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Economics is a social science, desperately trying to be a physical or natural science.
Economists attempt to prove their science chops by using mathematics. Open any economics text and you will see it filled with false mathematic equations. We say “false,” because equations imply a level of precision seldom found in the social sciences.
Consider Supply and Demand, the very bedrock of economics theory. You’ve seen the basic formula: Demand / Supply = Price (or Value).
Mathematically, it indicates that if you know two of the variables, you can determine the third variable.
Utter nonsense, and we all know it.
While Supply sometimes can (but often, not) be physical, and measured directly, Demand most often is non-physical, psychological and a derivative of the formula. Two, completely different entities in the same formula.
And then there is the third variable, Price or Value. Often they are quite different. While Price can be specific, Value, like beauty, can be in the eyes of the beholder.
At best — at the very best — the formula can give you a hint about what might be a direction. And yet, this is one of the most fundamental formulas in all of economics.
One unpredictable quantity is what makes the social sciences social: People.
Economics essentially is about money, and everything in economics devolves to motive.
What is your motive? Why do you want money?
Well actually, you don’t want money; you want what you believe it can buy: Goods and services, yes, and far more: Power, pride, admiration, security, the feelings of accomplishment.
Other than mere ignorance, what then is the motivation for telling the Big Lie?
We have discussed this in earlier posts, and we’ll borrow freely from those posts while compiling this chapter.
LEADERS & FOLLOWERS
We humans, being social animals, form societies. Most societies have Leaders and Followers. In human societies, the role of Leaders is protect, educate and guide us, so they are given special powers and privileges.
Evolution has taught Followers they benefit when their Leaders are strong, wise effective and possibly care about the well-being of Followers. So Followers are motivated to believe their Leaders have those traits.
We root for teams, often home-town teams or teams having other features with which we identifyh. Generally, we gain nothing from their victories and lose nothing from their defeats, and they care little about us. Yet we passionately care what happens to them. They are our Leaders. Their victories and losses are ours.
This makes evolutionary sense. Social animals cannot survive alone. We need the pack. When any member of the pack, especially the Leader, is attacked, our own safety is compromised, unless the attacker can be defeated.
Followers are motivated to close the physical and/or psychological distance between them and their Leaders.
Followers feel more comfortable when they figuratively can “touch” their leaders.
Just as Followers need Leaders, Leaders need Followers. Leaders too, do not survive alone.
Evolution has taught Leaders to strive to widen the psychological distance between them and their Followers, lest the Followers disrespect the Leader’s superiority, or even challenge the Leader for power. To be a Leader, one must have Followers who respect and agree to the Leader’s leadership.
To establish their superiority, Leaders create protocols. In Japan, the Follower bows lowest, while the Leader may barely nod. Popes and kings wear crowns and special robes. They live in castles, and they demand special forms of address, all to separate themselves from their Followers.
Leaders address Followers by first names, while Followers respond with “Mr.” or “Sir” or “Dr.” or “Senator” or “Excellency.” Thus, superiority is maintained.
American leaders may be rich, famous and/or have a powerful position in society. Your boss is a Leader and you are a Follower, except when you are a Leader and your assistant is a Follower.
You may not have to think about the protocols that separate you from your boss and separate your assistant from you. Followers follow protocols to strengthen the ties, and to gain favor with (i.e. come closer to), their Leaders. Followers obey commands and demonstrate appreciation for their Leaders. (No one ever was fired for giving the boss a gift or for laughing at the boss’s jokes.)
Leaders follow protocols to strengthen the fealty of their Followers (i.e. giving small gifts called “social spending”), while widening the psychological distance between them and their Followers.
We see a conflict of Leaders widening the psychological distance from Followers, while maintaining them closely enough for them to act as servants. And we see the Followers trying to close the psychological distance, while maintaining subserviance to please the Leaders.
It is a conflict marked by Followers’ envy and needs vs. Leaders’ contempt and needs. To them all, rank is a zero sum game. Others must be pushed down, for them to rise up.
We learn about bullying at an early age. It is a natural, human process whereby some people attempt to assert themselves as Leaders using the common, dual, distance-widening process: Lift themselves while depressing others.
Either works to provide the needed margin. Those who are not confident in the uplifting ability of their own personal qualities, may especially be tempted to resort to bullying.
Bigotry against race, religion, national background or social class is a form of bullying. By separating “us” from “them,” it makes us “better”.
When Donald Trump stigmatizes immigrants, Mexicans and Muslims, he appeals to the human desire for self-esteem relative to others.
GENERALISTS AND SPECIALISTS
Bears, for instance, are not social animals. The male bear roams alone. He is a generalist. He takes as his sole responsibility, finding his food and shelter, his safety and survival. He must be proficient in every aspect of his life.
By contrast, we humans are specialists. Some of us grow food and some distribute it, some cook it and some serve it.
Each of us has come to accept that other humans have specific knowledge we don’t have. Being neither a farmer, nor a distributor, nor a cook nor a waiter, I accept there are food-related experts who can do what I can’t. If I were a bear, I’d starve.
None of us is a Leader in all things. The wealthy man, who finds himself in legal difficulties, may regard his attorney as his Leader in legal matters, and be most anxious to have the attorney nearby and to follow the attorney’s advice — but not have the attorney as a social friend.
Exclusion from social circles is a way to uplift some by casting down others.
YOUR FRIENDS AND NEIGHBORS
Typically, the majority of your friends and neighbors are in financial circumstances similar to yours.
You probably live in a neighborhood matching your wealth. Poor people may be geographically restricted by finances. But even rich people, who can live anywhere, prefer to live among other rich people and associate with other rich people.
This is no accident. It is a matter of comfort. The rich feel uncomfortable when a poor person comes close, except in the role of servant. Even then, protocols are followed to maintain or widen the Gap between them.
THE RICH AND THE POLITICIANS
America’s political Leaders are first, the rich, and then the politicians, who are controlled by the rich (via campaign contributions and promises of lucrative employment, later.)
Both have similar desires: The rich want an underclass, tame enough to accept hard work for moderate-to-minimal reward, and not to demand more power or proximity.
The politicians, servants of the rich, want an underclass, tame enough to accept lies about the need for minimal reward, and not to demand more power or proximity.
Over time, the rich have developed worldwide, the BIG LIE – the ridiculous-on-the-face-of-it lie that a sovereign nation can run short of its own sovereign currency.
This is the lie that keeps the underclasses in chains.
Even a few seconds of thought should be sufficient to make one realize, a Monetarily Sovereign nation, which invented the laws that created its currency, always has the power to create more of that currency.
The federal government does it, daily.
Why then do Americans believe President Obama when he lies that “America must live within its means”?
Our nation has no “means,” if “means” is defined as the ability to pay bills.
The U.S. government pays its bills by creating dollars, ad hoc. This is the primary method by which the federal government creates dollars.
Why do Americans believe Congressman Boehner when he lies that, “America is broke”?
It functionally is impossible for America ever to be “broke.” Even were the federal “debt” to be 100 times its current level, the federal government could continue paying all its bills as it always has.
(Actually, the federal “debt” today is almost 50 times what it was in 1970, just 45 years ago, and the federal government continues to pay its bills, with no difficulty whatsoever.)
We are genetically disposed to rely on our Leaders, and part of that reliance is the tendency to accept what they tell us.
Only a few more seconds of thought should be sufficient to show how a sovereign nation can prevent or create inflation by giving its sovereign currency any exchange value it chooses.
Many nations arbitrarily have changed the exchange value of their sovereign currency, more often via devaluation (to increase exports), but occasionally through revaluation.
Why then do Americans believe Fed Chairman Bernanke when he pretends inflation is something that could happen beyond America’s control, and that he heroically is working to control it?
The reason is simple: Our Leaders have brainwashed us into believing only their strong hands separate us from chaos, despite the clear facts that it is our Leaders who, consciously or not, create chaos, in distance-widening efforts.
One is reminded of young girls who stay enslaved by their pimps, because in their innocence, they believe their pimps protect them from a cruel world.
It’s what their pimps tell them. It’s what our pimps tell us.
Consider anti-abortion laws, which never seem quite strict enough for some politicians. These actually are distance-widening laws, but with a moral veneer.
It is a way that certain groups exert control over women by claiming God as their moral ally. “I am good; you are bad.” (“You tricked Adam into eating the apple.”)
The rich and powerful pay no attention to such laws. They buy abortions at will. But the poor are trapped, by such laws, into giving birth to unaffordable, unwanted, future uneducated criminals, trapped by the rich in an endless cycle of poverty and powerlessness.
Of what value to humankind is forcing poor women to deliver such children into this world? One can debate about when a zygote becomes a sentient human being, but that debate is a excuse for an underlying motive: To create a larger, more compliant underclass.
Pro-”life” is the cover story into which a great many innocent, well-meaning people have bought. The unfortunate poor, chained to unwanted children, will work hard and cheaply (raising and empowering the rich).
And they will need government support for survival (raising and empowering the politicians).
What better way to enslave the poor than to force unaffordable burdens on them, then to be their only means of survival, so they must beg the rich and the politicians for help.
BUYING THE STAIRWAY TO HEAVEN
Humans have been taught to reward those in power, so to raise our status by narrowing the distance above us.
The ultimate power is God, so “He” universally is ewarded via prayer and valuable contributions to a church.
The motive of the rich, for accepting rewards, adoration from contemporaries and envy from those below.
The irony of poor people donating to a wealthy church is: The Leaders gain power, while the poor are told they must continue to ingratiate themselves with the all-powerful God, a God whose needs are infinite.
The poor never may stop giving.
The Leaders tell the poor that support of the religion is the sole path to heaven. The poor are impoverished further, and the Leaders, being the intermediaries between God and the poor, gain power.
In many religions, the Leaders wear costumes and create customs, to widen the distance between themselves and their Followers. The Leaders write and lead the prayers the Followers are compelled to read and recite, repeatedly.
Repetition implants the “truth.”. It is a classic brainwashing technique.
As always, the underclass attempts to close the distance from power, while power wishes to widen the distance between it and the underclass.
To Leaders, the distance is of foremost importance.
When anyone in power – any rich person, any business superior, any politician, and cleric – speaks about money or economics in general, the first question you should ask is, “Why? What is the motivation? How will this widen the distance between him and those with less power?”
“Rich” and “powerful” are not absolutes. They are comparative term. For someone to be rich, someone else must be poor.
If you own $1000, you are not rich if everyone else has $2000. But if you own $1000, you are rich if everyone else owns $10.
Similarly, you are powerful only if there are those having less power.
Power corrupts, and the corrupted tell lies to extend their corruption.
When any President, any Congressperson, any cleric, any person more powerful than you tells lies, they lie for the same reason: To maintain or widen the distance between them and you.
THE BASIS FOR ECONOMICS
Money is not the real goal of the rich, nor even of the middle class. The real goal is to widen the Gap.
No matter where in the wealth rankings people find themselves, their natural desire is to widen the Gap from those having less, and to narrow the Gap with those having more.
The rich, however, have far more power to widen the Gap, which is why the GINI ratio continues to rise.
President Obama tells lies to create and widen the gap. He wants the best Presidential Library. He wants the best legacy. He wants history to separate him from other Presidents. He wants to hobnob in the homes of the rich and famous. He wants his family to have the same.
President Obama will not come to stay at your house, but he very well may stay Bill Gates’s or Queen Elizabeth’s castle. What is his motivation?
Why would he prefer to spend time with Bill and the Queen than with you? Because he doesn’t want to be near you. He wants to be near them. He wants to increase the gap below him and narrow any Gap that may exist above him.
Meanwhile, you too would like to visit Bill and the Queen as a gap narrowing measure, and like the President you don’t want poor people coming to your house.
You too want to widen the gap below you and narrow the Gap above you.
This is the psychological basis for all economics: Motivation and the gap.
It is the reason for the Big Lie, and also is the primary reason so many of your friends are happy to believe the Big Lie.
It accommodates their own desires for growth.
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
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
Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
Recessions are cured by a rising red line.
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.
•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 the rest..
•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..