Author: Rodger Malcolm Mitchell

MBA Northwestern, business turnaround expert, economist

–We already have lost the war. For what exactly are American soldiers giving their lives?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Memorial Day weekend:
We are in a war and we already have lost. Some people believe the war began on September 11, 2011, but that was just a prominent salvo. The war actually began in 1775, and for many years we were winning.

It was a dual war, one for geography and one for a great idea – the idea of freedom, democracy and the rule of law – the idea that made America unique. We won the war for geography and never have looked back. In fact we have added massive pieces of geography, and today America’s land exists, safe and secure from any invaders.

We have enemies, but none is a likely threat to peel off any of our geography. New York is safe; California is safe; Alaska is safe; Hawaii is safe; everything in between is safe. The Taliban, al-Qaeda, the Islamist extremists – we fight them with weapons of war, but they have no chance to defeat us on the battlefield. They are annoying gnats, nothing more.

Yet they have defeated us in that other war, the war for freedom, democracy and the rule of law. Lest you feel this is one of those philosophical overstatements, made for shock effect, but lacking reality, I direct you to two articles:

Here are excerpts from an article written by John Mauldin, published May 28, 2011 and titled” “Trigger Points and Evasive Action” He asks, “When would a wise Jew have begun making plans to leave Germany?” but he really means, when did Germany become a dictatorship?

“When would a wise Jew have begun making plans to leave Germany? 1933? 1934? 1938? 1939?

“In retrospect, most people would say 1933, the year Hitler was appointed (not elected) Chancellor by President von Hindenburg. On 30 January, Hitler became Chancellor. He asked Hindenburg to dissolve the government and schedule new elections for March 5, which Hindenburg did.
[. . . ]
“On 27 February, the Reichstag building burned down. One man did it, who admitted he had done it. Hitler immediately identified him as a Communist, although even today, it is not clear that he did anything but act alone.

“Hitler used this as a propaganda tool. On March 5, the Nazis got 44% of the popular vote, up from 33%. With an allied party, they had 52% of the vote in the Reichstag.
[. . . ]
“On March 23, the government passed the Enabling Act. It took a two-thirds vote to do this. Hitler now possessed dictatorial powers. He had attained these by means of support by rival political parties.
[. . .]
“On April 1, a one-day boycott of Jewish businesses was staged by the S.A., which were technically private storm troops.
[. . .]
“What about 1935’s Nuremberg Laws on Citizenship and Race? They made it illegal for Jews to be citizens.
[. . .]
“And so on, right down to Crystal Night in November 1938, when rioters broke the plate glass windows of 7,500 Jewish-owned businesses and burned or damaged 200 synagogues, meaning most synagogues in Germany.
[. . .]
“After that, over 100,000 Jews packed their bags and departed. Between 1933 and 1939, about half the Jews in Germany emigrated: 250,000. But half did not. “There were a series of trigger points, 1933 to 1939. Most Jews sat tight until very late.
[. . .]
“Laws enacted by the Reich government shall be issued by the Chancellor and announced in the Reich Gazette. They shall take effect on the day following the announcement, unless they prescribe a different date. Articles 68 to 77 of the Constitution do not apply to laws enacted by the Reich government.

“Articles 68 to 77 stipulated the procedures for enacting legislation in the Reichstag. ‘So what?’ This seems to have been a mere technicality. The language was so procedural. But there was substance to it. As we read on Wiki, ‘The Enabling Act allowed the cabinet to enact legislation, including laws deviating from or altering the constitution, without the consent of the Reichstag.’

“It was time to move out and move on . . . and not just if you were Jewish.

“Some people see the signs. Others do not. Some decide to get out while the getting is good. Others do not. “Incident by incident, trigger point by trigger point, people see signs. Most people ignore them. ‘It can’t happen here.’ Most times it doesn’t. Sometimes it does.”

As John Mauldin said, “It can’t happen here. Most times it doesn’t. Sometimes it does.” Could it happen in America? Has it already happened in America? Read excerpts from a May 28, 2011 article in Barry Ritholtz’s The Big Picture, titled “We’ve Gone from a Nation of Laws to a Nation of Powerful Men Making Laws in Secret.” (For the full article, go to: Secret Laws )

Some defendants are no longer allowed to see the “secret evidence” which the government is using against them. . . The U.S. Supreme Court has ruled that judges can throw out cases because they don’t like or believe the plaintiff … even before anyone has had the chance to conduct discovery to prove their case. In other words, judges’ secret biases can be the basis for denying people their day in court, without even having to examine the facts.
[. . . ]
Congress just re-authorized the Patriot Act for another 4 years. However, Senator Wyden, a member of the Senate Select Committee on Intelligence, notes that the government is using a secret interpretation of the Patriot Act different from what Congress and the public believe. . . “Known as Secret Law, the official interpretation of the Patriot Act could dramatically differ from what the public believes the law allows.”
[. . . ]
Most members of Congress have not even seen the secret legal interpretations that the executive branch is currently relying on and do not have any staff who are cleared to read them. Even if these members come down to the Intelligence Committee and read these interpretations themselves, they cannot openly debate them on the floor without violating classification rules.
[ . . . ]
So patently illegal is Obama’s war in Libya as of today that media reports are now coming quite close to saying so directly; see, for instance, this unusually clear CNN article today from Dana Bash. As a result, reporters today bombarded the White House with questions about the war’s legality, and here is what happened, as reported by ABC News‘ Jake Tapper:

Talk about “secret law.” You’re not even allowed to know the White House’s rationale (if it exists) for why this war is legal. It simply decrees that it is, and you’ll have to comfort yourself with that. That’s how confident they are in their power to operate behind their wall of secrecy: they don’t even bother any longer with a pretense of the most minimal transparency.

[. . . ]
Scott Horton – a professor at Columbia Law School and writer for Harper’s – says of the Bush administration memos authorizing torture, spying, indefinite detention without charge, the use of the military within the U.S. and the suspension of free speech and press rights:

We may not have realized it at the time, but in the period from late 2001-January 19, 2009, this country was a dictatorship. The constitutional rights we learned about in high school civics were suspended. That was thanks to secret memos crafted deep inside the Justice Department that effectively trashed the Constitution. What we know now is likely the least of it.

[ . . . ]
The United States has been in a declared state of emergency from September 2001, to the present. . . . “NOW, THEREFORE, I, GEORGE W. BUSH, President of the United States of America, by virtue of the authority vested in me as President by the Constitution and the laws of the United States, I hereby declare that the national emergency has existed since September 11, 2001 . . . .”
That declared state of emergency has continued in full force and effect from 9/11 to the present. President Bush kept it in place, and President Obama has also.
[ . . .]
The Washington Times wrote on September 18, 2001: “Simply by proclaiming a national emergency on Friday, President Bush activated some 500 dormant legal provisions, including those allowing him to impose censorship and martial law.”
[ . . . ]
The New York Times wrote in an editorial:
Beyond cases of actual insurrection, the President may now use military troops as a domestic police force in response to a natural disaster, a disease outbreak, terrorist attack, or to any ‘other condition.’ (These) continuity of government laws were enacted without public or even Congressional knowledge, and neither the public or even Congress members on the Homeland Security Committee – let alone Congress as a whole – are being informed of whether they are still in effect and, if so, what laws govern.

So the war for freedom, democracy and the rule of law, now has been lost. The Germans didn’t see it coming, when Hitler stole their freedom, all in the name of national security, that all-purpose excuse every dictator uses, when he steals freedom from the people.

It is the same excuse President Bush used after 9/11, and it is the same excuse President Obama uses today. It’s so insidiously logical, so beguilingly rational: “The nation is threatened, so we must enact these ‘temporary’ measures. And yes, you may lose a bit of freedom, but the laws only threaten terrorists (Germany called them ‘Jews”) so you, being innocent, have nothing to worry about.”

Bush gave himself dictatorial powers, while Congress and the Supreme Court acquiesced. Obama now has inherited those dictatorial powers, while Congress and the Supreme Court, both more concerned with liberal vs conservative causes than with freedom, democracy and rule of law, continue to acquiesce. America now effectively is a dictatorship.

And that is how the war was lost. Please tell me again, on this Memorial Day weekend, for what exactly are the men and women in our armed forces giving their lives?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

–Financial frauds who give exactly the same advice to every client, no matter what the situation.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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We all are aware of the euro nations’ financial problems, especially the problems of the PIIGS – Portugal, Italy, Ireland, Greece and Spain. We have discussed the fact that because these nations, in surrendering their Monetary Sovereignty, surrendered their control over their money supply. They are unable to create the money necessary to support their economies.

I predicted in a 1995 speech at the UMKC, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.” However, not all European nations surrendered their Monetary Sovereignty. Among the nations choosing to remain Monetarily Sovereign are Poland, Romania, Sweden, Norway and the United Kingdom.

Here are some sample news items:

Bloomberg; 5/25/11: “Poland’s economic-growth forecast was raised to 3.9 percent from 3 percent at the Organization for Economic Cooperation and Development

5/27/11: According to Capital Economics, a British research group, Romania’s economy will grow by 3% this year compared to a previous forecast of 1%, followed in 2012 by a 2.5% advance. The recovery will be fueled by private consumption, but also by the resumption of investments. Also the research group states that Romania has the second best potential for economic development in the region, along with Bulgaria, Poland and Russia.

OCDE:1/2/11 – Sweden is expected to continue to recover strongly from the recession as high saving, low interest rates and an improving jobs market encourage consumers to step up spending, according to the OECD’s latest Economic Survey of the country.

Bloomberg: 5/26/11: The mainland (Norway) economy will expand 3.3 percent this year and 4 percent in 2012, after growing 2.2 percent in 2010, the Organization for Economic Cooperation and Development said yesterday.

The Monetarily Sovereign nations are doing better than the monetarily non-sovereign nations. No surprise there for those of you who have been reading this blog. The key, of course, is for a Monetarily Sovereign nation to realize it’s Monetarily Sovereign. Not all do.

Why the British economy is in very deep trouble, Financial Times, Posted by Neil Hume on May 26, 2011

Here’s something for the Chancellor and the Office for Budget Responsibility (OBR) to chew on: a warning from Dr Tim Morgan, the global head of research at Tullett Prebon, that the deficit reduction plan won’t work and the UK is headed for a debt disaster.

Morgan says sectors that account for nearly 60 per cent of UK economic output are critically dependent on debt (public or private) and set to contract rather than expand. This will render economic growth implausible and means the burden of public and private debt will prove too heavy for the nation to carry:

Over the past decade, the British economy has been critically dependent on private borrowing and public spending. Now that these drivers have disappeared – private borrowing has evaporated, and the era of massive public spending expansion is over – the outlook for growth is exceptionally bleak.

Sectors which depend upon either private borrowing or public spending now account for at least 58% of economic output. These sectors are now set to contract rather than expand, which renders aggregate economic growth implausible. And, without growth, there may be no way of avoiding a debt disaster.

The UK, wisely avoided surrendering its Monetary Sovereignty, then forgot why it did so. It thinks, “the era of massive public spending is over.” Why? It has no idea. It believes it’s monetarily non-sovereign.

This puts the UK in the same position as the U.S., whose politicians, media and old-time economists do not understand the implications of Monetary Sovereignty. Read any article or listen to any politician, and you will not be able to tell whether the subject is a Monetarily Sovereign nation or a monetarily non-sovereign nation. They say exactly the same things about both.

What would you think about an investment advisor who gives exactly the same advice to a wealthy, married old man with no children, as he gives to an impoverished single, young woman supporting five children? If someone says exactly the same things, makes exactly the same predictions, and offers exactly the same advice regarding two diametrically opposite monetary situations, that person is a fraud.

I have just described the debt-hawk media, politicians and old-time economists.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

–We never will find a solution, because we’re discussing the wrong problem.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
==========================================================================================================================================================================

Here are five headlines and the first lines of their articles, from the May 26th Washington Post. What do these five articles have in common? What is their fundamental premise?

Senate rejects GOP budget plan that would overhaul Medicare
The Senate voted 57 to 40 against GOP Rep. Paul Ryan’s 2012 budget proposal, with all but five Republicans supporting the spending plan.

Plum Line: Senate Dems up pressure on GOP over Ryancare
Senate Democrats are going to hold a vote today on the GOP budget plan that includes the proposal to end Medicare as we know it, in an effort to put Senate Republicans on the spot and keep up momentum after the big Dem victory in NY-26.

2chambers: Ryan says Democrats have ‘lied to’ voters about his budget plan
One day after his party — as well as his 2012 budget blueprint — was dealt a stinging defeat in a New York special election, House Budget Committee Chairman Paul Ryan (R-Wis.) said Wednesday that the election was not a referendum on Republicans’ proposed changes to Medicare, and he argued that Democrats had distorted the issue for political gain.

The California researcher who could save health-care reform — and the budget
Joe Selby has been named director of the Patient-Centered Outcomes Research Institute

Ezra Klein: When ex-budget directors stop being polite and start getting real
Peter Orszag, concluding a column on why Paul Ryan’s Medicare reforms won’t work to control costs.

The fundamental premise is that the federal deficit should be reduced, and not one of these articles even questions it, much less discusses it. Imagine a group of people discussing the best way to sail from Europe to India, without falling off the edge of the world. Many ideas are debated fervently, but the fundamental premise – that one can fall off the edge of the world — never is discussed. When the fundamental premise is wrong, all solutions will be wrong. And that is why there never can be a good solution to our economic problems, no matter how long, passionately and cleverly we debate.

In a Monetarily Sovereign nation, deficits are what supply money to the economy. Without deficits, America would have no money and no economy. Because a large economy has more money than does a small economy, a growing economy requires a growing money supply. So growing deficits are necessary for economic growth. Further, a Monetarily Sovereign nation has the unlimited ability to pay any bills of any size, instantly.

All efforts to reduce the deficit, i.e. reduce the money supply, by necessity must result in recessions and depressions, and that is exactly what history has shown us. (See: Facts about Monetary Sovereignty )

Our economic problems cannot be solved so long as the discussions are based on a faulty premise. Only when we acknowledge the basic truth of Monetary Sovereignty – federal deficit spending is necessary and sustainable — will we create a solid foundation for economic progress.

We can’t find our way home if we take the wrong path.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY

–Does unemployment actually stimulate the economy?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
==============================================================================================================================================================================

Those who understand Monetary Sovereignty know the federal deficit/debt issue is phony, created by the Tea (formerly Republican) Party as an election ploy and/or out of sheer economic ignorance. It’s an issue I predicted would come back to bite the Tea Republicans as specifics about what’s to be cut became understood. Hello Medicare, Social Security, the military, and on and on and on.

So, I anticipate the right wing will begin to focus on a better issue, and that issue will be: unemployment. We all can empathize with those who want income but can’t find a job. Presumably this issue will make more sense than cutting the money supply to stimulate the economy, Rep. Boehner’s latest bit of desperation nonsense.

One problem is definitional. What exactly is unemployment? Is it:
–people who don’t have jobs?
–working age (whatever that is) people who don’t have jobs?
–people seeking employment?
–people seeking employment, and whose separation/unemployment benefits have run out?

Other factors include:
–length of unemployment
–age of those unemployed
–relationship to population size
–definition of a “job” (This one can be especially complex. For instance, do home workers have jobs? Do part-time workers have jobs?)
–Cash workers who don’t pay taxes and are “invisible” to the government statisticians

All these thoughts came to me when I looked at this graph.

graph 1

It shows the total number of unemployed (blue line) and the Civilian Employment / Population Ratio (red line).

The number of unemployed remains near its all-time high, which is an important election issue. But population too is at its all-time high. So, the red line is more revealing, simply because it takes population into consideration.

And it shows something rather interesting. The ratio of employment to population, while relatively high is nowhere near its all-time high, which occurred in 2000. In fact, the Civilian Employment-Population Ratio is higher than it was during all the years from WWII through 1983.

Even more interesting: Unemployment has tended to fall during the years preceding recessions, then climb during recessions, only to fall again when recessions ended. This could indicate that unemployment does not precipitate recessions, but rather is a result of recessions.

Neither curing unemployment nor increasing employment, seems to prevent recessions. On the contrary, based solely on these data, one could make the case that employment efforts are economically counter-productive.

I don’t have good evidence to explain this counter-intuitive result, but as a businessman, I have a hunch: When business improves, companies hire too many people. They create excessive employment. Then, because payrolls become excessive, companies pare down. And this, along with reduced federal deficit growth, leads to a recession.

I am not saying the federal government should encourage unemployment or even neglect it. Rather, I believe reduced unemployment works in parallel with reduced federal deficit spending to cause recessions.

graph 2

Rather than trying to attack unemployment directly, the federal government should increase deficit spending on many fronts, which will stimulate the overall economy and thereby, counteract the negative economic effects of what seem to be periods of excessive employment.

As I said, I don’t have proof for this conjecture, other than the data shown above. Perhaps you have a different explanation.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. It’s been 40 years since the U.S. became Monetary Sovereign, , and neither Congress, nor the President, nor the Fed, nor the vast majority of economists and economics bloggers, nor the preponderance of the media, nor the most famous educational institutions, nor the Nobel committee, nor the International Monetary Fund have yet acquired even the slightest notion of what that means.

Remember that the next time you’re tempted to ask a dopey teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it screwed up my future.”

MONETARY SOVEREIGNTY