–How the UK teaches America about economics

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.
==========================================================================================================================================

Britain was much smarter than the euro nations. It kept its Monetary Sovereignty. The euro nations surrendered their Monetary Sovereignty. They have no sovereign currency. Instead, they use an “alien” currency, the euro. No euro government can create euros. Each can, and already has, run short of euros. So, each can be forced into bankruptcy.

Britain, like the U.S., has the unlimited ability to create its sovereign currency, in its case, the pound. It never can run short of pounds. It can pay any bill denominated in pounds. It never can be forced into bankruptcy.

Unfortunately, Britain’s leaders and the U.S.’s leaders act as though their nations are like the euro nations: Monetarily non-sovereign. Each pretends they are running short of their sovereign currency, and each offers the same “solution” to this non-existent problem.

A commentator, Roger Erickson, called the following article to my attention:

The Telegraph
“Everyone must make contribution’ towards deficit,” says Cameron
By Christopher Hope and Rowena Mason

Speaking at the end of a special Cabinet meeting to discuss this afternoon’s Autumn statement, Prime Minister Cameron said: “Britain is on the right track. “We are dealing with the deficit and debts in a fair way. Everyone must make a contribution. We are equipping Britain to succeed in the global race.”

The Chancellor of the Exchequer George Osborne will say there is “no miracle cure” for the UK’s economic problems as he misses his own targets on reducing the national debt and deficit this afternoon.

Translation: “My solutions didn’t work, so I am doing the right thing.”

Setting out his annual Autumn Statement, Osborne will ask households to bear more financial pain while the economy struggles to get back to growth.

Translation: “Just like our American friends, we are going to screw the middle and lower income groups, by convincing them that getting screwed is patriotic. They have been trained to believe anything.

After weeks of negotiations within the Coalition, the Conservatives have vetoed a Liberal Democrat plan for a mansion tax, but could still raid pension pots. Mr Osborne is also expected to freeze or limit benefits to send out a stronger message that work should pay.

Translation: “The Americans taught us this one. No new taxes on the wealthy, but cut benefits for the poor and middle income groups. You see, giving people pensions turns them into sloths. People should be made to work until they die. (That’s why the Americans keep raising the Social Security age.)”

The Chancellor will also have to admit that his record on paying down Britian’s debts is not as good as he might have hoped when the Coalition came to power. This year alone, Britain will have had to borrow around £10 billion more than expected, because of a lower tax take and welfare pressures.

Translation: “Even though we have the unlimited ability to create our sovereign currency, the pound, we need to borrow the pounds we previously created. We already know this makes no sense, so please don’t ask us why we do it.”

Mr Osborne will also reveal independent figures on the UK’s growth, which are likely to show the economy has stagnated this year and will be sluggish in 2013.

Translation: “Tax increases and/or spending cuts (aka “austerity”) don’t work. Austerity never works. In the history of the universe, austerity never has worked. So let’s continue our austerity.”

Paul Johnson, an economist at the Institute of Fiscal Studies, said the outlook for growth will remain gloomy. “Back in March the Office for Budget Responsibility thought the economy would grow by about 0.8 per cent this year, not very much but at least positive. The average of independent forecasters is now that it is actually going to go down this year. The OBR back in March looked relatively optimistic compared with what most people think now. Most importantly a significant part of that loss in growth is it looks like we are never going to get it back.”

Translation: “We know we are destroying the economy, and we have no plan to grow the economy. So trust us.”

Chris Leslie, one of Labour’s shadow Treasury ministers, said Mr Osborne is now entering a period of reckoning and urged him to change course with slower cuts and more spending to boost growth. “Today I think is going to be the period in which [the Chancellor’s] philosophy is blown out of the water,” he told ITV’s Daybreak.

Translation: “You may think that one day, the public might discover that spending cuts and tax increases always destroy an economy. But let’s face it. The public is so brainwashed, I doubt they ever will understand what we are doing to them.

“Look at America. They ran deficits, so they are recovering, while we are shrinking. Yet, the Americans argue about the best way to cut deficits and send America back into recession.”

.
Our politicians, here in America, have learned a great deal from our British cousins. They have learned how to screw the American lower and middle income groups, while widening the gap between the rich and the rest. They have learned how to brainwash the American public into believing the federal government’s finances are like personal finances.

They have taught the American public that suffering is patriotic, and that in some unknown, mysterious way, the people’s financial pain will benefit their children and their grandchildren.

The UK has their Cameron. We have our Obama. They have their Osborne. We have our Geithner. All preach the same failed lessons. And we have learned those lessons well.

The euro nations are doomed by their austerity. Britain is doomed by its austerity. America is doomed by our austerity.

Austerity is dooming us all. The only question: Will we die by the Democrat’s knife or by the Republican’s gun. That is what the two parties now are debating.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

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 nineteen top idiotic comments about our economy

Here is an article in the Canada Free Press, demonstrating the incredible misinformation that has been, and is being, shoveled into the minds of the public. In one article, you will see just about every idiotic comment, concerning our economy, that ever has been made.

First idiocy:

National Debt Is Still the Biggest Threat to Our National Security
Dr. Ileana Johnson Paugh
Americans are in denial about the simple fact that our national debt is the biggest threat to our national security.

Fact: Americans aren’t in denial. They actually believe this nonsense.

Second idiocy:

National debt grew exponentially from Washington’s profligate deficit spending, recessions, and wars.

Fact: The national, so-called “debt” is nothing more than the total of T-security accounts at the Federal Reserve Bank – no threat to anyone. The “profligate” (The word means “wildly extravagant, completely given up to dissipation and licentiousness”) spending is necessary to grow the economy.

Third idiocy:

When I looked today at the national debt clock, each taxpayer owed approximately $142,000

Fact: We taxpayers don’t owe the amounts in T-security accounts at the Federal Reserve Bank. To liquidate these accounts, the government merely debits them, while crediting checking accounts. No new dollars needed, and we are not liable for anything.

Fourth idiocy:

Perhaps the debt figure would become more real to Americans and take on dire significance if each taxpaying citizen would receive a bill for $142,000 payable in full right now, no kicking the can down the road to our children and grandchildren in exchange for our current comfort.

Fact: Deficit reduction is what “kicks the can down the road” (Have you become weary of that banality?), to our children and grandchildren, because it cuts back on their food, housing, education, fresh air and water, inheritance and the thousand of other benefits austerity will force them to forego.

Fifth idiocy:

It is true, our national debt is measured in dollars, which we can always print in order to meet our payments. This is called monetizing the deficit.

Fact: “Meeting our payments” requires nothing more than debiting T-security accounts at the Federal Reserve Bank and crediting the checking accounts of T-security holders. No new dollars are “printed.”

Sixth idiocy:

Doing so, however, creates inflation, as too much money is chasing too few goods.

Fact: Where did “too few goods” come from? The author must have heard that expression somewhere and felt compelled to use it. Anyway, since paying off the “debt” requires no additional dollars, it has no effect on inflation.

Seventh idiocy:

A responsible government should never print money in outlandish excess of GDP, the amount of final goods and services produced in a year. If they do, hyperinflation will occur, and severe devaluation of the currency.

Fact: She doesn’t explain exactly what “outlandish excess of GDP” means, but the U.S. never has had hyperinflation, not even during the Great Depression or WWII. Anyway, while federal debt is only $9 trillion and the federal deficit this year is but $1 trillion, GDP is a huge $16 trillion. Not much danger in exceeding this invented criterion of “outlandish excess.”

Eighth idiocy:

“Since 1971, U.S. borrowed $50 trillion to produce only $13 trillion of goods and services in a 40 year period.” Egon von Greyerz, a financial analyst with Matterhorn Asset Management AG in Zurich, Switzerland, said, “From 1971 when President Nixon ended the gold-backing of the dollar, virtually all of the growth in the Western world has come from the massive increase in credit rather than from real growth in the economy.”

Fact: If federal “debt” is $9 trillion, how did we “borrow $50 trillion”? Von Greyerz must mean the total of, “borrowed, repaid, borrowed, repaid, borrowed, repaid” which truly a strange measure.

And if the GDP this year is $16 trillion, how did we “produce only $13 trillion of goods and services in 40 years”? Perhaps Von Greyerz neglected to count goods and services produced in 39 of those 40 years.

Ninth idiocy:

The mantra that the “rich are not paying their fair share” promoted by the MSM sound bites and the Democrat ruling party prompted many to calculate what would happen if we were to confiscate every millionaire and billionaire’s wealth, what impact would have on our national debt, the accumulated budget deficits of previous years. All the U.S. accumulated wealth would last a mere two months.

Fact: O.K., I admit it. Aside from the gratuitous “Democrat ruling party” jab, I have no idea what this paragraph means nor, I suspect, does the author. No one I know has spoken of confiscating all billionaire’s wealth, much less confiscating millionaire’s wealth.

Though I disagree with all federal tax increases (aside from “sin” taxes), it’s difficult to get too exorcized about a 4% increase in the top marginal tax rate – a rate few billionaires ever pay (Ask Warren Buffett.)

Tenth idiocy:

There is a difference between income and wealth. The Democrats are talking about taxing the rich (income), not taxing the wealth – big difference which voters clearly do not understand. Taxing income will result in “spreading the wealth” from producers to takers in the name of “social justice” and the subsequent consumer spending, with no tangible assets created. Excessive tax discourages capital formation and job creation, stifling economic growth. Perhaps that is the political intent of the ruling party.

Fact: Dr. Paugh’s comment favors taxing wealth, i.e. property taxes, vs. taxing income. Oh, really? Her wealthy backers surely won’t like that. And she hints the “ruling party” wants to stifle economic growth, but provides no motive for her belief.

Eleventh idiocy:

Taxing the rich already brings in the lion’s share of revenue to the Treasury. If the rich are taxed too much, who is going to create manufacturing jobs, the government?

Fact: Again, though I oppose tax increases, that proposed 4% marginal increase, which hardly any rich people pay, is not going to eliminate manufacturing jobs. And manufacturing jobs are not provided by rich people, but rather by manufacturing companies, which are not slated for tax increases.

Twelfth idiocy:

Average earners and small businesses that pay taxes at the personal income tax level are now the rich

Fact: No fact here, just a great big HUH? No idea what she’s talking about.

Thirteenth idiocy:

Mark Steyn calculated that, if everyone’s tax indebtedness would go up according to (the) Buffett rule, the deficit created by the Obama administration in 2011 would be paid off in 514 years and we would still have the deficits created in the other three years of this presidency.

Fact: The federal government does not “pay off” deficits. They are the arithmetic difference between taxes and spending. Paugh probably is confused between “deficit” and “debt.” To pay off the debt the government merely debits T-security accounts and credits checking accounts.

Fourteenth idiocy:

The national debt has exceeded $16.3 trillion but Gross Domestic Product (all the final goods and services produced in a year domestically) is only $15.3 trillion, one trillion short.

Fact: The national debt is the total of outstanding T-securities sold since the beginning of America. The GDP is the goods and services produced in one year – completely different measures. It’s like comparing the sweetness of apples and airplanes.

Fifteenth idiocy:

The problem is not that Americans, rich or poor, are not paying enough taxes, the problem is that Congress and this administration are spending too much money. Spending to GDP ratio is 41 percent.

According to the formula: GDP=Federal Spending + Non-federal Spending – Net Imports, Federal Spending increases GDP.

Sixteenth idiocy:

We have paid so far in 2012 almost $4 trillion in interest from excessive borrowing when our money supply from cash and savings is $10.3 trillion.

Fact: Federal interest payments are part of Federal Spending which increases GDP. Being Monetarily Sovereign, the federal government neither needs, has or uses a “money supply” to pay its bills. It creates dollars, ad hoc, during the bill-paying process.

Seventeenth idiocy:

Our current policy seems to be putting pressure on the U.S. dollar until two options remain – default on the U.S. debt, or monetizing it by printing more money. If we default, as in any case of bankruptcy, creditor nations would demand payment in American assets – our oil fields, mines, land, parks, monuments, buildings, military bases, and even the indentured servitude of generations of taxpayers.

Fact: Being Monetarily Sovereign, the U.S. cannot be forced into bankruptcy and can pay any debt of any size. The statement about “oil fields, mines, indentured servitude,” etc. is too stupid to warrant further comment.

Eighteenth idiocy:

Defense Secretary Leon Panetta said: “One of the national security threats is the question of whether or not the leaders we elect can, in fact, govern and can, in fact deal with the challenges that face this country.” (Emelie Rutherford, Defense Daily, November 26, 2012)

Fact: True, but this has nothing to do with the federal budget. Anyway, Panetta is no budget expert.

Nineteenth idiocy:

Panetta acknowledged that budgeting “can’t just be about cutting, it’s got to be about investing, investing in space and cyber, investing in unmanned systems, investing in the kind of capability to mobilize quickly if we have to. And most importantly, maintaining our defense industrial base in this country so that we are not in a position where I’m forced to contract out the most important defense capabilities that I need. I can’t do that. I can’t just contract those out to another country. I’ve got to have that capability here in the United States.”

Fact: Paugh says, “National debt is the number one threat to national security. If we keep squandering trillions of dollars borrowed from our potential foes and have nothing to show for our spending, except increasing dependency of our population on welfare, food stamps, and entitlements, if we cut NASA and rent space on Russian flights, if we spend so much that we are no longer able to invest in infrastructure, technology, medicine, space exploration, industry, manufacturing, and defense, our integrity as a powerful nation is severely threatened and damaged.”

She wants a decreased deficit, and decreased taxes, but increased spending on “infrastructure, technology, medicine, space exploration, industry, manufacturing, and defense.” Hmmm . . . wonder where decrease in deficit money will come from.

Oh, I know. Being right wing, she’ll take it from “ welfare, food stamps, and entitlements.” Isn’t she a sweet one?

And that, my friends, is in total, is the most idiotic article you ever will read – except for one thing. It isn’t idiotic at all. It’s a calculated element of the 1%’s brainwashing of the 99%. Making you believe the deficit should be reduced, is part of the master plan to widen the gap between the rich and the rest. Why else do you think Donald Trump is stumping for it.

And the plan is working. Ask anyone.
======================================================================================================================================================================================================================
Dr. Ileana Johnson Paugh is a freelance writer (Canada Free Press, Romanian Conservative, usactionnews.com), author, radio commentator (Silvio Canto Jr. Blogtalk Radio, Butler on Business WAFS 1190, and Republic Broadcasting Network), and speaker. Her book, “Echoes of Communism, is available at Amazon in paperback and Kindle. Short essays describe health care, education, poverty, religion, social engineering, and confiscation of property. A second book, “Liberty on Life Support,” is also available at Amazon in paperback and Kindle. Her commentaries reflect American Exceptionalism, the economy, immigration, and education.
Visit her website, ileanajohnson.com. Dr. Johnson can be reached at: ileana@canadafreepress.com
======================================================================================================================================================================================================================

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARY SOVEREIGNTY

Just a little message regarding the BIG LIE.

Today, our politicians are struggling to find a way to reduce the federal deficit. They want to increase taxes (without increasing taxes) and reduce federal spending (without reducing spending). Reducing the deficit is known as “austerity” and austerity has had consistent results, down through the years. It causes new recessions and deepens existing recessions.

Here is a graph of federal deficits from 1901 through 2012. If you squint and count carefully, you’ll see we have had 22 recessions, an average on one recession every five years. (When the blue deficit line rises, deficits are being cut. When the blue deficit line goes above 0, we are in a surplus.)

1901 through 2012

22 recessions: On average, one recession every 5 years.

Although our economy is complex, and each recession has unique causes, Monetary Sovereignty posits that deficit reductions and federal surpluses have negative effects on the economy, by reducing money growth. Further, the politicians and media, being in the employ of the top 1% income group, tell you deficits should be reduced.

You might find it interesting to see facts, rather than to rely on intuition and the BIG LIE. You might like to see past deficits and surpluses graphed against recessions.

I’ve broken the years into segments, so you can see the individual recessions and what precedes them.

1901 through 1915

4 recessions; preceded by 2 surpluses; 1 reduced deficit

1915 through 1922

2 recessions; 0 surplus; 1 reduced deficit

1922 through 1933

3 recessions: 3 surpluses

1933 through 1949

3 recessions; 1 surplus; 1 reduced deficit

1949 through 1970

4 recessions; 2 surpluses; 1 reduced deficit

1970 through 1983

3 recessions; 2 reduced deficits

1983 through 1992

1 recessions; 1 reduced deficit

1992 through 2012

2 recessions; 1 surplus; 1 reduced deficit

Of the 22 recessions, 9 were introduced by federal surpluses and 8 others were introduced by deficit cuts. Only 5 came when deficits were increasing.

This post began, “Today, our politicians are struggling to find a way to reduce the federal deficit, also known as “austerity.” The growth rate of the U.S. economy this year has averaged a bit over 2%.

The euro nations’ politicians keep applying austerity. The result: Their economic growth rate this year is less than zero: a -.1% (minus growth rate).

Our politicians are working very hard to turn the U.S. into the eurozone and to lead us into another, probably worse, recession. President Obama’s “grand bargain” will accomplish that.

And he knows exactly what he is doing.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

#MONETARY SOVEREIGNTY

–Russia, South Korea, Mexico, India and Brazil buy tulip bulbs to hedge against the dollar

What do you call it when masses of fools buy a useless product, hoping that later they will sell this useless product to even bigger fools? Tulip bulb mania?

Before It’s News
Why Brazil Will Keep Buying Gold – and Driving Up the Price

As a group, central banks will have bought about 500 tons of gold this year, the most in more than 40 years. More large purchases are expected in 2013.

Foremost amongst the gold buyers are the central banks of emerging economies around the globe. Recent years have seen purchases by Russia, South Korea, Mexico, India and, as most believe, China.

Another country joining the party, or in this case the carnival, is Brazil. So why is Brazil jumping aboard the bandwagon now and buying gold at a record pace?

Since 2008, Brazil has attempted to fight the appreciation in the real by buying U.S. dollars. In the course of doing so, it has accumulated about $132 billion, the world’s sixth-largest reserves.

Roughly 80% of the reserves are denominated in U.S. dollars. And, as of the end of 2011, only 0.8% of its reserves were not in the form of government bonds or other bonds and bank deposits.

An economist at the Sao Paulo consultancy Tendencias, Silvio Campos Neto, told the Financial Times, “The dollar has its problems because of monetary easing policies and fiscal uncertainties that will also exert a certain pressure on the currency, so it’s natural the country [Brazil] is on the lookout for other types of assets.”

Gold essentially is useless. A tiny bit is used in dentistry and for jewelry and electronics, but the vast majority just sits in vaults around the world, costing money to store, insure, protect and ship from place to place, and it pays no interest. Meanwhile the supply goes up: About 2,500 tons are mined each year.

It is the classic white elephant, the value of which is based on the “bigger fool” philosophy mentioned above.

Brazil et al, are Monetarily Sovereign, meaning:

1. They can create infinite quantities of their own sovereign currencies. They never can run short.
2. Thus, they do not need to export goods and services, since exporting merely is device for importing their own sovereign currency.
3. They have the power to set their exchange rates at any level, by controlling supply and demand (through currency exchanges or by increasing or decreasing interest rates).

As for gold:
4. Gold, having virtually no utility, its value is backed by nothing. Compare this with the value of the U.S. dollar, which is backed by the full faith and credit of the U.S. government.

As for Brazil:
5. If the U.S. dollar fell to $0, Brazil would not lose a penny. It merely would create the necessary reals to buy whatever it needs. Having dollars in reserve does nothing for Brazil, except perhaps as a trading convenience. Same for gold reserves.

None of this is to say that gold has not appreciated in price compared with the dollar. Gold bugs (especially those selling gold) like to talk about recent price rises, conveniently forgetting the most recent gold bubble. It occurred in 1980, when the price doubled to about $600 oz, then fell to about $300, and drifted even lower for the next twenty years.

Bubbles do that. U.S. real estate appreciated in price for more than 60 years, before the bubble burst. But unlike gold and tulip bulbs, real estate has utility. So over time, as the population increases and people acquire more dollars, demand will increase and the price of real estate will rise, unless the government causes another really big recession.

Bottom line: The leaders of Monetarily Sovereign nations buy and sell gold, under the fiction they are being fiscally prudent, when in fact they are engaging in a useless activity. Perhaps it has some psychological benefit, as in “I just can’t sit here and do nothing. People will think I’m useless. So I’ll do something that looks good, and people will think I’m wise and necessary.”

Anyway, for Brazil, this silly hobby not only is without benefit, but it also is without risk. If gold were to crash yet again, Brazil could continue whatever importing and exporting it wishes, with its only danger being leaders ignorant of Monetary Sovereignty.

While the supply of gold keeps growing, growing, growing, maybe you should buy land, especially since you are monetarily non-sovereign. As Mark Twain said, “They’re not making it any more.” And with global warming, and oceans rising, land is becoming more scarce.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

#MONETARY SOVEREIGNTY

Share this:

Share this:

Share this:

Share this: