Tag: economy

–Today’s ignorant comment, this time from Robert J. Samuelson, Opinion Writer at the Washington Post

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Unfortunately, this blog never will run short of material. With the vast majority of writers, politicians and even old-time economists, not understanding Monetary Sovereignty, and instead parroting today’s popular wisdom that federal government finances resemble personal finances, I have a huge selection of ignorant comments from which to choose.

This time, the myths come to us courtesy of Robert J. Samuelson:

Social Security, Medicare, Medicaid and other retiree programs constitute roughly half of non-interest federal spending.

These transfers have become so huge that, unless checked, they will sabotage America’s future. The facts are known: By 2035, the 65-and-over population will nearly double, and health costs remain uncontrolled; the combination automatically expands federal spending (as a share of the economy) by about one-third from 2005 levels. This tidal wave of spending means one or all of the following: (a) much higher taxes; (b) the gutting of other government services, from the Weather Service to medical research; (c) a partial and dangerous disarmament; (d) large and unstable deficits.

No Mr. Samuelson, it doesn’t mean any of those things. Let me address each:

(a)”. . . much higher taxes. . .”
Federal taxes have nothing whatsoever to do with federal spending. The U.S. is Monetarily Sovereign. It pays its bills by instructing banks to credit bank accounts. Whether taxes fall to $0 or rise to $100 trillion, neither event would change by even $1 the federal government’s ability to instruct banks to credit bank accounts.

In federal financing, there is no functional connection between taxing (or borrowing) and spending. When you and I spend, we transfer money. When the federal government spends, it creates money. Huge difference, that Mr. Samuelson does not understand.

(b)” . . . the gutting of other government services, from the Weather Service to medical research. . . “
This is based on the myth that federal spending is limited. It is, but not by what Mr. Samuelson thinks. It’s not limited by taxes. It’s not limited by borrowing. It’s limited only by Congress and inflation, which today is nowhere near. Remember, we’re in a recession, where the nation is starved for money. Federal spending adds needed money to the economy.

(c)” . . . a partial and dangerous disarmament. . . “
Same as (b)

(d)” . . . large and unstable deficits.”
Yes the deficits will be large. They need to be. This is a large country with large money needs. Deficits are the federal government’s method for adding money to this large country. Without large and growing federal deficits we will not be a large and growing country. And what the heck are “unstable” deficits? Or is “unstable” just a more erudite-sounding word you toss in as a synonym for “bad”?

Like most opinion writers, you do not understand the differences between Monetary Sovereignty and monetary non-sovereignty. Let me summarize our current situation:

Our economy languishes. Unemployment is far too high. We need to stimulate businesses so they will hire more people. You, Mr. Samuelson, are suggesting that the federal government pay less money to Social Security, Medicare, Medicaid and other retiree programs, because you erroneously believe the government does not have the unlimited ability to pay its bills.

If the federal government increases its payments to these programs, the recipients of this money will spend it, which will stimulate business and help reduce the unemployment problem.

Mr. Samuelson has joined the crowd who feels that funding ”. . . other government services, from the Weather Service to medical research” along with the military must be accomplished by reduced funding to our seniors and to our poor. If we follow Mr. Samuelson, America will decline to a mean, harsh, wretched nation, indeed.

Readers of Mr. Samuelson’s columns should drop him a note and suggest he acquaint himself with Monetary Sovereignty, before he spreads any more incorrect and harmful myths.

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.

MONETARY SOVEREIGNTY

–When the DINO battles the RINO, the LAWN will get trampled.

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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Have you noticed that the most angry battles sometimes concern the least significant problems? “She looked at me funny.” “He gave me the finger.” “My religion is better than yours.” “Your kids are ugly.”

In that vein, the most significant, most publicized, most hotly debated Congressional debate in recent memory, actually doesn’t matter. We have moved to the right. The Democrats are the new Republicans; the Republicans are the new fascists. But that is not the debate. The federal debt “problem” debate focuses on whether to use the Boehner plan, the Reid plan, the Gang of Six plan, the Republican, Democrat or Tea Party plan. And none of this makes much difference.

Why? The key feature of every submitted plan is deficit reduction; the rest is details. So, deficit reduction is not being debated. And it is deficit reduction that will lead to the next recession or depression, for it is deficit reduction that will reduce the growth of our economy’s money supply and our economy.

Deficit spending is the federal government’s method for adding money to the economy and for providing benefits to our children and grandchildren -– health care, retirement, roads and bridges, medical research, food and housing for the poor, scientific research, education, homeland security, food safety, retirement security, investment security and perhaps above all, employment.

The federal government is the economy’s biggest customer. When a business’s biggest customer begins to buy less, what happens to the business? That is what will happen to hundreds of thousands of businesses, and their employees, when the government begins to reduce its purchasing. Not a good thing for the unemployment problem. The federal government also is the economy’s biggest employer. What happens when the biggest employer begins to fire employees? Also, not a good thing for the unemployment problem.

Since money is the lifeblood of our economy, reducing the money supply is like applying leeches to cure anemia. The left vs right debate essentially has devolved to, “Shall I shoot you with the gun held in my left hand or held in my right hand?” The President and Congress are playing Russian roulette with our lives, and either way, you will be dead, just as any of the deficit-reduction plans will shoot the U.S. economy dead.

But no one is discussing that. Cutting the federal deficit essentially is a fait accompli, with only the method up for debate. Sadly, the result of cutting the deficit will be recession or depression. The economic pain will be distributed according to class. The wealthiest will feel almost nothing; the poorest will be devastated.

Ironically, the poorest are marching for deficit reduction, shoulder to shoulder with the rich. Why? They have been sold a bill of goods, by the media and the politicians, that they, their children and their grandchildren will benefit, when in fact, deficit reduction will increase the gap between the rich and he poor, by making the poor much poorer.

So don’t get all steamed up about who is wrong and who is right, who is a DINO (Democrat in name only) and who is a RINO (Republican in name only). Those things are meaningless. When the DINO battles the RINO, the LAWN (Lower Average Wage Nobodies) will get trampled.

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

–The debt clock: A symbol of economic ignorance

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Lately I’ve been seeing this image published more often, in various media.

Debt clock

This surely is the most misleading, downright untruthful sign you ever will have the misfortune to encounter. It’s untruthful because it shows the gross federal debt, which includes money the federal government borrows from itself.

Example: For convenience, my wife and I have separate checking accounts. When we are not together, she can write checks and I can write checks, and it’s easier to balance than if both tried to write checks from the same checkbook. Periodically, if one account is low, we transfer money from one account to the other (the government would call that “borrowing,” but it’s just debiting one account and crediting the other), so both accounts will have positive balances. I don’t feel I’m in debt to my wife, nor she to me. I never would consider these periodic internal transfers to be “debt.”

Similarly, the federal government’s internal “creditors” (i.e. Social Security et al) are not going to dun the federal government for payment of its “debt.”

While the Gross Federal Debt is around $14 trillion, the net debt is only about $8 trillion — well below the debt ceiling (another misleading, untruthful gimmick). Sadly, Congress and the President pretend not to understand that. So they injure our economy about something that isn’t real.

For their own selfish, political reasons, these politicians do more harm to America than al qaeda ever could. (I wish there could be a law precluding these traitors from standing in front of an American flag when they speak.)

The misleading part of the sign has to do with the words, “Your family share.” Most people interpret those words to mean their family owes a share of the gross federal debt, which as we have seen, is a fake number. But worse, your family does not owe a share even of the net federal debt. Your family could more accurately be said to own a share of the debt.

The federal so-called “debt” is the total of outstanding T-securities. When the government “borrows” it debits the “lender’s” checking account and credits the lender’s savings account (aka T-security account) at the Federal Reserve Bank. No dollars are shipped anywhere. It’s just an asset exchange accomplished by a debit and a credit.

When the government pays its “debt,” the process is reversed. The checking account is credited and the savings account is debited. At no time are taxes involved so at no time do you or any other taxpayers owe anything. Whether taxes are $0 or $100 trillion, the federal government’s ability to debit and credit bank accounts does not change.

Buying a T-security is essentially identical with transferring dollars from your checking account to your savings account.

You could be said to own a share of the debt, because federal debt is a measure of money in the economy. You are part of the economy, so that money benefits you. The greater the “debt,” the healthier the economy.

I don’t know whether the Durst family, which owns and maintains the clock, knows what it really means. They may be forerunners of the Tea Party, those clueless folks who hate government but love their Social Security, Medicare and Medicaid checks, their safe food and drugs, their highways, army protection, scientific research, FDIC security, homeland security and the myriad other perks provided by the federal government.

It’s enough you to know that every time you see that sign, you see economic ignorance at work.

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.

MONETARY SOVEREIGNTY

–What are the greatest threats to our economy?

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Here are two brief questions to those who wish to cut the federal debt:
-When do recessions begin?
-What cures them?

Resessions begin with reduced debt growth
Recessions begin with reduced debt growth and are cured by increased debt growth.

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The following is a brief message to those who claim federal deficit spending is in danger of causing inflation or hyperinflation.

Deficit spending does not cause inflation
In more than 60 years, there has been no relationship between deficit spending and inflation, which today is at a low level.

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The following is a brief message to those who claim removing debt from the economy will stimulate economic growth:

Debt and GDP are parallel
Debt growth and GDP growth parallel.

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The following is a brief message to those who feel inflation is a greater, more imminent problem than recession:

Inflation is low; GDP growth is low
Inflation is low; GDP growth is low.

So tell me, what is the greatest threat to our economy?

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.

MONETARY SOVEREIGNTY