–Republicans continue to be their own worst enemy, by Harold Meyerson Thursday, Jun 2 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The Washington Post published an article by Harold Meyerson, (Opinion Writer, June 2, 2011) titled, Republicans continue to be their own worst enemy. The article began with the well-deserved criticism of Paul Rand:

If you think it is Wisconsin Rep. Paul Ryan’s gutting of Medicare that is pulling the Republicans down, you need to think bigger. The House Budget Committee chairman’s proposal to convert Medicare into a private insurance-voucher plan is indeed a political calamity for the GOP, as the results of last week’s congressional special election in Upstate New York showed. But it’s far from the only disaster that the party has visited upon itself.

Mr. Meyerson then goes on to give what he considers to be additional examples of Republican self-immolation:

In Florida, only 29 percent of voters told the Quinnipiac pollsters last week that they approved of Gov. Rick Scott’s five-month tenure in office, during which Scott has endeavored to slash business taxes — already among the nation’s lowest — while also reducing spending on schools and cutting care for the developmentally disabled.
[ . . .]
Things are looking just as bad for the GOP’s new crop of Midwestern governors. In Wisconsin, Scott Walker, whose proposal to curtail collective bargaining for public employees triggered a nationally watched eruption of protest . . .

(Re.) Ohio Gov. John Kasich: . . . approval rating was a bargain-basement 33 percent, while his disapproval rating had risen to 56 percent. Voters . . . asked if they intended to support the referendum likely to appear on this November’s ballot that would repeal the Kasich-backed law sharply limiting collective bargaining rights for public employees. Ohioans said, by a 55 to 35 percent margin, that they’d vote to repeal it.
[ . . .]
In Michigan, Gov. Rick Snyder had a 33 percent approval rating, against a 60 percent disapproval rating, in a May survey that also found that 71 percent of Michigan voters thought poorly of his budget cuts to public schools, and more than 60 percent opposed his proposed tax reductions on business. A May survey of New Jersey voters by Fairleigh Dickinson University pollsters found that Gov. Chris Christie’s favorables had slumped to 40 percent, while his unfavorables had risen to 60 percent.

Meyerson compares them with Democratic governors Jerry Brown (California) and Andrew Cuomo (New York), who have favorable ratings.

In contrast to their GOP counterparts, neither Cuomo nor Brown has proposed stripping public employees of meaningful union representation, though both have sought and obtained cutbacks to public programs. The Los Angeles Times/USC Dornsife poll also shows that Californians support Brown’s plan to retain higher tax rates rather than further decimate public schools.

Meyerson concludes:

But the Republican governors — like Ryan and his fellow Republicans in Congress — have pursued a more radical course that sharply disadvantages most Americans. . . . Republicans did not run last year on a platform of ending collective bargaining, slashing school budgets and gutting Medicare — in essence, favoring society’s most powerful at the expense of everyone else — yet that’s precisely what they’ve done since gaining power.That’s not merely bad policy; it’s bad faith — and bad news for Republicans’ electoral prospects.

It also is extraordinarily ignorant (though I don’t know whether Meyerson truly understands why), because it is unnecessary. At the federal level, a Monetarily Sovereign government does not need to cut Medicare and Social Security. The federal government has the unlimited ability to pay for these vital services. While the Tea (formerly Republican) Party rightly says that increasing taxes on the wealthy is a bad idea for the economy, cutting Medicare and Social Security are orders of magnitude worse ideas.

Not only will Medicare and Social Security cuts harm the lower and middle classes, their children and their grandchildren, but these cuts will harm the entire economy by removing money from the economy. And this whole controversy exists because the Tea/Republicans do not understand the differences between Monetary Sovereignty and monetary non-sovereignty.

By contrast with the federal government, the states, being monetarily non-sovereign, do not have the unlimited ability to support state and local programs. They are forced to cut services or increase taxes or be more efficient. In reality, there is a low limit to how far efficiency can take you, so it comes down to services vs taxes, and people want their services.

Of course, the long-term solution to the states’ (and counties’ and cities’) problems is federal support. But again, this requires an understanding of Monetary Sovereignty, a knowledge of which not one national politician has demonstrated. (Visualize 550+ people running our economy, and not one of them has even a basic understanding of economics.)

So the Tea/Republicans, who rode to power on a wave of knee-jerk discontent, now will face an electorate who have had a chance to think about realities. Carrying anti-government placards and screaming anti-government slogans will not overcome the reality that the people like their Medicare and Social Security, and if anything these programs should be expanded – and don’t you dare touch them. Here is one case, where the people are much smarter than the politicians – or is that always the case?

Of course, this all gets back to my own favorite slogan, “Those who don’t understand the differences between Monetary Sovereignty and monetary non-sovereignty, don’t understand economics” (and they should stop writing about, or voting on, economic issues).

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 teenager, “What were you thinking?” He’s liable to respond, “Pretty much what your generation was thinking when it ruined my future.”

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

–We never will find a solution, because we’re discussing the wrong problem. Thursday, May 26 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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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


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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

–Does unemployment actually stimulate the economy? Wednesday, May 25 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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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

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