Tag: MMT

–Senator Kirk, a member of the Tea (formerly “Republican”) Party, displays massive ignorance.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Several days ago, I wrote to my Senator Mark Kirk, telling him the federal deficit and debt are not too high, and that a Monetarily Sovereign nation needs to run deficits in order to grow. This is the incredible response I received:

Dear Mr. Mitchell:

Thank you for contacting me regarding cutting spending and funding the federal government for the remainder of the year. I am greatly concerned about our national debt and believe that Congress needs to change course from spending money that we do not have. We will need shared sacrifice across government as we work to balance the budget and pay down debt.

So neither he nor his minions even bother to read letters. I didn’t contact him regarding “cutting spending and funding,” but rather not cutting spending and funding. And as far as “money we don’t have,” the federal government is Monetarily Sovereign. It has the ability to create unlimited money. Relative to Monetary Sovereignty, “money we don’t have” is nonsensical.

In recent years, our country has witnessed massive spending increases and budget deficits. This has led to an unprecedented amount of borrowing by the federal government. Since 2008, the national debt has increased by more than $4 trillion and currently stands at $14.2 trillion. We are borrowing $4 billion every day and this year we will pay $225 billion in interest on our debt.

If he understood Monetary Sovereignty, he would know federal borrowing is not like personal borrowing. The federal government doesn’t even need to borrow, and could pay off all its debts, tomorrow.

It is in this environment that Congress continues to consider funding for the federal government for the remainder of the year. To put our nation on a path of fiscal responsibility, Republicans and Democrats need to work together to pass a budget that includes serious anti-spending reforms that would make any future additions to our debt increasingly impossible.

In short, to assure a depression.

I have proposed 15 anti-spending reforms, which include a cap on spending, presidential line-item veto, federal hiring and pay freeze and permanent end to earmarks. I am also an original cosponsor of a Balanced Budget Amendment to the United States Constitution that would require Congress to pass balanced budgets and prohibit deficit spending or tax increases. Additionally, I have voluntarily reduced my Senate office budget by 15% to show that even Congress isn’t exempt from cutting back and living within its means.

Mathematically, a balanced budget assures a depression. See: Balanced Budget Idiocy

To ensure that future generations aren’t burdened with debt, we will need shared sacrifice across government and no one program should be singled out. Rest assured, I will continue to keep your thoughts in mind as I work to balance the budget and pay down debt.

Future generations will not pay federal debt. Taxpayers don’t pay for any federal spending. The federal government could eliminate all debt tomorrow, simply by crediting the bank account of T-security holders. The press of a computer button should do it.

Again, thank you for taking the time to contact me. To stay informed on important issues, I encourage you to visit my website at http://kirk.senate.gov and my Facebook page at http://www.facebook.com/SenatorKirk.

Yes, visit his site, and tell him how wrong he is. He really is frightening. He has no understanding of economics, yet proposes and votes on economics laws that will affect us all. Repeatedly, I have offered to teach him, but he isn’t interested. It’s Congressional hubris. I’m sorry to say I voted for this guy, but I won’t make that mistake again.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

MONETARY SOVEREIGNTY

–How to fix Medicaid, plus an idea for universal health care.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Here are excerpts from an article titled, “Medicaid bills settled in a hurry before aid ends,” by Dennis Cauchon, USA TODAY:

State governments are rushing to pay billions of dollars of medical bills before special federal assistance for Medicaid expires July 1.

The “hurry-up-and-pay” effort will put an extra $1 billion or more into the pockets of financially struggling states — and increase the federal deficit by a similar amount.
[…]
The federal stimulus law and a later extension provided states an extra $80 billion in 2009 and 2010 for Medicaid, the nation’s health care program for the lpoor. This was done by reducing the states’ share of the program from a national average of 40% to 28%.
[…]
Because states run the $400 billion a year program — while the federal government reimburses them — states can time payments to maximize the federal share.

Two thoughts: First, why doesn’t our Monetarily Sovereign federal government pay for 100% of Medicaid, instead of asking our monetarily non-sovereign states to pay? Can anyone answer that?

Second, wouldn’t the idea of having states run Medicare as a universal health care program, with the federal government funding it, satisfy the “anti-big-government” people? I know it won’t satisfy the debt-hawk contingent of the Tea (formerly known as “Republican”) party. Nothing short of a depression will satisfy them. But at least federal funding combined with state operation, should remove the fear of big government and so-called “socialism” from universal health care. Then no American would need to do without health care.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

MONETARY SOVEREIGNTY

–The G7’s backwards thinking about the Japanese yen. Save Japan from its friends.

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Once again, the mainstream economists have things backwards. I recently came across this article:

Is G7 yen intervention a good idea? by MICHAEL SCHUMAN, 3/18/2011
In a highly unusual step, the G7 agreed on Friday morning to coordinate their efforts to control the sharp rise in the Japanese yen. The decision today was prompted by a sudden surge of strength by the yen that by Thursday morning (in Tokyo) had pushed the Japanese currency to a record high against the U.S. dollar. Though the yen had subsequently pulled back a bit, it was still at a level worrying to Japanese policymakers. Japan freaks out when the yen strengthens, because it makes Japanese exports more expensive in international markets and thus can dampen economic growth.

Last week, I posted about why charitable contributions to Japan were meaningless. Now, the economists want to facilitate Japanese exports. Before you read any further, stop and think about this question: What is the purpose of Japanese exporting? The answer is not what you may have been told.

The purpose of Japanese exporting is to import yen. Japan doesn’t want to expend massive amounts of time, energy, labor an raw materials just so they can supply us with cars, computers and television sets. The Japanese are a nice people, but they’re not that generous. No, the sole purpose of expending time, energy, labor and raw materials is to acquire yen.

But, Japan is Monetarily Sovereign. It has the unlimited ability to create its sovereign currency, the yen. Even were Japan’s exports to fall to zero, the Japanese government could create sufficient yen to support its economic growth. Japan has no need to import yen (i.e. export goods and services).

The G7 (soon to be overtaken by the E7, but that’s another story) is using an obsolete gold-standard philosophy in a post-gold-standard world. Today, Monetarily Sovereign nations do not need to import their sovereign currencies. Stimulating Japan’s yen imports is like stimulating rain over the ocean.

And in any event, Japan soon will create and spend trillions of yen to rebuild its nation. That massive influx of yen will weaken the yen, and the G7 can breathe a sigh of relief. It also will engage in an orgy of back patting, for accomplishing something not only unnecessary, but something that would have happened naturally.

But what can you expect from a group that still has no concept of Monetary Sovereignty, perhaps partly because three of the “7” (France, Germany, Italy) were foolish enough to surrender their own Monetary Sovereignty.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

MONETARY SOVEREIGNTY

–Interview with Abby Romaine on WNZF. Is she the smartest lady on the air?

The debt hawks are to economics as the creationists are to biology. Those, who do not understand Monetary Sovereignty, do not understand economics. If you understand the following, simple statement, you are ahead of most economists, politicians and media writers in America: Our government, being Monetarily Sovereign, has the unlimited ability to create the dollars to pay its bills.
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Today, Abby Romaine again interviewed me on her WNZF show, Center: Uncensored. From what I can tell, Abby is the only radio broadcaster in existence who understands Monetary Sovereignty. This is particularly frightening, as Monetary Sovereignty is the basis for all modern economics.

The two things I puzzle about: How did she come to understand, and why is she the only one? Yes, there are MMT economists who get it, but if anyone out there knows of another media person, whether radio, TV or newspaper, who understands Monetary Sovereignty I sure would like to know his/her name. The editors of the WSJ and the Chicago Tribune don’t get it. No newsperson gets it. No columnist gets it. But Abby does.

Those interested in writing to this brilliant lady can reach her at: abby.romaine@gmail.com

Anyway, today she and I discussed Ron Paul, perhaps the nation’s leading architect of economic ignorance, and the Tea Party (formerly known and the Republican Party) and John (“America is broke”) Boehner, and the deficit and the debt.

I enjoy talking with Abby, because I like talking with smart people, but I probably mouthed off too much (Old people do that). My only concern is that Abby gets it. She understands that a growing economy requires a growing money supply, and federal deficits are the federal government’s method for growing the economy. She understands that federal debt could be eliminated tomorrow, simply by crediting the bank accounts of T-security holders. She understands that federal debt is not the accumulation of federal deficits, but rather that debt could exist without deficits and vice versa. And she understand that a nation with the unlimited power to create money never can be “broke.”

Why am I concerned? Because not being a radio guy, I don’t know if listeners would rather hear two people argue, and she and I don’t argue. She does play excerpts from Tea Party speeches, and perhaps that provides enough counterpoint. But Ron Paul? This guy is so ridiculous, even staunch conservatives find him an embarrassment. Maybe she should play some excerpts from an Obama speech. He at least sounds more rational, though he too is ignorant about our economy.

By the way, I thought Obama, coming from the rough ‘n’ tumble of Chicago politics would be endowed with major testosterone. But, he seems to be wimping out. The Tea (Republican) Party has a plan: Cut federal spending, which will slow the economy. Obama and the Democrats will be blamed for the poor economic performance, and in 2012, the Teas will be able to foist their own guy or gal on the American public, which by the way is exactly how the Teas won the House last year.

Never mind that executing this plan will hurt America. That isn’t a Tea concern. Cynically, they are interested solely in power. Paraphrasing my question of Abby: “What do you call American citizens who knowingly hurt America?” Then I answered my own question: “I’d call them traitors.” The irony is, the Teas love to wrap themselves in the America flag.

Second thought: That’s not irony; it’s marketing. Address the negative head-on, and turn it into a positive. Remember when cigarette advertising featured doctors telling us how healthful smoking is? Or Volkswagon bragging about how ugly the Beetle was? The Teas make a virtue out of cutting the benefits Americans enjoy.

Anyway, Obama has allowed the Teas to define the discussion. He doesn’t argue, as he should, that cutting federal spending is the dopiest idea since taxing Social Security benefits. Instead, he forlornly whines that yes, the deficit is too big, and we should cut it — only please cut it less. Just when we need leadership, we get groveling. As a Chicagoan, I’m embarrassed. Mayor Daley never groveled. He lied (They all do), but he never groveled.

If Daley were president, I suspect he’d look the reporters in the eye and say, “To cut federal spending is just, plain stupid.” And he’d be right.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity, nor grow without money growth.

MONETARY SOVEREIGNTY