The two points the American politicians (and much of the public) do not understand are:
- Monetary Sovereignty can prevent and solve any financial ill, any recession, any depression, any inflation, any shortage, almost any national need.
- Donald Trump, by intent or ignorance, is destroying our American way of life and attempting to install a dictatorship.
An excellent article by Noah Millman describes both points.
As today’s post will provide only excerpts, I urge you also to click the link and to read his article in its entirety.
America is coming apart. Europe is coming together.
Noah Millman, July 25, 2020
Why do some societies, like some couples, fall apart under pressure, while others band together?
If a crisis brings them together, will that make them stronger in the future?
And if they come apart, is that a sign that they should never have been together in the first place?
This week’s exemplar for “banding together” is the European Union (EU), whose leaders agreed to extraordinary new measures to promote a broad economic recovery in the wake of the novel coronavirus.
The agreement represents an about-face from the stance the EU took in the wake of the financial crisis of the last decade, which emphasized austerity rather than stimulus.
More importantly it broke two key structural taboos: the European Commission will, for the first time, be authorized to borrow significant sums of money; and a large portion of that sum will be disbursed to member governments in the form of grants.
The EU bears a cursory similarity to the United States of America. Both groups are composed of individual state governments.
Both the U.S. and the EU themselves are Monetarily Sovereign. They each own sovereign currencies, which they have the unlimited power to create.
The U.S. cannot run short of dollars; the EU cannot run short of euros.
For the EU, most of those governments are monetarily non-sovereign, meaning they don’t have their own sovereign currency. For the U.S., all the constituent state governments are monetarily non-sovereign.
You and I also are monetarily non-sovereign entities. So are counties, cities, and businesses. None of us owns a sovereign currency.
To survive long-term we monetarily non-sovereign entities must have a net inflow of money.
Even “break-even,” i.e. a balanced budget, is not sufficient because, with even the most modest amount of inflation, a balanced budget would cause us monetarily sovereign entities to lose real wealth.
For the monetarily non-sovereign states of the U.S. and the EU, this net inflow must come from net exports or grants from their Monetarily Sovereign U.S. or EU governments.
But within any group, it is mathematically impossible for all members to be net exporters, and it is unlikely they all will be net exporters to the rest of the world.
So there are periods when the states of the U.S. and the states of the EU run short of money.
Typically then, these states must borrow money, and when borrowing has reached its limit, they must levy increased taxes on their citizens.
But, because the citizens are monetarily non-sovereign, they too can run short of money. Increased taxes impoverish the citizens, who subsequently are unable to pay further taxes.
This is known as “austerity,” which always leads to an endless, downward helix of impoverishment, which only can be solved when the Monetarily Sovereign U.S. or EU creates new money and distributes it as grants, not loans, to the needy states.
The U.S. federal government impoverishes its states by unnecessarily taxing the states’ citizens — “unnecessarily” because the U.S. government, having the unlimited ability to create dollars, has no need for taxes.
And indeed, all your tax dollars are destroyed upon receipt.
It is federal deficit spending that enriches the populace, grows the economy, and makes state, county, and city survival possible.
Contrary to popular wisdom, it is the insufficiency of federal deficit spending that invariably leads to recessions and depressions.
Sadly, many state citizens pay more money to the federal government than their state receives from the federal government, which causes an erosion of those states’ finances.
(See: “Eleven states pay more in federal taxes than they get back”)
Over time, these states must receive money from the federal government or they will become insolvent, and be unable to service their debts.
This bit of simple arithmetic is not well understood in America.
The U.S. federal government levies taxes it neither needs nor even uses.
Indebted states struggle to provide basic benefits to their citizens.
A similar situation exists in the EU.
Of the 28 EU states, 12 do not have a positive balance of payments vs. the EU.
But of those 12, three are Monetarily Sovereign — UK, Sweden, and Denmark.
Those three cannot run short of their own sovereign currencies, and so long as those currencies have widespread acceptance, those countries always will be able to pay their bills.
The others have been, and it was feared always would be, struggling to stay afloat financially.
But Mr. Millman’s phrase, ” . . . a large portion of that sum will be disbursed to member governments in the form of grants.” seems to indicate that the EU just possibly may finally have discovered its own Monetary Sovereignty.
If so, the heretofore lagging EU will rocket ahead of the U.S. in growth and prosperity for its members and its people.
One hopes that the U.S. federal government’s current, proven ability to create trillions of stimulus dollars, with none of the bad effects predicted by deficit and debt critics, may awaken the realization that yes, the U.S. federal government is Monetarily Sovereign, and so has the unlimited power to support the states and the residents of America.
Which brings me to the union that seems to be coming apart: (America).
The primary characteristic of the American response to the coronavirus has been the lack of any national policy to speak of.
Individual states have been responsible for setting up their own testing infrastructure and contact-tracing apparatus, setting their own policies with regard to non-pharmaceutical interventions from lockdowns to mandatory masking, and even placed in competition with one another for personal protective equipment.
The federal government (has been) derelict in either building essential common infrastructure or promoting an agreed upon set of best practices.
It (has refused) to provide necessary funding to facilitate the opening of schools, and then threatening districts that don’t open with financial ruin.
President Trump has evinced a complete lack of interest in achieving meaningful collective goals, even those he ostensibly favors (like building a wall with Mexico).
Trump is interested in using power for pure assertion of prerogative, as he has demonstrated through his abuse of the pardon power and, most recently, by sending federal agents to Portland in response to ongoing protests and damage to federal property.
The purpose of his intervention is precisely to create the very chaos that he claims to want to quell, on the theory that public disorder ultimately helps the candidate promising a strong hand.
But it is also intended to demonstrate a willingness to use force against those who, in the view of his core supporters, deserve such treatment.
We frequently have noted Trump’s dictatorial, even Hitlerian bent ( here, and here, and here) which, along with his proven psychopathy, has been an ever-growing disaster for America.
Rather than merely protecting federal property, Trump’s storm troopers are dragging innocent protestors, even onlookers, off the streets, in clear violation of the Constitution’s guarantees of “the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”
In the eyes of Trump, Trump’s supporters, and all dictators throughout history, merely assembling and petitioning the government for a redress of grievances are adequate reasons for harsh retaliatory measures.
The consequences to national cohesion of this approach to federal governance — neglect coupled with brutality — are likely to be felt long after this administration has ended.
A progressive prosecutor in Pennsylvania is already on record as saying he will order the arrest of federal agents if they break the law in his jurisdiction, as they did in Oregon.
Even if he never has to make good on that threat, a line has been drawn, and the prospect of direct confrontation between state and federal authorities in some future contingency is real.
Meanwhile, states (such as in the northeast) that banded together to combat the coronavirus, and that are now requiring visitors from the rest of the country to quarantine upon entry, will undoubtedly find new ways to work together without waiting for the federal government.
The nation has not been so divided since the civil war, and it is no coincidence that one of the innumerable points of contention involves rebel flags and names.
One part of the nation still considers those who fought against America to be heroes, and rather than feeling freed of the onerous yoke of slavery, they feel subjugated and resentful for having lost their freedom– their freedom to enslave.
For his own purposes, Trump has picked at this lingering wound and made if fester more than it has in over 15 decades.
Rather than “Make America Great, Again,” Trump has Made America Hate, Again.”
Trump has finally united the center of the country against him, and a decisive repudiation will restore Americans’ faith in the possibility of collective action.
The first part may prove true in November, but I wonder about the second, and not only because I remember how quickly the overwhelming Democratic majority of a dozen years ago curdled into endless partisan trench warfare.
We discussed the Democrats’ propensity for “endless partisan trench warfare” in “The left’s suicidal insistence on purity” and “The left’s suicidal insistence on purity II“
Perhaps it behooves all of us who are appalled by the Trump years, and by what has happened to the party he purports to lead, to devote at least some of our energy to thinking outside the box.
How much do we actually want our states and cities to depend on the federal government, versus how much freedom do we want to chart our own course?
Do we want the battle against climate change to depend on which party controls the EPA — or do we want California to be able to use its economic clout to muscle the rest of the country along?
The rest of Mr. Millman’s article is devoted to his “outside the box” suggestion that we should consider the various states seceding from the union, just to scare people into thinking seriously about coming together.
But, our current divisions are not simply geographical. Trump also has made our nation’s divisions moral, theological, ethical, and national.
Good heavens, he even has divided us about something so obvious and basic as wearing masks to protect each other. How can there even be an argument about that?
Yet, there it is, another Trump division.
Thinking outside the box, seems to me, to begin with an acknowledgement of:
- The benefits of Monetary Sovereignty, and the federal government’s unlimited ability to give virtually everyone virtually everything they want.
- The dangers inherent in Gap Psychology, the desire to advance by making others fall behind.
Life is not a zero-sum game.
If the evil Trump has wrought doesn’t scare Americans sufficiently, then nothing will, and there is no hope for our future as one nation. We forever will be divided and weak.
It will be the end of the American experiment.
Rodger Malcolm Mitchell
Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..
THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.
The most important problems in economics involve:
- Monetary Sovereignty describes money creation and destruction.
- Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”
Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics. Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:
Ten Steps To Prosperity:
2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone
3. Social Security for all or a reverse income tax
4. Free education (including post-grad) for everyone
5. Salary for attending school
6. Eliminate federal taxes on business
7. Increase the standard income tax deduction, annually.
8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.
9. Federal ownership of all banks
10.Increase federal spending on the myriad initiatives that benefit America’s 99.9%
The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.