–How the 1% turns the 99% against itself and makes us into dogs

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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The 1% has the money and the power, but most importantly, it controls the minds of the 99%. It has managed to convince the 99% that the federal deficit (i.e. the money supply) is too large and that programs primarily benefiting the 99% (Social Security, Medicare, Medicaid, aid for the poor) need to be cut to “save” them.

And the 99% go along with this self-harming, suicidal notion, because they are so accustomed to being told what to do, they readily accept being punished for sins they didn’t commit.

You all have seen this picture. It’s a policeman — a solid member of the 99% — pepper spraying fellow members of the 99%, at the instigation of some unknown member of the 1%.

HELPLESS, PEACEFUL POLICE OFFICER DEFENDS HIMSELF AGAINST VICIOUS ATTACK BY ARMED AND ENRAGED #OWS CRIMINALS

A University of California at Davis police officer pepper-sprays students during a campus demonstration Nov. 18, an act that led to multiple suspensions and calls for the chancellor to resign. (BRIAN NGUYEN, Reuters Photo / November 22, 2011) Chicago Tribune.

The Tribune article says, “Though law enforcement officers will use pepper spray as a nonlethal tactic for crowd control, some have drawn criticism for its use during Occupy movement protests in Denver, Seattle and elsewhere.

“A New York City police commander was transferred in September after he sprayed two female protesters standing behind a police barrier. The UC Davis campus police chief and two officers were suspended after the incident there, and students called for the university chancellor to resign.”

What prompts police and the military worldwide to turn against their own neighbors? I suspect there is something in our pack-animal psychology that makes us yearn for the approval and direction of a leader. Dogs too, are pack animals, and will do virtually anything their leader tells them to do.

In short, we act like dogs.

If the President says, “Give up some of your Social Security,” we not only do so, but we mightily defend this harmful idea, against all criticism.

If the wealthy-owned newspapers say, “Surrender some of your Medicare,” we become convinced it necessary, and argue against anyone who says it isn’t.

If Congress says, “Cut spending on education, roads, bridges, stem-cell research, bank and securities regulation, food inspection and other important benefits,” we, with only the barest of whimpers, do as we are told– like pack dogs.

And if the mayor of your town criticizes #OWS, that is reason enough for the police to assume a mad dog posture, and beat, spray, cuff and arrest non-violent protesters, who are exercising their free speech rights on behalf of the 99% — of whom the police are a part.

Next time you are tempted to do the 1%’s bidding by sneering at #OWS for supposedly dirtying a park or blocking traffic, or by arguing for deficit reduction (which will increase the gap between you and the 1%), remember who you are and what #OWS is trying to do for you.

Don’t be that policeman. Don’t be a pack dog.

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

–Curing anemia by bleeding the patient. Saving the captain by throwing the passengers overboard.

The UK, like the U.S. is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the pound. It can pay any bill of any size at any time. Unfortunately, the UK, like the U.S., does not know it is Monetarily Sovereign, so it acts exactly like Greece, Italy and Spain, which are monetarily non-sovereign.

The UK and the U.S. see their ships of state sinking. They both need to bail them out, but both nations are ruled by leaders who do not understand the fundamental differences between Monetary Sovereignty and monetary non-sovereignty. So they try to solve their economic money shortages by supporting some sectors (big banks, mostly), while reducing support for sectors that benefit the poor (Social Security, Medicare, Medicaid, the military).

This is called: “Save the captain of a sinking boat by bailing water from the bow and into the stern, while throwing the passengers overboard” It’s a first cousin to the famous, “curing anemia by bleeding the patient,” which the U.S. has perfected into an art form.

Here is the UK approach:

UK aims for recovery with £20 billion loan scheme
By Tim Castle | Reuters 11/27/11

LONDON – Britain will underwrite 20 billion pounds of loans to smaller companies in a package of measures to boost the economy, while sticking to a strict austerity programme, Chancellor George Osborne said on Sunday.

Osborne is under pressure to find ways to revive a stagnant economy and avoid a return to recession without compromising a deficit-cutting spending squeeze.

The government will back loans to be made by banks to small- and medium-sized companies to cure a shortage of credit that has hampered Britain’s economic recovery.

The “revive, while deficit cutting” is the classic debt-hawk bailing system. Notice also that it involves loans to companies – loans which, when paid back, will reduce the money supply. Why loans instead of gifts? Because the UK does not know it is Monetarily Sovereign, and we’re talking about small companies, not big banks.

Osborne and his coalition government has staked its reputation on eliminating a budget deficit that was a record 11 percent when it came to power last year by implementing the deepest spending cuts in a generation.

This should read, “Osborne and his coalition government has staked its reputation on eliminating the money growth so desperately needed by his sinking economy.

That has limited his room for manoeuvre, cutting off the route of greater deficit-funding to stimulate growth and drawing criticism from the Labour opposition who say the austerity programme is too tight and should be relaxed.

Who’da thunk? You mean cutting the money supply has an adverse effect on an economy? Imagine that!

The neighbouring euro zone crisis has compounded the challenge, with the government’s fiscal watchdog expected to follow other forecasters next week by slashing its growth outlook for 2012 by more than half. The British economy has barely grown over the past 12 months, with households cutting spending as wages fall behind inflation and unemployment rises.

Captain Osborne says, “Pay no attention to that iceberg, mate. Full speed ahead.”

Osborne said it was the credibility gained by Britain’s adherence to its fiscal plan which meant he was able to create the loan guarantee scheme. “There are many governments at the moment that could not operate a scheme like this because (they) would not be regarded as creditworthy enough to do it,” he said.

Ah, the “credibility fairy.” Here’s how she works. A Monetarily Sovereign nation decides to starve its sinking economy of money. As a result, forecasters expect the economy to sink faster, which provides the economic credibility that allows the nation to lend money it should give.

Understand?

“We have got a deficit reduction plan that has brought us record low interest rates, that has earned us that triple A credit rating,” said Osborne. “We are absolutely going to stick to that plan because that is what is helping Britain weather this international debt storm and is also helping us lay the foundations of a stronger economy.”

Said another way: “Diving deeper into recession, with the money supply draining away, is what earns a triple A credit rating from the rating organizations that also gave a triple A rating to worthless mortgage securities. Based on our past success, we are laying the foundation for a stronger recession.”

. . . ministers have announced . . . measures to help growth, including backing mortgages for families buying new-build homes and a 400 million pound investment fund to help construction firms finance housing developments . . . an agreement with large British pension funds (to invest) in . . . roads and broadband networks, . . . a 1 billion pound programme to find jobs and work experience for 400,000 unemployed young people, and a 600 million pound investment in specialist maths schools.

Sounds good, right? Now, the other shoe drops:

There has been less detail on the funding for these measures, with newspapers speculating that some welfare benefits will be frozen to pay for them.

Perfect. Take money from welfare recipients to pay for economic growth. The lowest, weakest, least influential part of the 99% will pay for the 1%.

Sound familiar? In America we have a similar, though somewhat different system for screwing the 99%. We cut Social Security, Medicare and Medicaid benefits to “save” these programs (In Vietnam, we bombed villages to “save” them), while bailing out the biggest, wealthiest banks at the expense of the customers they screwed.

And the only ones complaining are the #OWS protesters, whom the 99% abhor for being loud, unkempt and causing traffic jams.

You simply cannot make this stuff up.

I award Chancellor Osborne 2 clowns for obvious reasons.

This brings my clown deficit to 1352. Osborne is worried.

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

MONETARY SOVEREIGNTY

Why are members of the euro zone like lobsters in a pail? A 1-clown news item.

This falls under the category: “When you’ve tried everything wrong maybe, just maybe, you eventually will try something right. The euro zone is coming closer, but still no cigar:

Euro zone may drop bondholder losses from ESM bailout
(Reporting by Julien Toyer, John O’Donnell and Luke Baker in Brussels, Andreas Rinke in Berlin and Mike Shields in Vienna; writing by Luke Baker; editing by Rex Merrifield, John Stonestreet), 11/25/11

BRUSSELS (Reuters) – Euro zone states may ditch plans to impose losses on private bondholders should countries need to restructure their debt under a new bailout fund due to launch in mid-2013, four EU officials told Reuters on Friday.

A good sign. Imposing losses on private bondholders would exacerbate the ridiculous austerity of the euro nations. Taking money out of private hands is economic suicide. (Hello, U.S. debt hawks. Are you listening?)

Euro zone powerhouse Germany is insisting on tighter budgets and private sector involvement in bailouts as a precondition for deeper economic integration among euro zone countries.

Bad sign, for the above reasons.

Commercial banks and insurance companies are still expected to take a hit on their holdings of Greek sovereign bonds as part of the second bailout package being finalized for Athens. But clauses relating to PSI in the statutes of the European Stability Mechanism (ESM) – the permanent facility scheduled to start operating from July 2013 – could be withdrawn, with the majority of euro zone states now opposed to them.

The concern is that forcing the private sector bondholders to take losses if a country restructures its debt is undermining confidence in euro zone sovereign bonds.

Well, of course. Any time you screw a lender, he is less interested in lending again. Commercial banks and insurance companies are lenders. This is what passes for deep insight in the EU.

Berlin wants all 27 EU countries, or at least the 17 in the euro zone, to provide full backing for alterations to the treaty before it will consider giving ground on other issues member states want it to shift on, officials say.

Germany is under pressure to soften its opposition to the European Central Bank playing a more direct role in combating the crisis, and member states also want Berlin to give its backing to the idea of jointly issued euro zone bonds.

Bad sign. Forcing monetarily non-sovereigns to guarantee the debts of other monetarily non-sovereign nations is exactly like forcing New York and California to guarantee the debts of Illinois.

Actually, the ten EU nations, not using the euro (and therefore Monetarily Sovereign) easily could back the debts of the euro nations – if those ten understood they are Monetarily Sovereign (which they don’t.)

While most euro zone countries just want to forget about enforced private sector involvement, some are adamant that there must be a way to ensure banks and not just taxpayers shoulder some of the costs of bailing countries out.

Hey, I hate the banks as much as anyone (See: Brake the Banks), but pulling euros out of the banks merely serves to impoverish an entire economy by reducing the money supply.

The euro zone continues to flirt with the only solution short of dissolution: The EU, being Monetarily Sovereign, must give (not lend) euros to member nations as needed. The EU sort of, kind of, almost wants the European Central Bank (ECB) to provide these euros, but just as they reach out to that solution, they pull back with monetary non-sovereignty ignorance.

Like virtually all U.S. politicians, media and citizens, and most old-line economists, the EU cannot understand the difference between Monetary Sovereignty and their own personal, kitchen-table finances.

To borrow an overworked analogy, the euro nations are like lobsters in a pail. The reason lobsters can’t escape from a pail is because every time one tries to climb out, the others pull it back down.

I award the EU one clown (formerly dunce cap), not only for economic ignorance, but for the humorous visualization of a bunch of lobsters pulling each other down. I now am running the equivalent of a 1351 clown deficit, still with no danger of bankruptcy nor need for austerity. I’m clown sovereign.

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

–A new group: Brake the Banks

The Tea Party was a recent phenomenon that managed to convince mostly Republicans (but many Democrats, too), along with the popular media and even some old line economists, that by some mathematical magic, reducing the money supply (aka cutting the federal deficit and reduced federal spending), could reduce unemployment and grow the economy. They are the most notorious believers in the myth, anemia can be cured by bleeding the patient.

I never have seen any substantiation for this wild-ass hypothesis, but it is widely followed, not only in America, but through much of the world. Ask your own friends if the deficit and debt are too high, and they will tell you, “Yes.” But ask them if there is too much money in the economy, and they likely will tell you, “No.” Such is popular ignorance.

The #Occupy Wall Street (#OWS) group is an even more recent phenomenon, that rightly believes the so-called “1%” is cheating the “99%,” but wrongly believes this situation can be cured by closing the income gap (or is it the wealth gap?) and taking money from the rich – a Robin Hood solution.

They have not yet achieved the initial, wide-spread acceptance of the Tea Party, partly because they haven’t expressed a coherent plan, and partly because they are young and tend to look scruffy – and perhaps partly because many people understand the Robin Hood solution would do nothing to benefit the economy.

If #OWS would take the trouble to learn Monetary Sovereignty, and use it to propose specific solutions, they could be a powerful force for economic growth. But will they? Probably not.

So, I suggest the time is nigh for a third group. This is the background:

1. Banks intentionally gave mortgages to unqualified people, then sold those worthless mortgages to Ginnie Mae and Freddie Mac, which bundled them into worthless bundles.
2. Banks intentionally sold these worthless bundles to unsuspecting investors, under the theory that ten pounds of garbage smells better than one pound of garbage.
3. Banks set about foreclosing on homes for which the bank held no mortgage. In many instances, the banks would invade the wrong homes, steal the furniture and refuse to allow the rightful owner access.
4. Banks also pretended to work with home owners on the government’s Home Affordable Modification Program (HAMP). Home owners were shuffled around from voice mail to voice mail, kept on hold for hours, repeatedly asked for the same documentation, and overall given the run-around for years, until the poor home owners were forced into default, at which time the banks took over the property. (In some cases, banks even falsely recommended default to home owners, as a way to move the HAMP process along.)
5. Banks used “robo-signers” – people who signed thousands of documents a day – to cheat on laws requiring individual bank employees personally to inspect and sign mortgage papers.
6. Banks, not having legal title, forced courts into foreclosure mills – where judges rubber-stamped hundreds of foreclosures each day, without allowing home owners the opportunity for defense.
7. Banks, having caused trillions in losses, both for their customers and themselves, appealed to friends in the administration for financial assistance. Treasury Secretary, Timothy F. Geithner, a notorious friend of banks, was pleased to bail out virtually any, large troubled bank or other financial institution. In a handful of cases, other large companies (GM, for instance), but no small companies were bailed out, but the vast majority of help went to the very banks that caused the recession.

To this date, no CEO, CFO or other decision-maker for any large bank has been investigated for their crimes, much less tried, much less convicted, much less sentenced, much less served any time. In the Obama America, banks and their officers are immune from the law.

Do you see a commonality? Yes, the banks stole billions and were the prime cause of the recession. They were “punished” by being rewarded with more billions. Unless action is taken, the banks will continue to steal and continue to be rewarded by Geithner, Obama et al, or by the next administration, as Republicans are equally beholden to banks as are Democrats..

So I propose the formation of a new group, perhaps called “Brake the Banks.” The goal of Brake the Banks would be to do exactly as its name suggests: Put the brakes on the banks, so they can’t continue to steal. Some thoughts:

1. Restore The Glass-Steagall Act, which prohibited commercial banks from engaging in the investment business. Unfortunately, the Gramm-Leach-Bilely Act repealed the Glass-Steagall Act’s restrictions on bank and securities-firm affiliations. It also amended the Bank Holding Company Act to permit affiliations among financial services companies, including banks, securities firms and insurance companies. The new law sought financial modernization by removing the very barriers that Glass-Steagall had erected. (New York Times, Friday, November 25, 2011)

or better yet:

2. Nationalize all banks licensed to do business in the United States. The profit motive caused banks and bank leaders to ignore public safety and responsibility. Instead, banking became a cesspool of personal greed, where sales commissions, not service, were the goal. Government owned banks, with neither private shareholders nor sales-rewarded employees, would be less subject to profit and greed motivations.

I suggest that Brake the Banks would be a worthy, third group, even more economically and positively effective than the Tea Party or #OWS.

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

MONETARY SOVEREIGNTY

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