–The stab in the back Monday, Aug 1 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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President Obama, the leader of the free world, elected to be the most powerful man in the universe, controlling both the presidency and one house of Congress, has just stabbed America in the back, caved to the Tea Party, and ceded leadership to the extremists and to yet another “bipartisan commission.”

You know a president has failed, when given all the power of the presidency, he steps back and asks the other party to make all the tough decisions, in the name of “compromise.” Why “bipartisan” when you control the Executive branch and half the Legislative Branch? As I asked in an earlier post, Coward, fool or traitor to America?

I think we now have our answer: All three.

We didn’t elect him to be our compromiser. We elected him to be our leader. He had options. Plenty of ways he could have led us.

He could have used the “platinum coin option,” in which the Treasury mints a multi-trillion dollar coin, deposits it with the Federal Reserve, and writes checks against that deposit. It’s a work-around the debt ceiling. The law reads:

”The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

He failed to use that option.

He could have used the “14th Amendment option” which requires the U.S. to honor its debts. The law reads:

”The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

He failed to use that option

He could courageously have told America the truth: The debt ceiling is a ridiculous, harmful, possibly unconstitutional piece of legislation that has no current function, and is being used by demagogs to threaten America, and it should be eliminated. America is the only nation in the world that hamstrings itself in this way. He could have fought against that foolish law.

He failed to use that option.

He even could have told the full truth that Federal Deficits = Net Private Savings, and reducing deficits will reduce our savings, injure business, exacerbate unemployment and doom America to further recession and probably depression.

He failed to use that option.

Yes, Obama had options. Plenty of them. Instead, he stood back and allowed the Tea Party to create a de facto Balanced Budget Amendment, the amendment he himself so publicly had denounced. But (whew!), he has eliminated the worries, the stress and the obligation of leadership. It’s all automatic now. He, in effect, has given the Presidency to the Tea Party.

He is the first president in American history who cannot increase our money supply, as federal deficits are the method by which the government increases our money supply. Money growth is the only method by which the economy can grow, so a recession, then a depression loom on the near horizon. Medicare is in serious trouble, just as Obama was boasting about his new medical plan.

But, he will not have to concern himself with economic stimuli. There will be none. He will not have to worry about help for the poor, the middle class or the unemployed. There will be none. He has been relieved of all those inconvenient concerns.

If you are unemployed, do not look to Obama for help. More will join you in the unemployment line. Lower class? You’re out of luck. Middle class? Obama cares nothing for you, either. Elderly? No help for you. Sick? You’re on your own. Uneducated? Not Obama’s worry. Government employee? Obama will fire you. Military? Who needs you? The governor of a state, the president of a county board, the mayor of a city? Go bankrupt for all Obama cares.

Wealthy? Ah yes, Obama will help you if you help him with nice, fat contribution. He now can focus on what he considers to be the important problem in America. He spread his legs and said to the right-wing extremists, “Take me,” just so he could concentrate on the 2012 election.

He came into this job carrying the hopes and dreams of the unfortunate. Then, he stabbed the working people, the poor, and indeed, the entire economy in the back. The lower classes elected him because they were fooled into thinking he was their champion. Some champion!

The only question that remains for Obama: In the midst of the 2012 recession (or depression): Will Americans again vote for the guy who lied to them about protecting them from the rich, or will they vote for someone from the right wing, who unashamedly won’t lie to them about protecting them from the rich?

Neither the President, nor any person in Congress, has told Americans the truth about our economy. Why, in this great nation of 300+ million, do we have such difficulty finding one honest, courageous, compassionate leader?

Obama had so many choices, so many opportunities. He rode in triumphantly, one sunny day, in the golden chariot of hope, and now, at night, he sneaks out, stealing our dreams and futures, taking the road most traveled – by a Chicago politician. That will be his legacy.

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

–A few simple questions that never have been answered Saturday, Jul 30 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The nonsense in Washington boils down to a few simple questions that never seem to be answered

First the background:
The federal government is the largest customer and money provider in America, spending about $3.8 trillion dollars per year on goods, services and benefits. This compares with under $12 trillion for the entire domestic business sector.

(http://www.gpoaccess.gov/usbudget/fy11/hist.html ) and (http://research.stlouisfed.org/fredgraph.png?g=1jb )

The U.S. government also is America’s largest employer, with about 4.6 million full time employees:

Military: 1,430,000 (Department of Defense, Active Duty Military Personnel Strengths by Regional Area and by Country, September 30, 2010); 700,000 defense employees worldwide (Department of Defense Civilian Personnel Management Service); 2009 Number of Full-Time Federal Employees – 2,518,101 http://www2.census.gov/govs/apes/09fedfun.pdf

The federal government employs as many people as the top nine civilian employers – Wal-Mart, McDonalds, UPS, Sears, Home Depot, Target, IBM, GM and GE — combined.

( http://nyjobsource.com/largestemployers.html )

The President, the Tea (formerly Republican) Party, the Democrats, the media, most columnists and old-line economists agree federal spending should be reduced and/or federal taxes increased. The goal: To reduce the federal deficit.

The two biggest problems facing America are the recession and the related unemployment.

Now for the simple questions:
1. What do businesses do when their biggest customer reduces purchases? Do they fire employees, reduce purchases of goods and services or both?

2. When businesses fire employees, or reduce purchases of goods and services, how does this stimulate the economy or cut unemployment?

3. What do individuals do when their salaries and/or benefit checks are reduced? Do they spend less, save less or both?

4. When individuals spend less or save less, how does this stimulate the economy or cut unemployment?

5. Considering all of the above, how does a reduction in federal spending and/or an increase in taxing (aka “deficit reduction”) solve our two biggest related problems: the economy and unemployment?

These questions never are asked, much less answered, because the politicians do not care about the answers. Their prime concern is not the working (or non-working) Americans. The politicians prime concern is who gets elected, i.e., power.

President Obama, the Tea (formerly Republican) Party and the Democrats all have the same goal, with the differences being only in the execution. And I use the word “execution” intentionally, because whoever “wins,” the American public will lose. We, our children and our grandchildren will suffer the execution of joblessness, poverty and loss of health and lifestyle. Our great American dream will be shattered — needlessly — all for the greed, ambitions and ignorance of the politicians.

While we stress about traitors at Fort Hood, we give a free pass to traitors in Congress, who intentionally do more harm to America than al Qaeda ever could.

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

–The depression cometh Saturday, Jul 30 2011 

Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Historically, whenever dollars have been taken from our economy, or even when dollar growth has been reduced, the economy has gone into recession or depression. (See: Cause of recessions and depressions)

Congress and the President insist the federal deficit must be reduced. There are but two methods for reducing the deficit: Increase federal taxes and/or reduce federal spending. Both methods reduce the number of dollars in the U.S. economy.

7/29/11: Roya Wolverson, Time Magazine: “The bad news just keeps coming. The U.S. economy grew even less than expected in the second quarter, at a rate of 1.3%, down from what many economists predicted would be 1.8% or higher. The reasons for the continued lackluster performance haven’t changed. Consumers, squeezed by higher gas and other prices, are buying less of everything from electronics to meals out to new furniture.”

Recently, I posted, “Based on where Obama and the Tea/Republicans are headed, there will be a depression (not just a recession) next year. Only a miracle of realization, by both parties, can save us now. (See: Depression in 2012)

7/30/11: Alan Rappeport, Pharmaceuticals Magazine: “Merck, the US drug company, will cut as many as 13,000 jobs, or 13 per cent of its workforce, as it looks to slash costs and invest in emerging markets. The cuts, to be achieved by 2015, follow those announced last year when Merck said it would reduce its staff by 17 per cent. Merck has been looking to achieve the savings it promised when it acquired Schering Plough for $41bn in 2009.”

Congress and the President remain ignorant. They continue to call for increased taxes and/or spending cuts. The depression cometh.

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

–Today’s ignorant comment, this time from Robert J. Samuelson, Opinion Writer at the Washington Post Friday, Jul 29 2011 

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

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