–Poland debates the economic suicide of austerity

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 motivation.
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Poland’s Monetarily Sovereign economy has been, and remains, far healthier than the monetarily non-sovereign economies of the euro nations. That may change according to an article in Der Spiegel. Here are a few excerpts:

Core or periphery?: Poland’s Battle Over Embracing the Euro

Since the fall of communism in 1989, Poland has become an EU member that has developed from a backward, agricultural country into a prosperous nation. Now liberal-conservative Prime Minister Donald Tusk wants to take the next step.

He has announced his intention to hold a “national debate” in the spring over Poland’s accession to the euro zone. “How should we decide?” he asks. “Do we want to be part of Europe’s core in the future or remain along its periphery?”

Note the use of the words “next step” and “accession” which imply progress, and the words “core” vs. “periphery,” which imply that Poland is being left out of something good.

Europe’s “core” is in an economic death spiral, drowning in a whirlpool caused by monetary non-sovereignty and slavish adherence to obsolete ideas like deficit/GDP limits. So yes, by all means, let’s dive right in, and drown along with them, rather than stay safe on the “periphery” shore.

With its national debt at only 56 percent of GDP and its currency, the zloty, relatively stable, the stability criteria are hardly an issue for Poland. The only minor sticking point is that last year’s 3.1 percent budget deficit is slightly higher than the deficit-to-GDP ratio of 3 percent demanded by the Stability and Growth Pact.

Except not one human on this planet can explain why a Monetarily Sovereign government’s deficit spending should be limited to 3%, or to any other percentage, of a nation’s product.

The government camp argues that the country needs the euro to remain competitive. But the conservative-nationalist opposition believes that Poland’s independence is at risk. It argues that, owing to German dominance, if Poland joins the euro zone it will lose the national character it developed in difficult struggles that claimed many victims.

Not just “national character,” Poland will lose its economy if it joins the failed eurozone. It would be akin to a move from the safe, posh suburbs to the crime-ridden, inner city slums, just to be part of “the core.”

About 75 percent of Polish exports go to EU countries. If the country joined the euro zone, one of the most important benefits is that the transaction costs caused by fluctuating exchange rates would disappear.

Exchange rates can help or hinder exports, depending on whose money is weaker. Currently, those “fluctuating exchange rates” don’t seem to have hurt Poland. And anyway, how about hedging on the futures exchanges? That’s why they were created.

All sovereign nations deal with exchange rates. So? Is this a reason to surrender your single most valuable asset: Your Monetary Sovereignty?

Despite the Europe-wide recession, Poland consistently generated high growth rates, but now the crisis has arrived. Poland’s 38 million people are holding onto their money, triggering a sharp drop in domestic demand. The Polish economy grew by only 2 percent in 2012, compared to 4.5 percent in 2011.

Let’s see. When the euro nations faltered, Poland prospered. Now the euro nations are drowning in depression, while Poland has “only” 2% growth. Anyone see a reason Poland should dive into that euro maelstrom?

The first showdown is expected in late February and early March, when the Polish parliament, the Sejm, will vote on ratification of the European fiscal compact, the agreement championed by German Chancellor Angela Merkel that obliges signatories to implement balanced-budget legislation and accept automatic sanctions for violating the new deficit rules.

Ah, good old Merkel. Here motto is, “If we couldn’t beat ‘em in the war, let’s beat ‘em down in the peace.”

“We think that EU integration goes much too far,” says Krzysztof Kawecki, a member of the center-right Right Wing of the Republic party.. “We don’t want a United States of Europe, but a confederation of independent national states.”

The fiscal compact, he says, gives Brussels a say in fiscal and budgetary policy. Kawecki believes that it would be “suicidal” to introduce an ailing currency like the euro today.

A “United States of Europe” would work.. Member nations would surrender their Monetary Sovereignty in exchange for receiving euros from the central government. But the EU proposes something far worse.

Member nations would surrender their Monetary Sovereignty in exchange for nothing. They would become slaves to the EU’s incessant demands for austerity, an economic black hole from which no nation emerges.

Austerity is everywhere (including the U.S.) a black hole designed by the rich to increase their power over the poor. And the euro is an income gap widening machine, guaranteed to impoverish all but the upper .1%.

God help the Polish people if their leaders manage to drag them into the EU’s austerity abyss.

(Then again, God help the American people, as our upper 1% income group drags us down into the austerity abyss.)

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

–Income inequality: The Stilgitz, Roubini, Buffett solution.

If I told you world hunger is a serious problem, would your first thought be: We should cut food rations to the people, who already are amply nourished, to “even things out”?

If I told you air pollution is a terrible problem in Beijing, China, would you suggest that China pollute other cities, to “even things out”?

If I told you deforestation is a serious problem in Brazil, would you suggest that the solution is to deforest Canada, to “even things out”?

If I told you that polio remains a problem in parts of India, would you suggest we introduce polio to other parts of India, to “even things out”?

No? Then you don’t think like Nobel Prize winner Joseph Stilgitz, New York University professor of economics Nouriel Roubini or Warren Buffett.

Consider these excerpts from an article in policymic.com, Income Inequality in America: What We Should Be Doing About It:

Recent studies are finding that inequality is not just a matter of ethics or justice, but a serious economic issue contributing to many of America’s current financial problems.

Inequality makes an economy inefficient and unstable, and limits the opportunities and mobility of its citizens.

New research is challenging economists’ traditional view that inequality is a necessary evil for an efficient capitalist society. Nobel Prize winner Joseph E Stiglitz leads the charge in his 2012 book The Price of Inequality, concluding that unequal societies are inefficient and tend to have unstable, unsustainable economies.

Absolutely true. Preaching to the choir, here. But continue reading.

A 2011 International Monetary Fund study agrees and adds that inequality tends to cause economic volatility. Stiglitz further argues, echoing a point raised by economist Christopher Brown of Arkansas State University, that income inequality hinders consumption spending and therefore causes “a shortfall in aggregate demand.”

What can we do about it?

Good conclusion and good question. Here is their answer:

Joseph Stilgitz and New York University professor of economics Nouriel Roubini, among others, agree that higher taxes, particularly for the upper-middle class and up, will help even things out, thereby “unlocking the U.S. economy’s growth potential in a sustainable way.”

“Even things out”? That’s the solution? And how will increasing taxes on anyone increase aggregate demand? Answer: It can’t. Reducing the money supply reduces aggregate demand.

Here’s a bit more nonsense from our renowned economists and capitalist.

They, along with billionaire Warren Buffett, additionally agree that the government should limit the tax breaks, subsidies, and loopholes allowed to the major energy, agri-business, pharmaceutical, and financial companies.

Yes, in this world market, we should do everything possible to hamstring American corporations. Energy research and development is unnecessary, as is pharmaceutical research and development. Right??

In Roubini’s words, the government should make sure, “corporations and individuals whose income is derived from investments pay taxes commensurate with the benefits they get from the US citizenship.”

Not only is this silly from a practical sense (How would “the benefits” be measured to make taxes “commensurate”?), but it is absurd from an economical sense. Taking more dollars out of an economy, depresses the economy. Period.

Learn Monetary Sovereignty, renowned professors. The federal government (unlike state and local governments) does not spend tax dollars. Because the federal government has no need for, nor use of, tax dollars, taxes do nothing but impoverish the economy.

Raise taxes on corporations, and what will the corporations do? Answers:

1. Fire workers or cut salaries
2. Spend less

Both of those results will impoverish our economy, especially the lower and middle-income classes.

Raise tax rates on the uber-rich, and what will they do:

1. Invest less
2. Buy less
3. Fire people who work for them.

All of those results also would impoverish our economy, especially the lower and middle-income classes — except for one thing: While the upper middle-class will get stuck and see their incomes reduced, the super-rich probably won’t pay the taxes anyway. Isn’t that what Romney’s offshore accounts are for? You can be sure the upper .1% will pay the politicians for exemptions and exceptions.

Yes, people love to see those with more money get their comeuppance, but this would be a classic cut-nose-to-spite-face act.

Surely, Stiglitz, Roubini and Buffett (oh, my!) know this stuff. It’s as basic as economics can get. So what are their real motives for making such silly suggestions?

As I often have said, the super-rich do not care about absolute income. They care about comparative income. They care about widening the gap. And what is the best way to widen the gap?

Increase taxes to impoverish the entire economy, so that even the middle class faces starvation.

The economists’ more charitable motive is this: When they win Nobels and are lauded in the upper-.1%-owned media, they like to please and hang with the rich. No one ever was fired, lost tenure or ignored by rich-owned media for laughing at the boss’s jokes.

That’s the more charitable motive.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

#MONETARY SOVEREIGNTY

–Budget cuts coming: Great news for us rich people

As readers of this blog have learned, we of the upper .1% income group – we mega rich – we bribe the politicians (via campaign contributions and promises of lucrative employment later) to reduce the so-called federal “deficit,” also known as creating “austerity.” You wouldn’t believe how much politicians love to be bribed.

Because the vast majority of deficit spending benefits you in the lower and middle income classes, deficit reduction widens the gap between us rich people and you middle class folks, and it is the gap that we upper 1%ers really care about. Without the gap, none of us would be rich, and the wider the gap, the more power we have over you. Power is what life is all about. You should get some.

Under the title, Budget cut warnings may prove harsher than reality, Alan Fram of the Associated Press, discusses what austerity will do to you middle class nobodies and for us mega-rich.

—Defense: A $3 billion cut in the military’s Tricare health care system could diminish elective care for military families and retirees.

This won’t affect us in the upper .1% income group. None of us are soldiers and anyway, we have our own “cadillac” health insurance.

—Health: The National Institutes of Health would lose $1.6 billion, trimming cancer research and drying up funds for hundreds of other research projects. Health departments would give 424,000 fewer tests for the AIDS virus. More than 373,000 people may not receive mental health services.

Cancer research, AIDS, mental health – who cares? What’s important is to cut the deficit. Why? No one knows, but you believe it. We in the .1% don’t get AIDS. That’s for poor folks. And we buy our own psychiatrists.

—Food and agriculture: About 600,000 low-income pregnant women and new mothers would lose food aid and nutrition education. Meat inspectors could be furloughed up to 15 days, shutting meatpacking plants intermittently and costing up to $10 billion in production losses.

I don’t know any low-income pregnant women, do you? And if those low-paid workers in meatpacking plants lose some of their income, well I don’t know any of them, either.

—Homeland Security: Fewer border agents and facilities for detained illegal immigrants. Reduced Coast Guard air and sea operations, furloughed Secret Service agents and weakened efforts against cyberthreats to computer networks. The Federal Emergency Management Agency’s disaster relief fund would lose more than $1 billion.

So we fire a few border agents and a few in the Coast Guard. None of us in the .1% work those kinds of menial jobs. And as for FEMA, really who cares? My rich friends and I don’t receive disaster relief.

—Education: Seventy thousand Head Start pupils would be removed from the pre-kindergarten program. Layoffs of 10,000 teachers and thousands of other staffers because of cuts in federal dollars that state and local governments use for schools. Cuts for programs for disabled and other special-needs students.

Some teachers lose their jobs – big deal. I can hire private tutors. Anyway, my kids go to expensive private schools. Don’t yours?

—Transportation: Most of the Federal Aviation Administration’s 47,000 employees would face furloughs, including air traffic controllers, for an average of 11 days.

So 47,000 people each lose 11 days of pay – is that something I’m supposed to care about? Let ‘em eat cake.

—State Department: Slow security improvements at overseas facilities.

So a couple more ambassadors get killed. Not my worry. Just blame Hillary.

—Internal Revenue Service: Furloughed workers would reduce the IRS’ ability to review returns, detect fraud and answer taxpayers’ questions.

This is great. Mitt and I hate those guys nosing into our offshore bank accounts.

—FBI: Furloughs and a hiring freeze would have the equivalent impact of cutting 2,285 employees, including 775 agents. Every FBI employee would be furloughed 14 workdays.

More unemployment for the middle class. Perfect. Just widens the income gap between us and you. By the way, what does the FBI do?

—Interior Department: Hours and service would be trimmed at all 398 national parks, and up to 128 wildlife refuges could be shuttered.

If I want to see wildlife, I’ll fly my private jet to Africa. You should, too.

—Labor: More than 3.8 million people jobless for six months or longer could see their unemployment benefits reduced by as much as 9.4 percent. Fewer Occupational Safety and Health Administration inspectors could mean 1,200 fewer visits to work sites. One million fewer people would get help finding or preparing for new jobs.

This is the best news yet. Increase unemployment while decreasing jobless benefits – the perfect combination for widening the gap between me and you.

—NASA: Nearly $900 million in cuts, including funds to help private companies build capsules to send astronauts to the International Space Station.

Science, who needs it? Really, what good is it?

—Housing: The Department of Housing and Urban Development said about 125,000 poor households could lose benefits from the agency’s Housing Choice Voucher program and risk becoming homeless.

All those lazy, homeless people wandering around. Thank goodness I built a big wall around my estate, so I don’t have to look at them.

In total, austerity is the greatest idea for us .1%ers. The more we cut federal spending, the wider that income gap. For a while, we thought only the Republicans were on our side, but now even the Democrats are starting to join in. They probably couldn’t resist the bribes.

Finally, I’d like to thank all you poor and middle-class slobs for demanding – yes, demanding – that the federal budget be cut, because you believe it’s “unsustainable” or will cause inflation or the government is “broke” or whatever other nonsense we’ve told you.

I know austerity causes you and your children great hardship, but remember, your sacrifices are for a good cause: To benefit us rich people.

Rodger Malcolm Mitchell
Monetary Sovereignty

[Confession: I’m not really part of the upper .1% income group, but it’s nice to dream, especially with the politicians being so cooperative.]

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#MONETARY SOVEREIGNTY

–“Flip the Debt.” Will they learn from “Occupy’s” mistake?

Well, we have an new protest organization. It’s called “Flip the Debt.” Unfortunately, like the Occupy” movement, they don’t understand economics. So they think our problem is corporations and rich people not paying enough tax.

Here is their press release:

Flip The Debt and Us Uncut Honeywell Action Press Release
Posted by Emine Dilek on Sunday, February 10, 2013

Honeywell CEO David Cote and ‘Fix the Debt’ will host a public event on Monday.

Unfortunately for them, a coalition of groups including FLIP THE DEBT, the Alliance for Retired Americans, and US Uncut will hijack their party to elevate our message about the hypocrisy of corporate tax dodgers demanding cuts to social programs.

‘Fix the Debt’ claims to seek bi-partisan solutions to reduce the federal debt and deficit, but Fix the Debt is a CEO-led group whose real objective is huge corporate tax breaks and drastic cuts in Social Security, Medicare, and Medicaid.

The hypocrisy is stunning…

David Cote and his CEO friends receive a lot from government:
In 2011, the firm got $725 million in government deals, making it the 35th-largest federal contractor.

However, these companies contribute very little in taxes: Honeywell’s actual tax rate from 2008-2011 was 2 percent. They are not alone. Corporate taxes as a share of GDP are near record lows.

Perhaps even more galling is Cote’s demand for cuts to earned benefit programs. Cote has $78 million in his Honeywell retirement accounts, enough to qualify for monthly retirement checks of $428,000 starting at age 65. In contrast the average retiree receives just $1,237 a month from Social Security.

If you think it’s time we stand up against corporate tax dodgers, RSVP to the page NOW! Please RSVP ‘Going’ regardless of whether you can attend. This will help you stay connected with the action. Also, we encourage people to post news, info, and photos about corporate tax dodgers on this wall.

Flip the Debt made good on its promise of protest:

When Honeywell CEO David Cote arrived at Saint Anselm College, he had expected a warmer reception. As the host of Monday’s “Fix The Debt” campaign event, Cote, whose company has come under heavy scrutiny by corporate watchdogs and tax advocates for its use of offshore tax havens, spoke only for three minutes before activists from the “Flip The Debt” campaign interrupted him with a message of protest, before being escorted out by police.

“Offshore tax havens” are not the problem. Low corporate taxes are not the problem. (In fact, they are beneficial.) The problem is a too-wide income gap and a too-low deficit.

You could do Flip the Gap a favor by going to their site and suggesting they immerse themselves in Monetary Sovereignty and/or Modern Monetary Theory. The basics don’t take long to understand, and this will make their protests productive. (You may have to do it via tweets, as I was unable to find an Email address at their site, http://www.flipthedebt.org/)

Otherwise, they’ll just be another Occupy movement that failed to accomplish much, because it refused to learn the facts.

It will be a shame to see their energy wasted.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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