Tag: economic myths

–More “Constitutional” phony baloney from the Tea Party

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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Each day I become more convinced that being a member of the Tea Party is a litmus test for childishness. Back in April, I wrote the post “What does the Tea Party want?” in which I explored some of the truly inane pronouncements by this group. It is an amazing attribute of the human species that anything sober and logical (Monetary Sovereignty) will be rejected by a large group, but anything outrageously juvenile (Lady Gaga) will be revered by an even larger group.

In the earlier post, I commented not only on the Tea Party’s adoration of such sages as Sarah Palin and Christine O’Donnell, but it’s hopelessly confounding message:

Unfortunately for Tea Party “logic,” they not only want lower taxes, but lower deficits and less government. At the same time, they want a stronger army, better schools, federal supervision of banks and other financial firms, better roads, defense of our borders, less crime, more guns, defense against terrorism, safer food, better retirement, better unemployment insurance, police, health care, rescue from hurricanes and other disasters, more jobs and a better environment.

I reminded readers that what the Tea Party wants costs money, the money they don’t want the government to spend. But now that bit of TP logic has been superceded by the next puerile demand, to which the eagerly submissive GOP has agreed. Not only must the House of Representatives waste an hour or a day listening to someone read the U.S. Constitution aloud (“Now follow along, children. See Spot jump.”), but every new bill must contain a statement by the lawmaker who wrote it citing his constitutional authority to enact the legislation.

Puleeze. The most contentious bill passed by Congress – hated by the TP – already contains such a statement, and that hasn’t prevented two judges from ruling one way and a third judge from ruling the other. What is called the “Individual Mandate” of the Patient Protection and Affordable Care Act already includes these sentences:

The individual responsibility requirement provided for in this section (in this subsection referred to as the requirement) is commercial and economic in nature, and substantially affects interstate commerce . . . In United States v. South-Eastern Underwriters Association (322 U.S. 533 (1944)), the Supreme Court of the United States ruled that insurance is interstate commerce subject to Federal regulation.

Well, I guess that should satisfy the TP.

The problem is that the Constitution was written 200+ years ago to address problems of the time, and must be interpreted to address today’s problems. And while “originalist” Justices Antonin Scalia and Clarence Thomas claim to have special insight into the original intent of the Constitution framers, they don’t, they don’t even try, and anyway, why should anyone want that?

The Supreme Court has nine members rather than just one, because the Constitution, like the Bible, is either vague, outdated or repeatedly misconstrued concerning almost all we wish to know. Every Justice has pledged to obey the Constitution, yet seldom do we see a 9 – 0 decision. Does this mean some Justices intentionally disobey the Constitution every business day?

Reality check: The true issue is not whether a law obeys or disobeys the Constitution, but rather, whether the sponsors are Democrats or Republicans (aka TP sycophants). But that bit of truth does not perturb the TP members, who live in a magical world of dreams, where all wishes come true, even (especially?) those that are self-conflicting.

It seems our Representatives prefer time-wasting, populist, pandering nonsense, to actually learning about, and coming to grips with, real problems, which is why the recovery has been so slow, and why millions of Americans have no jobs, no homes, no health insurance and no retirement.

What next from the Guns ‘n’ God Group? A rule that the House must stand and recite the Pledge of Allegiance every day?

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

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

–Are you for immigration reform? What does that mean?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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Congress has been debating immigration reform, and like all political “reforms,” the word means different things to different people. Health insurance “reform” means federally provided, affordable insurance to everyone, or to no one, or somewhere in between. Budget “reform” means cut spending, increase taxes, both or neither. Tax reform means make taxes simpler or fairer or lower or higher.

But what does immigration reform mean? Does it mean fewer or more immigrants? Does it mean an easier or more difficult procedure? And more importantly, what is the goal? Is it to:
–Protect our nation from terrorists and other enemies?
–Protect American workers from competition?
–Protect America from crime?
–Save our limited resources?
–Keep American white? Or Christian? Or English speaking?
–To relieve an overcrowded America?
–Just keep Mexicans out?

For example, consider Rep. Steve King, an Iowa Republican who wants to end automatic or “birthright” citizenship for all children born in the United States. What is the benefit to America? He says it’s to prevent non-citizens from coming here on a visa, and intentionally having a child, thereby circumventing immigration laws. Aside from the probability the number of such people is small, what is the problem? What if some women do that? Who has been harmed? How has that diminished America?

Or consider those Republican lawmakers from southern states and lawmakers who wish to copy Arizona’s harsh law. They would give police the massive job of screening all suspects for immigration status. Why? They claim the undocumented immigrants are too costly, using medical and educational facilities without paying taxes. But how true is this really? What percentage of undocumented immigrants do not pay taxes? And what would be the police costs and the court costs and attorney costs and the logistic costs of pursuing all these people, trying them and deporting them, only to have them return again and again? And what would be the cost in human suffering, or do we now consider undocumented immigrants to be something less than human?

These lawmakers claim their goal also is to protect their states from crime, but do undocumented immigrants cause more or less crime than citizens?

Rather than allowing the xenophobes, who wish to create a “fortress America,” to coopt the word “reform,” perhaps those, who still belief the words on the Statue of Liberty, might wish to define reform in our own terms. How about if “immigration reform” means make immigration much faster and easier? How about recognizing that going through danger, cost and effort is prima facie evidence of people who truly want to be Americans, and such desire might make them more loyal and more devoted to our nation than those lucky enough to be born here?

Surely, we can protect America without building a North Koreanesque barrier. Is Mexico our enemy? Are the great open plains so crowded? Is the American worker too weak to compete? Are resources truly limited to a Monetarily Sovereign nation that at the snap of an finger, can spend trillions on the world’s greatest war machine? And don’t immigrants actually contribute to our resources? My immigrant parents did.

Yes, let’s have immigration reform. Let’s open the welcoming arms of a great, confident, powerful America, rather than hiding behind the barbed wire curtain of a crouching, fearful, mean spirited bunch of petty losers.

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

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

–When will the economy recover?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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At long last, when will the economy recover? Wait a minute. Look at this graph:

graph 1

Considering that the data only goes through September, 2010, one easily can infer that the economy already has recovered. Yes, the stock market has not recovered, but that could be good news. It could mean it still has plenty of recovery left in it.

And yes, unemployment still is a big problem:

But that could be a good thing, too (although not for those who are unemployed.) A high level of unemployment mitigates against inflation. The government could continue to use its infinite spending ability and not be concerned it was causing inflation. For instance, FICA could be eliminated, as it should be, rather than the tentative, temporary step now taken. And the standard deduction could be raised, also as it should be. And Social Security benefits could be increased, and Medicare could be expanded, again as they should be.

And interest rates have stayed way down:

graph 3

And that’s another good thing, because it means the Fed has plenty of room (not that “room” really is needed) to raise rates if inflation should rear its ugly head.

There are plenty of leading indicators one might explore, but these graphs give me cause for optimism, if only the federal government will seize the moment.

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

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”

–News: China must control inflation, exports and GDP growth. But how?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand monetary sovereignty, do not understand economics. Cutting the federal deficit is the most ignorant and damaging step the federal government could take. It ranks ahead of the Hawley-Smoot Tariff.
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On December 17, 2010 Columnist Michael Schuman published an online article saying:

Chinese inflation hit 5.1% in November, the fastest clip since the pre-crisis boom months of 2008. Though much of the increase is in food (up 11.7% from a year earlier), the inflationary pressures are spreading to more aspects of the economy.

By hiking interest rates, the central bank would be increasing the interest burden on borrowers. That, in turn, could intensify a bad loan problem at China’s banks that many economists believe is an inevitable result of the lending boom.

So the Chinese have instead turned to an old favorite, price controls on certain staple foods.

Inflation is the loss in value of money compared to the value of goods and services. The cure for inflation is to increase the value of money and/or to decrease the value of goods and services.

The later is difficult for any government to accomplish, other than with price controls. Sadly, price controls have serious defects. They lead to reduced supply, while allowing demand to increase, which invariably causes pent up demand and black markets.

A second approach is for the government to buy, store then mete out supplies of oil, when prices rise. Because oil is the prime mover of inflation, this can be an effective anti-inflation plan, if the government has the discipline to do it. The plan falls apart when the government becomes reluctant to part with any of its suddenly-more-precious oil.

In all, increasing the value of money seem to be the best prevention/cure for inflation. That can be accomplished by decreasing the supply of money or by increasing the demand for money. Reduced government spending or increased taxation can reduce the supply. However, reducing the money supply not only leads to recessions and depressions, but involves very slow, uncertain and cumbersome processes.

In addition to the difficulty of knowing how much to increase taxes or to reduce spending, the even more difficult question is which taxes to increase and/or which spending to decrease. By the time politicians finish debating and voting on these highly political questions, the situation either may have passed or more likely, worsened appreciably.

Preventing/curing inflation requires agility and incremental response, for which interest rate modification is ideal. Raising interest rates can be done instantly and in tiny increments. It increases the demand for money, which increases the value of money – perfectly anti-inflationary.

China’s reluctance to strengthen its currency probably is tied to its false belief it must continue to build its export business, which relies in part on the weakness of the yuan. The function of exports is to bring money into an economy, but China, being Monetarily Sovereign does not need additional money coming in from outside its borders. It has the unlimited ability to create money.

China also may subscribe to the popular belief that low interest rates stimulate its economy. American history shows this belief to be false. See: Low interest rates do not help the economy. China also may believe high rates increase business costs, and so actually could foster inflation. However, in America at least, high rates have not corresponded with inflation. (See Item 12,) probably because interest is a minuscule part of most companies’ costs..

The Chinese government has the ability to be its nation’s own best customer. It does not need to rely on exports. This is a fact for all Monetarily Sovereign nations. China has the means to prevent/cure its inflation by raising interest rates. It needs only to understand its own powers.

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

No nation can tax itself into prosperity. Those who say the stimulus “didn’t work” remind me of the guy whose house is on fire. A neighbor runs with a garden hose and starts spraying, but the fire continues. The neighbor wants to call the fire department, which would bring the big hoses, but the guy says, “Don’t call. As you can see, water doesn’t put out fires.”