–The difference between ignorant and stupid. S&P, supercommittee and Chicago Tribune

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.
The difference between ignorant and stupid is this: Smart people know when they are ignorant. Stupid people don’t. Which brings me to my favorite newspaper editors, those of the Chicago Tribune.

I’ve had a continuing correspondence with Bruce Dold, Tribune editor, in which I have offered to explain Monetary Sovereignty to him or to anyone else at the Tribune. All he had to do is name one person at the Tribune who was willing to learn. His response:

9/26/11: Thank you for your note and for your other emails on this subject to Tony Hunter and to me. I want to assure you that I have shared your views with other members of the editorial board and discussed them with Mr. Hunter. The editorial writers understand your position on monetary sovereignty. We respectfully disagree with your views on the likely economic impact if federal policy were based on those views.

Yes, the federal government can print dollars, which state and local governments cannot do. But to do so at will would have staggering inflation implications. To say federal spending does not use borrowed money seems to ignore the $9.5 trillion in U.S. public debt, half of which is held by foreign entities. S&P wasn’t willing to ignore that.

(Previously I had showed him how there has been no connection between federal deficits and inflation. Despite the current circumstances of high deficits and low inflation, right before his eyes, Dold believes that any deficit spending causes inflation.)

And as for his comment, “To say federal spending does not use borrowed money seems to ignore the $9.5 trillion in U.S. public debt,” I agree there is something called “federal debt,” but the federal government does not spend borrowed money (which I repeatedly have explained to him.) Why should it if, as he says, “the federal government can print dollars”?

Apparently not one employee of the Chicago Tribune is willing to learn, which probably is why the Tribune continues to lose readers. And this brings me to their latest (11/22/11) editorial, this one titled, “$3 million every minute”. Here are a few excerpts:

To all those who complained of unfairness when Standard & Poor’s downgraded the creditworthiness of these United States in mid-summer: The rest of us accept your apology. You were wrong . . . As S&P managing director John Chambers said . . .”what we’re seeing is a threat the United States government is slightly less creditworthy.” . . . U.S. leaders needed to unite and deliver “stabilization and eventual decline” of U.S. debt.

Not only do they want a disastrous balanced budget (“stabilization”), but they want taxes to exceed federal spending (“decline”). They, having learned nothing from history, want the money supply to decline:

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

O.K., so the Tribune editors aren’t the only stupid ones. They copy the stupidity of S&P, who believes a Monetarily sovereign nation has less “creditworthiness” because its “debt” had grown. Of course, as our readers know, the federal debt merely is a reflection of the money supply, and declines in federal debt growth lead to recessions. See Items #3 and #4 in https://rodgermmitchell.wordpress.com/2009/09/07/introduction/

In short, the Tribune editors practice “kitchen table economics,” in which they equate U.S. federal finances with personal finances, demonstrating mind numbing cluelessness about Monetary Sovereignty.

As a group the (supercommittee) have (sic) fiddled as the U.S. declined from a deficit of $161 billion in 2007 to a shortfall of $1.3 trillion in the fiscal year that ended eight weeks ago.

“Declined”? “Shortfall”? Are those words properly attributed to the money growth that is necessary to grow an economy?

. . . more of your tax dollars will go to interest payment on debt held by China . . .

Wrong, again. For a Monetarily Sovereign government, there is zero relationship between tax collections and federal spending. If taxes fell to $0 or rose to $100 trillion, neither event would affect the federal government’s ability to pay its bills, by even $1.

The supercommittee, like Congress in toto, couldn’t even pluck the lowest-hanging fruit, tax reform that would reduce deductions, lower rates and raise some more revenue.

Don’t let the misdirection of “lower rates” fool you. “Raise some more revenue” is a tax increase. The Tribune believes a tax increase, which removes dollars from the economy, somehow will stimulate the economy. “That ol’ black magic has me in its spell.”

Why, then, did we think the Deficits Dozen would confront the real challenge — entitlement programs and other “payments to individuals” that in 2010 devoured 66 percent of the federal budget. We have 50 million on Medicare, 52 million on Social Security, with millions more drawing from disability, nutrition and other programs. All well and good . . . today’s enormous entitlement programs will only explode.

And there you have it. The 1% wants to cut back on dollars sent to the 99% — dollars for health care, retirement, disability, nutrition, etc. This is exactly what #OWS is protesting about. The editors of the Chicago Tribune have generous, company-sponsored retirement programs, generous, company-sponsored health care insurance, and undoubtedly have incomes well above the average. So, they subscribe to the 1% mantra: “99% screw you. I’ve got mine.”

Yet our leaders in Washington, facing these inevitablilities plus the visible plight of drowning-in-debt Europe, have served up next to nothing.

Again, the editors, repeatedly having refused my multiple offers to explain Monetary Sovereignty to them, demonstrate their ignorance of Monetary Sovereignty, by comparing monetarily non-sovereign Europe with Monetarily Sovereign America. This has transcended ignorance and moved solidly into stupid, with the Tribune editors figuratively clamping their hands over their ears and screaming “I can’t hear you; I can’t hear you.”

Ignorance of Monetary Sovereignty, and the stupidity that prevents even the attempt to understand it, is the single, most serious problem in the world, today. This combination of ignorance and stupidity has destroyed and continues to destroy the lives not of thousands, not of millions, but of billions of people around the world.

I award you editors of the Chicago Tribune a solid 5 dunce caps, for the ongoing, intentional stupidity of the 1%. One day, with the help of my readers, and other of similar bent, we will awaken the world to the lies you tell, and then you’ll pay. Oh yes, you’ll pay.

Readers, make ready the chopping blocks. Meanwhile, keep writing to your politicians, media types and economists. The truth will out.

(I now am running a 1,349 dunce cap deficit. The Tribune editors have no clue about what that means.)

Rodger Malcolm Mitchell

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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings


–Debt “unsustainable” no longer.

An alternative to popular faith

        Just when I thought the Chicago Tribune was starting to get it, they ruined everything. For years, the Tribune has told its readers the federal deficits and debt are unsustainable, that China and the other nations would refuse to lend to us, that the government would be unable to service its debts and that federal taxes needed to be increased or spending reduced.
        And because the federal debt is unsustainable, the government is not able to support Medicare, Social Security, Medicaid and universal health care without significant tax increases or benefit cuts.
        Then I saw this in the March 30, 2010 editorial titled, “Debt Dangers”:“But the U.S. is not about to run out of money, even if it keeps overspending. Why not? First it can appropriate more of its citizens earnings through the tax system. Second and most important, it can print money to pay its bills.
        Wow, is the staid, old Tribune finally starting to understand? Do they realize the government can support Medicare, Social Security, Medicaid and universal health care, even if taxes are reduced? Do they understand we don’t need China and the other nations to lend to us, because we can create money without borrowing?
         Sadly we were not to be so fortunate, for a few sentences later, the editorial said, “The danger is that (the government) would create money to make those debts payable, a course that would lead to much higher inflation.”
        Never mind that today, following the most massive deficits in our history, the government’s chief worry is deflation, not inflation. Never mind that for the past forty years, there has been zero relationship between deficits and inflation, and in fact, the largest deficits have corresponded with inflation reductions. (See the graph, below).

Debt vs inflation

        And never mind that deficits repeatedly have proved stimulative, while reduced deficits are depressive. Intuition and popular faith trump facts every time.
        Then the Tribune editors compounded the crime by stating, “The economy would also suffer as businesses and households scrambled to cope with the disruptive effects of soaring prices. It would suffer again if and when the government decided to curb inflation by driving up interest rates — a step that virtually guarantees a sharp downturn.”
        Never mind that high interest rates have not slowed GDP, nor have low rates stimulated, which is why the Fed’s twenty rate cuts failed to prevent or cure the recession. (See the next graph. If high interest rates slowed GDP, the peaks of the blue line would have to correspond with the troughs of the red line.)


         But at least, the Tribune has taken the first step, and perhaps we never again shall see that ridiculous sentence, “The federal debt is unsustainable.”

Rodger Malcolm Mitchell