–Obama’s phony food fight — and we are the food.

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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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

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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

Quantitative Easing (QE) for Dummies. Really.

Twitter: @rodgermitchell; Search #monetarysovereignty
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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:

Monetary sovereignty

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.
monetary sovereignty

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

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

–You destroyed the world and paid a 10 cent fine. You are a big bank.

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

Thank you for your leadership, Mr. President

September 19, 2013 2:01 pm
JPMorgan hit with $920m in fines over ‘whale’ trade
By Tom Braithwaite and Kara Scannell in New York and Daniel Schäfer in London

US and UK authorities hit JPMorgan Chase with $920m in fines on Thursday for wrongdoing related to the “London whale” trading losses.

Wow! $920 million sure sounds like a lot of money

Jamie Dimon, chief executive, initially referred to the position as a “tempest in a teapot” in an April 2012 earnings call before revealing large losses.

In the same call, Doug Braunstein, then chief financial officer, said the positions in question were “fully transparent to the regulators [who] … get information on those positions on a regular and recurring basis as part of our normalised reporting”.

But an investigation by a powerful US Senate committee found that the Office of Comptroller of the Currency, the bank’s primary regulator, was not aware of the specific positions.

John McCain, the committee’s leading Republican, accused bank executives of “deception”.

Wow, again. The top management was derelict in its duty and lied to Congress. I wonder who’s going to jail.

But Mr Dimon and his top lieutenants, avoided specific criticism in the four regulatory actions.

Not only are Dimon and his top honchos not going to jail, they are not even prosecuted. In fact, they aren’t even criticized.

So is anyone going to jail for one of the biggest crimes in history?

Last month, when prosecutors charged two former London-based traders with hiding hundreds of millions of dollars in losses, US attorney Preet Bharara said the criminal investigation was continuing.

President Obama, having been bribed (via campaign contributions and promises of lucrative employment later) by the big banks, has decided that fishing for minnows is sufficient punishment for the big banks.

Daily Beast
Goldman & JP Are Still Tops—But Dimon Takes a Pay Cut

Earnings reports show that the two big banks did great this year, even if JPMorgan CEO Jamie Dimon had to cut his pay in half to $11.5 million.

Oooh, the pain, the punishment. He’s down to $11.5 million, not counting the huge perks of his office. (All those with a free private plane, chauffeur-driven car and generous stock options, please raise your hands.)

At least JP Morgan paid that big $920 million fine.

JPMorgan reported that it took in $99.9 billion in revenue and $21.3 billion in net income in 2012. In total JPMorgan’s 2012 revenue was 12 percent higher than the year before.

The “big” fine was less than 1% of revenue — a rounding error — and less than 5% of profits. Clearly, those rich bankers and Congress have learned their lessons, and things like this never will happen again.

Big Bank Lobbyists Help Write Bank Regulation Bills for Congress
Tuesday, May 28, 2013

Lobbyists from Wall Street’s biggest banks are dominating the writing of new legislation to weaken the Dodd-Frank financial reform law passed in 2010 to correct some of the abuses that led to the Crash of 2008 and the Great Recession.

The banks are paying for the privilege, donating more than $1.3 million to key members of Congress (70% of it to Republicans) in the first quarter of 2013, according to the Center for Responsive Politics.

Dodd-Frank was weak to begin with, and didn’t come close to solving the problems that caused the Great Recession. But the banksters want to weaken it even more!

Not only are the politicians whores, but they are cheap whores, charging a lousy $1.3 million to save the banks many billions. Jamie Dimon could have paid the whole thing out of his one month’s salary, not counting airplane. (Actually, his airplane costs alone could have paid for the bribes.)

This is what passes for governance in post- “Citizens United” America.

Thank you for your leadership Mr. President. When you leave office, enjoy your big Obama Library and your lucrative speaking gigs, while the rest of us starve.

Rodger Malcolm Mitchell
Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

–The constitutional solution to gun violence, that scares the hell out of the NRA

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

Is America Crazy?
September 18th, 2013, Leonard Pitts Jr.

Is America crazy?

Twelve people killed at a secure naval installation virtually on the front porch of the federal government, eight others hurt, the shooter shot to death, and it’s just another manic Monday, another day in the life of a nation under the gun.

Every gun murder, every mass gun murder, every mass gun murder even of children — in fact, every gun murder of every kind, provides the gun lobby and gun loonies, in their twisted logic, with a rationale for more guns and fewer gun restrictions.

It’s as though someone were to claim that the solution to the bankster crimes which destroyed our economy, is to reduce bank regulation so more crooks could run banks. It’s the same level of sanity. (Yikes, that’s exactly what some politicians do argue. Oh, well.)

And we will have the argument we always have about a Constitutional amendment written in an era when muskets were state of the art and citizen militias guarded the frontier.

Yes, there’s that Constitutional amendment, which begins, “A well regulated militia being necessary to the security of a free state . . . ,” but we ignore that “militia” stuff.

It’s been argued. Sanity and clear English have lost. So what next?

Will providing every man, woman and child in America with semi-automatic, large clip, military style weapons, really reduce gun violence?

Wayne LaPierre of the NRA probably says, “Yes.” Do you agree?

Most sensible restrictions on gun ownership have been declared unconstitutional, so what is the honest solution to America’s high gun violence rate?

The solution is here. It’s 100% constitutional. And if LaPierre has read it, he has wet his pants:

Make each manufacturer, seller or provider of a gun liable for the use of that gun.

That’s it. Simple, legal, effective. But before you jump in with objections, please read the full post.

Then send it to your Congressperson and more importantly, your local politicians (It probably would be a local law).

And do send it to LaPierre along with a diaper. He’ll need it.

Rodger Malcolm Mitchell
Monetary Sovereignty

As the lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

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