    Like

    1. Sad, sad, sad….

      Nobody “took” anything from us, we gladly gave it away for “free” cheese. The options were pretty clear and we took the bait. RMM is well versed on the economy, and knows full well that nothing is free. But nonetheless, for some reason – Rodger feels that pushing nonsense is the way to go. Perhaps he is the one working for the filthy rich – I don’t know. But I do know he is no idiot.

      If nothing is free, than how can the government “give” away things? Easy, they create the money and hand it out. That creation of money is what makes your life a living nightmare, it’s the reason your buck is worth less year after year after year.

      Yet people can’t figure out how this is occurring. You have 2 choices:

      1) No government theft and maintaining and gaining purchasing power
      2) Government theft and losing your purchasing power year after year

      There is no “other way” and MS is pure bullshit. You either keep dreaming or you wake up and smell the coffee. I know for sure that Rodger has smelled the coffee.

      Like

      1. If I understand your comments, your entire objection boils down to this simple 4-word sentence: “Deficit spending causes inflation.”

        While your intuition may support that notion, there is, in fact no factual basis for it.

        Data indicates no relationship between federal deficit spending and inflation. See: Federal Deficit Spending Doesn’t Cause Inflation. Oil does.

        and

        Deficits, inflation and hyperinflation

        The value of money = Demand / Supply. Your hypothesis focuses on Supply and forgets entirely about Demand.

        The Fed controls inflation via interest rates. An increase in rates “strengthens” (makes more valuable) the dollar, by increasing demand for the dollar, beyond increases in supply.

        Whenever the Fed senses that inflation will rise much above the target rate of about 2.5%, the Fed raises interest rates, and that cures the inflation.

        You personally may feel inflation is too high. If so, it is not caused by excessive deficit spending, but rather is an intentional plan by the Fed.

        In the past seven years since the Great Recession, despite massive deficit spending, the Fed has been concerned that inflation is too low, thus the very low interest rates.

        For reasons unknown, the debt-worriers continually believe we are about to fall into a Weimar/Zimbabwe/Argentina hyper-inflation (which we never have experienced), when in fact the 99% have not yet recovered from the recession.

        Rather than fretting about something that never has happened in America, how about fretting about something that is happening right now: The growing Gap between the rich and the rest.

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  4. I understand the MS description. I wonder about the ‘acceptance’ of the description as a prescription for what ails us. This goes back to currency being whatever we accept it to be. Not enough people accept MS to cause media to take notice. It’s like stuck in limbo. I can’t put my finger on it; whether it’s a matter of timing and evolution (like the internet) or is one of those ‘too good to be true’ things. In either case I feel there will be a showdown between truth vs. lie.

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  5. RMM how can MS serve to resolve monopoly-finance capitalism’s strangulation of real market growth? Since the 70’s there’s been a pronounced slow down in economic growth in the real economy while the financial sector has sky rocketed. Can MS serve, today, as the antidote to economic stagnation?

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  6. I can’t wait for the day when all the world’s sovereignties decide to go the ten step route. But I’m afraid I’ll have to. This isn’t a nip it in the bud situation; this is way beyond first stage cancer. It’s going to be messy and down to the wire!

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