–Rick Newman and mental anorexia

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.
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Who is Rick Newman? I’ll let him tell you about him:

I’m an award-winning journalist and author covering many of the most pressing issues of our time. As a columnist for Yahoo! Finance, I explain how the momentous changes sweeping through the economy affect ordinary people–and what you can do about it.

I was Chief Business Correspondent for U.S. News & World Report, where I worked as a writer for more than 20 years. I’m also a frequent commenter on networks such as CNN, MSNBC, and Fox, plus a lot of local radio stations.

I’ve ridden on submarines, flown on Air Force jets and tromped through mud with soldiers while covering the Pentagon. I’ve walked the halls on Capitol Hill and interviewed many of America’s top political and business leaders.

I won the Gerald R. Ford Prize for Distinguished Reporting on National Defense. I’ve also won awards from the National Press Club, the Society of Professional Journalists and the International Association of Firefighters. And I’ve been a finalist for the Livingston Award for Young Journalists and the National Magazine Award.

With (my book) Rebounders, I shifted to socioeconomic issues that directly affect millions of Americans.

Wow! Rick Newman is an Expert — which is why I’ve decided to show you excerpts from a column he just wrote for Yahoo Finance:

The Exchange
How China helps pay for Medicare, U.S. aircraft carriers

Chinese holdings of U.S. federal debt hit a new record high toward the end of 2013. We should probably be grateful.

China has been the largest foreign holder of U.S. debt since 2008, when it overtook Japan, which is now No. 2.

Chinese holdings of U.S. debt strike some people as a national-security vulnerability, but that’s largely a myth fed by fear-mongering xenophobes.

Exactly right. This guy really seems to know his stuff.

Chinese holdings of U.S. debt (T-securities) are nothing more than deposits in China’s T-security accounts at the Federal Reserve Bank — essentially identical with deposits in bank savings accounts.

Pay back is no problem for banks or for the U.S. government. To pay back, they just transfer dollars from savings accounts to checking accounts. Simple.

For one thing, the debt held by China only amounts to about 7.6% of the entire $17.2 trillion in U.S. debt. Overall, Uncle Sam’s portfolio of creditors is pretty well diversified.

Borrowing from all sources, including China, also helps Washington pay for more programs than Americans finance on their own through taxes.

Uh oh! Newman says dollars deposited in China’s T-security accounts pay for federal spending. He doesn’t recognize Monetary Sovereignty.

Those dollars in China’s T-security accounts don’t belong to us. They belong to China. Does a (legitimate) bank use depositors’ money to pay its bills?

A trenchant irony of China’s lending to the United States is it helps pay for aircraft carriers, fighter jets, missiles and other military hardware that would menace China if there were ever a standoff between the two nations.

Sure, Mr. Newman. The Chinese are so stupid, they are funding our military, which one day will be used against them. Too bad they don’t have economists as smart as you.

Funds from China also help pay for Medicare, highways, education grants, prisons, food stamps and most other things the federal government spends money on.

He doesn’t “seem to” understand the difference between monetary non-sovereignty (states, counties, cities and him) vs. Monetary Sovereignty.

He acts as though federal financing is just like his own personal financing!

A few programs — most notably, Social Security — have a dedicated source of funding. Medicare is partly funded that way, but money for some parts of the popular healthcare program for seniors comes from the Treasury Department’s general fund.

For the most part, money from taxes and borrowing goes into the same pool at the Treasury, with no distinctions on how dollars from different sources are spent. “Whether the payments are derived from debt or taxes, it’s all one big pot of cash,” says Deborah Lucas, a finance professor at MIT’s Sloan School of Management.

OMG! Now an MIT finance professor spreads The Big Lie?

Rick and Deborah, please listen closely. The Federal government does not maintain “a big pot of cash.” The U.S. money supply does not include such a pot. There is no pot.

If the pot existed, where would it be? The Treasury? If the entire Treasury building, and all those sheets of freshly printed dollar bills, burned to the ground, would the government be unable to pay its bills? No, that would have no effect on federal bill paying.

The government pays its bills by sending instructions (NOT dollars. Instructions.) to creditors’ banks to increase the balances in creditors’ checking accounts. When banks follow these instructions, which they always do, dollars come into existence.

The federal government neither has nor needs a big pot of instructions. It cannot run short of instructions.

Federal financing is different from your personal “kitchen-table” financing.

“When people ask ‘how bad would it be for the United States if China withdrew its money,’ the answer is, ‘how bad would it be for China if the United States went bankrupt?’” says Richard Kogan of the Center for Budget and Policy Priorities. “China has a big stake in the solvency of the United States. They want us to pay all their principal and interest and keep buying the stuff they make.”

And now Richard Kogan joins the ignorance parade. If China wished to withdraw its money, the U.S. government simply would transfer dollars from China’s T-security account at the Federal Reserve Bank, to China’s checking account, also at the FRB. No new dollars needed.

To pay the interest, the U.S. would instruct the FRB to increase the balance in China’s checking account.

As for the “solvency of the United States,” puleeze! The U.S. creates unlimited dollars ad hoc, simply by sending instructions. It is 100%, absolutely, positively impossible for the U.S. to become insolvent.

[By another definition, the U.S. is, and always has been “insolvent,” in that it has no dollars, but that’s just a semantic game.]

And as for “buying the stuff they make,” so long as China’s banks, here and abroad, are glad to accept U.S. Treasury instructions, we’ll be able to keep buying that stuff.

The vast scale of borrowing by the U.S. government is a different story altogether and a legitimate worry.

Why is the size of deposits in T-security accounts at the Federal Reserve Bank a “legitimate worry”?

Washington has made halting progress on its debt recently, with the annual deficit dropping from $1.1 trillion in 2012 to $680 billion in 2013.

There’s still no plan, however, for addressing federal budget gaps that are expected to explode starting around 2020. With luck, China will still have a lot of money to invest by then — and remain in an accommodating mood.

Or, if our luck is “bad,” China will transfer the balances in its T-security accounts to its checking accounts, at which time we will “owe” China zero.

And that will have zero effect on the U.S. government’s ability to pay its bills by sending instructions to creditors’ banks.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback to Success

If, like the U.S. Federal Government, you have the unlimited ability to pay bills, by all means buy his book. Make him rich. Otherwise . . . maybe not.

I can’t say whether Rick, Deborah and Richard are owned by rich employers or truly are ignorant of Monetary Sovereignty. But their comments demonstrate why the American-in-the-street remains aggressively ignorant about our economy, and why the money/power gap between the ultra-rich and the rest widens.

It’s hard to blame the public for mental anorexia, when the people are being fed garbage.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (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

–The wasteful spending myth and The Big Lie

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

A soon as Congress and the President finish patting themselves on the back for their wonderful display of partisanship (enabled by the Republicans’s realization that the voting public may be catching on to Tea Party tactics), they will begin to criticize the $1.1 trillion federal spending bill they just passed.

They all will moan about the “pork,” the “wasteful spending” and the “earmarks” contained in the bill. And the Republicans especially will stammer that the reason the bill doesn’t include long term unemployment insurance is because other cuts were needed or (heaven forbid!) the deficit and debt would rise.

It’s all part of The Big Lie.

The reason long term unemployment wasn’t extended in this jobless economy is simple: It would benefit the non-rich and possibly narrow slightly the gap between the rich and the rest. Far better to keep these people as desperate slaves, willing to work for minimum wage and without benefits.

Assuming “wasteful” means “non-productive” or “valueless”, a Monetarily Sovereign government cannot spend wastefully. It’s impossible.

If the federal government were to pay 1000 people $1,000 each to dig a hole and fill it in, most people, ignorant of economics, would claim that’s wasteful. It isn’t.

Sure, there are more productive uses for that million dollars, than digging a hole and filling it in, but 1000 people now have an additional million dollars to spend. Business and other creditors will receive those million dollars, and they will hire and pay employees, and on and on.

Being Monetarily Sovereign, the government can create dollars endlessly, without collecting taxes and without borrowing endlessly.

Ben Bernanke could do his famous “helicopter” drop of a million dollars in the middle of Times Square, and even that would not be wasted spending. The people scrambling to pick up the dollar bills would spend or save, and either way, benefit the economy.

About the only way federal spending could be considered wasteful is if the dollar bills were dropped into a fire, and even then, the only thing that would be wasted would be the paper. No dollars would be lost. Dollar bills are not dollars.

Here are some of the examples of The Big Lie you have been told:

According to the Cato Institute, Chris Edwards is the director of tax policy studies at Cato and editor of DownsizingGovernment.org. He is a top expert on federal and state tax and budget issues.

He said, “Federal ‘waste’” is a broader problem than simple screw-ups, such as an unused $300 million Pentagon blimp. The federal government has been wasting money since the beginning of the Republic, and I (have) proposed reforms, including privatization and chopping aid to the states.

Well of course you have, Chris. Cato is the bastard child of the Koch brothers, those billionaire, “patriotic” Americans who spend billions to widen the gap between the very rich and the rest. Chris Edwards’s soul is owned by his rich employers.

“Privatization” means “Let our for-profit companies do it, so we can screw the public by raising prices and cutting services.”

A perfect example was Chicago’s Mayor Daley’s privatization of Chicago’s parking meters. Parking prices went way up, and the city’s taxpayers no longer will receive parking revenue — for another 99 years!

That’s “privatization,” the crooked politician’s way.

And as for “chopping aid to the states,” this too widens the gap. Like federal spending, the vast majority of state spending benefits the vast majority of each state’s residents — the non-rich. But states are monetarily NON-sovereign. They are unable to create their sovereign currency. They have no sovereign currency.

So by gutting state aid, the rich gut aid to the non-rich, thereby widening that gap between the rich and the rest.

It’s all part of the plan.

Senator cites need to stem tide of wasteful government spending

Sen. Tom Coburn of Oklahoma said this week that the lack of Republican power in the Senate will likely mean there will be no legislative fix to his “wastebook”:

*A $297 million blimp that would provide continuous surveillance of the Afghan battlefield. After it canceled the program, the Army sold the airship back to the contractor that was building it for $301,000.

*$7 billion worth of vehicles being transferred to other countries or destroyed in Afghanistan instead of shipped back to the U.S. DOD will save about $500 million by sending them to allied countries or selling them as scrap.

*The National Guard’s $29 million promotional contract with NASCAR driver Dale Earnhardt Jr. National Guard spokeswoman Michelle Hall responded that the contract generated $75 million worth of media exposure and allowed the Guard to tap into NASCAR’s fan base of 77 million people.

*The $34 million, 64,000-square foot Camp Leatherneck complex in Afghanistan, which the Defense Department has never used.

*Nearly $300,000 worth of benefits paid by the Army to Maj. Nadal Hasan, the admitted murderer of 13 people at Fort Hood, Texas, before his conviction in August. Army spokesman Troy Rolan noted the Fifth Amendment’s right to innocence — meaning Hasan was entitled to continue receiving his base pay.

*More than $400,000 spent on C-27J tactical transport planes that were never used.

Spokespeople for the military said the blimp, equipment and airplanes were cancelled because of the Afghan drawdown. The Dale Earnhardt money was “worth it.”

If they had been honest (and brave) they would have explained that this spending benefited the American economy. Instead, they just went along with The Big Lie.

Federal $100 billion: Overpayments to federal SS insurance recipients a ‘waste’

The Office of Management and Budget has recently alleged that the federal government made a total of $101.3 billion in “improper payments.” These include too much given to Social Security insurance recipients. The government has a very slim chance of ever getting back those wrongfully given SS and other funds.

What a shame! $101.3 billion that cost nobody anything — not you, not me, not our future children or grandchildren — went to the American people to spend or save as they choose. How much “better” it would be to raise taxes or cut federal spending, so the deficit could go down, and the economy could suffer. That is The Big Lie.

The conclusion of the Office of Management and Budget is if more attention were given to the over-spending allotted to SS insurance recipients and Medicare issues by the government, the U.S. nation could literally save dozens of billions of dollars in the coming years.

Note the clever use of the words “the U.S. nation.” They are in there to make you believe that somehow this “waste” is costing you money, when in fact, reducing the “waste” is what costs you money.

Federal finances are different from your “kitchen table” finances. The federal government is Monetarily Sovereign. You are monetarily non-sovereign. The two are diametrically opposite. Like comparing tunas and tubas.

The bribed politicians, bribed media and bribed mainstream economists don’t want you to know that.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–With low inflation, verging on deflation, what’s the excuse now?

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

Readers of this blog know that our politicians, media and mainstream economists have been bribed by the ultra-rich to widen the gap between the rich and the rest.

The politicians are bribed by the ultra-rich via campaign contributions and promises of lucrative employment for themselves and their families (the Bill Clinton syndrome)

The media are owned by the ultra-rich. (The FOX syndrome)

The mainstream economists are employed by universities that have been bribed, and/or they are employed by the so-called “think tanks” (the CATO syndrome) which are funded by the ultra-rich.

Very briefly, they all are bribed to brainwash millions of Americans with The Big Lie — the myth that federal spending is too high, unsustainable and must be reduced.

Because the vast majority of federal spending benefits the vast majority of Americans, i.e. the millions of non-rich, reductions in federal spending widen the gap.

When House Speaker said, “Let’s be honest. We’re broke,” he was expressing The Big Lie.

When one of the brainwashed millions tells me that federal spending is unsustainable, here is the inevitable scenario:

Brainwashed: “Social Security benefits (or Medicare benefits, or any other federal spending) must be decreased.”

RMM: “Do you think the federal government can run short of dollars?”

Brainwashed: “No, they always can print dollars, but that will cause hyper-inflation. Remember Weimar Republic (or Zimbabwe, or Argentina)”

Despite 200 years of wars, recessions, depressions, stagflations, inflations and bubbles, the U.S. never has had a hyper-inflation, and today we are nowhere near hyper- inflation. Instead, we are near deflation and recession.

Huff Post
Harlan Green, Editor and Publisher
Deflation is the Danger
Posted: 09/14/2013 12:14 pm

Deflation is the danger to economic growth at present, not inflation. For inflation is a sign of economic growth, yet prices have barely risen if one looks at the major inflation indexes, like the CPI or Personal Consumption price index.

The so-called PCE price index is the main inflation indicator liked by the Federal Reserve, and it is running far below the Fed’s preferred target of 2 to 2.5 percent.

. . . the emphasis on holding down inflation . . . resulted in 2 decades of low inflation that was called the “Great Moderation”–has meant slower economic growth and less productive investment, as well as two further recessions in the last decade, including the Great Recession.

We have not had an inflationary environment since the 1970s, and that was ‘cured’ by then Fed Chairman Paul Volcker with his double-digit interest rates.

So now what can brainwashed parrots for the ultra-rich to say? They acknowledge that the federal government has the unlimited ability to (erroneously called) “print” dollars. The government never can run short of dollars to pay its bills.

Our current problems are slow growth, unemployment and a widening gap between the rich and the rest.

The non-rich need increased, not decreased, federal deficit spending for Social Security, Medicare, Medicaid, poverty aids, education, the infrastructure, pure food, clean water and the myriad other benefits of federal deficit spending.

And our primary danger is deflation, not inflation.

So with low inflation, verging on deflation, what’s the excuse now?

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–The great European mysteries, solved

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

So they labored mightily, to build a complex machine, which they named “the EU,” and now they say it’s not working right, and they want to fix it, but they can’t agree on why they built it or what the machine is supposed to do.

———-THE EURO———-

Reform EU or Britain quits – George Osborne lays down ultimatum
Membership withdrawal threat after Tory MPs sign letter calling for dismantling of Europe’s core principles via veto powers
Nicholas Watt, chief political correspondent, The Guardian, Tuesday 14 January 2014

Mats Persson, director of Open Europe, said: “There is a huge debate in Europe about what the EU’s defining mission should be in future – the single market or the euro?

Got it? Europe created the EU and the euro, but now has no idea why the EU exists or why the euro exists, and what they are supposed to accomplish.

There are those who believe the goal is to facilitate intra-Europe trade.
There are those who believe the goal is to create a united Europe politically.
Or financially.
Or militarily.
Or economically.
But they’re not quite sure why.
Or how.

There are those who believe the goal is to maintain the euro. But they too are not quite sure why or how.

And then there are the wealthiest Europeans who believe the goal is just to make a carload, boatload and trainload of money for themselves, at the expense of the lowly citizens, for as long as possible, until the pitchforks and torches show up.

George Osborne will today deliver a stark warning to Britain’s European partners that the UK will leave the EU unless it embarks on whole-scale economic and political reform.

[He wants to] dismantle the rules of the European single market which were drawn up to prevent France imposing protectionist measures by denying member states a national veto.

It goes like this: You are a Monetarily Sovereign nation, with two major assets: The unlimited power to create your own sovereign currency, and the unlimited power to determine your economic fate.

Obviously, you don’t want such a burden. You’d rather be a slave nation. So what do you do? You voluntarily surrender those most valuable assets, and you put your nations fate into the hands of some unelected, foreign bureaucrats called the EU.

Surprise! That hasn’t worked out so well:

The EU suffers from a chronic lack of competitiveness and the European economy has stalled over the last six years while the Indian economy has grown by a third and the Chinese economy by 50%.

[Osborne said,] “As Angela Merkel has pointed out, Europe accounts for just over 7% of the world’s population, 25% of its economy, and 50% of global social welfare spending. We can’t go on like this.”

O.K., so the euro has been an unmitigated disaster, as we who understand Monetary Sovereignty began predicting many years ago.

But wait!

The UK did not adopt the euro. The UK did not surrender its Monetary Sovereignty, the single most valuable asset any nation can have. The UK did not put its future into the hands of unelected, foreign bureaucrats. So everything is good. Right?

Well, maybe not.

Osborne is expected to say that (Prime Minister David) Cameron will press for a realignment of the rules of the single market to ensure the 18 members of the eurozone cannot outvote the 10 EU members, such as Britain, which have not joined the single currency.

So that is the big “reform” — a “realignment of the rules.” Still the same old euro. Still the same old bureaucrats. Still the same old economic disaster.

And no one really explains, on a cost/benefit basis, why the EU continues to exist.

And worse yet, the UK, despite retaining its Monetary Sovereignty — despite having the unlimited ability to create it sovereign currency, the pound — despite the unavoidable lessons of deficit cutting by euro nations — the UK austerity train just keeps rolling down the hill.

Why? Why the EU and why economy-crushing austerity, even in a Monetarily Sovereign nation?

Well, those are the great European mysteries — or they would be mysteries but for one small detail: Everything that has been done and will be done, is at the direction of the continent’s wealthiest people.

The same people who built the complex machine now volunteer to fix it, but they simply will rearrange a few parts, and the machine will continue to “work” as badly as before.

All this “build it, fix it, build it, fix it” is just a giant smoke screen — a misdirection to fool the masses and to hide the true purpose of the euro, the EU and their inevitable austerity-induced recessions and unemployment: To widen the gap between the rich and the rest.

The misdirection has been working and continues to work. Even America uses the same kind of misdirection for the same purposes.

The plumber keeps sabotaging the pipes, so you’ll have to keep calling him back, again and again, and paying him for every visit. He gets rich. You get poor. And the plumbing still doesn’t work.

The mysteries are solved. The purpose of the EU and the euro is to widen the gap between the rich and the rest. Period.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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