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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..
Bernie Sanders currently is my favorite Presidential candidate. He’s the most liberal of the bunch, which means he cares more about the lower 99% income/wealth/power folks, and he is less bought-and-paid-for than neo-liberal Hillary Clinton and the conservative side’s, mentally and morally challenged.
We don’t know how he would be as President (we never do), but just being less beholden to the rich could put him in the “great” category.
But, I am bothered by a mystery.
Stephanie Kelton knows the facts. She understands Monetary Sovereignty. She teaches it. She is an MMTer of the first rank.
Last December, Bernie Sanders hired Stephanie to be his chief economist. Presumably, he wanted to learn what Stephanie knows.
And presumably, she has taught Bernie things like:
1. Federal finances are not like personal finances. The federal government cannot run out of its own sovereign currency, the dollar.
2. Federal deficit spending grows the economy.
3. Federal debt is nothing more than deposits in the Federal Reserve Bank, and is not a burden on the federal government.
3. Reductions in federal deficit spending lead to recessions and depressions.
4. Tax cuts are stimulative because they put dollars into the pockets of consumers; similarly tax increases are recessive.
So Bernie knows all this stuff. But even knowing Monetary Sovereignty, here is what Bernie wants to do:
1. Stop corporations from using offshore tax havens to avoid U.S. taxes. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations.
2. Establish a Robin Hood tax on Wall Street speculators. Creating a speculation fee of just 0.03 percent on the sale of credit default swaps, derivatives, options, futures, and large amounts of stock would reduce gambling on Wall Street, encourage the financial sector to invest in the job-creating productive economy, and reduce the deficit by $352 billion over 10 years, according to the Joint Committee on Taxation.
3. End tax breaks and subsidies for big oil, gas and coal companies. If we ended tax breaks and subsidies for big oil, gas, and coal companies, we could reduce the deficit by more than $113 billion over the next ten years.
4. Establish a Progressive Estate Tax. If we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $300 billion over 10 years.
5. Tax capital gains and dividends the same as work. Taxing capital gains and dividends the same way that we tax work would raise more than $500 billion over the next decade.
6. Repeal all of the 2001 and 2003 Bush tax breaks for the top two percent. Repealing the Bush tax breaks for all of the top two percent would reduce the deficit by about $400 billion over the next decade.
7. Eliminate the cap on taxable income that goes into the Social Security Trust Fund.
8. If we imposed a currency manipulation fee on China and other currency manipulators, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.
9. Reduce unnecessary and wasteful spending at the Pentagon. We could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.
10. Require Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry. Requiring Medicare to negotiate drug prices, similarly to what the VA currently does, would save more than $240 billion over 10 years.
Note that every one of these 10 recommendations would take dollars out of American’s pockets, and send the dollars to the federal government, and not one recommendation would stimulate the economy.
They solve the non-existent problem of reducing the federal deficit and debt.
Bernie knows it. Stephanie knows it. So what is going on? It’s a mystery.
My guess: Bernie is a politician. As such, he believes that telling the American public the truth would be a political kiss of death.
So he first wants to get elected, and then, once he’s in power, he will do some of the correct things (See the Ten Steps to Prosperity).
At least, I hope that is what is in his mind. Why else would he hire Stephanie?
Anyway, my belief is this: Bernie Sanders will not receive the nomination unless he does something spectacular. His “Hail Mary pass” would be to tell the truth about Monetary Sovereignty.
Probably, he would not be believed. But, barring Hillary having a heart attack or being caught in bed with a Republican, that would be only the way Bernie could win an unwinnable nomination.
Worth a try?
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 Click here
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. Recessions come after the blue line drops below zero and when deficit growth declines.
As the federal deficit growth lines drop, we approach recessions, each of which has been cured only when the growth lines rose.
Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.