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Mitchell’s laws:
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●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.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Everything in economics devolves to motive, and the motive is the Gap.
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What is the fundamental difference between Greece and the U.S.?
First a bit of background. Federal deficit spending creates dollars by adding them to the economy. A federal surplus destroys dollars by taking them from the economy.
It’s that simple.
Syriza Commits to Deep Austerity in Its Proposal to Creditors
Posted on June 7, 2015 by Yves SmithWe’ve been telling readers, to sometime hostile responses, that Syriza has in fact already agreed to a continuation of austerity.
“Austerity” is another word for deficit reduction, i.e. removing money (in Greece’s case, euros) from Greece’s economy.
(Finance minister) Varoufakis (is committed) to continued austerity even as he tries to present it as the reverse.
“What are we talking about? Of an independent tax agency, of keeping forever a reasonable primary surplus, of a sensible and ambitious privatization program… of a true reform of the pension system …of liberalizations of markets for goods and services etc,” he wrote.
Translation: A “reasonable” primary surplus occurs only when taxes exceed government spending.
Ask yourself this: If I give the government more in taxes than what the government gives me, will my wealth increase or decrease? Will I be able to spend more or spend less?
Will businesses, which rely on my spending, have more or less income and be more or less profitable? And will this grow the economy or shrink it?
In short, for any nation, there is no “reasonable” primary surplus.
Now as we’ve stressed, any primary surplus is contractionary, and will be particularly damaging in an economy already in depression like Greece’s.
The leaked creditor proposal offers a (surplus) target of 1% (of GDP) in 2015, 2% in 2016, 3% in 2017 and 3.5% in 2018 and beyond and asks that Greece introduce a supplementary budget for 2015 to meet the new target.
Translation: The criminal banks want to extract as much money from Greece as possible, as soon as possible. The reason: They know Greece is insolvent and will not, for long, be able to pay its suppliers of goods and services.
So the banks scramble to suck up the remaining euros, before other creditors get them, while pretending the rape of Greece is prudent economics.
The current Greek VAT system includes 3 rates (6.5%, 13%, 23%). Creditors ask to move to a 2-rates system, with the two rates being 23% and 11%.
VAT is a sales tax system, that like all sales taxes, is regressive. It punishes most the middle and lower income groups — the people who spend the greatest percentage of their incomes on goods and services.
The rich, who invest most of their income, are mostly immune to VAT. And that is the whole point. The euro system was sold as a way to improve trade efficiencies and thus, to benefit workers and small businesses.
It was a clever lie, aka “the Big Lie.”
The purpose of the euro system is to empower the rich (1%) and to enslave the middle and the poor (99%). And that is exactly what austerity mathematically must do.
By draining the blood from an economy, the rich act as the leeches, forcing the 99% to be the blood donors.
Pension reform: The creditors ask for “further immediate steps to improve the pension system, that are expected to yield around 1 percent of GDP in savings annually in 2016-17, including significantly tightening early retirements rule, increasing health contribution for pensioners, and phasing out the non-pension solidarity grant”.
Translation: The words “reform” and “improve” are euphemisms for “cut.” The rich want to cut the pensions on which the 99% survive.
The rich also want to force the 99% to work longer (“tighten early retirements”), pay more for health care insurance and eliminate government contributions to their version of Social Security.
All this so the bankers can be paid, and the Gap between the rich and the rest can grow.
And lest you believe this is a problem solely affecting the Greek people:
Obama is on track to leave a budget surplus
Bill Clinton left the presidency with a budget surplus. And although the first five years of Barack Obama’s presidency have featured high (but falling) deficits, it’s starting to look like Obama could do the same.
Obama leaving office with a balanced budget would come as a big shock to those who have compared the U.S. to crisis-stricken countries like Greece, or claimed that Obama is spending like a drunken sailor.
But that is exactly what the U.S. is on trend to do.
What does the following graph tell you about when recessions occur?
Recessions never seem to occur when the federal deficit — the measure of federal government money being added to the economy — is above 3% of Gross Domestic Product. The strong tendency is for recessions to occur after the federal deficit falls below 3% of GDP.
And where is the line now?
Although President Clinton loves to boast about the surpluses his administration ran, the fact is that those surpluses of the late 1990s led to the recession of 2001.
There was no reason for surpluses. Inflation was low and bore no relationship to federal deficit spending:
The surpluses were created at the behest of the rich.
The title question asks: What is the fundamental difference between Greece and the U.S.?
Greece, being monetarily non-sovereign, has no sovereign currency. It does not have the unlimited ability to create its own currency. It uses the euro, over which it has no control.
It neither can prevent nor cure recessions and depressions. It floats helplessly in a boat steered by its banker creditors, the “Troika” — the International Monetary Fund (IMF) the European Commission (EC) and the European Central Bank (ECB).
The Greek people are suffering victims of the banks.
By contrast, the U.S. is Monetarily Sovereign. It originally created, and has total control over, its sovereign currency, the dollar. It can create as much as it needs, merely by pressing a computer key.
The U.S. never can be unable to pay its debts.
Why then does the U.S. use the same austerity — the same deficit cutting — as Greece? Because just as the rich control the Greek economy, so too do the rich control the U.S. economy, specifically by controlling the President and Congress.
This control is in the form of campaign contributions and promises of lucrative employment later. In short, our government is bribed to do as the rich wish, courtesy of the U.S. Supreme Court.
The American rich want to cut pensions (including Social Security), cut Medicare, cut aids to the impoverished, cut aids to education, and make the 99% pay more for services — the same as what the European rich are doing to Greece.
It is the rich who bless American gun ownership, then look on, mouthing “tsk tak” while the 99% kill one another.
The rich are the same the world over. Their greed knows no bounds. No amount of money, wealth and power satisfies them. The distance between the rich and the rest never is great enough, despite how much the Gap has grown.
Dictators assemble armies to beset their own countrymen; the rich assemble followers to beset the 99% who object to economic abuse.
These followers have been trained to sneer at “libs” who demand government services, and taught to claim falsely that federal spending causes inflations, sloth and dependence.
Like pet parrots, they speak the words given them by the rich, not understanding it is they, the followers, whom the rich despise for their ignorance and subservience.
The Greeks have fallen into the economic maelstrom called, “the euro.” They cannot help but be sucked down, down, down, with no depth of poverty sufficient to satisfy the rich.
But here in America what is our excuse?
Rodger Malcolm Mitchell
Monetary Sovereignty
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The 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. Federally funded, 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. (Refer to this.)
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)
Initiating The Ten Steps sequentially will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
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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
Long term view:
Recent view:
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.
#MONETARYSOVEREIGNTY
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#Monetary Sovereignty - Mitchell 