Libertarians attack Warren, so she must be good. Thursday, Sep 12 2019 

Background: The Cato Institute is an American libertarian think tank, founded as the Charles Koch Foundation.

It supports lowering or abolishing most taxes, opposition to the Federal Reserve system, the privatization of numerous government agencies and programs including Social Security, the Affordable Care Act, and the United States Postal Service, along with adhering to a non-interventionist foreign policy.

Reason is an American libertarian monthly magazine published by the Reason Foundation. Peter Suderman works for Reason.

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Libertarianism tends toward anarchy; seemingly any level of government ownership or control, no matter how small, is considered too large by libertarians.

The following article perfectly illustrates the libertarian worldview:

Elizabeth Warren’s Plans Don’t Add Up

The Warren worldview of ill-founded economic pessimism is both bloodless and moralizing.

PETER SUDERMAN | FROM THE OCTOBER 2019 ISSUE OF REASON

At the heart of Elizabeth Warren’s campaign for president—and of her entire career as a politician and public intellectual, are two simple ideas.

The first is that the economy is fundamentally broken. She declared that “millions and millions of American families are also struggling to survive in a system that has been rigged by the wealthy and the well-connected” and in which she insisted that the only response was to fight for “big structural change.”

She inveighed against corporate profits and monopolistic businesses and corrupt lawmakers who have “made this country work much better for those who can make giant contributions, made it work better for those who hire armies of lobbyists and lawyers, and not made it work for the people.

It was present in the 2007 essay that imagined what would eventually become the Consumer Financial Protection Bureau, a federal agency premised on the notion that American families were being “steered into overpriced credit products, risky subprime mortgages, and misleading insurance plans'”

She proposed an array of economic policies, from a $15 minimum wage to enforcing restrictions on certain bank loans, that she argued could stave off the crisis.

(She issued a) slew of white papers and policy proposals that have poured forth from Warren’s campaign as if she were running a think tank rather than a presidential bid.

Image result for poverty in america

It’s her own fault. Don’t ask for government help.

Apparently, libertarian Suderman doesn’t believe that “millions of American families are also struggling to survive in a system that has been rigged by the wealthy and the well-connected” and “this country works much better for those who can make giant contributions, and for those who hire armies of lobbyists and lawyers.”

He is living in a libertarian dream world.

He doesn’t like that Warren has proposed a $15 minimum wage, up from the current federal minimum of $7.25 hour — barely survivable for a single person, and poverty-level for supporting a family.

Libertarian Suderman doesn’t like that Warren wants to restrict the terrible bank loans that contributed to the “Great Recession of 2008.”

Suderman doesn’t like that Warren has issued “white papers and policy proposals,” rather than merely promising generalities and American greatness.

In the space of just a few months this year, Warren released plans for everything from ending drilling on public lands to breaking up Facebook and Amazon.

She wants to spend $500 billion on affordable housing and trillions more to cancel most student debt, make public college tuition free, and offer subsidies for childcare.

And she has proposed paying for these costly programs with wealth taxes designed not only to offset the price tag of new government spending but to help reduce economic inequality by shrinking large stores of wealth.

To Suderman, ending drilling on public lands, providing affordable housing, canceling student debt, and offering free college tuitions — i.e. ideas to narrow the Gap between the rich and the rest — are terrible.

He is right about one thing: “Paying for” her ideas with a wealth tax is unnecessary and unworkable. It is unnecessary because the federal government, being uniquely Monetarily Sovereign, it creates dollars at will. So, your federal taxes do not fund federal spending. 

Unworkable, because “wealth” is far too easy for the truly wealthy to hide.

Warren’s penchant for wonky policy detail has defined her candidacy: “Elizabeth Warren has a plan for that” has become a rallying cry and a slogan, one her fans have plastered across an array of T-shirts and campaign signs.

Warren has happily embraced this persona, joking with crowds that her focus on the details of federal agencies would turn them all into nerds.

Heaven forbid that a candidate supplies plans and details. To Suderman, it would be far better to offer bland Trump-like generalities, like “Repeal and replace ACA”” and “Build the wall” than to provide specific, people-friendly details.

Warren wants the federal government to be the American economy’s hall monitor, telling individuals and companies what they can and can’t sell or buy and making some of the nation’s most successful businesses answer to her demands.

Being the economy’s “hall monitor,” i.e. preventing miscreants from stealing, is exactly what the federal government should do.

And oh, horrors, telling the nation’s most successful businesses what dishonesty not to commit, is unthinkable to Suderman, who seems to believe that “liberty” means allowing big business to do whatever it pleases.

It seems to be working. During the first six months of 2019, this strategy vaulted Warren into the top tier of Democratic primary contenders, helping her raise more than $19 million during the year’s second quarter and placing her among the top three or four candidates in the party’s crowded field.

Focus groups and political reporting have consistently found that Democratic voters are warming not only to the substance of Warren’s ideas but to the very fact that she has them.

Well yes. Having ideas and detailing them, not only is good politics, but it is good governance. Would that more politicians did it.

Although she has received kudos for the volume and specificity of her plans, Warren has a history of pushing misleading research and cherry-picked data designed to support politicized conclusions.

Warren first rose to prominence as the co-author of a pioneering study of consumer bankruptcy, which was published in book form in 1989 under the title As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America.

Warren and her co-authors based the book on a trove of court data from about 1,500 bankruptcy cases in Pennsylvania, Illinois, and Texas during 1981.

The book relied on real-world case studies. Warren statistically analyzed a trove of unique data. She was telling a story to make an argument about politics and policy.

The story was that rapacious credit card companies, rather than consumer overspending, were primarily responsible for a run-up in consumer debt and the resulting sense that household budgets had grown more precarious.

The book’s authors saw bankruptcy in broadly sympathetic terms, as a financial safety net for struggling families. In the years that followed, Warren would go on to become one of the nation’s most prominent advocates of making bankruptcy easier, more lenient, and more accessible.

But that story had some notable problems. Among others, it was based on cases from 1981, a recession year when consumers would have looked worse off than usual. It was released years later, after a significant reform to the bankruptcy code in 1984 rendered its picture of American bankruptcy somewhat out of date.

Here, Suderman criticizes the currency of Warren’s bankruptcy research, none of which has anything to do with the currency of her above-mentioned economic recommendations.

It’s as though Suderman would hate her ideas for child-rearing because her book on auto repair is out of date. In short, Suderman’s criticism is inane and utter nonsense.

And note the words, “rather than consumer overspending.” They illustrate the libertarian belief that poor people are responsible for their own misfortune.

Warren drew on her bankruptcy research to argue that the middle class had been given a raw deal.

The number of households filing for bankruptcy had shot up dramatically, she said, and it wasn’t because they were spending too much.

Instead, the increasingly high cost of housing, driven heavily by competition for access to good schools, and the pile-up of medical debt were driving families into dire straits.

It is the high cost of living, not just housing, has driven families into dire straights.

Again, Suderman wants to “prove” Warren is completely wrong, by trying to nit-pick a point of data, when her overall conclusion (that the Gap between rich and poor has widened, and many families are in financial trouble and need protection) is correct.

These effects were compounded by the movement of women into the workforce.

Where stay-at-home wives had once served as a safety net—the earners of last resort should a breadwinner husband lose his job—the rise of the working mother had increased financial risk for two-earner families.

The book’s findings were marked by controversy and unanswered questions about the soundness of her methodology. In particular, Warren’s notion that housing prices have been pushed upward by school competition doesn’t fully stand up to scrutiny.

Although research has found that school quality does impact housing prices, the effect is fairly modest. A 2006 study in the Quarterly Journal of Economics found a 2.5 percent increase in home prices for every 5 percent increase in test scores.

And in what way does the so-called “fairly modest” difference in home prices negate Warren’s position on student debt, mortgage supervision, family bankruptcy, the minimum wage, and the prevention of financial cheating by large companies?

It doesn’t, but Suderman tries to make his point by fixating on minutia to distract you from the main point, that middle-class families are struggling, and the very purpose of government is to improve the lives of its citizens.

And then there’s the role of taxes. In the book’s hypothetical comparison budgets, Warren presents taxes as a percentage of household income—24 percent in the 1970s, 33 percent in the 2000s—which the book describes as a 35 percent change.

Yet as George Mason University law professor and consumer finance scholar Todd Zywicki has noted, the choice to render taxes only as a percentage of income has the effect of masking the total dollar value.

Using Warren’s own figures, Zywicki calculated that the tax increase—owing partly to the hypothetical family hitting a new tax bracket and partly to the imposition of additional state, local, and property taxes over time—was by far the largest factor affecting the modern family’s budget.

Warren’s numbers, in other words, showed that families had been strapped not by increased spending on homes or health insurance but by a bigger tax bill.

Yes, taxes on the middle classes are too high. So, how does that eliminate the need to follow Warren’s proposals? Again, it doesn’t. It’s just another Suderman diversion.

Zywicki is among Warren’s most outspoken critics, and he has made this case—that Warren’s data do not show what she claims they do about the plight of the middle class—on multiple occasions over the span of more than a decade.

What Suderman fails to mention is that Zywicki is a senior fellow, paid by the Cato Institute, that aforementioned libertarian think tank, which spends its time and money trying to prove that government not only is unnecessary but a hindrance to America.

Zywick is not exactly an impartial commenter.

Warren co-authored a Health Affairs study purporting to show that at least 46 percent of the nation’s bankruptcies were a result of medical bills, a figure she subsequently updated to 62 percent.

Her research claimed that medically induced bankruptcies had increased a shocking 23-fold since 1981.

President Barack Obama warned that sky-high medical costs had forced many Americans to “live every day just one accident or illness away from bankruptcy.”

One wonders, what is the fundamental point Suderman is trying to demonstrate? That sky-high medical costs are not a serious financial problem for millions of Americans?

The response by Warren and her co-authors was revealing. In one sense, they were engaged in a conventional academic dispute about interpreting bankruptcy data. But what they were really fighting about—what was really at stake—was public policy.

Warren clearly believed that the value of her research was in the story it told and the way that story informed and influenced the real world of politics and public affairs.

Yes, that exactly is the point. What does it matter whether housing prices, or school costs, or medical costs are most responsible for bankruptcies or other forms of financial distress?

The point that Suderman doesn’t want you to understand is that these are problems the federal government can and should address. It has the means, if only it had the will.

Sadly, the Sudermans of the world would rather quibble about differences in data than to solve the clear and obvious problems that plague us.

Yes, some things are more troublesome than others, but that does not mean we should stall. while people suffer, debating how much more troublesome school costs are than medical costs.

But perhaps, stalling is what Suderman wants.

In the aftermath of the 2007–08 financial crisis, Congress, then controlled by Democrats, passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was billed as a direct response to the economic meltdown and an attempt to make sure it never happened again.

A centerpiece of the bill was the creation of a new federal agency, the Consumer Financial Protection Bureau (CFPB), which was modeled on Warren’s original proposal.

The bureau, as imagined by Warren, was premised on the notion that consumers did not and in some cases could not understand the financial services they relied on, and that only an army of unusually powerful government bureaucrats could save them from blundering into the tricks and traps set by lenders.

And that is absolutely correct. Left to their own designs, the banks created the most convoluted, complex financial products, that no one, not even Suderman, could understand, then sold them to the public, with disastrous results.

The CFPB’s mission, meanwhile, was far more expansive than its origin story might imply. From payday lenders to cash advance services, many of the financial products it was given the power to regulate had little or nothing to do with the financial crisis.

Suderman’s senseless point seems to be that if a financial scam had nothing to do with the Great Recession, it should be ignored.

The CFPB was the culmination of decades of research and advocacy on Warren’s part. She had imagined it, fought for its creation, and then, from her perch in the administration, ushered it into being.

And yet there was a kind of victory as well, in the simple fact of the CFPB’s creation. Warren would not be its leader—that role would eventually go to former Ohio Attorney General Richard Cordroy, who was given a recess appointment that caused its own controversy—but she had willed it into being and would continue to provide spiritual guidance.

She did not achieve her political ambitions, but on the policy question, she had triumphed.

In the years that followed, something strange happened: Warren, the icon of progressivism whose political brand had proven too toxic to move through the CFPB nomination process, became the object of a strange new respect from the right.

Apparently, being respected by some right-wingers is a curse for Suderman.

Under President Donald Trump, in July, The American Conservative, long a bastion of immigration-skeptical conservative nationalism, ran an essay extolling Warren’s economics, particularly her plans for a new bureaucracy dedicated to “defending good-paying American jobs,” and saying that in some respects, “Warren may be a bigger economic nationalist than even Trump himself.”

A paragraph of utter nonsense, but what else can one expect in political discourse?

Nor is Warren’s popularity limited to small opinion journals.

In June, Fox News’ Tucker Carlson, among the most-watched hosts on cable news and an influence on the Trump administration, opened his show with an extended monologue praising Warren’s domestic jobs plan and its elevation of “economic patriotism,” which calls for, in the senator’s words, “aggressive new government policies to support American workers.”

“Many of Warren’s policy prescriptions make obvious sense,” Carlson said. “She sounds like Donald Trump at his best.” Later, at a conference in July, he praised The Two-Income Trap as “one of the best books I’ve ever read on economics.”

Suderman’s position is if a right-winger likes any of her recommendations that is prima facie evidence she is not a progressive. It’s wrong and a bit goofy, but it’s Suderman.

But then, the quick reversal:

It is hard to imagine the Republican Party ever embracing Elizabeth Warren. Trump frequently mocks her claims of Native American heritage, and the congressional GOP continues to view her with deep hostility. She’ll never be an ally to the party.

But in some increasingly influential corners of the right, her ideas and her outlook are winning.

The rest of Suderman’s long article is a rehash of his “unaffordability” claim about her proposals, and his dislike of the detail with which she presents them.

But “unaffordability” is a false claim concerning federal spending, and quibbling about the details rather than solving the big-picture problems solves nothing.

SUMMARY
Government is created by the governed to improve their lives. That is the purpose of government.

Peter Suderman is a classic libertarian, a hater of government. As a libertarian, he wastes more than 6,000 words denying the obvious — that for many people, good schooling, good housing, good food, and good medical care are unaffordable and that the banking industry has cheated millions of innocent people.

Suderman denies that many families are driven into bankruptcy by trying to pay for the abovementioned schooling, housing, food, and medical care, or eschewing bankruptcy, they must forego these life necessities.

Suderman also hints at the libertarian’s “bootstraps” theory, in which the victim is blamed for not earning enough, or being frugal enough, or smart enough to pay for their own needs.

To libertarians, “liberty” means freedom from government help. People should pull themselves up by their bootstraps, rather than depending on the government.

Then he applies the libertarian, “Catch 22” objection to deny people those bootstraps by implying that the $15 minimum wage is a bad idea. “Gotcha!”

In the real world, our “bootstraps” consist of things like a good education, good health, good housing, and money — all of which the federal government can and should provide — and all of which libertarian Suderman would not provide.

Why does libertarian Suderman deny the obvious?

Because to admit it would require him to offer solutions, and those solutions inevitably require federal spending — an anathema to libertarians.

Warren’s proposals are fact-driven and logical, which Suderman dismisses as “bloodless.” Her proposals also benefit the poor and middle classes, which Suderman dismisses as “moralizing.”

Suderman and the libertarians live in a harsh mythical world, where there is no allowance for poverty, people are expected to be born with all they need to succeed, and it only is laziness that prevents them from realizing their dreams.

Asking for help from the government supposedly is a moral and financial imposition on the rest of us who, of course, are self-sufficient.

It is the ultimate expression of Gap Psychology, in which people wish to widen the income/wealth/power Gap below them.

–Saving America by closing the gap: A suggestion for #OWS Friday, Dec 9 2011 

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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It had seemed mysterious to me, that otherwise well-informed, often intelligent people – people who have easy access to the facts – still seem not to understand the very basis of all economics: Monetary Sovereignty. Media writers and politicians are examples of groups who easily could discover the truth, yet they don’t.

For years I’ve ascribed this to laziness of mind or reluctance to admit error. I may have been wrong on both counts.

Let’s begin with a few, absolute, undeniable facts:

1. In 1971, the U.S. federal government became Monetarily Sovereign. It gave itself the unlimited ability to pay any bill of any size, any time.
2. Given this unlimited ability to create dollars, it needs neither taxes nor borrowing to support its spending.
3. U.S. states counties and cities, corporations and individuals are monetarily non-sovereign
4. The sole economic limitation on federal spending is inflation.
5. Since the U.S. became Monetarily Sovereign, and deficits increased greatly, the Fed largely has been able to control inflation at close to its target range of 2%-3%, and there never has been imminent danger of hyperinflation.
6. Federal deficit spending is economically stimulative and supports many economic benefits; reduced deficit spending, i.e. austerity, restricts benefits.
7. Dollars have no physical existence. Much like numbers, they exist only as accounting references. You nether can see nor touch a dollar.
8. The federal government pays its bills, not by sending dollars, which being non-physical, cannot be sent, but rather by sending instructions to banks to mark up accounts.
9. Austerity negatively impacts the poor more than the rich.

One may choose to argue these points, but the evidence suggests such arguments devolve to word play and sophistry. I never have known of an intelligent – emphasis on “intelligent” – debt hawk who seriously will deny any of the above. Yet, these same debt hawks continue to maintain that reductions in federal deficits are prudent and necessary, which strangely does not result in feelings of cognitive dissonance. They seem comfortable holding conflicting beliefs.

As said earlier, I first thought this indicated mental laziness, a cousin to low intelligence. And later I felt it might be closer to pride, hubris and the difficulty in admitting error. In my more recent posts I’ve suggested the real problem is class warfare. The wealthiest 1% are pressing down on the less wealthy 99%, not so much to increase absolute power, but to increase comparative power.

As a businessman, I often saw that absolute compensation was much less important to workers than comparative compensation. A worker making $25K per year was happy, if he were the highest paid among his peers, but a worker making $50K per year was angry if he were the lowest paid. One only need look at professional athletes to see this effect.

Though rationally, absolute income and benefits should be of paramount importance, the “wealth gap” has great psychological meaning. While austerity impacts the poor and the rich, the upper 1% are willing to accept some loss of wealth if the loss to the poor is greater, i.e. if the “gap” grows.

We see this everywhere. Deficit cutters want to reduce Social Security benefits. This negatively would impact the 1%, but not nearly so much as it would hurt the 99%. The same is true for Medicare reductions. Reducing military expenditures might make America less safe for all, but this has the “advantage” of unemploying thousands of soldiers and workers in militarily-related industries, thereby increasing the gap. Cutting postal services will be an inconvenience for the 1%, but a major trauma for those postal workers who lose their jobs.

Everywhere you look, reduced deficit spending hurts America overall, but the 1% are hurt less than the 99%. Reduced deficit spending growth leads to recessions, which grow the gap.

This effect may not always be intentional or even conscious by the 1%. It may simply be a matter of “comfort.” The 1% are uncomfortable when the gap narrows – when members of the 99% move into the neighborhood or into the exclusive building. Some clubs levy high fees to keep the “riff-raff” out. In organizations catering to the 1%, the staff goes beyond courtesy into obsequiousness, further to extend the gap.

Even racial and religious bigotry may be related to a psychological desire to press down some groups in order to extend the gap.

America’s and the world’s opinion leaders – the T.V. personalities, the print media editors, the politicians, the economists – they generally are part of the 1%, and if not the 1% at least the upper 5%. Emotionally, they all treasure the gap and feel uncomfortable when it closes.

Increased deficit spending would stimulate the economy, benefitting everyone, but it would benefit the 99% more, and that bothers the 1%. Even the upper 50% treasure the gap between them and the lower 50%. Everyone loves the gap if they are part of the “haves.”

Citizens, who don’t want immigrants to become citizens, use non-factual excuses like crime and job loss to explain their feelings. “Straights” deny marriage to gays, thereby maintaining the social gap. Everywhere we look, we find groups trying to press down other groups, not for any personal benefits, but to maintain a gap.

And that may be why facts and logic have had so little effect on economic beliefs. The greatly maligned (by me) Chicago Tribune editors, who stoutly refuse even to look at facts, much less acknowledge them, may not reflect mental laziness or reluctance to admit error. They may reflect their possibly subconscious, personal desire to maintain or build the gap.

So if facts and logic cannot overcome the myth that deficits should be reduced and austerity is beneficial, what can? In many nations, military power. In today’s America, political power.

Historically, efforts to reduce the gap have been met with resistance by the upper levels, this resistance being overcome only by political power. All the bloody revolutions fall into that category. Martin Luther King’s marches and especially voter registration, led to the gap-closing, Civil Rights act of 1964, perhaps America’s greatest revolution since the Civil War.

Political power means votes. While #Occupy Wall Street wishes to close the gap, it’s immediate goals are not clearly defined. They seem to want to bring down the upper 1%, a goal that will be met with the fiercest resistance, and which would not benefit the 99%.

#OWS first must learn Monetary Sovereignty, then put forth and support candidates (probably Democrats, not independents) who will show the 99% how MS can close the gap. The 1% will resist, but the 99% have the votes.

Warren Mosler ran for office. He was creamed. He had no backing, no name, no voice, no organization. He was alone with his facts and logic. #OWS should get behind people like Warren (and Warren himself, if he still has the stomach for politics), march for them, gather voters for them and give them big, loud, visible soapboxes, where they can shout the benefits of federal deficit spending – where they can show the 99% how their lives and their children’s lives need not be relegated to agonizing austerity.

That should be the focus of #OWS’s efforts: Learn MS, then elect candidates who understand MS. Given enough votes, the media, the politicians and even the old-school economists will fall in line, and America will emerge from the doldrums into the light.

Don’t damage the 1%. Damage the gap.

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


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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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

–Financial frauds who give exactly the same advice to every client, no matter what the situation. Friday, May 27 2011 

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

-Social Security bankrupt? Impossible. Saturday, Sep 12 2009 

An alternative to popular faith

      Which of the following federal agencies might go bankrupt, without a change in the law?

1. Bureau of Prisons
2. Centers for Disease Control and Prevention
3. Coast Guard
4. Central Intelligence Agency
5. Department of Justice
6. Department of State
7. Department of Labor
8. Department of Transportation
9. Department of the Air Force
10. Department of the Army
11. Department of the Navy
12. Department of the Treasury
13. Social Security Administration
14. Centers for Medicare & Medicaid Services
15. Department of Health and Human Services

       Answer: It is impossible for any federal agency to go bankrupt. None ever has; none ever will. Not even during the Great Depression did any federal agency go bankrupt nor did any federal check bounce.
      Then, in 1971, the federal government went off the gold standard specifically to give itself the power to create enough money to pay its bills, no matter how high.
      Think about this: “‘I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.’—Paul O’Neill, Secretary of the Treasury, June 19, 2001″

He said there is no money in the trust fund, yet it has been paying benefits. How is that possible? Because, benefits are paid by our Monetarily Sovereign, U.S. government, not from a mythical trust fund.

      Now tell me again why Social Security and Medicare might go bankrupt.

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

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