Consider this short article to be a “where-do-we-go-from-here” think piece.
The UK has voted to leave the European Union. The EU bankers, hoping to discourage the departure of their cash cows (aka “EU member nations”), will debate the best ways to exact the most excruciating vengeance on the UK.
What the UK has done is what all nations should do: Preserve its national sovereignty, particularly its Monetary Sovereignty (MS).
The euro nations committed a devastating error by exchanging their sovereign currencies and their government financial prerogatives for the mouthful of ashes known as the EU. They looked at the EU, and said, “Take me,” and taken them the EU gladly has — taken them for huge sums of money, while the populace suffers.
The EU even has taken over the political sovereignty of its member nations. Read this denial in the Politico web site:
There are no imminent plans to create an EU army. The creation of EU headquarters would integrate national operational headquarters and command-and-control centers, facilitate planning and enhance coordination of civilian and military EU missions.
“. . . integrate national operational headquarters and command-and-control centers, facilitate planning and enhance coordination of civilian and military EU missions” is exactly what America’s Pentagon does. It is the definition of military headquarters.
The EU doesn’t need to “create” an army. Armies already exist. All the EU wants to do is to run those heretofore national armies.
The euro nations did not (and most nations, including the UK, still do not) recognize the vast power of their political and Monetary Sovereignty:
- An MS nation never can run short of its own sovereign currency. It has the unlimited power to pay any invoice and service any debt denominated in its currency.
The cities, counties, states, businesses, and individuals of a nation are monetarily NON-sovereign, and do not own the powers of MS.
- An MS nation has the unlimited power to protect the value of its sovereign currency (inflation) by regulating both the Supply and the Demand for that currency. Demand is a function of Risk and Reward, and the Reward for owning a currency is Interest.
That is why the Fed raises interest rates, i.e increases the Reward when inflation looms.
- An MS nation never needs any sort of income. It never needs to levy taxes if the ostensible purpose is to pay for goods and services. It pays its bills by creating its sovereign currency, ad hoc. (Certain taxes can have economic control functions, but all taxes disappear upon receipt.)
An MS nation also never needs to borrow or to earn a profit.
- An MS nation never needs austerity, i.e the reduction in deficit spending or the creation of “balanced budgets.” On the contrary, deficit spending is the method by which an MS nation creates national prosperity, and balanced budgets create recessions and depressions.
An MS nation has the unlimited power to prevent those recessions and depressions.
- An MS nation has the power to eliminate poverty and to support a middle class, and to narrow the Gap between the rich and the rest. (See: The Ten Steps to Prosperity).
An MS nation has the unlimited power to feed, clothe, house, educate, and protect the health of its people in two ways: By a direct infusion of cash to the populace (a la Social Security) and by paying businesses to provide services to the populace (a la Medicare).
- An MS nation has the unlimited power to maintain and modernize its infrastructure, and to fund research and development in all fields of science and technology.
- While individual businesses may benefit from export, an MS nation has no need to export. Exporting involves sending the fruits of scarce and valuable labor and physical assets to other nations, in exchange for money, of which the MS nation has an unlimited supply.
(Imagine manufacturing automobiles and sending them abroad in exchange for air.)
These are the fundamental facts, and the vast, largely unrecognized powers of Monetary Sovereignty.
And now, allow us to drift to speculation. Where do we go from here?
Monetary Sovereignty is the most valuable asset any nation can have. Like all assets, some of its value lies in its scarcity. Some nations don’t have it, and none seems to recognize its power.
If every nation not only were MS, but had leaders who understood and used the powers of MS, fewer nations would be motivated to exchange their scarce goods and services for money, i.e. there would be less motivation to export. (Why trade scarce resources for money that can be created freely?)
MS nations simply could support their own businesses and their economies without the need to ship scarce resources abroad.
(The U.S. consistently runs huge trade deficits — import more than we export — yet never runs short of dollars. Its Monetary Sovereignty allows it to create unlimited, economically stimulative dollars, to replace the dollars sent abroad.)
Though MS nations do not need to export, they all need to import, which with every nation being MS, could create a conundrum: No nation needing to export, but every nation needing to import.
In such a case, nations might be tempted to return to barter — nations paying for foreign goods and services, with domestic goods and services.
But because barter is inefficient, the world could invent a common, scarce product (CSP), for instance — dare I say it? — gold, silver, platinum and the like, to act as a surrogate for barter.
(The euro was sold as a CSP controlled by the EU. It might have worked had the financial merger of European nations been supported by a political merger, i.e. a United States of Europe. In such an arrangement, the citizens and their states (not greed-driven bankers) would have had a voting voice in the use of their money.
This is not to say a united states of “anything” is a perfect solution. Far from it, especially if expanded to encompass the entire world. The notion of one-world-rule is frightening to contemplate.)
When a CSP is inconvenient to use, as are the metals, credits based on CSP are created. Thus, one might visualize a bifurcated money system, with CSP credits being the currency of international trade, and sovereign currencies being used locally.
Yet, even that clear division would not endure, as sovereign currencies inevitably would be exchanged with CSP credits. This would bring us right back to the fact that Monetarily Sovereign nations could produce and acquire CSP credits in unlimited amounts, thus reducing the motivation for export.
The same would be true for an international currency, like bitcoin.
In the future, not just nations, but smaller political entities — states, counties, cities, even businesses and individuals — could become Monetarily Sovereign. Small, tentative steps have been taken, the missing link being widespread acceptance.
(Visualize McDonald’s wishing to stimulate sales, so it issues millions of $0.10-off electronic coupons for the purchase of any McDonald’s products. Is McDonald’s sovereign over the coupons? Is there a limit to McDonald’s issuance of the coupons? Are the coupons money?
Where are we headed and where will it all end? There never may be an ending point: Money may continue to evolve, as each solution begets a new problem. Clearly, the citizens of the first nations to discover and use the power of MS will benefit most.
Equally clear, the “secret” will not remain hidden. It is out there today, for all to see — the solution to many of our financial and personal problems.
If those problems are hunger, homelessness, poverty, illiteracy, disease, scientific progress, the infrastructure, the environment, and/or the Gap between the rich and the rest, Monetary Sovereignty provides solutions.
We have only to understand it and have the will to use it.
=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.