—-OECD’s unveils its plan to grow economies: Suppress business

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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Before we analyze the plan from the Organisation for Economic Co-operation and Development (OECD) let’s summarize the differences between a Monetarily Sovereign (MS) vs. a monetarily non-sovereign (MNS) entity.

1. The U.S. government is MS. You and I, Chicago, California and Greece are MNS.
2. An MS government has the unlimited ability to create its sovereign currency. An MNS government has no sovereign currency.
3. An MS government does not need to ask anyone for its sovereign currency – not lenders, not taxpayers.
4. An MS government creates its sovereign currency by spending; it destroys its currency by taxing; taxes received are not part of the money supply.
5. An MNS entity creates money by lending; it destroys money when loans are repaid; Taxes received remain part of the money supply.
6. An economy grows when its supply of real (inflation adjusted) money grows; it shrinks when its supply of money shrinks.

[The OECD is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade.]

The Telegraph
OECD unveils plan to end ‘golden era’ of tax avoidance
By Philip Aldrick, 19 Jul 2013

David Cameron has called on the world’s leaders to get behind a global crackdown on tax avoidance and “break down the walls of corporate secrecy”.

The Prime Minister was throwing his support behind proposals to stamp out sophisticated tax dodging strategies. The Paris-based think-tank has drawn up a 15-point action plan to stop multi-nationals moving profits from one country to another to reduce their tax bill.

–What is the biggest problem facing the world’s economies? Lack of growth.
–When an economy is in or near recession, what is the worst thing a government can do? Suppress business.
–What is the surest way to suppress business? Increase business taxes.

The crackdown follows public outrage in the UK, the US and across Europe about the minimal amounts of tax paid by big businesses. In Britain, Google, Amazon and Starbucks have been accused by politicians of being “immoral” for not paying their “fair share”.

Forcing business to pay more taxes is counter-productive for any economy. An MS government neither needs nor uses tax money.

An MNS government does need and use tax money, but long term survival is not possible via local taxes. Long term survival for an MNS entity requires money coming in from outside its borders. (You are MNS. Visualize trying to support yourself by taxing yourself.)

Britain has been at the forefront of efforts to overhaul the antiquated global tax system, by pledging to contribute €400,000, alongside France and Germany, to help the OECD turn its proposals into concrete policies.

Translation: Britain, which is MS, will pay the OECD to weaken Britain’s businesses. Britain’s government can afford this waste. It has the unlimited ability to create its sovereign currency.

However, Britain’s businesses will suffer, meaning Britain’s economy will suffer.

France and Germany are MNS. They too will pay the OECD to weaken their businesses. Their governments cannot afford this waste. There will be a double loss: Their governments will lose the money and their businesses will be weakened.

Mr Cameron said, “I will call on fellow leaders to get behind this action plan to ensure that we break down the walls of corporate secrecy, once and for all, and that all companies pay their fair share.”

Translation: “Although I have no idea what a ‘fair share’ of taxes is, I will demand that our nation’s business be weakened, so that they will hire fewer workers and pay them less.

“That will increase the gap between the rich owners and the workers, which is our real goal.”

The OECD report said, “Existing domestic and international tax rules should be modified in order to more closely align the allocation of income with the economic activity that generates that income.”

Sandy Bhogal, head of tax at law firm Mayer Brown, said: “The aim of linking the revenues of multinational businesses to particular territories and requiring reporting on a multilateral basis will be extremely complex to agree and implement.

“This process will take a considerable amount of time, even with the cooperation of all the relevant parties.”

Translation: “The whole thing is foolish and harmful to your country, but if you want to spend your money this way, we’ll be glad to take it.”

Business groups such as the CBI (a business lobbying organisation in the UK) have disputed that there is a broad problem with tax avoidance and claim measures to address it could hit job creation, trade and innovation.

Translation: “We didn’t get the message. We still claim businesses paying more taxes will help our economy. Right?”

Tax avoidance has long been the bane of governments but, in the current austere times, it has come to be seen as totally unacceptable. Politicians in many leading countries – including the UK, US, France and Germany – want to tighten up the loopholes.

Translation: “Yes, we know the U.S. has no need for taxes, while France and Germany do need taxes — but the public doesn’t understand the difference.

“And yes, we know that when companies are weakened, the top brass continues to rake in its salaries and perks, while the lower employees are cut, which widens the income gap — but the public doesn’t understand that either.

“As long as we facilitate ignorant people demanding their own destruction, we’ll keep ruling them.”

And so, we are treated to yet another internationally acclaimed organization (Hello, EU and IMF), and not so acclaimed organization (Hello U.S. Congress and U.K. Parliament) spouting absolute rubbish, the intent of which apparently is to widen the gap between the rich and the rest.

OECD’s plan: The troika is lagging because two of its horses are sick. Please sicken the third — for “fairness.”

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone. Click here
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY

–Wall Street exec. No evidence for criminal charges. Surprised?

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

This goes under the heading, “Same old, same old: Too big to jail.”

Wall Street Journal
SEC Files Civil-Enforcement Action Against SAC Chief Cohen
By Jean Eaglesham and Jenny Strasburg

The Securities and Exchange Commission filed a civil-enforcement action against SAC Capital Advisors LP chief Steven A. Cohen, alleging he ignored “red flags” that should have alerted him to insider trading “under his watch.”

The SEC said Mr. Cohen “failed to take reasonable steps to investigate and prevent” insider trading at the Stamford, Conn., hedge-fund firm.

The SEC is seeking to bar Mr. Cohen, one of Wall Street’s most high-profile investors, from overseeing investor funds.

Federal prosecutors have concluded they don’t have enough evidence to file criminal insider-trading charges against him before a five-year statute of limitations expires at the end of the month.

It’s been five years that this guy has made millions by failing to prevent insider trading, but gosh darn it, in five years of looking, we simply can’t find enough criminal evidence, and now the statute of limitations will expire. Oh, woe is us.

It’s not that we didn’t want to jail him — well, yes it is. The Obama administration never jails big contributors. But we want you to know how sad we are.

The move is the first time regulators in the investigation have brought an action against Mr. Cohen personally. His firm has been the subject of a long-running investigation into insider-trading that has resulted in criminal charges against a number of traders and others with ties to SAC.

But, while trading involving Mr. Cohen has been cited in government documents related to those cases, he hasn’t been criminally charged in those matters or any other.

“It’s the first time, but gee, we didn’t know he even existed. You say he’s been the head of this firm all these years? Wow! We never knew.”

And gosh darn it, now, just when we’re about to get the criminal evidence on him, the statute of limitations will expire. Wouldn’t you know it?”

SAC recently agreed to pay $616 million to settle two SEC insider-trading cases involving the firm’s employees. The firm didn’t admit or deny wrongdoing in agreeing to the settlements. SAC has said Mr. Cohen and his firm acted appropriately.

Doesn’t every firm that “acts appropriately” agree to pay $616 million? Nothing criminally wrong here, folks. Yes, we know that fines don’t mean anything to these firms — just a cost of doing business. But we didn’t think you knew it.

“The SEC’s administrative proceeding has no merit,” a spokesman for SAC said in a statement. “Steve Cohen acted appropriately at all times and will fight this charge vigorously.”

Of course our Mr. Cohen and we at SAC acted appropriately. We paid the $616 million because we felt the SEC could use the money. That proves what nice people we really are.

The SEC is ignoring SAC’s “exceptional supervisory structure, its extensive compliance policies and procedures, and Steve Cohen’s strong support for SAC’s compliance program,” the spokesman said.

Yes, we at the SEC see that SAC’s own PR flak now has admitted Cohen was strongly involved in the crooked compliance program (as he is required to be), but that doesn’t mean he’s guilty of anything — at least not for two more weeks, when the statute of limitations runs out.

The SEC alleges Mr. Cohen ignored “highly suspicious information” that should have prompted “any reasonable hedge fund manager” to investigate.

“Hedge-fund managers are responsible for exercising the appropriate supervision over their employees to ensure that their firms comply with the securities laws,” Andrew J. Ceresney, co-director of the SEC’s Division of Enforcement, said in a statement.

“I, Steve Cohen, am using the Sgt. Schultz defense: ‘I see nothing; I hear nothing; I know nothing.’ Here’s $616 million. We’ll make it back in a month. But remember, if you want future campaign contributions, leave me alone.”

Ceresney said, “After learning about red flags indicating potential insider trading by his employees, Steven Cohen allegedly failed to follow up to prevent violations of the law.”

Oops, forgive the typo. That should have read: “After learning about red flags indicating potential insider trading by Cohen’s employees, the Security and Exchange Commission failed to follow up to prevent violations of the law.”

Uh, Mr. Cohen, please remember there will be an election next year. May we count on your continued and generous support?

Please, sir.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–The crazy solution to the pension problems of businesses and local governments: Social Security Pension for All

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

You probably live in a state, county or city that is in financial trouble because of pension liabilities. Pension problems are everywhere:

WATCHBLOG: Fitch downgrades PA bonds; cites pension problems

Could Philly be the next Detroit?

California unions lost some ground last year when Gov. Jerry Brown pushed through the Legislature a series of public-pension cuts that affect their members.

Dozens of local pension boards are in “bad shape”

The Wall Street Journal reports New Jersey Pension Gap Hits $54 Billion

Too often, you read about the need for pension “reform.” The word “reform” is a euphemism for “screw the retirees, screw the creditors and/or screw the taxpayers.” Whenever you read or hear the words, “pension reform,” you can be absolutely positive, someone will be screwed.

Here’s what the Chicago Tribune said in today’s editorial:

The legislative conference committee assigned to devise pension reforms will meet again Friday. As if on cue, Thursday brought three grim reminders of how urgent it is that this committee rapidly start the long process of rescuing Illinois.

Ladies, gentlemen, what further proof do all of us need that Illinois requires not just half-a-loaf pension “fixes” (same as “reform”), but reforms big enough to take pressure off of the state’s budget? That is, off the state’s taxpayers.

Read how are they propose to “take the pressure off the state’s taxpayers:

The best plan now on the table would eliminate Illinois’ $100 billion unfunded pension liability over 30 years, deliver still-generous benefits to retirees — and save taxpayers a projected $187 billion.

Get it? Cut pensions by $100 billion. According to my math that would cost Illinois taxpayers $100 billion, as it is the taxpayers who would see their pensions cut.

The city of Detroit filed for bankruptcy, in large part because of its retiree pension and health liabilities. The Wall Street Journal reports that, under the bankruptcy plan, retirees are set to get less than 10 percent of what they’re owed.

That’s how pension “reform” works. Everyone gets screwed.

Illinois is already insolvent, unable to pay bills as they come due. And every year Illinois pension costs devour so much revenue that education and other needs go unmet.

We hope the conference committee members absorb all of this and realize that a middling pension deal won’t do what many citizens want: not just save the pension system, but also take a big share of that pressure off the state’s annual budgets.

Chicago isn’t part of the state pension system, but none of us should be surprised if fixes at the state level become the template for a city fix as well. (Moody’s Cites Pension Problems as Reason for Downgrading Chicago’s Bond Rating)

Any plan projected to reduce pension costs by something less than $187 billion would force taxpayers to contribute extra billions. And it likely wouldn’t save enough future spending on pensions to ease the current strangulation of other budget priorities.

We’ll close not with a word of encouragement, but with two: Go big!

Ah, the Tribune’s favorite words: GO BIG! These are exactly the same words the Tribune used when describing their plan for federal deficit reduction (i.e. GO BIG!) Is this a masculinity thing with the Tribune editors?

The words were ridiculous then and they are ridiculous now, because they do not address the fundamental problem facing state and local pension plans:

Every state, every county, every city and village in America is monetarily non-sovereign. It is a rule in economics that any monetarily non-sovereign entity cannot long survive unless it has dollars coming in from outside its borders or sphere.

You, being monetarily non-sovereign, must have income to survive long term. The same is true of corporations, all of which are monetarily non-sovereign.

Each state, county and city must have dollars coming in from outside its borders. It cannot survive long term on taxpayers alone, for taxes merely recirculate internal dollars; it’s added dollars that are needed.

THE CRAZY SOLUTION:

No monetarily non-sovereign entity should be allowed to contract for future pension payments. The problems with pensions are quite simple:

1. They promise future payments, that when totaled, can exceed past deposits. If you live long enough, you will receive more money from your pension than has been deposited by you or for you.

2. To make up the difference, pension plans invest the deposits, and investments often lose money, or don’t return sufficient dollars.

I myself, already have received more from Social Security than I deposited, yet it is 100% impossible for Social Security to go bankrupt (despite what the lying politicians and newspapers tell you.) So how can the federal government keep paying benefits?

The U.S. government is Monetarily Sovereign. It creates dollars at will. It can pay any debt of any size at any time, regardless of tax income. That is what “Monetarily Sovereign” means.

SOCIAL SECURITY AS THE NATION’S SOLE PENSION

In the past, we have advocated Medicare for All, with the federal government underwriting full-pay Medicare for every man, woman and child in America.

Similarly, the U.S. should provide Social Security Pension for All (SSPA), and not the pittance-paying, approx. $15,000 per year Social Security we have now.

No, it should be a Social Security that provides enough money for a person or for a family to live decent lives during their retirement years — with benefits perhaps triple current benefits.

States, counties, cities and corporations should be precluded by law, from providing pensions to employees. If people want pensions exceeding SSPA, they simply should save the additional money. If they are unable to save money, SSPA will provide a living pension income.

No sudden tax increases. No surprises when your planned-on pension doesn’t materialize. Less chance creditors will demand more interest from taxpayer.

In addition ,u>we should eliminate FICA (thus benefiting employees and employers).

Social Security Pension for All, would greatly reduce state, county and city insolvency, reduce the need for taxes and tax increases, reduce the screwing of employees and creditors and allow states to spend their limited and precious dollars on things needed in the state.

The federal government, being Monetarily Sovereign, easily could and should finance Social Security Pension for All. The U.S. government is the sole entity in America that has the unlimited ability to support any initiative.

Question for the Chicago Tribune: Is Social Security Pension for All “GO BIG!” enough for you?

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–What do we fix first – the environment or the economy?

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

The July 6, 2013 issue of NewScientist Magazine contained an article asking the following question:

What do we fix first – the environment or the economy?
08 July 2013 by Fred Pearce

Before we analyze a few excerpts from that article, take a moment to think about the choice. The clear implication is that in some way, “fixing” (a non-scientific term) the economy and fixing the environment are mutually exclusive — that if we do one, we can’t do the other, at least not at the same time.

It is one of the most pressing questions of our time: what is the relationship between financial and environmental meltdown? Are the two crises the same thing, needing to be dealt with together?

Or do we, as even some business leaders suggest, have to “fix the environment” (another non-scientific term) before we can fix the economy?

Unfortunately, especially in a science magazine, the author never is specific about what “fixing” really means, so determining precedence is a foggy enterprise at best.

You might expect a strong “yes” from the greens to fixing the environment ahead of the economy. Long-time Greenpeace activist Amy Larkin (says) the high costs of coping with extreme weather, pollution and declining resources are, she says, catching up with capitalism.

“Coping with” is not exactly “fixing.” We can “cope with” extreme weather and pollution by staying indoors, and we can “cope with” declining resources by finding more resources — but is that what the greens really want?

Our carefree attitude to the “externalities” of wealth generation has generated an environmental debt that is loading unsustainable financial debt on us all.

Ah, “unsustainable financial debt.” Is that what needs fixing? Is there really any such thing as “unsustainable financial debt”?

For you, yes. For me, yes. For Chicago, for California, for Greece — yes, yes and yes. All are monetarily non-sovereign, so can run short of money.

But for the U.S. government, no. Being Monetarily Sovereign, the U.S. government never can run short of dollars. It never can be unable to pay any size debt payable in dollars. “Unsustainable financial debt” does not apply to the U.S. government

As shortages of natural resources push up prices, a looming resource crunch is manifested in market meltdown.

Shortages of natural resources can push up prices. All that means is more money would be needed to buy these resources. But for Monetarily Sovereign nations, the supply of money is unlimited. So what’s the problem?

Well, there IS a problem, but it’s not a price problem. It’s the problem, very simply, of being short of natural resources.

Paul Donovan and Julie Hudson, economists for the Swiss bank UBS, argue that “there is a second credit crunch”, an environmental one.

By ransacking global resources and enfeebling ecosystems, the authors say, we are drawing down environmental credit as surely as reckless spending on a credit card draws down financial credit.

Investment strategist Jeremy Grantham warns in even starker terms of the escalating impacts of growing food and water scarcities, linked to climate change. “The days of abundant resources and falling prices are over, forever.”

Again, a false parallel is being made between limited resources, like food and water, and the unlimited resource of money.

Many economists argue that reckless consumption, driven by easy credit, helped fuel financial crisis. Environmentalists agree that the same consumer binge drove up environmental debt.

No one knows what “reckless” consumption is, other than it’s what the other person does. Similarly, no one knows what “easy” credit is. Right now, interest rates are near zero, which is pretty “easy.”

The financial crisis was caused by bank fraud, not “easy” credit, and it has been fueled by federal austerity.

The rising prices of diminishing resources such as metals, agricultural products, timber and fish were a constant theme in the run-up to the financial crisis.

Actually, overall inflation (“rising prices) was not particularly high during the years preceding the recession, and inflation did not precipitate the recession.

Now a growing number of business people believe that only by tackling environmental and resource issues head-on can they return to prosperity and growth.

Agreed, depending on what “tackling” means.

The Worldwatch Institute, a highly regarded environmental think tank, argues that we know how to generate renewable energy, feed 9 billion people, restore landscapes, stabilise climate and manage water, while taming corporations and improving social justice.

“There is no physical or technical impediment…”

Absolutely agreed.

Alan Weisman (author of Countdown: Our last, best hope for a future on Earth?) says that humans do have a sustainable future – provided there are many fewer of us. “Either we humanely bring our numbers down or nature’s going to hand out a pile of pink slips.”

Robert Malthus rises again.

Weisman is a little behind the curve here. The average woman in the world today has fewer than 2.5 children, half the figure of 40 years ago. We are most likely heading for peak population by mid-century.

That puts the onus where it belongs – on the overconsuming rich rather than overbreeding poor.

Disagree on both. The rich are not “overconsuming” (yet another non-scientific term) nor are the poor “overbreeding.”

Most authors argue that dealing with them will mean we have to “deleverage”, as economists say. In other words, reduce both financial and environmental debt.

“Financial debt” is another term for “money supply.” The author doesn’t realize it, but he is suggesting the solution to our economic problems is to reduce the money supply.

But for me, they all miss a fundamental difference between the crises. We can write off financial debt, directly through bankruptcies or indirectly through inflation.

But the natural environment is the planet on which we live. We can’t default on climate change, write off disappearing ecosystems, or inflate away eroded soils. There is no way we can shrug off environmental debt.

Well, he’s sort of, kind of right. Money is an artificial, nonphysical construct. We can make as much or as little as we wish. Instantly.

The U.S. government, being the creator of, and sovereign over, the dollar, could if it wished create more dollars than there are stars in the sky, and do it with the push of a computer button.

However, clean air, clean water, plants, food, housing and animal species are physical and real, and come in limited quantities. We cannot create unlimited amounts, instantly.

So getting back to the title question, “What do we fix first – the environment or the economy?” the answer is, we should stimulate the economy by repairing the environment.

For instance: Federal investment in “cleaning” water (sterilization and desalination) would employ people and add dollars to the economy, thereby stimulating the economy.

Federal investment in finding/developing less polluting energy sources (wind, water, solar, geothermal, maybe nuclear) also would employ people and stimulate the economy.

Federal investment in research and development to solve all our ecological problems, merely involves exchanging an unlimited resource (money) for limited ecological resources.

In short, the answer to the title question is: We can help fix the economy BY fixing the environment.

The enemy is not overpopulation. People are our most valuable resource. Nor is the enemy excessive consumption by the rich, although the rich are the basis for our problems.

The enemy is economic austerity, which has been fostered by the rich as a means to widen the income gap between the rich and the rest.

We already have everything we need — money, manpower, brains and science — to solve our environmental problems. We just need to dump the superstition of austerity.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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