Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

…………………………………………………………………………………………………………………………………………………………………………..
It takes only two things to keep people in chains: The ignorance of the oppressed and the treachery of their leaders..
………………………………………………………………………………………………………………………………………………………………………………

Lest you believe financial writing is humorless, allow me to disabuse you of such thoughts. Here are excerpts from a site called “Business Insider.”

Britain’s refusal to pay a £50 billion Brexit divorce bill could have an unexpected negative impact on the EU
Will Martin

LONDON — Ratings agency Standard & Poor’s has warned that the European Union’s credit rating could be at risk of downgrades if the United Kingdom refuses to pay a Brexit divorce bill of up to €60 billion.

There’s your first bit of humor. Remember, it was Standard & Poor’s that in 2011, downgraded U.S. Treasury bonds from AAA to AA+.

S&P also was among the agencies that gave AAA ratings to worthless mortgage-related securities, leading to the “Great Recession.

The notion that anyone still takes such ratings seriously surely must be one of the biggest jokes in the financial world.

Ah, but it gets funnier:

“An S&P report cited by the Daily Telegraph says, ‘This is because our ratings on the EU are to a certain extent predicated on our expectation that the UK would honour its share of financial obligations to the EU.'”

Think about it. The UK is Monetarily Sovereign, meaning it has the unlimited ability to create British pounds. The UK never can run short of its own sovereign currency, the pound.

Not only can it pay any debt denominated in pounds, but because the pound is widely accepted worldwide, the UK could exchange pounds for euros, and thus also pay any debt denominated in euros.

Further, the EU also is Monetarily Sovereign meaning it has the unlimited ability to create euros from thin air.

This means the EU has no need to receive pounds or euros from the UK.

It comes down to this:

A nation with the unlimited ability to create money argues about paying money to an organization that also has the unlimited ability to create money.

And a credit agency thinks this is a serious argument.

Really, does it get any funnier than that?

[News item: The Atlantic Ocean refuses to hand over the cup of water it owes to the Pacific Ocean. S&P downgrades both oceans.]

The British government has said that it will pay a settlement to the 27-nation bloc, but believes the amount demanded by the EU is too high.

In March, leaked documents obtained by Dutch magazine De Volkskrant suggested that the EU would consider taking the UK to court if the two sides don’t agree on the bill.

UK: “Your honor, we have unlimited money. We create it at the touch of a computer key, and it would cost us nothing to pay them.  But we won’t pay them, because . . .”

EU: “Your honor, we too have unlimited money, which we create at the touch of a computer key. Their money won’t benefit us. But we want them to pay us, because . . . ”

Currently, the EU has an AA credit rating, the second highest awarded by S&P. It previously sat in the highest AAA tranche, but was downgraded soon after Britain voted to leave the EU.

S&P: “Remember us, your honor? We are the ones who have given the United States a lower rating than Microsoft and Johnson & Johnson. We think the U.S. is more likely to run short of its own sovereign currency, the dollar, than are those two corporations.

“And people still believe us!”

A ratings downgrade would not merely be a symbolic gesture from S&P, but would also materially impact the EU’s ability to access financing. The lower a country’s credit rating is, the higher rates it must generally pay when accessing debt in the markets.

It can also become more difficult to find entities willing to provide funding, although even if the EU were to be downgraded to an A rating, it would still be considered to have a “strong” ability and commitment to repay its debts.

Why would a large Monetarily Sovereign entity, having the unlimited ability to create its own sovereign currency — a currency widely accepted and traded all over the world –need to borrow?Image result for make-believe

It doesn’t — doesn’t need to borrow, and in fact, doesn’t borrow.

Bonds issued by such entities are nothing more than investment products, meant not to obtain money for the issuer, but rather to provide a safe harbor for investors.

Similarly, paying higher interest rates is no burden whatsoever on a Monetarily Sovereign entity. It merely creates the sovereign money necessary to pay any interest it is charged.

Why then, do the UK, the EU, and the credit agencies go through this charade? 

The purpose is to give the illusion of money scarcity.  The EU maintains power over its members (who are monetarily non-sovereign) by rationing euros.  Similarly, the UK and the U.S. governments maintain power over the citizenry by rationing their sovereign currencies.

(Some degree of rationing also is necessary to give value to money, i.e. to prevent excessive inflation. But the major nations of the world ration far more strictly than is necessary for that purpose.)

The very rich run the financial world. The reasons for the above-described farce devolve to Gap Psychology, the desire of the richer, more powerful people to distance themselves from the rest.

They are the same reasons the politicians, the media, and the economists have been paid to tell you such falsehoods as: The U.S. “can’t afford” Medicare for All, and Social Security is “insolvent.”

The purpose is to keep you in your place, well below the rich economically, socially and with far less power.

Yes, the whole thing is hilarious — to the rich.

Not so funny for the rest of us.

Rodger Malcolm Mitchell
Monetary Sovereignty

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

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 can afford better health care than can 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 A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) 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 EVERYONE Five 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 benefitting 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 FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce 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 business taxes would be a 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.

MONETARY SOVEREIGNTY