–Congress, the media, the economists: The same Big Lie since 1940. What the hell is the problem? Friday, Sep 25 2015 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is
the Gap between rich and poor.
•Austerity is the government’s method for widening
the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

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Sen. Rand Paul, Kentucky Republican and 2016 presidential contender, said he could not support any bill that “continues to add to our nation’s mountain of debt. (By Tom Howell Jr. – The Washington Times – Thursday, September 24, 2015)

Congress, the media and the economists have been telling you the same Big Lie since — well, forever. What the hell is the problem?

The Big Lie, simply stated is this: “The federal debt should be reduced. Whether its federal debt or personal debt, being in debt is bad.”

But why is federal debt bad?

Will the federal government default? Will the federal debt cause inflation? Will our children have to pay the federal debt?

No, no and no.

So, what exactly is the problem with the federal debt?

Government debt threatens to send U.S. economy into death spiral, CBO warns

Rising federal debt threatens to choke economic growth within a decade, beginning a death spiral that will sap revenue from government programs even as demands grow, forcing the government to borrow even more, Congress‘ budget watchdog said in a frightening report Tuesday.

Budget cuts or tax increases now would help avert that scary scenario, leaving the economy far stronger than it otherwise would be, the Congressional Budget Office said.

The next few years will show solid improvement in the budget as the effects of the stimulus wear off.

So let’s get this straight: Tax increases make the economy stronger by . . . by what? By removing dollars from the economy?

Are we supposed to believe that reducing the money supply increases GDP??

And that federal spending, which adds dollars to the economy, should be decreased?

What branch of economics claims that adding dollars to an economy, particularly at a time of extremely low inflation, depresses the economy?

And finally, do we need the effects of the stimulus, which by definition stimulated the economy — do we need those stimulative effects to wear off?

Earth to CBO, Earth to CBO. Come in please.

And then we come to the infamous “debt ceiling,” the law that says, “Beyond an arbitrary limit, the U.S. government should not pay for what it already has bought.”

Right. Congress and the President first decide how much to spend and tax, and then the debt ceiling determines which debts they will pay, after all the spending and taxing.

Intelligent?

If that makes sense to you, feel free to join the CBO, drifting somewhere on a distant planet.

Returning to earth, here are the simple facts:

monetary sovereignty

In 1939, the federal debt was $48 billion.
In 1972, the year the U.S. government became Monetarily Sovereign, the federal debt was $436 billion — a 9-fold increase in 33 years.
Last year, the federal debt was $18 trillion — a 41-fold increase in 43 years.

Yet here we are: Despite the CBO’s ludicrous claim about a “death spiral,” the federal government still has no difficulty paying its debts (phony “debt ceiling” notwithstanding).

And despite debt-nuts’ incessant warnings about hyper-inflation, our inflation rate is as low as it ever has been — so low as to concern the Fed.

And with today’s federal tax rates at relatively low levels, nobody’s children are paying for past federal debts.

So again, what the hell is the problem? Why do we see headlines like these?

–The Treasury Department estimated (when) the government would hit its $18.1 trillion borrowing limit

–Highway trust fund runs out next summer

–Social Security disability payments will run out of money in 2016

–Medicare: Running out of time and money; The crisis is coming—with no easy fix in sight

–The United States Postal Service is in deep financial trouble

And why does the Big Lie continue to be told and believed, year after year:

FEDERAL DEBT, A TICKING TIME BOMB Sept 26, 1940, New York Times: Deficit Financing is Hit by Hanes: ” . . . unless an end is put to deficit financing,to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship

Our politicians, media and economists long have known that the public is economically ignorant, and will believe the same lies, even when the lies become laughably obvious.

The same warnings, since 1940 and earlier, about federal debt — yet the debt grows, and none of the warnings come true, the “time bomb” keeps ticking, and still the public believes.

Just like in the Peanuts comic strip, where Lucy repeatedly pulls the football away before Charlie Brown can kick it — and Charlie never catches on — the American public never catches on to the fact that the Monetarily Sovereign federal government cannot run short of its own sovereign dollars.

What is the purpose of the Big Lie? Very simple: Federal deficit spending benefits the poor and middle classes far more than the rich.

The rich run the government (via campaign contributions and promises of lucrative employment later), the media (via ownership) and the university economists (via university contributions).

The rich want the Gap between the rich and the rest to be widened, for without the Gap, no one would be rich, and the wider the Gap, the richer they are.

So now, as we enter the silly season of the federal debt ceiling debates, remember this: The federal debt ceiling is a Big Lie, and what the politicians, the media and the university economists tell you will be bullsh*t.

But our Charlie Brown public keeps getting fooled.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Ten 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 Click here
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)

10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
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10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Recessions come after the blue line drops below zero.

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–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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