Britain has voted to leave the European Union, so the markets will crash.
There is no functional reason for the markets to crash, but investors are lemmings, and it takes only a few leaping off the cliff to begin a stampede of cliff divers.
Nothing real will change today. The exit from the EU will take months, years to accomplish, and meanwhile no one knows exactly how that will be accomplished.
Years ago, Britain was smart enough not to fall into the euro trap. So having their own currency, they have been Monetarily Sovereign, and tomorrow, they still will be. Britain always has had one financial foot out the EU door.
So Brexit will be more easily accomplished than a French “Frexit” or a Greek “Grexit.”
With all the doom and gloom claims, you might think some people know what will happen, but of course, they don’t.
About all we know for sure is that Britain has given itself the right to reject whichever immigrants it fears most — just like every other non-EU nation on earth.
Xenophobia probably was the fundamental reason Brexit passed, but even here, we don’t know how Britain will exercise that right.
The primary thing we don’t know, and will not know for months, is how the EU will react. Will the EU enter a punishment mode, canceling trade agreements with Britain, so as to dissuade other nations from following Britain?
That “cut-your-nose-to-spite-your-face” action is quite likely, since the EU leaders continually have shown they are far more concerned about the future of the EU itself than about the futures of any member states.
Let the Greek people suffer. Let the French and Italians struggle. We don’t care so long as we EU bankers and executives are fat, rich, and healthy.
So Britain may have to re-learn what the rest of the world knows — what the U.S., Canada, Australia, Mexico, Japan, China et al long have known — how to survive and prosper outside the EU.
It really isn’t all that difficult.
The British pound will crash. So much the better for exports. Will the EU nations ignore these new, lower prices and refuse to buy British goods and services? Unlikely, though that probably is what the EU itself will attempt to enforce.
The EUs greatest fear is that Britain, which already proved the euro was an impediment to prosperity, will succeed and prove the EU itself has been nothing more than a power grab by rich bankers.
The EU was billed as some sort of war-preventer, but it is nothing of the sort. In its essence, it is a declaration by European nations, “We can’t govern ourselves, so we ask that you rich bankers govern us, because we know you have our best interests at heart.”
The EU knows that the best thing Greece, France, Italy and the like, can do is re-adopt their own sovereign currencies, thereby becoming Monetarily Sovereign. In this way, they can support their middle- and lower-income groups, rebuild their infrastructures, and spend their way into prosperity — all of which has been denied them.
This terrifies the rich EU bankers, who would lose their power along with their cushy, overpaid jobs. Just think; all these years of failed economic policies, and now the leeches will have to find useful work. Oh, horrors!
So the markets will drop, because that is what they are expected to do, and the insiders will pick up bargains.
But, what will happen a year from now or five years from now? It depends on what the British politicians do and what the rich EU bankers do.
If the British politicians would use their newly recovered sovereignty to grow their economy (unlikely, since they are budget-balancing, austerity demanding right-wingers), the British would prosper and other nations would follow their lead.
More likely, the rich bankers of Britain and the EU will convince the populace that the starvation of austerity is good, and prosperity is just for the lazy. In that case, the British people will be punished to the fullest extent of the law.
(“Let that be a lesson to you people who want to run your own lives, rather than allowing us to rule you with an everlasting recession and a widening gap between the rich and the rest.”)
Brexit is a good escape plan, but like all plans, it depends on how it is implemented. Escaping your handcuffs is great unless you allow the austerians to lock you in jail.
Rodger Malcolm Mitchell
Ten Steps to Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich afford better health care than the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE AN ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA, AND/OR EVERY STATE, A PER CAPITA ECONOMIC BONUS (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:
Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012
Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONEFive reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefiting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE CORPORATE TAXES
Corporations themselves exist only as legalities. They don’t pay taxes or pay for anything else. They are dollar-tranferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the government (the later having no use for those dollars).
Any tax on corporations reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all corporate taxes come around and reappear as deductions from your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and corporate taxes would be an good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.
The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.