Question of the day: Why is it easier to believe in worldwide ignorance than in conspiracy?

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive.
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Of our leaders – the President and his many advisors, the Secretary of the Treasury and his many advisors, the Chairman of the Fed and his many advisors, the Counsel of Economic Advisers and their 400+ economic PhDs, and Congress, 535 strong – not one of these thousand-plus leaders admits to understanding Monetary Sovereignty.

Not one admits to knowing the federal government cannot run short of dollars. Instead, 100% of them falsely claims the government is “broke” and the federal deficit is “unsustainable” and the debt will be paid by our children.

Not one admits to knowing the U.S. government, being Monetarily Sovereign, is different from the monetarily non-sovereign governments of Chicago, Ohio, Greece and France.

Not one admits to understanding why personal finances are unlike federal finances. So our leaders lie, as President Obama did, when he said, “You have to live within your means, so the federal government should live within its means.”

The followers of Modern Monetary Theory (MMT) reject the notion that this is a conspiracy, perhaps because conspiracy theories, in of themselves, so often have lacked proof. MMT says this simply is an example of massive and unimaginable ignorance, which can be cured by education.

So they try to educate our leaders with ever simpler and clearer explanations – all to no avail. Somehow, strangely, our leaders just can’t seem to “get it.”

Meanwhile, the charade in Washington, DC continues, as each political party competes to destroy the American middle class, by cutting benefits.

Recently, I read an article by Chris Cook, a senior research fellow at University College London and a former director at the International Petroleum Exchange. The piece is titled, THE MYTH OF DEBT. I urge you to read it.

Here are a few excerpts:

The fiscal myth of tax and spend shared by virtually all schools of economics is that tax is first collected and then spent. This has never been the case: the reality has always been that government spending has come first and taxation later.

Taxation acts to remove money from circulation and to prevent inflation: it does not fund and never has funded public spending.

THE clearing banks have their own power to create money, for the purposes of lending. They are responsible for most new money in the modern system They, too, are the subject of a well-peddled myth, which is that deposits are first collected by banks and then spent or loaned into circulation on the basis of requiring a certain reserve level of deposits to be maintained.

In fact, there is no constraint on UK credit/money creation of reserves: the constraint on modern money creation by private banks is the capital required to cover losses on loans. Private banks first lend . . . and then fund their dated interest-bearing loans (assets) with dated interest-bearing deposits (liabilities).

Putting most money creation into the hands of organisations whose raison d’etre is to make money from lending (and more recently, from speculation) is behind much of what has gone wrong with the financial system. As with all historic bubbles, the profit motive drove excessive credit creation.

Bank lending departments were abetted by everyone from bank lobbyists persuading the authorities to allow dangerously low capital ratios to trading departments devising increasingly complex instruments for shifting loans off bank balance sheets to make more and more lending possible.

From these observations, I reach two conclusions. First, the clearing banks cannot be trusted to freely create the credit which is modern money. If money is to be created by a middleman or intermediary then it should be either the central bank or the Treasury itself.

My second conclusion is that we must revisit the concept of the national debt itself and recognise it for the national equity it is in reality. We have only saddled ourselves with this debt delusion because we have forgotten what the true relationship actually is between public spending and taxation.

Mr. Cook’s article appeared March 5th, 2013, in the Scottish newspaper, the Herald. Clearly, he understands Monetary Sovereignty. His Scotland is part of the UK, which remains Monetarily Sovereign, while much of Europe surrendered its most valuable asset, its Monetary Sovereignty, by adopting that alien currency, the euro.

Why did Mr. Cook feel compelled to write this piece? Because, the leaders of the UK, and all their economic advisers, even now, debate the best way to sacrifice their middle class, while also debating the forfeit of their Monetary Sovereignty via entry into the eurozone.

So, is this an example of worldwide ignorance or worldwide bribery and conspiracy?

Aside from their provably wrong statements, there is no evidence these thousands of economics-educated people do not understand the basics of economics. There is no evidence telling us these people do not understand the clear and obvious facts expressed in Mr. Cook’s article and in thousands of other such articles written under the MMT banner and in this very blog.

While zero evidence tells us these people are ignorant, what is the evidence for conspiracy?

Slate
The Failure of Peterson-ism
By David Weigel|Posted Monday, Dec. 10, 2012

For 20 years, a coalition of wealthy people—Pete Peterson chief among them—has spent hundreds of millions of dollars to build public support for austerity.

Hundreds of millions of dollars? Where did those dollars go? Many went into the campaign funds of politicians. Hundreds of millions will buy a great many politicians.

Then there are the Koch brothers.

According to

OpenSecrets Blog here are a few Koch political expenditures:
–Political Action Committee Spending (1989 to 2010): Koch Industries: $5,938,993
–527 Group Contributions (2001 to 2010): Koch Industries: $574,998
–Lobbying Expenditures (1998 to 2010): Koch Industries: $50,972,700

So well more than $55 million dollars were spent, most of them on “lobbying.” That too will buy you a great many politicians.

Then there is George Soros:

http://www.politico.com/news/stories/1010/43157.html Politico quotes him as saying, “Admittedly, consumption cannot be sustained indefinitely by running up the national debt …”

According to OpenSecrets blog: Individual donations to 527 organizations (2001 to 2010)
George Soros: $32.5 million

Hundreds upon hundreds of millions of dollars, given to politicians by people who claim the federal deficit and debt are, or soon will be, too large. Are these billionaires, with all their access to economic facts, also ignorant of economics?

Finally, the rich own the media, which promulgate the lie that deficits must be reduced.

So, which is more likely: Universal ignorance of economics by economics experts and the media or worldwide bribery of politicians and ownership of the media? All the evidence is on the side of bribery; no evidence supports worldwide ignorance.

What is the motive? Why do billionaires, who if anything, are experts in money, “waste” their valuable, and much beloved, dollars spreading the lie that deficits must be reduced? Because that lie will widen the wealth and income gap between the rich and the rest.

If you earned $50,000 per year, would you be rich? Yes, if everyone else earned $10,000. But no, if everyone else earned $50,000. It is the gap that makes the upper .1% rich and powerful, and the wider the gap, the richer and more powerful they are.

Without the gap, no one would be rich. That is why the rich are willing to spend millions, even billions, to widen the gap and to increase their power over the middle- and lower-classes.

Do we really believe we are so brilliant that we understand a Monetarily Sovereign government cannot run short of money, but these thousands of intelligent leaders simply cannot understand? A reporter in Scotland understands, but the leaders of the UK do not? Really?

These leaders are not stupid people. They are bribed people.

The public has been misled and brainwashed. The people do not want to learn economics, but rather wish to rely on their leaders. When the bribed leaders lie, the public believes.

So to change the world, and to save the middle- and lower classes, we who understand Monetary Sovereignty first must explain to the people how and why they have been lied to. We must not fear to explain the conspiracy and the motive.

Only when the people see the bribery and the lies, will they be willing to accept the truth.

And it is the truth that will save them from the ever growing disaster known as the “gap.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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 Imports

#MONETARY SOVEREIGNTY

–The Nation aids the .1%’s effort to enslave the nation, by Katrina vanden Heuvel

Katrina vanden Heuvel is the current editor and publisher of The Nation, a magazine founded in 1865. It’s founding prospectus reads::

“The Nation will not be the organ of any party, sect, or body. It will, on the contrary, make an earnest effort to bring to the discussion of political and social questions a really critical spirit, and to wage war upon the vices of violence, exaggeration, and misrepresentation by which so much of the political writing of the day is marred.”

Here are excerpts from Ms. VandenHeuvel’s article demonstrating her “war upon . . . misrepresentation.”

It’s time to tax financial transactions
By Katrina vanden Heuvel, Published: March 5

On Friday at midnight, the sequester kicked in, triggering $85 billion in deep, dumb budget cuts that sent “nonessential personnel”— such as air traffic controllers — packing.

Not to worry, though: Wall Street’s day was pretty much like any other. Billions of dollars in profits were made off of trillions of dollars in financial transactions. And the vast majority of those transactions were conducted tax-free.

We don’t need a team of policymakers to tell us this isn’t good policy, or that it needs changing.

Comment: The budget cuts were “dumb” if you care about America, but they were smart if you want to widen the gap between the wealthiest .1% and the rest of us – which is what Congress has been bribed to want. (The bribing consists of massive political contributions, courtesy of the Supreme Court, plus promises of lucrative employment, later.)

Those budget cuts directly impacted the 99.9% while leaving the .1% relatively unscathed, thus accomplishing the gap-widening that is the real goal of the .1%.

Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions — three pennies on every $100 traded.

Translation: The cure for “dumb” budget cuts, which suck dollars from the economy is taxes, which suck dollars from the economy.

The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it.

But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.

And here is where the economic ignorance kicked in. Ms. vanden Heuvel, the editor and publisher of The Nation, actually believes federal taxes pay for federal spending.

She is clueless about the difference between a Monetarily Sovereign government (which neither needs nor uses tax revenue), and a monetarily non-sovereign government (which does need, and does use, tax revenue).

Apparently, she believes monetarily non-sovereign Illinois, Chicago, Greece, you and I are financially identical to the Monetarily Sovereign U.S. government, which has the unlimited ability to pay its bills, and never needs to ask anyone for dollars.

And this is a woman who writes an economics column!! Is it any wonder the public is confused?

And after years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax .

When it comes to cutting the deficit, 6 in 10 Americans prefer taxing the financial industry to cutting social spending.

Imagine that! Most — 6 in 10 — Americans would rather tax Wall Street than see their Social Security benefits cut? (But who the heck are those other four Americans??)

Note there is no discussion about whether the deficit should be cut – no discussion about whether to bleed the anemic patient. That merely is assumed. The only discussion is how best to bleed the anemic patient.

After all, the tax isn’t just a good revenue raiser. It’s smart regulatory reform.

The high-frequency traders that now dominate our markets would be hardest-hit by the tax. A top economist recently concluded that their lightning speed, algorithm-driven trading drains profits from traditional investors. And analysts fear that such mass trading strategies could lead to disaster if markets behave unexpectedly.

Translation: One unnamed “top economist” concluded, without proof, that high frequency trading drains profits by . . . well, we don’t know how, so we simply will accept the word of this unnamed “top economist.”

Also, since this tax would be “insignificant” (her description), it wouldn’t eliminate high-speed trading, so what is she trying to say?

Europe, at least, seems to agree. Eleven nations, led by the conservative German government, are on track to start collecting the tax by January 2014. Expected revenues: $50 billion per year.

Er, ah, Ms. Katrina Vanden Heuvel, are you talking about monetarily non-sovereign Europe, which not only does need and use tax dollars, but which has the worlds worst record with regard to economics, and is suffering for it? Is that the Europe you’re referencing for economic wisdom?

Sequestration is a septic wound, self-inflicted by lawmakers who can’t agree on anything. Here, at last, we have a smart idea with widespread support — Americans and Europeans, populists and economists, progressives and conservatives.

After Friday’s dumb budget cuts, a little smart policymaking would be nice for a change.

Yes, sequestration is a bad idea (though not a “dumb” one, when the real motive is to widen the income gap.) It’s a bad idea because it sucks dollars from the economy, just as taxes do.

Even the editor and publisher of The Nation magazine is clueless about economics. It’s discouraging that she doesn’t understand the difference between Monetary Sovereignty and monetary non-sovereignty – a difference that provides the basis for all modern economics.

It’s even more discouraging that apparently she never has tried to learn.

And most discouraging is that she indoctrinates the American public with her ignorance.

That is how The Nation aids the .1%’s effort to enslave the nation.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–MMT: Save America. Focus on the gap.

Before I retired, I spend most of my working life resurrecting small, troubled companies. During that time, I interviewed dozens of such companies, and usually found their major problem to be lack of focus.

In desperation, these companies repeatedly had added products or services to their offerings, always hoping the next product or service — a wider line — would provide the needed profits. They didn’t recognize, however, that each time they added something, they lost something: They lost focus.

With each added product or service, they also added competitors, while spreading their own financial efforts. So rather than becoming stronger, they became weaker. Soon, they had so many competitors, and spread their efforts so thinly, it became impossible for them to survive.

My solution was to identify the one narrow niche each could dominate — the niche that had few, strong competitors and where they could focus all their marketing efforts.

Often there was resistance from management, because they hated to give up on many of their beloved products and services, but in the end, they relented, and their focus is what built their companies.

A failed marketer to attorneys was built into the largest used law book source in the world. A sick software company was built into the largest business simulation seller in the world. That is what focus can accomplish.

Which brings me to MMT. What is their focus?

They defend against false claims about the deficit and about the debt. They defend against false claims about employment; unemployment and full employment. They defend their suggestions about guaranteed employment.

They defend against false claims about inflation, recession and depression. They battle false claims about tax rates, tax loopholes and tax types — FICA, flat taxes, sales taxes. They defend aid to the poor, aid to the states, aid to education. They defend Medicare, Medicaid and Social Security. They talk about the banks and the Fed and Quantitative Easing.

Randy promotes his jobs guarantee. Bill wants the banks supervised. Stephanie lets everyone know inflation is not an imminent problem. Warren lectures on sector analysis.

So what exactly is MMT’s message?

While MMT’s messages are spread ever more thinly, they in turn, face far better-funded competitors — billionaires who have the financial power to outshout MMT at every turn.

Some well-funded competitors talk about the deficit: Heritage Foundation, the Center for Strategic and International Studies and the American Enterprise Institute. Some well funded competitors talk about taxes: The Tea Party. Pete Peterson and the Koch brothers drown MMT’s messages with dollar volume.

MMT tries to fight wars on multiple fronts. But, that is what cost Germany WWII, and had the U.S. been able to focus on Japan, we probably would have won in a year — certainly less than four, long years. The Occupy groups fail because of diverse messaging.

And here is little MMT, like the Alamo, out-manned and out-gunned and attacked on all sides. And to make things even more difficult, the enemy owns the media and the politicians, and MMT’s stories are counter-intuitive.

At long last, MMT must learn it needs to focus its efforts, and that focus should be The Wealth Gap: How big it is, who is causing it and why.

The focus not only should include the facts, but the outrage — not just logic, but the emotion. Consider this amazing video: Viral Video Shows the Extent of U.S. Wealth Inequality

It should start every MMT interview. MMT should express anger not only that this has happened, but why it has happened. MMT should say:

— What is happening. (Inequality rising for many years.)
— Who is responsible? (The upper .1% income group.)
— What is their motive? (The gap is what makes them rich and the bigger the gap, the richer they are.)
— How are they doing it? (By bribing politicians via campaign contributions and promises of lucrative employment later, and by ownership of the media.)

Bottom line, MMT, you need to focus. Many of you teach at UMKC, so getting together is easier. Decide on a plan of attack. Familiarize yourselves with the basic “gap” arguments, then use them every time you write an article or are interviewed.

The gap is the one narrow niche you can dominate. You can make the gap the most important problem in all of economics — far more important than debts and deficits.

Like an advertising or marketing campaign, you should use the same phrases, to imprint these words in the people’s minds. Just as “debt” and “deficit” have been wrongly imprinted, so should “the gap.”

Consistently pound away at the same message: “Cut the gap.”

FOCUS. That is the way the little guy beats the big guy. That is the way MMT can beat Pete Peterson and the Kochs, and save America.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–Economics in three pictures: Makers, Takers and Deficit Cutting

Perhaps you have been confused by politicians discussing “makers,” “takers,” and “deficit cutting.” Here is what these terms really mean:

THE MAKERS

THE TAKERS

DEFICIT CUTTING

Remember the correct definitions the next time you hear a politician mention these terms.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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