Even more meaning of America. What is the source? Why does it exist?

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

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 ultimately 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 motive.
======================================================================================================================================================================================

Last March we published the post, “The Meaning of America,” which you might wish to read.

The word “meaning” was a pun. It not only stood for “definition” but also for “becoming cruel.”

I thought about that post today, when I read a short column in today’s Florida SunSentinel. The lead was:

“Florida ranks second among states with workers who have been unemployed for at least six months.”

It was followed by the question:

“What would help get Florida’s long-term unemployed back to work?”

At this point, one might have expected answers like, “Provide free job training and education” or “Improve the economy so that more good jobs are available, everywhere” or “Eliminate FICA, to make hiring less expensive to businesses” or “Provide federally funded Medicare for all, to lift the healthcare insurance burden off business.”

But, that is not what the people answered.

“REMOVING extended federal unemployment benefits. Is that soo hard to figure out????”
Keyla

“There are jobs out there people have got to (sic) lazy. Sorry but it’s the truth.”
Liebra

“I suspect giving them money will not work will not do it. call me silly. Gal at the dog park was unemployed for months and months. one week before here benefits were to expire she found a job. Duh.”
Hank

“I believe a person in order to receive unemployment checks should bring 20 statement letters of denial from 20 different companies every month to get a check.”
Victor

“Opening the classified ads and earnestly applying for and following up on job opportunities! Simple as that.”
James

In short, the people say the fault is not with the economy. The fault is not with the government. No, the fault is with those lazy, good-for-nothing unemployed. That is what the people have been brainwashed into believing.

In the same issue of the SunSentinel, there was a longer article that included these comments

Job-placement experts say the stigma of a lengthy layoff means job seekers have to work harder to catch the eye of an employer.

Mason Jackson, president of Broward County’s WorkforceOne, worries many people “just don’t know how to market themselves” or that their interview skills have faded “because they’ve always gotten jobs by who they know.”

Ed Patterson, of Lake County, has been without steady work for 20 months and is ready for almost any opportunity. A software specialist, he was in the banking industry, starting decades ago as a teller.

He worked his way up, ultimately making six figures, he said, before being laid off in July 2012. Today, he said, he’d go back to being a teller, “just to give me a little income.”

He’s 66 but can’t afford to retire. He’s been collecting Social Security and raiding his retirement fund to pay his bills. He sold his house — “just to get out from under it” — and lives in a rental. He’s frustrated by a job search that seems futile, saying many unemployed feel abandoned.

“I’m not out there alone,” Patterson said. “There’s a lot of people like me out there, and a lot of them have just given up.”

(Apparently, Ed is one of those “people have got to (sic) lazy.”)

You rightfully may object to basing conclusions on this small sample, but my sensing is that America has become meaner. We are the people who display proudly “Give me your tired, your poor . . .” at our front door; yet now we wish to punish those tired and poor.

We are the sons and daughters of immigrants, proud of America being a “melting pot”; yet now we wish to fortify our borders, and make the process for becoming a citizen arduous and lengthy.

We wrote into our Constitution, the 24th Amendment, prohibiting the revocation of poor people’s voting rights due to the non-payment of a poll tax; yet today, many of our states again pass laws trying to prohibit the same people from voting.

We are a people proud of taking the side of the underdog, proud of fighting against injustice, proud of America’s charities and good works. Yet now, an entire political party is devoted to meanness and selfishness. An entire party is devoted to kicking the downtrodden. And entire party is devoted to blaming the victim.

They couldn’t do it, if enough of mainstream America didn’t agree. So the question becomes: What is the source of this meanness? Why does it exist in our America and tarnish us as a nation?

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
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)

—–

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.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise. Federal deficit growth is absolutely, positively necessary for economic growth. Period.

#MONETARY SOVEREIGNTY

O Canada! What are they doing to you?

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

Reader “Questioner” sent in this comment:

http://news.yahoo.com/canadian-government-set-comfortably-balance-budget-2015-211839820–sector.html;_ylt=AgtiudW_qJzeL.gvds8V8DnQtDMD;_ylu=X3oDMTBsMm1uODllBGNvbG8DYmYxBHBvcwM4BHNlYwNzcg–

Canada has a balanced budget and a surplus – will this actually be harmful for their economy since they are Monetarily Sovereign?

The above article includes these comments:

Canada’s Conservative government looks set to comfortably balance its books in 2015 or even sooner, its latest budget showed on Tuesday, with cuts in spending on the public service more than offsetting a series of modest new expenditures.

Finance Minister Jim Flaherty acknowledged the budget would be narrowly balanced this coming year, but said he preferred to have a “nice clean surplus next year”.

The government estimates a bigger-than-expected C$6.4 billion surplus in 2015-16. In the year ending March 31 of this year, the deficit is pegged at C$16.6 billion.

The Conservatives, in power since 2006, plunged into a deep deficit in 2008 as they pumped out stimulus money to deal with the recession after having cut taxes earlier. Previously, the Canadian government had an 11-year string of budget surpluses.

What is a net budget surplus? It is the central government removing more money from the private sector than the government puts back in. This reduces the private sector’s money supply. The private sector is people and businesses. Does anyone really believe it is a good idea to take money from people and businesses? Remember:

Gross Domestic Product = Government Spending + Non-government Spending + Net Exports. By formula, cuts to any of those terms, cuts GDP.

Because a large economy has more money than does a small economy, reducing the money supply makes an economy smaller. This is what the Canadian economists are so proud of.

Notice that when things got tough, the Canadian government ran a “deep deficit” to cure the recession. Why? Because to grow an economy requires growing the money supply. The “deep deficit” worked. It stimulated economic growth.

In fact, the “deep deficit” worked so well, the Canadian government will revert to taking money out of the private sector! Yikes!

But wait, what about that “11-year string of budget surpluses”? Didn’t that reduce the money supply in the Canadian private sector?

There is that one other source of money: Net Exports. For those 11 years (and much more), Canada ran trade surpluses, a positive balance of trade. It’s exports exceeded its imports. Net money was coming in:

Today, Canada no longer is running those surpluses. It has begun to run trade deficits.

In December of 2013, Canada’s trade deficit widened slightly to CAD 1.7 billion, up from CAD 1.5 billion in November, as imports rose 1.2 percent while exports edged up by 0.9 percent.

Bottom line: Canada’s politicians have decided to turn Canada into an impoverished euro nation. Despite being Monetarily Sovereign, and having the unlimited ability to create its sovereign currency, Canada pretends to be monetarily non-sovereign.

Canada’s politicians spread The Big Lie, that Canada’s finances are like personal finances, and running a surplus (taking money from people and business) is prudent economics.

And the Canadian people, accepting The Big Lie, will suffer greatly, and not understand why.

Rodger Malcolm Mitchell
Monetary Sovereignty

—–

#MONETARY SOVEREIGNTY

–Are federal taxes destroyed upon receipt? The shorter and longer answers.

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

Reader tetrahedron720 asked, “How would you go about explaining the decision to destroy money upon receipt as compared to not destroying it as is the case with state and local government, i.e., is there a url or source that shows a balance sheet of local government vs. the balance sheet of the federal government that would by comparison isolate the difference clearly?”

The shorter answer is: Federal balance sheet accounts are not part of the money supply. All of the money supply is in banks or other private hands. All state and local money is in banks or other private hands.

Here’s a longer, I hope better, answer:

Semantics. That is the real problem. We all do this: We say we take, send or give dollars to anyone. But, we really take, send or give instructions, not dollars.

Readers of Why a dollar bill is not a dollar, and other economic craziness know that a dollar has no physical existence. You cannot see, touch, hear, feel, smell or give a dollar.

That dollar bill in your wallet is not a dollar. It represents a dollar, just as a title represents a car or a note represents a loan. That dollar bill is a bearer bond, telling the world that the bearer of that note is owed $1 by the U.S. federal government.

By way of analogy, consider numbers. Numbers too, have no physical existence. You cannot see, touch, hear, feel, smell or give the number seven. You can see representations like “7” and “VII” and “SEVEN,” but you cannot see the number itself.

You can give me seven bats, 7 balls or VII brooms, but you cannot send me the number seven. Similarly, and contrary to intuition, you cannot send me a dollar, although we use that phrasing all the time.

You can send me a dollar bill, a piece of paper that represents a dollar. Or you can give me your $1 check, which is nothing more than a set of instructions, telling my bank to increase the number in my checking account by 1 (and to decrease the number in your checking account).

All money measures have one thing in common: All money exists in the private sector.

The federal government has no money. Why would it? It creates its sovereign currency, the dollar, ad hoc, when it pays bills. Whenever the federal government sends a check, in payment of a bill, that check is not money. The federal government, not having money, can send no money.

You never will see a number showing how much money the federal government owns, but you always will see how much the federal government supposedly owes.

When John Boehner famously lied, “Let’s be honest. We’re broke,” he was referring to the fact that the government supposedly owes trillions, but has no money. In fact, that always is the case for a Monetarily Sovereign nation. It creates its sovereign currency ad hoc, so at any moment in time, its debts far exceed its holdings of money. It has no holdings of money.

A federal government check merely instructs a creditor’s bank to increase the number in the creditor’s checking account. It does not deliver dollars, since dollars, having no physical existence, cannot be delivered.

At the same time the bank increases the number in the creditor’s account, corresponding federal accounts are decreased, but none of those accounts are part of the money supply. So when you send tax money to the government — or more properly, send your instructions in the form of a check or wire — the dollars that existed only as numbers in your checking account are destroyed. They cease to be part of the money supply.

What about state and local tax dollars? When you send your checks to your state and local governments, the numbers in your checking account are reduced. But, contrary to what the federal government does, the state government deposits its tax receipts in private banks. Those dollars are part of the money supply.

The process is like this:
1. You write a set of instructions (a check). [You still own the dollars.]
2. You mail the instructions. [You still own the dollars.]
3. Your state receives your instructions. [You still own the dollars.]
4. Your state mails your instructions to its bank. [You still own the dollars.]
5. The state’s bank follows your instructions, increases the number in the state’s account and tells your bank to reduce the number in your account. [At that instant, dollars have been “transferred” from your account to the state’s account. The tax dollars remain in the money supply.]

Bottom line: When you pay taxes, you actually send instructions, not dollars, to various governments.

When state and local governments follow your instructions, the nation’s money supply remains the same. When the federal government follows your instructions, the nation’s money supply falls.

The difference: The federal government is Monetarily Sovereign. State and local governments are monetarily non-sovereign. A Monetarily Sovereign government has the unlimited ability to create its sovereign currency, in any amount at any time, for any reason it wishes.

So it would make no sense to ask how much money the federal government has. It would be like asking (as Warren Moseley might say) how many points a scoreboard has. The answer in both cases: “As much as it needs at any moment in time; it creates them ad hoc.”

As for you and me and state and local governments and euro-using nations, none of us has a sovereign currency. We cannot create unlimited amounts of money instantly, so it’s reasonable to ask how much money we have — and that is the Money Supply.

And that is the longer answer.

I hope it helps.

Rodger Malcolm Mitchell

Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

Monetary Sovereignty describes money creation and destruction.
Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY

–The economics of chaos. What we know for sure. The value of money (inflation) formula

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

Because a large economy, by definition, contains more money than does a smaller economy, an economy growing from smaller to larger requires an increase in the money supply.

But in the minds of people ignorant about economics, every solution to recession, every solution to the income gap, every solution to other economic misfortunes — indeed every government action that involves adding to the money supply — always must lead to inflation and unsustainable debt.

For them economics is simple: Money Supply (MS) = Inflation (I). Period.

(The exceptionally ignorant believe all solutions lead to hyperinflation, with the inevitable, wrongheaded comparisons to Zimbabwe, Weimar Republic and Argentina.)

But economics actually is among the most complex of all sciences, encompassing psychology, sociology, mathematics, engineering, physics, chaos theory and innumerable other disciplines.

Inflation includes that complexity, for Inflation most certainly does not = Money Supply.

Inflation is the change in value of Money vs. the value of Goods and Services.

The Value of Money = Demand / Supply.
The Demand for Money = Reward/Risk
The Reward for owning money is Interest.

Put them all together and you have:
Value of Money = (Interest / Risk) / Supply.

Then we come to the Value of Goods and Services (G&S), which is calculated.

Value = (Demand / Supply) X Cost

Consider any Good, such as steel. The value of steel = the Demand for steel divided by the Supply of steel, x the cost of producing steel. The price of steel rises when demand rises, the supply falls and/or the cost of production rises.

So Inflation depends on this:
[(Demand for G&S / Supply of G&S) x Cost of producing Goods and Services] / [(Interest / Risk) / Supply of Money]

That is a long, long way from from the debt hawks’ simplistic: Money Supply = Inflation.

But, it gets more complicated. Each Good and each Service weighs differently on inflation. The cost of tomatoes might rise and have a very small effect on inflation, while the cost of oil has a huge effect on inflation.

Further, the price of some goods is artificially controlled (oil is an example), and the Demand for oil reacts minimally to price changes. Inflation then is the weighted Values of every Good and Service / the Value of Money, and that weighting, in of itself, is complex.

But, it gets even more complicated, for psychology is a big part of economics, and humans as a group, react differently to different situations.

Finally, a small inflation can be self curing or self perpetuating, depending on the power of automatic stabilizers (factors that automatically work against changes in inflation).

Many sciences encounter such complexity. Consider these excerpts from the January 25, 2014 issue of Science News Magazine

Tomorrow’s catch, Chaos theory’s potential for fisheries management
BY Gabriel Popkin, JANUARY 10, 2014

Pacific sardines all but disappeared from coastal waters in the 1950s. Numbers remained low until the late 1980s, when enough fish finally reappeared to make commercial harvesting worthwhile again. By then, sardines in the highly productive California Current were carefully managed.

Scientists still debate what causes sardine numbers to rise and fall. Overfishing certainly played a part in the collapse. Research suggests that a cooling of the eastern Pacific Ocean also played a key role.

The thinking goes that a cool period starting in the mid-1940s, combined with decades of overfishing, sank the sardine.

So, for the scientists, Sardine population = 1 / (Fishing x Water Temperature)

Based on this understanding, the Pacific Fishery Management Council developed a temperature-dependent method to predict population changes and set harvest limits for sardines in the California Current.

In 2010, however, scientists analyzed data from the previous two decades and published a study questioning the correlation between sardine population growth and sea surface temperature. As a result, the council removed ocean temperature from the mathematical models they use to forecast sardine population growth.

The council’s decision frustrates George Sugihara, a theoretical biologist. In his view, the simulations that fishery scientists use to predict population changes and set quotas are fundamentally flawed.

The simulations can’t capture how a population’s growth rate might change in response to the other fish species living in the ocean, for example, or to the amount of zooplankton, or to wind speeds or, for that matter, to fishing itself. He says “it’s like trying to understand reality by just looking at one page” of a book.

I do it. You do it. We all do it. We look for simple correlations. To the layman, Money Supply = Inflation makes perfect intuitive sense. “Print” more money, and we’ll have inflation. Right?

But somehow, it doesn’t work that way. In fact, since 1972, when we stopped using gold as a backing for the dollar, there has been no relationship between federal “money printing” (deficit spending) and inflation..

How is this possible? Complexity.

And as for federal debt being “unsustainable” and “costing taxpayers money,” these myths have been demolished in many posts throughout this blog, for instance here and here.

Intuition betrays us in all sciences. Time depends on speed (We age slower as we go faster.) An atomic particle can be in different places at the same moment. Fish populations do not correlate directly with fishing. Debt is not a burden on the federal government. And inflation does not result from federal spending.

So where does that leave us? Economics is beyond complex; it is chaotic. It follows the butterfly effect (A butterfly flapping its wings can change world weather). So simple, linear causes and effects are rare.

We are left, then, with the few things we know for sure.

1. We know for sure that a growing economy requires a growing money supply, as discussed, above (although this is not to say there is a linear relationship between money supply and economic growth).

2. We know for sure that federal spending and exports add money to the economy while federal taxes and imports remove money from the economy.

3. We know for sure that the federal government (unlike state and local governments) cannot run short of dollars, so can pay any debt at any time (unless Congress rules against paying its debts).

4. We know for sure that money cures poverty, at least temporarily. Give a poor person money and/or services on which he must spend money, and at that moment he is less poor (recognizing that any given individual quickly may lose the money or waste the services provided to him).

5. We know for sure that a growing gap between the rich and the rest punishes the majority, while rewarding the minority.

6. We know for sure that rewarding the poor and middle classes more than we reward the rich, narrows the gap between the rich and the rest.

7. We know for sure that education in general helps people in general to grow economically.

8. We know for sure, that when crime is rewarded more than punished, crime will exist, and when the rewards grow vs punishments, crime will grow.

And this knowledge is what leads us to “The Nine Steps to Prosperity,” below.

Rodger Malcolm Mitchell
Monetary Sovereignty

—–

#MONETARY SOVEREIGNTY

Share this:

Share this:

Share this:

Share this: