Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Early this month, Federal Reserve Chairman Ben S. Bernanke, warned Congress the U.S. was in danger of falling over a “fiscal cliff” — a recession caused by the expiration of tax cuts and the imposition of spending cuts.

Using “Fed-speak,” Bernanke correctly told Congress that deficit reduction will cause another recession.

Now, more and more people are asking Congress, “What the hell have you done?”

TPM
Massive Coalition Fights Congress Over Looming Domestic Cuts
By Brian Beutler, July 13, 2012

When debate in Washington turns to the year-end “fiscal cliff,” it invariably centers on looming cuts to defense programs, and the Bush tax cuts.

But billions of dollars in annual funding to domestic programs is also on the line. Nearly 3,000 organizations that benefit from non-defense discretionary spending, including heavy hitters like AARP, have aligned to push Congress to sort out not just the tax and defense issues, but across the board cuts that threaten medical research, border security and everything in between.

Translation: “Sort out” means, “Find a way to cut the deficit, and force the nation over a fiscal cliff, but don’t cut my budget.”

“There is bipartisan agreement that sequestration would be devastating to the nation,” the alliance writes in a letter to members of Congress. “The nearly 3,000 undersigned national, state, and local organizations — representing the hundreds of millions of Americans who support and benefit from nondefense discretionary (NDD) programs — couldn’t agree more.

Congress and the President must work together to ensure sequestration does not take effect. We strongly urge a balanced approach to deficit reduction that does not include further cuts to NDD programs, which have already done their part to reduce the deficit.”

Translation: Congress and the President worked weeks to create the sequestration plan that everyone know would be a disaster. Now that what everyone knew would happen, soon will happen, we ask that Congress work just as hard to undo the plan they created.

[Aside: Rep. Jesse Jackson, Jr. has disappeared. Some people are outraged, and want him to return, now. But Chicago Mayor Rahm Emanuel said, “Why would he get back to work to a Congress that does no work?” That says it all.]

Last year’s debt limit deal created the sequester as a mechanism to force Congress to cut $1.2 trillion from the deficit. But that came on top of nearly $1 trillion in locked-in cuts to domestic programs over the coming decade. The groups say its time for other parts of the budget to take a hit.

Translation: We know cutting deficits will force the economy over a “fiscal cliff,” but no one can prevent Congress from destroying America. So just don’t cut my budget.

Here are excerpts from the alliance’s letter to Congress:

July 12, 2012
Dear Member of Congress:

We strongly urge a balanced approach to deficit reduction that does not include further cuts to NDD programs, which have already done their part to reduce the deficit.

NDD programs are core functions government provides for the benefit of all, including medical and scientific research; education and job training; infrastructure; public safety and law enforcement; public health; weather monitoring and environmental protection; natural and cultural resources; housing and social services; and international relations.

Every day these programs support economic growth and strengthen the safety and security of every American in every state and community across the nation. Yet NDD programs have borne the brunt of deficit reduction efforts.

For example, there will be fewer scientific and technological innovations, fewer teachers in classrooms, fewer job opportunities, fewer National Park visitor hours, fewer air traffic controllers, fewer food and drug inspectors, and fewer first responders. America’s day-to-day security requires more than military might.

NDD programs support our economy, drive our global competitiveness, and provide an environment where all Americans may lead healthy, productive lives. Only a balanced approach to deficit reduction can restore fiscal stability, and NDD has done its part.

Sadly, these people do not object to deficit reduction. In fact, they favor it. They just don’t want their own budgets cut. But, Bernanke’s “fiscal cliff” comment did not refer to specific budgets. It referred to deficit reduction – any deficit reduction.

These people still do not recognize that deficit reduction by any name (“balanced budget,” “living within our means,” “fiscal responsibility”) hurts the entire nation. A growing economy requires a growing money supply; deficits are the method by which the government adds dollars to the economy.

There is not one valid reason why deficits should be reduced; rather, they should be increased. The facts are there for all to see.

Lord, what will it take?

Rodger Malcolm Mitchell
Monetary Sovereignty

P.S. I award 2 dunce caps to the NDD for not recognizing their fundamental problem is deficit reduction, and instead proposing a “beggar thy neighbor” solution (Don’t cut us, but do cut someone else).

==========================================================================================================================================
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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

My senator, Dick Durbin, has proposed new legislation. Here is what he says on his web site:

Many students turn to private student loans to help finance their education. Traditionally, private student loans issued by for-profit lenders have been—appropriately—treated like credit card debt and other similar types of unsecured consumer debt in bankruptcy.

If student debt became so overwhelming that a graduate had to declare bankruptcy, private loans could be discharged like any other debt. But in 2005, a provision was added to bankruptcy legislation that protects the private lenders that extend private credit—not federally guaranteed student loans—to students.

Where students could once find relief from suffocating debt, there is now no escape from high-interest, predatory student loans. And the student lending industry has not been the same since the law was changed–it quickly exploded from $11.8 billion the year before 2005 to a peak of more than $23 billion just four years later.

Today, a significant portion of students are burdened with tens—or even hundreds—of thousands of dollars in student loan debt, and, in our current economic climate, too many are struggling to make timely payments on these loans.

Senator Durbin’s proposed solution: Change the law to allow students to go bankrupt. According to Bloomberg:

The largest private student lender is SLM Corp., (SLM) known as Sallie Mae, which made $2.7 billion in private education loans last year, up 19 percent from a year earlier, the company said in a statement in January. It expects to originate about $3.2 billion this year.

Sallie Mae’s portfolio of private student loans was about $36 billion, and loans to students at for-profit colleges account for about 10 percent, according to the Newark, Delaware- based company.

“Sallie Mae supports reform that would allow federal and private student loans to be dischargeable in bankruptcy for those who have made a good-faith effort to repay their student loans over a five-to-seven year period and still experience financial difficulty,” Patricia Nash Christel, a spokeswoman for the company, said in an e-mail.

While being able to go bankrupt is better than not being able to go bankrupt, encouraging thousands of college students to put a bankruptcy on their credit history is not desirable. Further, maintaining barriers to school attendance, makes no sense for our nation. The future survival and growth of America requires us to make school an affordable and attractive option for as many people as possible.

Here are some facts that bear on this subject:

A. Most elementary school and high school education is provided free, courtesy of the states.

B. But, states are monetarily non-sovereign, and cannot create dollars at will. Most have serious financial problems. Supporting lower education is a large burden for the states. By contrast, the federal government is Monetarily Sovereign, having the ability to create dollars at will.

C. Even with free education available, many students opt out of elementary and, especially, high school. One reason: Families cannot afford to support the students. They need the students to go out and earn money.

D. College education is important to U.S. economic growth in this increasingly technical world, where machines do more of the “grunt” work, and brains increasingly are more important than brawn.

Given these facts, I’ve proposed this solution to the student loan problem:

1. The federal government should take over the funding of elementary and high school education. Because the states are strapped for funds, lower education funding may take a back seat. Every day, America loses the value of one of our most important resources: Our young people.

2. For the same reasons, the federal government should take over the funding of college education, including advanced degree education.

3. The federal government also should pay each student a salary for attending school. [See link for more details]

Finally (note to Warren Mosler and Randy Wray), though I have criticized Modern Monetary Theory’s (MMT) Jobs Guarantee (JG), I could visualize paying a salary for attending school, as a partial solution to the unemployment problem.

The negative would be the probable requirement that the “employee” attend full time and pass the course, which would preclude finding a full-time job, elsewhere. The positive would be that attending school would be more beneficial than typical minimum wage jobs — more beneficial to the worker and more beneficial to America.

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Today’s (7/10/12) Chicago Tribune published an editorial titled, “Irrelevant and irresponsible”. Here are a few excerpts. See whether you agree with the Tribune editors or with the Tribune editors.

The federal government is in the midst of serious fiscal crisis and hurtling toward a much worse one.

Translation: In Tribune-speak, “Serious financial crisis” means the federal deficit and/or debt (the Tribune often uses these terms interchangeably — and incorrectly) are too high, and therefore a bad thing.

On Monday, President Barack Obama propos(ed) to extend the Bush-era tax cuts, for everyone except those making $250,000 a year or more. It’s a step that would widen the federal budget deficit by $175 billion a year, compared with letting all the cuts expire.

Translation: “Widen the federal budget deficit” is a bad thing.

Not that extending some or all of the tax cuts at the end of 2012 is a bad idea. Barring such an extension, rates will go up and money will be sucked out of an economy that is already sluggish. The current slowdown might turn into an outright recession. This is not the time for a tax increase.

Translation: Widening the federal budget deficit is a good thing.

But neither is it a time to ignore the steadily growing fiscal hole we are digging. Any extension should be part of a broader package that includes concrete measures to bring down the long-term deficit.

Translation: Widening the budget deficit is a good thing today, but for the same reasons, it’s a bad thing tomorrow.

One of the few instances when both (parties) accepted needed sacrifice was in last year’s debt ceiling showdown. The resulting plan called for some $900 billion in specified spending cuts over a decade. A so-called congressional supercommittee was tasked with finding another $1.5 trillion in savings, and if it failed — which it did — the deal called for $1.2 trillion in automatic cuts roughly balanced between defense and non-defense programs.

Translation: The $900 billion called for sacrifice by the lower 99% income group, because widening the budget deficit is a bad thing.

Romney is promising to tear up the deal because of its impact on the military. The cuts would be large, and they would take a lot of discretion away from the Pentagon, which are two legitimate complaints.

Translation: Widening the budget deficit is a good (“legitimate”) thing.

(Romney’s) plan, says Cato Institute analyst Christopher Preble, would mean nearly $2.6 trillion in additional defense outlays over the next decade — making it 45 percent higher (in inflation-adjusted dollars) than it was under President Ronald Reagan during the Cold War. A defense buildup of that magnitude is politically unrealistic and financially unaffordable.

Translation: Widening the budget deficit is a bad thing, because our Monetarily Sovereign government, having the unlimited ability to create dollars, can’t create enough dollars, so can’t afford to service the deficit.

Sometime before we arrive at the fiscal cliff that looms at the end of the year — that’s Federal Reserve Chairman Ben Bernanke’s term for the simultaneous automatic spending cuts combined with across-the-board tax increases — politicians will have to stop playing chicken and actually reach a compromise on the difficult fiscal choices the country faces.

Not widening the budget deficit is a “fiscal cliff,” which is a bad thing. Politicians should stop playing chicken and both widen and not widen the budget deficit — i.e., jump off the “fiscal cliff” while not jumping off the “fiscal cliff.”

But so far, Obama and Romney are devoid of serious proposals, leaving businesses and individuals to guess what will happen. Their irrelevance and irresponsibility leave the U.S. economy hobbled by uncertainty.

Obama and Romney have chosen to dodge the issue. If they and their similarly feckless comrades in Congress persist down this dead-end path, the consequences of their reckless posturing will not be so easy to evade.

Translation: Budget deficits are a bad thing. Budget deficits are a good thing. Though the federal government has the unlimited ability to create dollars, it cannot afford to pay for deficits. We don’t know why the President and Congress don’t understand this simple concept.

Obama and Romney are “feckless,” because they don’t increase the deficit while decreasing the deficit, which the government both can and cannot afford.

Question: Why would an intelligent person take two diametrically opposing sides of the same issue.
Answer: If he is intelligent enough to realize what he is doing, then he must have a secret agenda.

Question: Are the Tribune editors intelligent?
Answer: Yes, I believe they are.

Question: Do the Tribune editors realize they they are taking two opposing sides of the same issue?
Answer: I have corresponded with Bruce Dold, the Editorial page editor, several times, and have discussed this very fact. He ignores it.

Question: Does Bruce Dold have a secret agenda?
Answer: It’s the only conclusion I can imagine.

Question: What is Bruce Dold’s and the Tribune’s agenda?
Answer: Most federal spending helps the lower 99% income group far more than it helps the upper 1%, and when all federal taxes are considered, the lower 99% pay a higher share of their income than do the upper 1%.

Therefore, debt reduction increases the gap between the 99% and the 1%. I believe that is the secret agenda of the Tribune, which is owned by members of the 1%.

Question: What will happen?
Answer: Ironically, the Tribune editorial was titled, “Irrelevant and irresponsible.” Because the Tribune editors — and most newspaper editors — behave irresponsibly, their papers are becoming irrelevant. Fact checking via the Internet has become so easy, that papers are less often regarded as infallible guardians of the Truth, and more often regarded as mouthpieces for the rich.

The public, not trusting the papers, is leaving in droves. Circulation is down and papers are going out of business.

It seems that if you are going to be lied to, you’d rather to receive your lies in a more entertaining manner (a la Fox News) than in the deary format, surrounded by comparatively obsolete news, the papers provide.

Newspapers have two choices; They can appeal to an audience that wants the facts. Or they can appeal to an audience that doesn’t care about facts, but prefers entertainment. Otherwise, I foresee a time when there are left only a handful of papers in the entire United States.

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY