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

Sen. Ted Cruz isn’t the only one who wants to gut your health care.

The Tea Partiers aren’t the only ones who want to cut government spending for your social programs.

The Republicans aren’t the only ones who have been bribed by the rich to widen the gap between the rich and the rest.

The Democrats aren’t the only ones who pretend to be friends of the downtrodden, while voting for the powerful.

No, they aren’t the only ones. The entire American populace seems to agree with them.

You have been brainwashed that government spending is “bloated,” “wasteful,” “excessive” and “needless” (to use some common terms), and should be reduced. All lies.

You repeatedly have been told the debt and deficit are “unsustainable,” “unaffordable,” “a ticking time bomb” and “will be paid by our children and grandchildren.” More lies.

So once again, let us look at what happens when government spending is cut.

The most common measure of economic growth (or shrinkage) is Gross Domestic Product:

Gross Domestic Product (GDPA) is the blue bar.

Gross Domestic Product is composed of four measures:

–Personal Consumption Expenditures (PCECA)
–Gross Private Domestic Investment (GPDI)
–Net Exports of Goods and Services (NETEXP)
–Government Consumption Expenditures & Gross Investment (GCE)

These four measures, when added together, make up the orange bar, which as you can see is identical with the blue bar.

Now, see what happens to Gross Domestic Product if we eliminate government spending (GCE):

Gross Domestic Product drops by about 20% — the difference between the orange bar and the blue bar — a monster decrease.

Let’s see what happens if we cut government spending only by half:

We suffer a 10% decrease in Gross Domestic Product. That still is a huge decrease. Consider that GDP fell 2% from 2008 to 2009. Cutting government spending in half, would cause a loss five times greater than the crash of the Great Recession.

But it gets worse. Government spending pumps dollars into the economy, which helps to grow Personal Consumption Expenditures and Gross Private Domestic Investment. A reduction in government spending will reduce private spending.

Let’s take a look at what happens if we reduce private spending by just 10%:

Gross Domestic Product falls about 19%. And that folks, is called a depression.

What happens in a depression? The richest .1% of our population does just fine, because the rest become so desperate for money, you will accept slave-labor jobs.

You become the servants of the rich, begging them for whatever handouts they wish to give you.

It’s happening even now. With unemployment high, the rich offer part-time jobs and reduced salaries, which you accept, both reluctantly and gratefully, while you do without proper health care, education, food, housing and all the other things no American should lack.

Corporations profit while the populace suffers.

The sequester, once considered outrageously so harsh, no politician would dare allow it to happen, now is the norm from which further cuts will be made.

The right wing (including Republicans and Democrats, there being no left wing in America) continues to demand ever more cuts in government spending.

They want you to believe the lies.

And the rich want slaves.

Please sir, a dollar to feed my children?

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. 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)
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.

#MONETARY SOVEREIGNTY

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

How can al Qaeda destroy America?

Not by crashing airplanes into two New York skyscrapers. That killed four thousand people out of a total of 300 million. (It also resulted in drones killing lots of al Quada. Not a good net result for a terrorist.)

Not by planting the occasional bomb, for instance at the finish line of a marathon. That’s not going to destroy the most powerful nation in world history. And, not with sarin gas or anthrax. Those would be mere pinpricks on an elephant’s tail.

The heart of America is the American economy. To destroy America, al Qaeda must destroy the American economy. How could they do that?

1. Al Qaeda could tell Americans the economy’s money source — the federal deficit — should be shut down.

Al Qaeda could help brainwash the populace into believing falsely, that federal finances are like personal finances, in which debt is a danger. People must not be allowed to understand that federal deficits are the government’s method for growing the economy, and that taxpayers do not pay for those deficits.

Above all, do not allow Americans to understand: GDP = Federal Spending + Non-federal Spending + Net Exports.

2. Al Qaeda should turn Americans against each other. Spread the myth that the poor are “takers” and that the rich are “makers.”

Tell the populace that people without health insurance are at fault for their own misery, as are the unemployed, the ill-educated, the ill-housed and the ill-fed.

Al Qaeda should tell Americans the BIG LIE, that federally supported health care, unemployment insurance, food stamps, food and drug regulation, bank and financial market regulation, and most other federal spending are unaffordable, encourage sloth, discourage self-reliance, and must be paid for by American children.

Fool the people into supporting “debt ceilings,” increased FICA, “broadening” the tax base, the sequester, elimination of the Affordable Care Act, reduced Social Security benefits, reduced aid to education and reduced aid to the poor and “Go Big” (on deficit reduction).

Tell people to ignore the words of William Dudley, President of the New York Federal Reserve Bank, who on September 23, 2013, said:

In particular, it is still hard for those who are unemployed to find jobs. Currently, there are three unemployed workers per job opening, as opposed to an average of two during the period from 2003 to 2007.

Al Qaeda should hide the fact that not only is American unemployment still near highs, but low-paying, part-time work is well above record highs.

(None of this paints a picture of a lazy workforce, looking for government freebies, rather than working. Instead, it is a picture of economic desperation — former executives as Walmart greeters — exactly what al Quada should support.

3. By turning Americans against each other, and by widening the gap between the rich and the rest, al Qaeda could foment civil disobedience, which when met with resistance, even could devolve into revolution (God willing), with Americans killing Americans. (They could name it the “American spring.”)

4. Al Qaeda should help arm Americans, to make it easier for us to kill each other. Mischaracterize the 2nd Amendment, which specifically refers to a “well-regulated militia” and was written at a time of muskets and swords, to mean that every American should carry high powered guns with large ammo clips, everywhere we go.

In this way, Americans will do what al Qaeda wants done, but has been unable to do: Kill thousands upon thousands of Americans. And as the killing increases, more Americans will be persuaded to carry even more lethal guns for “self-defense,” in an unending, upward helix of murder, defense and more murder.

5. Al Qaeda should support the radical ideas promulgated by The Committee for a Responsible Federal Budget, the Club for Growth, the National Rifle Association, the Koch Brothers, Erskine Bowles and Alan Simpson, Pete Peterson and other right-wingers who favor activities helpful to al Qaeda’s goals.

Instead of working alone, al Qaeda should seek out those already helping to destroy America, and work with them. The first step might be to contact U.S. Senator Ted Cruz (R-TX).

Just a thought.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. 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)
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.

#MONETARY SOVEREIGNTY

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

It’s that time again, and again we are treated to the phony food fight, between the right wing (Obama Democrats) and the extreme right wing (Tea Republicans), to decide the best way to destroy the American economy.

Will the nation be forced to renege on its debts, ruining our credit world-wide and annihilating the dollar’s value (Tea Republican’s choice), or to impose on the middle-class a crushing “Grand Bargain” that would impoverish millions (Obama Democrat’s choice)?

An economics writer named “Joe Firestone,” wrote an excellent article titled: Stop the Kabuki: It’s About “the Great Betrayal” I urge you to read it.

In the article, Firestone lists five methods by which Obama could free himself, and the nation, from the shackles of debt ceiling nonsense. (It’s nonsense simply because a Monetarily Sovereign government like the U.S., never can run short of its sovereign currency. That’s what “Monetarily Sovereign” means.)

Every one of these five methods would solve the problem, end the battle, and set America on a course for growth. Obama will adopt none of them.

Everything in economics devolves to motive, and Firestone lists as Obama’s motive:

All of this high drama is necessary for him (Obama) to pretend to his base that he was forced to do what he’s been trying to do for years: sacrifice old people since he perversely believes that “reforming” Social Security and Medicare will get him brownie points in the presidential legacy ledger.

I believe Mr. Firestone is wrong. I do not believe “legacy” is the prime motive for the Chicago politician who miraculously was lifted from nowhere to become our President.

Obama’s entire, political career has been based on the Chicago truth that money talks, and the wise politician listens. He was an undistinguished community organizer (whatever that is), an undistinguished attorney and an undistinguished teacher, who somehow found the money to become an undistinguished state senator, and found even more money to become an undistinguished national Senator.

He quickly learned to follow the money from fundraiser, friend and convicted felon, Tony Rezko. It was the money that plucked Obama from relative obscurity to become President.

As a comment to Mr. Firestone’s article, I wrote:

Missing from this excellent article is the answer to this fundamental question: “WHY will President Obama refuse to solve the problem? Why does he prefer the Grand Bargain?”

Without disclosing motive, the whole plot makes no sense. Everything in economics devolves to motive

The answer: President Obama has been bribed by the rich, to widen the gap between the rich and the rest. (See: Don’t be shy, MMT. It’s bribery, pure and simple. )

He has been bribed via campaign contributions and promises of lucrative employment — great wealth for him and his family. (Call it the “Clinton syndrome.”)

He has been bribed by the promise of a huge Obama Library. (Call it the “Pritzker syndrome.”)

This leads to the question, “Why have the rich bribed President Obama to impose the Grand Bargain?”

The motive: The rich do not care about their income or their wealth; they care only about the gap. It is the gap that makes them rich.

If there were no gap, no on would be rich, and the larger the gap, the richer they are.

Think of all the things for which the federal government spends. Social Security, Medicare, Medicaid, roads, bridges, education, the military, regulation of food, medicine, the financial markets, etc., etc..

Cuts in federal spending invariably affect the poor far more than the rich. Cuts in federal spending widen the gap.

Then there is “broadening the tax base,” that euphemism for taxing the poor more.

Obama has been bribed to widen the gap, and like a good Chicago politician, he bends to the money.

That is the motive.

Now the drama of a brave, resolute Obama, fighting against the forces of right wing evil, will play out, bolstered by the fact that the right wing really is evil.

You will be told that Obama is battling to save America, but that his hands are tied, and all he can do is cut spending on whatever benefits the middle- and lower-classes, because he has no choice.

Read Firestone’s article and you’ll see he has plenty of choices. But he won’t use them. By contrast, we have two choices. We can voice our displeasure, by contacting our politicians and the media.

Or we can sit back and enjoy Obama’s phony food fight.

For, we are the food.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. 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)
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.

#MONETARY SOVEREIGNTY

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

Here is how Quantitative Easing is described and justified by the popular media and mainstream economists — and by Fed Chairman Bernanke.

What exactly is quantitative easing?
Tim Mullaney, USA TODAY, September 18, 2013

[Quantitative Easing (QE) is] the technical term for the Federal Reserve’s policy of buying bonds and other assets in order to pump money into the economy.

The most recent strategy, called QE3, had the Fed buying $85 billion of bonds every month.

Does bond buying really pump money into the economy? Imagine your neighbor owns a Treasury bond. You buy it from him. Have you pumped money into the economy?

When your neighbor bought that T-bond, two of his accounts changed: His bank checking account was debited and his T-bond account, at the Federal Reserve Bank (FRB), was credited. A T-bond account is very much like a bank savings account.

In essence, when your neighbor bought that T-bond, all he did was transfer dollars from his checking account to his savings account. Did the amount of money in the economy change? Clearly, not.

Then, when you bought his T-bond, four accounts changed:

1. His checking account was credited
2. Your checking account was debited
3. His T-bond account was debited
4. Your T-bond account was credited.

All four accounts changed by the same amount. Did the amount of money in the economy change? Again, clearly not.

Now visualize that instead of you buying your neighbor’s bond, the Fed buys your neighbor’s bond.

Your neighbor’s checking account is credited and his T-bond (i.e. savings) account is debited — for the same amount. Did the amount of money in the economy change? Again, it did not.

Summary: Contrary to popular myth, promulgated by Bernanke, the media, the politicians and the mainstream economists, QE absolutely, positively does not “pump money into the economy.”

. . . and nurture the recovery.

The irony is that pumping money into the economy is widely known to “nurture the recovery.” Yet, the President, Congress, the popular media and the mainstream economists agree that federal deficit spending, which does pump money into the economy, should be reduced. Huh?

Anyway, because QE does not pump money into the economy, it does not “nurture the recovery.”

But wait. Many of the T-bonds are being bought from banks. Presumably, this provides the banks with more reserves, allowing them to lend more money, which would “nurture the recovery.”

Wrong, for three reasons:

1. As we have seen, the seller of T-bonds merely transfers dollars from one of his accounts to another. No new dollars are created. The (bank) seller does not obtain dollars it didn’t already have.

2. T-bonds themselves function as bank reserves, so the bank gains zero reserves

3. Despite the misleading term “fractional reserve” lending, bank lending is not constrained by reserves, which are available in unlimited amounts from the public, other banks and from the Fed itself. Instead, bank lending is constrained only by bank capital.

Summary: QE does not stimulate bank lending to “nurture the recovery.”

But wait, again. What about interest rates?

The Fed hoped to . . . drive down long-term interest rates so more people would buy and build homes and invest in businesses.

With short-term interest rates already near zero, the central bank’s traditional tool of lowering rates couldn’t be pushed any farther.

Fed bond buying increases the overall demand for T-bonds. Because the price of any commodity is based on supply and demand, Fed bond buying increases the price of T-bonds.

Bond prices and interest rates move inversely. When prices rise, rates fall. QE does indeed reduce long-term interest rates.

But is the reduction in interest rates economically stimulative? Does it cause more people to “buy and build homes and invest in businesses”?

Fifty years ago, when I bought my first house, I paid 5% for a 30-year mortgage. Houses were selling like the proverbial hotcakes. Subsequently, mortgage rates rose — as did house sales:

Later, interest rates were raised in the late 1970’s, to cure inflation. Housing starts did decline, because of the recession. Then, for the next 10 years, while interest rates fell, housing starts rose, then fell.

Overall, and especially from 1991, there has been zero relationship between interest rates and housing starts.

Beginning in 1991, housing starts rose dramatically, while interest rates fell, but not reaching 5% until late in the Great Recession.

For 40 years, 30-year mortgage rates were above 5%, and housing starts were dramatically higher than today. More recently, the Fed has used QE1, QE2 and QE3 to reduce long term mortgage rates, which now stand at about 4% — and currently are rising, while housing starts have leveled off.

Meanwhile, the Fed talks about ending its latest QE, as though it were a powerful weapon against recession, that no longer will be needed.

And there is one more problem with QE: It reduces the amount of interest (on T-securities) the federal government pays into the economy.

Rather than adding dollars to the economy, QE reduces the supply of dollars.

The facts: QE is a fraud. It is not a powerful weapon against recession. It is not a weapon at all. If anything, QE has a negative influence on the economy.

Today, economic growth is so slow as to be borderline recession. If QE could stimulate the economy, it would have worked by now and the Fed would use it well into the future, if not, forever.

The Fed’s mere threat to discontinue QE, has caused what seems to be an ironic panic in the stock markets.

Why does the stock market like a process that is anti-stimulative? Why does the Fed engage in this fraud?

(The Fed long has claimed that reduced interest rates are stimulative. If you want to know why that is false, read “Low interest rates — a sneak tax on you.”)

You’ll see that low rates widen the gap, between the rich and the rest. Business profits and the stock market love the cheap, desperate labor gap-widening provides.

Further, low rates do not increase the federal deficit or the federal debt, and they give the appearance the Fed is doing “something” about the economy, by adding a phony $85 billion a month.

1. The people are led to believe the Fed is struggling heroically to stimulate the economy.
2. The wrongly maligned deficit is not affected.
3. And of course, the gap between the rich and the rest is widened.

For the President, the Congress, the media and the mainstream economists, all bought-and-paid-for by the upper 1% income group, it’s the perfect ploy.

QE is, indeed, for dummies.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. 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)
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.

#MONETARY SOVEREIGNTY