Tag: deficit

–Why Pakistan and Afghanistan, but not Mexico?

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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This is not my area of expertise, but you may find it thought-provoking.

First the setup question: Why have U.S. soldiers been in Afghanistan and Pakistan? Presumably, the answer is to fight the Taliban and al Qaeda, who over the years, have killed many Americans and who represent a serious, ongoing threat to the American way of life. That seems like a reasonable use of an army, even when the action occurs in a putative ally.

Now the real question: Which has caused more American deaths and hardship, and been a bigger threat to the American way of life: The Talaban/alQaeda combination or the drug cartels of Mexico? The question came to mind when I saw a Washington Post article which said:

Today’s competitive crime mafias in Mexico are no longer satisfied with bazookas, rocket-propelled grenades or land mines. The Mexican military has discovered that gangsters south of Texas are building armored assault vehicles, with gun turrets, inch-thick armor plates, firing ports and bulletproof glass.
[ . . . ]
Last year authorities found an elaborate tunnel stretching more than 2,200 feet, complete with train tracks and ventilation, that was used to move marijuana between a house in the Mexican city of Tijuana and a warehouse in Otay Mesa, Calif.

On the high seas, maritime forces have intercepted dozens of “narco-submarines” hauling multi-ton loads of cocaine north. The semi-submersibles travel very low in the water to avoid detection.

With growing frequency, U.S. guards have spotted ultralight aircraft barnstorming over the border fences to drop 200-pound loads of pot in fields for waiting pickup trucks that flash their high beams or create a makeshift drop zone out of light sticks. According to U.S. officials, there have been more than 300 ultralight incursions into the United States in the past 18 months.

I say the Mexican drug cartels have caused far more damage to America, and are far more likely to continue doing damage well into the future. If true, why do we devote so much military effort to Afghanistan and Pakistan, all of whom are far across the ocean, while devoting virtually no military effort to Mexico, right on our border.

As in Afghanistan and Pakistan, the Mexican government has shown very little inclination or ability to rid itself of America’s enemies, the drug cartels. Isn’t there even more reason to make the same deal with Mexico as we have with Afghanistan, and send in our bombers, our Predators and our troops?

According to the Journal of American Medical Association, in 2000, 17,000 deaths occurred as a result of illegal drug abuse. But death is only a small part of the story. Consider individual lives ruined, entire families ruined, entire neighborhoods ruined. The damage done by the Pakistan and Afghanistan wars, while horrendous, pales in comparison to the damage done by illegal drugs from Mexico.

What is different about the Mexican “disease” that makes it immune from a “vaccination” by the U.S.army? Mexico, is within easy range of our army, and stabilizing Mexico not only would reduce illegal drugs, but illegal immigration. Further, Mexico could become a much stronger trade partner, if its people and businesses were not subjugated by crime lords.

The current situation makes internal reform almost impossible. The government, the army and the drug cartels all work together. There is no institution with the power to stop them. Mexico will continue to decline until it is one vast illegal drug factory. There is no countervailing effort. Talk about WMDs, what is worse than illegal, habit-forming drugs?

So my question is: Why Afghanistan and Pakistan, but not Mexico? Don’t we have our priorities confused?

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

–How the poor get screwed. Why deficit reduction increases the gap between rich and poor.

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Every politician claims to love the poor, the downtrodden, the unemployed. Yet, the same politicians vote to cut the deficit, hurting those poor he/she loves so much. Sadly, the poor buy into it.

Both parties claim that reducing the federal deficit will reduce unemployment and benefit the working class and the poor. Exactly how a reduction in net federal dollars flowing into the economy will stimulate employment and benefit the working class, never is explained, because there is no explanation. It is a bogus argument.

To reduce the deficit requires taxes to be increased or federal spending to be reduced. The Democrats want to reduce the deficit by increasing taxes on the “wealthy.” The Tea/Republicans want to cut the deficit through federal spending reductions. Functionally, there is no difference between a tax increase and a spending reduction; both reduce the amount of money being added to the economy.

Traditionally, the Republicans have favored cutting taxes, an act that benefits economic growth. Democrats traditionally have wanted to spend more, which also benefits economic growth. Unfortunately, the Tea Party, a perverted outgrowth of President Reagan’s memorable statement, “. . . government is the problem,” has taken over the Republican Party, who now will do and say anything to get into power.

This has dragged in the Democrats, who will do and say anything to stay in power, so both parties now are preaching an anti growth line, being led by a group of economic know-nothings. Extreme views often gain favor during difficult times, when people are desperate for a solution, and in this case, the extreme views are supported by the wealthy. Note how such luminaries as Bill Gates and Warren Buffet have made statements actually supporting a tax increase! Why do rich people want their taxes raised? Not out of generosity. Read on.

Because a growing economy requires a growing supply of money, a tax increase and/or a spending reduction reduce economic growth. And no matter how it’s done, deficit reduction hurts the lower incomes most. Consider a tax increase on the wealthiest. What does it accomplish? It reduces the amount of money in the economy. A Monetarily Sovereign nation does not spend tax money. It has no need to. The spending itself creates money. So what happens to tax money? It leaves the economy and is destroyed. It simply ceases to exist.

History shows that every depression and most recessions not only have been caused by reductions in the money supply, but even by reductions in money supply growth. See: SUMMARY. Who suffers most during recessions and depressions – the wealthiest or the poorest? Right, the poorest.

Although tax increases will force the wealthiest to pay more taxes, that will not affect their life styles. They’ll find more tax “loopholes.” They’ll get by on two cars rather than three (Dealerships may fire some working salespeople), and the remodeling of the 2nd home may be delayed a year (Some tradespeople will lose their jobs). But life will go on for the wealthy. Not so for the less wealthy who, during a recession, may become unemployed, lose their housing, spend less and cancel plans for children’s college.

According to the IRS, the bottom 50 percent of Americans earned less than $32,879 and paid only 2.9% percent of the nation’s income taxes, down from 3 percent a year earlier. So to reduce the so-called “deficit,” shall we increase taxes on these folks?

Where the lowest paid really get hit is with FICA. In 2010, income taxes totaled $935 billion, and FICA totaled $875 billion – pretty close. But while all income is subject to income tax, only salaries below $100K are subject to FICA – an enormous saving for the wealthy. And, not only does FICA steal 7.65% from every salaried worker, but it steals another 7.65% from his/her boss. Think of it as 15.3% that could have gone to the salaried employee, but instead goes to the government, where it is destroyed. FICA, not income tax, is the big tax burden on working people.

In short, all taxes and tax increases hurt everyone in the economy — they are recessionary — but they hurt the poor more than the wealthy, so by comparison, the wealthy become wealthier. Tax increases make the wealth gap grow.

Now consider a federal spending reduction. Medicare and Social Security are the biggest targets, and who relies most on these federal programs – the 1% of Americans defined as “rich, who earned an adjusted gross income of $410,096 or more and accounted for 22.8% of all wages, while paying 40.4% of total reported income taxes? Or are the 99% defined as “not rich” more likely to need Social Security and Medicare?

Right. If Medicare and Social Security are cut, the rich will hardly notice. Warren Buffet probably doesn’t even know whether he receives Medicare and Social Security benefits. Financially, it is meaningless to him. Cutting social programs hurts the poor more than the rich, increasing the gap between rich and poor.

Or, we could cut military spending. This would cut profits and jobs from all those industries that sell to the U.S. military, and it would cut the number of salaried service people. Cutting military programs hurts the poor more than the rich, increasing the gap between rich and poor.

No matter where you look in the federal budget, spending cuts would hurt the bottom 99% far more than the top 1%.

In summary, federal tax increases and federal spending cuts (i.e. deficit reduction) cause recessions, and all three hurt the middle class and poor far more than they hurt the rich. Deficit reduction will increase the gap between the rich and the poor.

And the wealthy have brainwashed the non-wealthy into thinking this is a good thing.

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

Erskine Bowles and Alan Simpson reveal why the nation is in trouble: Them.

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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President Obama created a deficit commission headed by Erskine Bowles, chief of staff for President Clinton, and Alan Simpson, former Senator from Wyoming. The two of them wrote a fact-free, guest column for the 5/2/11 Fortune Magazine.

Here is the first paragraph of their article:

Our nation faces the most predictable economic crisis in its history. Spending is rising rapidly, and revenues are failing to keep pace. As a result the federal government is forced to borrow huge sums each year to make up the difference.

Totally, 100% wrong. Since 1971, the end of the gold standard, the U.S. federal government has had the unlimited ability to pay its bills without borrowing, even without taxing. There is zero relationship between federal deficits and the federal government’s ability to spend.

The situation Bowles and Simpson describe is called monetary non-sovereignty. But the U.S. is Monetarily Sovereign, an entirely different economic situation. It’s as though Bowles and Simpson were hired to analyze a football game and came back with recommendations based on tennis rules.

Creating T-securities from thin air, then exchanging them for dollars previously created from thin air(aka “borrowing”), no long is necessary. The fact that the two people heading Obama’s deficit commission don’t understand this fundamental truth of economics, is shocking.

Bowles and Simpson are no more ignorant than the politicians, media writers and old-line economists. What’s shocking is the fact that they head a commission entrusted with analyzing the situation and making recommendations based on their analyses. Instead, they parrot the popular and obsolete wisdom of the day.

Continuing the paragraph:

If not addressed, burgeoning deficits will eventually lead to a fiscal crisis, at which point the world’s financial markets will force decisions upon us.

There’s that word “eventually” again, the word all debt-terrorists use, because they have no facts. “Eventually” is the cousin to “unsustainable” and “ticking time bomb,” previous debt-terrorist favorites. Yes, “eventually” the U.S. will lose the ability to pay its bills, if Congress, on the advice of Bowles and Simpson, refuses to raise the debt ceiling. Meanwhile, according to current law, the U.S. can pay any bill of any size and time — without borrowing.

Later, in another paragraph, Bowles and Simpson say:

Recently Paul Ryan, the Republican chairman of the House Budget Committee, put forward a serious, honest plan for addressing our nations fiscal challenges. But while it makes a constructive contribution to the debate, it fall short of the balanced, comprehensive approach necessary to achieve bipartisan support.

Huh? It’s “serious,” “honest” and “constructive,” but it’s not “balanced” or “comprehensive”? Paul Ryan’s plan is the worst thing that possibly could happen to America, especially to America’s lower paid, 90% majority, the people who depend on Medicare, Social Security and jobs, all of which Ryan’s plan would erode. Bowles and Simpson, rather than actually looking at facts, have given us the typical, wrongheaded gobbledegook we can expect from political appointees who have no idea what they are talking about.

The article ends with:

(The) prospect for bipartisan compromise now offers us the best hope for genuine progress that benefits both sides, and important, benefits the country.

Sure, they want compromise so long as the compromise begins with the diametrically wrong assumption that our Monetarily Sovereign nation somehow has gone back to pre-1971, on the gold standard, to become monetarily non-sovereign.

If you’re wondering how the wealthiest nation in the world could find itself in ongoing financial difficulties, you only need listen to Bowles and Simpson, the two men given the assignment to investigate solutions, but instead came back with exactly what their boss told them.

Bowles and Simpson — may their names live on in disgrace, as classic examples of political hacks who know nothing about the job they were given, so rather than helping, they do damage. (“Doctor, your patient died needlessly. You did a Bowles and Simpson operation.”)

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

–When will the wise Muslim get out of America?

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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In the previous post ( We already have lost the war), I reprinted excerpts from an article written by John Mauldin, in which he asked, “When would a wise Jew have begun making plans to leave Germany?”

He reminds the reader about a series of events occurring in pre-World War II Germany that presaged the holocaust, events each of which would have given the “wise Jew” a clue about what was to happen. In each case, Mauldin asks whether this is the point at which the “wise Jew” should have seen the handwriting on the wall, and left. You might wish to read that post before continuing with this one.

The point of today’s post is that some of the same events occurring in pre-war Germany are occurring now in America, and this time, the main target is Islam. So the question is: When would the wise Muslim begin to make plans to leave America?

Here is one parallel with yesteryear:

Americans’ bias against Jews, Muslims linked, poll says
By Michelle Boorstein, Washington Post Staff Writer, Thursday, January 21, 2010

A (Gallup) poll about Americans’ views on Islam concludes that the strongest predictor of prejudice against Muslims is whether a person holds similar feelings about Jews.

The poll, conducted in the fall (of 2009), is the latest large-scale survey to find a high level of anti-Muslim sentiment in the United States. . . The Gallup poll asked Americans about their views of Islam, Christianity, Judaism and Buddhism and found that 53 percent see Islam unfavorably.

And here is another hint for the “wise Muslim.”

Ground Zero:Exaggerating the Jihadist Threat
by Romesh Ratnesar, Time, August 18, 2010

President Obama’s statement on Aug. 13 endorsing “the right to build a place of worship and a community center on private property in lower Manhattan” has unleashed another storm of partisan bloviation. Obama is “pandering to radical Islam,” says Newt Gingrich; John Boehner finds Obama’s comments “deeply troubling.” On this issue, the President’s critics have public opinion on their side: nearly 70% of Americans in a CNN–Opinion Research Corporation poll say they oppose a Ground Zero mosque.”

And yet another hint for the “wise Muslim”

Growing Bias Against Muslims In America
Posted in Liberaland by Alan, 9/13/2010

“There is a hatred, an open hatred, and a lack of tolerance for people who are Muslim,” said Mary Jo O’Neill, regional attorney for the Phoenix district office of the Equal Employment Opportunity Commission. She said she has seen an uptick in discrimination complaints among Muslim workers in her region, which includes Arizona, Colorado, Wyoming, Utah and New Mexico.

Claims of bias against Muslims in the workplace rose to 1,490 last year (2009) from 1,304 in 2008 and just 697 in 2004, according to EEOC figures. Last year’s total was even higher than in the year after the 9/11 attacks, when bias claims hit 1,463. Figures from this year are not yet available.

No, I am NOT suggesting that Muslims should leave America. On the contrary, my fervent prayer is that the anti-Muslim demigogs and the hate-mongering bigots will quit America and the Muslims will stay with us to enrich our multi-faceted society. But if you read the previous post and think about what happened in Germany and now is happening in America, you will see disturbing parallels.

We have not gone so far as a “Crystal Night” in America, yet. We like to think we are the compassionate land of the free – we like to think it couldn’t happen here — but in truth, no nation is immune from the bigotry disease. Perhaps the killing of bin Laden will reduce the heat, but I suspect that one more 9/11 tragedy will unleash the dogs of hatred, perhaps far worse than anything we have seen.

What do you think the wise Muslim should do?

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