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•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•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.
•The single most important problem in economics is the Gap between rich and poor.
•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.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..
Here are excerpts from a 7/31/15 Reuters article. Read them and determine, “What is the Scandal?”
WASHINGTON (Reuters) – The number of U.S. troops deployed in battle zones is at its lowest level since before the 2003 invasion of Iraq. Still, Congress has authorized a 38 percent increase in the war budget over last year.
The contradiction is the legacy of an emergency war fund, started in the aftermath of the Sept. 11, 2001 attacks, that has become a favorite Washington way to sidestep the impact of fiscal constraints on military spending.
The Overseas Contingency Operations account, or OCO, has been tapped to fund tens of billions of dollars in programs with questionable links, or none, to wars, according to current and former U.S. officials, analysts and budget documents.
This spring, Congressional Republicans abandoned any pretense that OCO should be used for its stated purpose – the wars in Iraq and Afghanistan and related operations. In a maneuver to increase defense spending, they simply approved adding $38 billion in other, non-war Pentagon spending to the account, bringing the total to $89 billion.
In doing so, lawmakers tapped OCO’s budget magic: as a contingency fund, it doesn’t count against budget caps on defense and non-defense spending imposed in 2011.
Experts say that a complete accounting of questionable OCO spending may be impossible.
O.K., what is the scandal?
You’re supposed to believe the scandal is the federal government’s use of devious techniques to spend more than it has budgeted. You’re supposed to believe the federal government is spending dollars it doesn’t have in a wasteful and shocking lack of fiscal discipline.
Yes, that is what you’re supposed to believe. But the real scandal is: The federal budget is essentially meaningless — worse than meaningless — it is deceptive, not just in its operation, but more importantly, the federal budget is deceptive in its implied purpose.
For you and me, and for cities, counties, states and businesses, all of which are monetarily NON-sovereign, the purpose of a budget is to find some balance between income and outgo.
If, for instance, you earn $50K per year, you probably can’t afford to buy a $5 million home. So you budget your spending, and perhaps rent an appropriately priced apartment.
The federal government, being Monetarily Sovereign, and able to create dollars at will, suffers from no such restrictions. It can afford anything.
Unlike your budget, the purpose of which is to restrict your spending, the federal budget merely is an accounting procedure, to indicate what spending is proposed.
The real scandal is how both political parties pretend that the federal government’s dollar supply is limited, and so, spending must be limited — especially any spending that benefits the poor and middle classes — while taxes must be increased, especially taxes that impact the poor and middle classes.
Thus, benefits from Social Security, Medicare, Medicaid, food stamps, housing, etc. are under constant scrutiny and pressure, with repeated claims they are “unsustainable,” while FICA is increased, and there are calls to “broaden the tax base” or “institute a flat tax” (which tax the poor more).
There is one, and only one, limit to federal spending, and that limit is not “sustainability” or affordability or availability of funds. The U.S. federal government never, never, never can run short of dollars to pay its bills. Even if all federal taxes, of every type, fell to $0, the federal government could continue deficit spending, forever.
The one, the only, limit to federal deficit spending is excessive inflation. (We use the term “excessive,” because most economists agree that a certain, small amount of inflation is beneficial.)
At some point — a very distant point, a point we never have reached in our history — federal deficit spending theoretically could become so large, even an increase in interest rates might not be able to prevent excessive inflation.
At that never-reached point, we simply would have to cut deficit spending. Until then, the federal government can spend at will.
Yes, the real scandal is the pretense that federal spending is like personal spending, limited by income.
And, until the public understands the differences between Monetary Sovereignty and monetary NON-sovereignty, our economy and the economies of the world, will limp along in fits and starts.
Growth will continue to be interspersed with unnecessary recessions and depressions. Sad situations like the euro and Greece will repeat. And the poor and middle classes will continue to be punished.
The poor and middle classes pay a terrible penalty for their ignorance, and that is the real scandal.
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
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.