–The “Fort Knox” poll for suckers

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

Mitchell’s laws:
●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 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.
●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.
●Everything in economics devolves to motive, and the motive is the Gap.
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Most polls have flaws. Sometimes the mere order of questions biases the results. Quite often, the wording of questions decides the answers.

There are bad polls; truly gawd-awful polls and there are political polls. These later range from O.K. to ignorant to “I-can’t-believe-anyone-would-create-such-a-ridiculous-piece-of-sh*t” polls.

And then we come to the ultimate poll for suckers, courtesy of the right-wing Washington Post. Here it is in its entirety:

Mr. Obama: “Is Ft. Knox Empty?”

Cast Your Vote Now!

YES_________
I am gravely concerned that President Obama may have emptied Ft. Knox. As a U.S. Citizen and taxpayer, I demand a complete and immediate audit of U.S. Gold reserves.

NO__________
Barack Obama would never go so far as to permit America’s gold reserves to be withdrawn to finance massive public debt.

Enter Email Address:* _____________________________________(required)

It’s a simple fact. The United States Bullion Depository at Ft. Knox has not been fully audited since the Eisenhower administration!

Honest financial institutions openly embrace audits to prove that they are good and faithful stewards. But the federal authorities who control the nation’s once vast gold reserves at Ft. Knox? They haven’t allowed a comprehensive audit to be conducted since 1953!

In fact, no visitors whatsoever are permitted at the Depository, not even United States Congressmen. According to the U.S. Treasury website, “this policy is strictly enforced.”

Is the U.S. gold reserve being whittled away to finance federal spending? Did we ship all our gold to New York to dump on the market or to China to cover our debts? Is the vault at Ft. Knox in fact empty, as many have suggested?

Let’s pause for a moment from these breathless, clearly biased questions, to answer with a couple of inconvenient facts:

1. Gold does not finance federal spending. Dollars finance federal spending. Even if the U.S. did not own one gram of gold, this would have no effect on the federal government’s ability to pay its debts.

Apparently, the author of this poll doesn’t understand (or want you to understand) that President Nixon completely divorced the dollar from gold.

People do not accept dollars for being backed by gold, simply because dollars are not backed by gold.

The poll continues:

The feds refuse to audit the gold reserves, so Money Metals Exchange is auditing public opinion. We want to know your opinion – since an audit has not been permitted in over half a century. Do you suspect that Ft. Knox is empty?

VOTE NOW to register your opinion, and you’ll also be entered in a special drawing to win 50 FREE U.S. Silver Eagle Coins worth over $1,000!

We’ll send poll results to every member of Congress, and to the most powerful federal official most Americans have never heard of, United States Treasurer Rosa G. Rios, who oversees the U.S. gold reserve!

Ooooh! Everyone loves a conspiracy. The Treasurer and the members of Congress will be shocked — SHOCKED — to learn that many Americans want to know how much gold is in Fort Knox.

The whole subject is beyond silly, but gold bugs claim:

1. Gold is “real money.”
Fact: Gold isn’t even fake money. Gold never has been money, which always is determined by a creator, usually a government. Gold always has been a commodity used for barter.

The same is true of silver, platinum, palladium, copper, brass, bronze, etc. All are commodities used for barter.

2. Gold is a “store of value.”
Not sure exactly what a “store of value” means, but I suspect it means that over time, people have wanted it. The same can be said about the above-mentioned metals as well as diamonds, antiques, my house and a good book.

If “store of value” is supposed to mean gold keeps its value, surely that isn’t true. The value (price?) of gold bounces up and down in yo-yo fashion, just like any commodity. By clever time selection, one can prove gold is a great investment or a terrible investment — and it doesn’t even pay interest or dividends, and it costs insurance and storage.

3. For thousands of years, gold has had value, but fiat money can go worthless.
Yes, if the United States dollar becomes worthless, and the nation becomes destitute, and you own gold (or silver, platinum, palladium, copper, brass, bronze, etc.), you will be able to barter them for the food no one can afford to grow and the clothing no one can afford to weave.

If you think that is a viable financial plan, I have bridge to sell you.

Further, ALL money is fiat money, in that by definition, it is created by the FIAT of the issuer. Gold itself, never has been money.

Gold coins have been money, by the fiat of various governments. Those governments arbitrarily decided (i.e. by fiat) how many dollars, lira, pesos, francs, etc. were to equal a gram of gold or an ounce of silver. And those decisions changed through the years — again, by government fiat.

U.S. pennies once were copper and nickels were nickel. So, were copper and nickel money?

And as for that “thousands of years” nonsense, I remind all that for thousands of years horses were a primary method of transportation. They were replaced by technology. But a few suckers kept buying buggy whips. Gold too, has been replaced by technology, and a few suckers keep buying it.

Bottom line, the federal government would be neither more nor less able to pay all its bills, if Fort Knox were empty or chock full of gold. There are only two groups who want you to care:

*The bullion dealers (Money Metals Exchange et al, who make their fortunes operating the “greater fool” scheme. (Similar to a Ponzi scheme or a “bubble,” the “greater fool” scheme means you buy something at too high a price, hoping to find a greater fool who will buy it from you at an even higher price.)

*The rich, who want suckers to believe money is a physical entity, and the federal government can run short of dollars.

This belief justifies deficit reduction. Because deficit spending benefits the poor more than the rich, deficit reduction widens the gap between the rich and the rest. And widening the gap is the primary goal of the rich. (It’s the gap that makes them rich. The wider the gap, the richer they are.)

So go to the Washington Post article and answer the poll. You might win “50 FREE U.S. Silver Eagles worth over $1,000!”

Is it just me, or do you also find it hilarious that in a poll about gold, the prize is silver coins?

You just can’t argue facts with suckers. The Nigerian bank con relies on this.

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
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.
——————————————————————————————————————————————

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

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

–Who says the Fed has no sense of humor? QE to end

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

As readers of this site know, Quantitative Easing (QE), is touted as a way to stimulate the economy by adding dollars to the economy.

It does no such thing. QE is a fake, a fraud, a flimflam. The purpose: To give the impression that the Fed is “doing something” to stimulate the economy, without federal deficits.

To a small degree, QE actually reduces the number of dollars entering the economy.

Here’s how QE works. First, there must be a Treasury Security:

1. From thin air, the Treasury creates on its books an entry: “Treasury Security.”

2. An investor (you, for instance) tells your bank to debit your checking account and to credit your Treasury Security account at the Federal Reserve Bank.

A Treasury Security account is very much like a bank savings account, so in essence, you have transferred dollars from your checking account to your savings account. No dollars created or destroyed.

Then, comes the QE process:

3. The Fed instructs the Federal Reserve Bank to transfer your dollars from your Treasury Security account back to your checking account, and to transfer ownership of the Treasury Security to the Fed.

Again, no dollars are created or destroyed. No stimulus. No nothing. Dollars moved from one of your bank accounts to another of your bank accounts.

Bottom line, the Treasury created a Treasury Security and gave it to the Fed. The Fed gave dollars to the Treasury, which being the original creator of those dollars, has no use for them. So they are destroyed.

This leaves unanswered the question: If adding dollars to the economy stimulates the economy, and if the Treasury can create Treasury Securities from thin air, why doesn’t the Treasury create dollars from thin air, send them into the economy and dispense with the shell game scam?

The answer: That is exactly what the Treasury does every day, when it pays government bills. It should do more. (See Ten Steps to Prosperity, below).

What QE does do is reduce long-term interest rates, by increasing the demand for Treasury Securities, which increases their price, which in turn, decreases rates. (Price and rates move inversely.)

And by reducing rates, QE reduces the interest paid to the economy by the Treasury. QE cuts the deficit, which probably is one of its purposes.

Here is where the Fed’s sense of humor comes into play:

BloombergView
The Fed’s $4 Trillion Bet
OCT 29, 2014

The U.S. Federal Reserve announced today that it will halt the bond-buying program known as quantitative easing — one of the biggest experiments in economic policy ever attempted. The policy was a gamble, and it’s too soon to be sure of the results.

See the humor. QE started in November 2008, a full six years ago. It is “one of the biggest experiments in economic policy ever attempted.” Yet, “it’s too soon to be sure of the results”!

What??! Six years of the biggest policy experiments ever, and it’s “too soon” to know the results?

That’s like saying, “For the past six years, we’ve been dropping atomic bombs on Peoria, IL, but it’s too soon to know what happened.”

This doesn’t mean the program is over. The Fed still holds more than $4 trillion in bonds, roughly a fifth of all U.S. Treasury and mortgage-backed securities outstanding.

Until they’re divested — a challenge in its own right — these vast holdings will continue to have an effect on markets.

These “vast holdings” are nothing more than a line on the Treasury’s books saying that X dollars worth of the Treasury Securities created from thin air, are owned by the Fed. The left pocket owes the right pocket.

To eliminate these “vast holdings,” one government agency needs only to debit and the other agency needs to credit, and Presto! The “vast holdings” disappear into the thin air from whence they came.

The whole process is an accounting embarrassment, a juggling of the books, in an attempt to obscure the fact that it is Congress, not the Fed, that has the power to stimulate the economy. Congress does it by deficit spending, which really adds dollars to the economy.

Exactly how much QE has helped the economy remains a matter of debate. Former Fed Chairman Ben Bernanke said in 2012 that the Fed’s first two rounds may have boosted output by 3 percent and added more than 2 million jobs.

Where did Bernanke get these numbers? From that same thin air that provided the Treasury Securities.

In a more recent paper, San Francisco Fed President John Williams said such estimates were uncertain.

Yes, the effects of the biggest policy experiment ever, are “uncertain.”

Some believe QE has gradually diminishing effects; others that it has no positive effect at all.

Well, that seems to settle it. The effects are huge, or uncertain, or diminishing, or none at all — or as I believe, negative.

The BBC reported that as a result of this grand experiment, the Fed has added $3.7 trillion worth of assets to its holdings, about an eightfold increase.

So where are those 3.7 trillion dollars? What became of them?

This year’s federal deficit is below $500 billion. That is how many dollars the federal government added to the economy. So you can imagine the effect of adding 3.7 trillion dollars to our economy.

It would have been gigantic. The debt-hawks would have been screaming “hyper-inflation.”

But, nothing. No hyper-inflation. Hardly even any inflation. The economy creeps along, rising slowly, slowly.

In answer to the question, there are no additional $3.7 trillion. They are dollars that moved from private checking accounts to private Treasury Security accounts and back again. Just a Three-card Monte shuffle.

And you probably thought the Fed had no sense of humor.

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARYSOVEREIGNTY

–How did the Kochs get so rich, and the rest of you get so poor? A primer.

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

It described the Libertarian / Tea Party / Republican Koch Brothers, the too-big-to-jail billionaire, world-class polluters and law-breakers. The description was in general terms, focusing mostly on the phony drives for privatization concocted by crooked politicians.

Now, we have a more detailed look at how the Kochs have purchased three political parties — Libertarian, Tea and Republican — and the minds of millions of voters.

Here are some excerpts. I urge you to read the entire article. You may have trouble believing the depths of the chicanery, so keep an open mind:

Rolling Stone
Inside the Koch Brothers’ Toxic Empire

The Kochs are our homegrown oligarchs; they’ve cornered the market on Republican politics and are nakedly attempting to buy Congress and the White House.

The Kochs have been aided and abetted by the right wing Supreme Court, which tells us that money is the same as speech, and in the immortal words of Justice Scalia, ” . . . the more speech, the better.”

Koch Industries’s troubled legal history – including a trail of congressional investigations, Department of Justice consent decrees, civil lawsuits and felony convictions, combine to cast an unwelcome spotlight on the toxic empire whose profits finance the modern GOP.

Under the nearly five-decade reign of CEO Charles Koch, the company has paid out record civil and criminal environmental penalties. And in 1999, a jury handed down to Koch’s pipeline company what was then the largest wrongful-death judgment of its type in U.S. history, resulting from the explosion of a defective pipeline that incinerated a pair of Texas teenagers.

Yes, yes, I know. Before the brainwashed apologists for right wing excesses bombard us with “There are bad Democrats, too,” let me say that I know of no people with the record of lying, cheating, stealing, fraud, unimaginable greed and blatant attempts to control the politics of America, as the Kochs.

If the apologists for criminality know of someone with a worse record, please do this: Read the entire article, then tell me of anyone to equal what you read, and detail their criminality.

Only three companies rank among the top 30 polluters of America’s air, water and climate: ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation’s waterways than General Electric and International Paper combined.

The cost is borne by communities in cities like Port Arthur, Texas, where a Koch-owned facility produces as much as 2 billion pounds of petrochemicals every year. In March, Koch signed a consent decree with the Department of Justice requiring it to spend more than $40 million to bring this plant into compliance with the Clean Air Act.

Imagine you being fined $5 for polluting the air and water of millions of people, while you earn millions for doing it. That seems to be what fines mean to the Kochs.

In a recent acquisition, Koch bought Frac-Chem, a top provider of hydraulic fracturing chemicals to drillers. Thanks to the Bush administration’s anti-regulatory agenda – which Koch Industries helped craft – Frac-Chem’s chemical cocktails, injected deep under the nation’s aquifers, are almost entirely exempt from the Safe Drinking Water Act.

This is a test of your logic: Why would the Bush administration give the Kochs a free pass to pollute drinking water?

Denser, dirtier and cheaper than coal, petcoke is the dregs of tar-sands refining. U.S. coal plants are largely forbidden from burning petcoke, but it can be profitably shipped to countries with lax pollution laws like Mexico and China. One of the firm’s subsidiaries, Koch Carbon, is expanding its Chicago terminal operations to receive up to 11 million tons of petcoke for global export.

Koch’s thinking is crystallized in a manifesto Charles wrote for the Libertarian Review in the 1970s, recently unearthed by Schulman, titled “The Business Community: Resisting Regulation.”

Charles lays out principles that gird today’s Tea Party movement. Referring to regulation as “totalitarian,” the 41-year-old Charles claimed business leaders had been “hoodwinked” by the notion that regulation is “in the public interest.”

He advocated the “barest possible obedience” to regulation and implored, “Do not cooperate voluntarily, instead, resist whenever and to whatever extent you legally can in the name of justice.”

If you’re like you and me, you have to obey the law. But, if you’re richer than God, you can resist the law, even be convicted of criminal activity, and never spend a day in jail.

Money isn’t bribery; it’s speech. Ask Justice Scalia.

Bill Koch called Charles and David, “the biggest crooks in the oil industry.”

A Senate committee investigating Koch business with Native Americans would describe Koch Oil tactics as “grand larceny.” The Senate committee concluded that over the course of three years Koch “pilfered” $31 million in Native oil.

Stealing is one crime. Destroying the environment is another. But:

Richard Fink, head of Koch Company’s Public Sector and the longtime mastermind of the Koch brothers’ political empire, confessed to The Wichita Eagle in 1994 that Koch could not compete if it actually had to pay for the damage it did to the environment.

Now you know the definition of “compete.”

And be sure to read the section describing how two teenagers, Danielle Smalley and Jason Stone were burned to death by a an explosion in a Koch pipeline — a pipeline that never should have been opened.

Bill Koch said: “Koch Industries has a philosophy that profits are above everything else.” A former Koch manager, Kenoth Whitstine, testified to incidents in which Koch Industries placed profits over public safety.

As one supervisor had told him, regulatory fines “usually didn’t amount to much.” When Whitstine said he was concerned that unsafe pipelines could cause a deadly accident, another manager said that it was more profitable for the company to risk litigation than to repair faulty equipment. The company could “pay off a lawsuit from an incident and still be money ahead.”

What is a human life worth compared with profits? Ask the Koch brothers.

Now nearing 80 – owning a large chunk of the Alberta tar sands and using his billions to transform the modern Republican Party into a protection racket for Koch Industries’ profits – Charles Koch is not about to see the light.

Nor does the CEO of one of America’s most toxic firms have any notion of slowing down. He has made it clear that he has no retirement plans: “I’m going to ride my bicycle till I fall off.”

So long as the punishment costs less than the criminal profits, and there never is jail time involved, a criminal has no reason to stop.

Their political network helped finance the Tea Party and powers today’s GOP.

Koch-affiliated organizations raised some $400 million during the 2012 election, and aim to spend another $290 million to elect Republicans in this year’s midterms.

So far in this cycle, Koch-backed entities have bought 44,000 political ads to boost Republican efforts to take back the Senate.

Now, think about it. Why are people convicted of polluting your air and water, people responsible for the deaths of American children — why are people of that ilk happy to spend hundreds of millions of dollars to elect Republicans?

Is it for your benefit? Will helping the Kochs grow richer and more powerful benefit you and your family?

How did the Kochs get so rich and the rest of you get so poor?

The Kochs are riding your bicycle — and you’re happy to let them.

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARYSOVEREIGNTY

–More credit agency nuttiness: Ignorance or criminality?

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

Today, October 29, 2014, reader Ian Winograd wrote:

Off topic, but here is something of interest:
http://www.cnbc.com/id/102132053
“Moody’s reported on Wednesday that the U.S. government’s current fiscal position remains healthy but if there aren’t policy changes, there will be long-term risks from social spending that could affect the nation’s credit standing.

Spending, especially for Medicare and Social Security programs, will cause a rise in future deficits and debt levels toward the end of the decade, Moody’s said. An aging population will contribute to rising cost and demand for health-care services.

The report called for additional revenue, which could be realized from a higher-than-expected U.S. economic growth rate or policy changes such as an increase in Medicare premiums and co-payments.”

So Moody’s is going to lower the credit rating of a monetary sovereign nation, fearing that the US won’t be able to pay its bills.

This is the same company that gave A+ ratings to mortgages given to people with no jobs, no incomes and no assets.

My response was:

During and after the Great Recession, the credit agencies gave higher ratings to some monetarily non-sovereign euro nations and to many corporations (all of which are monetarily non-sovereign), than they gave to the U.S. government.

These agencies are owned by the rich, and their clients are the rich. The rich hate government spending, because most government spending benefits the middle- and lower-income groups.

And, of course they hate progressive income taxes (but love regressive FICA and sales taxes), because the rich pay “too much.”

In short, the credit agencies are paid to widen the Gap between the rich and the rest. And the management of Moody’s either is ignorant of basic economics, or they are criminals doing the bidding of the rich — and I doubt they are ignorant.

Moody’s is not the only “ignorant or criminal” rating agency. Take Standard & Poors (please):

Standard & Poors rates the following euro nations AAA: Austria, Finland, Germany, Luxembourg. It rates the euro nation, the Netherlands, AA+

All euro nations are monetarily non-sovereign, meaning they have no sovereign currency. They use an “alien” currency, the euro, over which they have no control. They can run short of euros.

They all rely on taxes and net exports to provide sufficient euros. If taxes and/or exports decline, they could be unable to pay their bills.

By contrast, the U.S. government is Monetarily Sovereign. It is sovereign over its currency, the dollar. It never can run short of dollars. It pays all its bills by creating dollars, ad hoc.

Even if all taxes fall to $0, and net exports remained below $0, the federal government will be able to pay its bills forever. Despite recessions, depressions, wars, inflations, stagflations and epidemics, no federal check ever has bounced. There is no need.

S&P rates the federal government AA+, below Austria, Finland, Germany and Luxembourg, and equal with the Netherlands.

Fitch, the 3rd large rating agency, provides equally “ignorant or criminal” ratings.

But, that is not the worst of it.

Here are three corporations (corporations!)rated AAA: Microsoft, Exxon Mobil, Johnson & Johnson. They all are monetarily non-sovereign. They cannot create money, because they have no sovereign currency. The rely on net sales and borrowing, to pay their bills.

Yet, these corporations are rated higher than the U.S. federal government!

Apple, with an AA+ rating, supposedly is as credit-worthy as the United States. And if you believe that, surely you will want to buy my bridge going to Brooklyn.

So what do you think? Ignorance or criminality?

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARYSOVEREIGNTY

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