Mitchell’s laws: The more budgets are cut and taxes increased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 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.
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This lovely structure is what can happen when man decides to fight nature.

New York Times

Vast Defenses Now Shielding New Orleans
By John Schwartz
Published: June 14, 2012

NEW ORLEANS — Finally, there is a wall around this city.

Nearly seven years after flood waters from Hurricane Katrina gushed over New Orleans, $14.5 billion worth of civil works designed to block such surges is now in place — a 133-mile chain of levees, flood walls, gates and pumps too vast to take in at once, except perhaps from space.

Two “lift gates,” 50 feet across, can be lowered to block the waters of Lake Pontchartrain. A navigation gate 95 feet wide, whose curved sides weigh 220 tons apiece, can be swung gently but mightily into place.

Yet all that seems puny in comparison to the two-mile “Great Wall” that can seal off the channel from Lake Borgne to the east, or the billion-dollar west closure complex, which features the biggest pumping station on the planet.

Whatever storms might approach New Orleans this year or in the future, they will encounter a vastly upgraded ring of protection. The question is whether it will be enough.

Or, we could have moved inland to higher ground.

(It is) a vast civil works project that gives every appearance of strength and permanence. “This is the best system the greater New Orleans area has ever had,” said Col. Edward R. Fleming, the commander of the New Orleans district of the corps.

Marc Walraven, a district head in the Dutch ministry of transport, public works and water management, recently toured the defenses. While 100 percent safety is impossible, he said, and challenges in operations and maintenance can be expected, “the constructions that have been built are in my opinion adequate to defend New Orleans.”

Or, we could have moved inland to higher ground.

Tim Doody, the president of the levee board that oversees Orleans and St. Bernard Parishes, disagrees. While the construction appears to be strong, he said, the level of protection authorized by Congress for the corps to build is “woefully inadequate.”

The new system was designed and constructed to provide what is informally known as 100-year protection, which means it was built to prevent the kind of flooding that has a 1 percent chance of occurring in any given year.

But New Orleans has seen storms far more damaging than the 100-year standard. Katrina is generally considered to have been a 400-year storm, and rising seas and more numerous hurricanes predicted in many climate-change models suggest harsher conditions to come.

“It’s what the country will pay for; it’s what FEMA insures for,” Mr. Doody said. “But our thought and belief is that we all need to be behind protection that’s greater than that.”

Or, we could have moved inland, to higher ground . . .

While a major storm could lead to street flooding — something New Orleans, much of which is below sea level, sees even with heavy rainfall — the kind of catastrophic, explosive wall of water resulting from the failure of sections of flood wall and the dissolution of poorly-built levees that devastated so much of the city after Katrina should not occur again, (corps officials) say.

Overall construction started in 2006, and while some work is still going on, the projects are substantially complete and functional for this hurricane season.

Even many in the corps seem astonished by the speed of the work; projects of this magnitude would normally take decades to construct, said Kevin G. Wagner, a senior project manager with the agency. Looking out toward the billion-dollar pumping station and gates at the west closure complex, he said, “It’s truly amazing, starting in 2009, to be where we are today.”

Or, we could have moved inland, to higher ground . . .

Building greater than 100-year protection might not be simply a matter of building walls ever higher. It will also come from restoring the coastal environment that slows and buffers storms and their surge. It means restoring wetlands that have been rapidly disappearing, and perhaps creating barrier islands to act as speed bumps for storms.

When asked whether he thought the new hurricane structures would be effective, Jasen Seymour, a 19-year-old who was bowfishing with a friend near the 17th Street Canal, said “If the Army Corps of Engineers has anything to do with it, it’s not going to be strong.”

Still, some residents demonstrate their faith in the future simply by not leaving. Artie Folse, who rebuilt his home after Katrina and lives just a few blocks from the site of the breach of the 17th Street Canal that inundated his Lakeview neighborhood, said: “The fact of the matter is, I still live here. That pretty much says it all.”

Or, you could have moved inland, to higher ground . . .

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

==========================================================================================================================================
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 deficits, the 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, Americans are suffering from unemployment, which means Americans are suffering from lack of income — particularly the so-called “99%” who comprise the middle and lower income groups. And today, the political campaigns are in full swing, with politicians telling you what they think you want to hear.

And today, they will tell you what they plan to do about our economy, and particularly about the federal deficit. So today, might be a good time to remind you, once again, why the federal government doesn’t increase deficit spending.

After all, if the federal government would spend more on goods and services, while cutting taxes, this would create more jobs, reduce unemployment and put more dollars into the pockets of Americans. So, why not increase federal deficit spending?

As you know, the federal government (unlike state and local governments, businesses, the euro nations and us private people) is Monetarily Sovereign. It has the unlimited ability to create dollars.

If the government owed you a trillion dollars, it simply would instruct your bank to increase the number in your checking account by 1,000,000,000,000. Done! “Paying for” its debts is no problem for the federal government. It never can run short of dollars.

The federal government doesn’t even need taxes. If federal taxes were $0, the federal government still could create as many dollars as it wished, and still could pay you that trillion dollars. So, why not increase federal deficit spending?

According to Table S–6. Proposed Budget in Population- and Inflation-Adjusted Dollars (Government Printing Office), the total proposed 2012 budget is $3.7 trillion, of which $1.5 trillion is for Medicare, Medicaid and Social Security, which goes into the pockets of us Americans. That’s a good thing, right?

So why not increase deficit spending on things like Medicare, Medicaid and Social Security?

Another $884 billion goes for “Security,” much of which pays soldiers’ salaries and the domestic companies that make the guns, planes and ships for the military. We all hate war, but financially, paying soldiers as well as domestic companies that hire people, would seem to be a good thing for our economy. Right?

If the federal government can create all the dollars it wants, and most of those dollars go into the pockets of Americans, why not increase federal deficit spending?

Now, some people will tell you that although millions of Americans and American businesses are struggling financially, and although the federal government can create unlimited dollars, and although these dollars would go into the pockets of Americans, while supporting vital services like health care, education, infrastructure and defense, the deficit should be reduced.

Why? These people will tell you deficit spending causes inflation.

They will tell you that inflation is our biggest worry and we should remember the Weimar Republic and Zimbabwe hyperinflations. Never mind that the Weimar hyperinflation was caused by the onerous post-WWI conditions put on Germany by the Allies. And never mind that the Zimbabwe hyperinflation was caused by Robert Mugabe’s stealing of land from farmers and giving it to people who didn’t know how to farm.

And never mind that despite wars, recessions, depressions and federal deficit spending, we never have experienced hyperinflation. Those people fear a hypothetical, never-experienced problem more than the real problem of a recession from which we have not yet recovered.

So for those people, I again offer the following graph:

As you can see, there has been zero relationship between federal deficit spending and inflation. Zero.

So if the federal government is capable of unlimited deficit spending, and if deficit spending helps cure unemployment and puts dollars into American pockets, and does not cause inflation, why do we not increase federal deficit spending?

The answer: Ignorance and intent.

Some of our leaders — politicians, economists and the media — are ignorant of the facts. And some of our leaders, knowing the federal spending which reduces unemployment and puts dollars in the pockets of the 99%, also reduces the income gap. They don’t want that. They are the servants of the 1%, bought and paid for.

The next time you read about or hear someone saying the federal deficit is too high, “unsustainable” or should be reduced, know this: That person either is ignorant of the facts or intentionally wants to increase the gap between rich and non-rich. There are no other alternatives.

Now, the challenge is to find a politician who will tell the truth about the economy. Good luck with that.

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

==========================================================================================================================================
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 deficits, the 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.
==========================================================================================================================================

The euro nations, being monetarily non-sovereign, are unable to create their own currency, the euro. So to pay their bills, they are forced to limit their spending to what they can tax and borrow. Economists have given this problem the benign name, “austerity,” and it has led to the economic disasters of Greece, Italy, Ireland, France, Spain and Portugal, with others soon to follow.

Austerity (deficit reduction) always means the slow death of an economy, and it particularly impacts the lower income groups. The wealthy never feel austerity. They still ride their yachts and limousines, and eat at the best restaurants. In fact, austerity increases the income gap between the upper 1% and the other 99%.

By contrast, the U.S. is Monetarily Sovereign, so can create its sovereign currency the dollar — in unlimited amounts. Its spending is not limited to taxes and borrowing, both of which could be eliminated with no effect on the federal government’s ability to pay its bills.

Unfortunately, the Max Baucuses of the world, care nothing about the euro experience (as well as a similar experience which caused the Great Depression.) They treat the U.S. as though it were a euro nation — monetarily non-sovereign — so with deficit reduction, the result will be the euro result. Economic devastation for America.

New York Times
June 11, 2012, 12:44 PM
Baucus Says Tax Overhaul That Raises Revenues Is Moving Forward
By Jonathan Weisman

Senator Max Baucus of Montana, the chairman of the Senate Finance Committee, said on Monday that an overhaul of the tax code was moving forward, but that any plan must raise more revenue, help reduce the deficit and address the nation’s growing disparity between rich and poor.

Translation: Actually, I don’t give a damn about the poor, but I use that “disparity” phrase to fool them into thinking its necessary to raise their taxes and cut their social benefits.

“Everyone needs to contribute,” Mr. Baucus said during a speech at the Bipartisan Policy Center, a centrist research organization in Washington.

Translation: Never mind that the lower 99% will contribute comparatively more, because they have less to spare.

Mr. Baucus said he had been moving forward on a tax code overhaul that would be a pivotal part of any long-term deficit reduction deal. Mr. Baucus participated on Wednesday in a secret dinner on the end-of-year “fiscal cliff” that included Democratic Senate leaders like Charles E. Schumer of New York and Richard J. Durbin of Illinois.

Translation: The “fiscal cliff” is a series of tax hikes and spending cuts (aka “austerity) set begin on Jan. 1. Economists know this could cause the U.S. economy fall back into another recession. Therefore, to prevent the fiscal cliff, I am proposing a series of tax hikes and spending cuts. I know this makes no sense, but the unwashed masses won’t understand that.

That plan is likely to stay under wraps until after the November election, unless broad support for it coalesces earlier. Mr. Baucus does not want partisan lines drawn around the plan during the campaign season.

Translation: In the unlikely event the public catches on to the idiocy of my plan, I don’t want Republicans to get kicked out of office. So we’ll spring it on the people after elections.

In January, the Bush-era cuts to income, capital gains and dividends tax rates are set to expire, and the first wave of automatic defense cuts are scheduled to go into force. A new article in The New Yorker asserts that President Obama, regardless of the election results, is willing to allow all the tax cuts to expire on Jan. 1 if Republicans refuse to compromise on his demands to allow tax cuts for the rich to lapse.

Translation: The President is willing to let the entire country go down the tubes. (“I’m going to hold my breath until I get my way.”)

Mr. Baucus said deficit reduction and tax reform could not be separated. “We simply don’t raise enough revenue.” Since the 1986 tax code overhaul, the American economy has grown by 88 percent, he said, “but the rising tide has not lifted all boats.”

Translation: Sure, cutting taxes has helped economic growth, and the stimulus spending has helped moderate the recession, but the rich still could do better, and I’m going to help them.

He also hinted at major changes to the corporate income tax code that would lower rates and curtail, if not end, the United States’ worldwide corporate income taxation, but would tighten rules that allow American companies to shift income to offshore tax havens. Instead of automatically extending dozens of temporary business tax breaks, he said, Congress this year must pick which breaks should live and which should lapse.

Translation: For corporations, the subject is: Which taxes to cut. For the people, the subject is: Which taxes to raise.

“Tax reform is a once-in-a-generation opportunity,” he said. “We can cement America’s preeminence.”

Translation: We can cement the 99%’s feet and drop them overboard.

“The tax piece of the debt puzzle is going to be given equal prowess with entitlement reform,” said Former Senator Pete V. Domenici, Republican of New Mexico, who, along with the Democratic economist Alice Rivlin, has his own broad deficit reduction plan. “You can’t have one without the other.”

Translation: “Entitlement reform” is our way of saying, “Cut Social Security; cut Medicare; cut Medicaid; cut aid to education; cut all the benefits to the 99%, but do not raise taxes on corporations or on the 1%. Alice Rivlin is part of the old-line, Brookings Institution, that to this day, has not understood what happened on August 15, 1971, when the U.S. became Monetarily Sovereign. She may be a dope, but she’s our perfect tool for fooling the 99%.

[Aside: Cutting taxes on corporations is a great idea, but the rest is bad economics.]

Wanted: One person in Congress who has the intelligence and the integrity to shout from the rooftops: “Cutting the deficit is the dumbest thing any Monetarily Sovereign nation can do. The more budgets are cut and taxes increased, the weaker an economy becomes.”

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

==========================================================================================================================================
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 deficits, the 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.
==========================================================================================================================================

I hope you enjoy comedy as much as I do. Here are a few excerpts from a truly hilarious article about Spain.

Spain Bank Rescue Glee Morphs Into Markets Rout
By Associated Press | June 11, 2012 |

MADRID (AP) — Euphoria over a lifeline of up to €100 billion ($125 billion) to rescue Spain‘s hurting banks morphed into a financial markets rout in a matter of hours Monday, as investors digested the still-undefined plan and became concerned the country may be unable to repay the new loans.

What!! You mean lending a lot more money to someone who has no source of income, and cannot possibly service its current debts, will not solve that person’s debt problem??! Who’da thunk it?

The rate on Spanish 10-year bonds — a measure of market trust in a country’s ability to repay debt — rose to an alarmingly high yield of 6.47 percent.

You think that’s “alarmingly high”? Would you really want to lend money to someone who has no hope of ever servicing their debt — and now is burdened with even more debt? I think 6.47% is way too low.

Overshadowing Spain’s acceptance over the weekend of a bailout for banks burdened by toxic property assets and loans are Greek elections next weekend and concerns that the anti-bailout left-wing party Syriza could become the largest party in parliament, putting the country’s membership in the zone at risk.

If Greece left the euro behind, within two years, they would be one of the wealthier nations in Europe. Why? They could pay their debts, with no difficulty, and a probably lower-value currency, would allow them to become big exporters. Monetary Sovereignty would mean more money; more businesses and more jobs.

Investors also zeroed in on Italy, sending its bond yields sharply higher amid worries it could be next in line for a bailout.

Or, better yet, Italy should get in line to leave the euro. Face it, the euro is the worst idea since raising duties during the Great Depression.

“Plenty of risk still remains in place, with question marks over the ability of Spain to repay the debt, especially, if the country fails to get back on the growth path, the outcome of the upcoming Greek elections and the perception of situation in Italy,” Anita Paluch of Gekko Global Markets wrote in a note to clients.

Anita, they can’t pay their debts. Their people are broke. They have no jobs. The nation is broke too, also with no source of income. The country just took on huge added debt. And you wonder whether the country will “fail to get back on the growth path”?? What world do you live in?

Spain’s bond yield is worrisome because it is perilously close the 7 percent rate that is considered unsustainable, and the level that pushed Greece, Ireland and Portugal to ask for bailouts of their government finances.

Forget the 7% rate. A 1% rate would be unsustainable for a nation that has no net income and no source of money. How do you people come up with these magic numbers? From a “Magic 8 Ball”?

“When people lend money, they never do it for free. They want to know what is done with the money,” said Joaquin Almunia, the European Competition Commissioner.

“I am not talking about just the obligation to pay back the money, but also some other kind of terms,” he told Cadena Ser radio, adding that these remain to be determined.

Translation: Not only are we lending you money you cannot repay, but we are assigning conditions to the loan — conditions you cannot meet. (Could it get any funnier? Hello Jay Leno, are you listening?)

The loan will be supervised by the European Commission, the European Central Bank and the IMF, Almunia said. This troika will have people on the ground overseeing the restructuring of the Spanish financial sector. Representatives of the same three groups regularly visit Greece, Ireland and Portugal to make sure the governments in those nations are complying with bailout terms.

Oh, thank goodness. I was worried you might send idiots. But, I feel reassured, now that Greece, Ireland and Portugal have recovered due to your excellent supervision.

Altafaj noted that the European Commission last month recommended Spain undertake further reforms such as speeding up the phasing of a higher retirement age — it is to go from 65 to 67 — and raise VAT sales tax.

Great idea. The people are broke and jobless, so your solution is to reduce their pensions and increase their taxes.

Harold Heckle and Alan Clendenning in Madrid contributed to this report.

Thanks guys, for providing a few laughs in this otherwise gloomy day. Here’s your reward:

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

==========================================================================================================================================
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