–Wake up, America! You are being led to a Greek tragedy by fools

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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The President of the United States, 100% of Congress and virtually all of the media and old-line economists believe the federal deficit is too high. The Tea Party wants reduced federal spending to “get the government off our backs.” America is close to unanimous in the belief that increased deficits are unaffordable and will put us in the same position as Greece.

As you readers know, America is Monetarily Sovereign, while Greece is monetarily non-sovereign. Not to understand the difference between the two is like not understanding the difference between up and down, black and white, rich and poor. Yet none of the abovementioned President, Congress, media, economists or Tea Party understand this fundamental difference, much less care enough to learn. They are stupid with intent.

On June 5, 2005, I gave a talk at the University of Missouri, Kansas City, in which I said, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.”

Today, Greece, is forced to restrict its deficits, aka adopt “austerity.” Greece has no choice. Being monetarily non-sovereign, it cannot create the euros it needs for economic growth, or even to pay past bills. By contrast, the Monetarily Sovereign U.S. does have a choice. We do have the unlimited ability to create our sovereign currency, the dollar. We do have the unlimited ability to pay any bills of any size. We never can go bankrupt.

But those who are ignorant of Monetary Sovereignty tell us we must “live within our means”, a nonsensical, blatantly ignorant statement, when discussing a Monetarily Sovereign nation. They tell us so-called “printing money” will cause inflation, and they give the hoary, old, inappropriate example of the Weimar Republic, a situation which bore zero resemblance to the U.S. Comparing the U.S. to the Weimar Republic would be as foolish as saying don’t drive your car because the Titanic hit an iceberg.

Since the U.S. became Monetarily Sovereign on August 15, 1971, there has been no relationship between federal deficit spending and inflation. See: “Federal deficit spending doesn’t cause inflation; oil does.” The facts are there, but facts seem not to matter to our “thought” (if you can call it that) leaders.

Which brings me to the subject of this post. Because our “thought” leaders want us to adopt a Greek-style austerity, I’d like you to see what happens when citizens are ruled by fools who demand deficit reductions..

Thank you to the outstanding Naked Capitalism blog, for bringing to the world’s attention, a letter written by the sister of Dimitri Lascaris, a lawyer with family in Greece. The post is titled: “Austerity Policy Destroying Greek Society”

Here are excerpts from that letter:

Dimitri…the decline in our income and therefore in many facets of our lives began in the fall of 2009. In our family carpentry business, we began to go without work intermittently, but for longer and longer stretches as time progressed. Customers who owed us large amounts of money couldn’t pay even 5% of the balance owing on their account.

Our customers of course gave priority to the payment of bank loans, or worse, they gave priority to the payment of credit card debts they had incurred in order to secure the basic necessities…rent, water, electricity, health insurance and food. Cash has became more and more scarce for our customers, and therefore for us.

In a very competitive job market, Greek parents sought to equip their children to secure a job as a civil servant. For that purpose, Greek parents commonly employed ‘frontistiria’ (or supplementary education through tutoring) as early as the onset of elementary school. The need to eliminate the financial burden of tutors was one of the first signs that people were struggling to survive.

All you see is a succession of empty storefronts with rent signs and often a deluge of unopened mail just inside the door. The few businesses that have managed to stay open have gigantic banners proclaiming 50-70% reductions.

Walking through what used to be crowded and bustling markets now feel like a Sunday stroll through deserted urban centers. Going to take care of business at The National Bank of Greece was once an all-day affair…most often now, you can zip in and out in less than 5 minutes.

On the other hand, the line-ups to make payments at the Greek electrical company have become longer and longer. There you find very volatile crowds of people fighting with employees to defer payments through payment plans, or to have their electricity reconnected after having had it cut off as a result of the “haratsi,” which is a government property tax incorporated into the electrical bill, often quoted by legal experts as one of the many unconstitutional acts this government has committed.

What right does the electrical company have to assume the role of a tax collector, and to deprive us of electricity when we become unable to pay the arbitrary taxes issued at the drop of a hat to generate more money for the EU and IMF?

Suicides, drug abuse, prostitution and crime have infiltrated village life. In our village, which has slightly more than 1000 inhabitants, I was a victim of theft by a drug addict just outside my front door. I have been to the funerals of two friends who were murdered here in the village by their assailants when they were unable to produce money on demand.

We, as well as many people we know, are experiencing a strained home environment as a result of financial difficulties. Now we call our customers to beg them on a regular basis to pay something, anything, toward the debts they owe us, because food or heat in the dead of winter has become an issue for us. We now rely on help from family members. People we know go to retirees in their families to ask for contributions from their meager pensions.

We are all now at the mercy of anyone with money at hand to help our family survive. At almost 52, when your stamina and endurance have started to wither away, life feels like a chore. However, children have a way of making you ‘plug’ back into life, even if it’s only to focus on just one more day.

This Greek tragedy is not caused by Greece being profligate. It is caused by Greece’s leaders having voluntarily surrendered the single most valuable asset Greece had — financially more valuable than all that nation’s land, more valuable than all that nation’s buildings, bridges, rivers, lakes and dams, financially more valuable even than that nation’s population — its Monetary Sovereignty, the ability to create their sovereign currency.

Thus, Greece is trapped into austerity. The people running America want us act like Greece, i.e. to act as though we are monetarily non-sovereign by reducing our deficits, and in acting like Greece we will become Greece.

Wake up, America. Read the above letter again. This is the fate our leaders will create for us and for our children. We will be at the mercy of the 1%.

And we can’t say we weren’t warned.

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

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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:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–U.S. Congress and the President find a way to allow boats to sail as far as they wish without falling over the edge of the world. Boats to be built out of thinner, flimsier wood.

U.S. Congress and the President have found a solution, allowing boats to sail as far as they wish, without falling over the edge of the world. Boats will be built out of thinner, flimsier wood, causing them to sink before they get to the edge.

Washington Post: Congressional negotiators reach tentative deal on payroll tax, unemployment benefits
By Paul Kane and David Nakamura, Published: February 14

Congressional negotiators reached a tentative deal Tuesday to extend a payroll tax holiday, unemployment benefits and Medicare payment rates for doctors, while finding more than $50 billion in cuts to reduce the effect on the federal deficit.

While President Obama and congressional leaders publicly jousted over the negotiations, senior Democrats and Republicans worked behind the scenes toward a compromise that would extend the tax and unemployment benefits through the year. A deal also would mean that doctors would not see a drop in rates paid by Medicare, according to senior aides in both parties.

Despite evidence lacking either for an edge to the world, or for the desirability of reducing deficits, Congress and the President are proud of their work.

Citizens cheer.

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

#MONETARY SOVEREIGNTY

–Who are the people who vote Republican these days? Why do they hate so much?

I, who used to vote mostly Republican, because I believed the conservatives had a better handle on business and economics, now find myself disagreeing with the conservative movement on almost every major issue:

Treatment of gays: I favor allowing gays to marry (who does it hurt?) and do not feel being gay is an “abomination” or whatever other insults the pious right throws at it. Love is better than hate.

Treatment of immigrants: I favor making U.S. citizenship much easier. I would do a background check for criminality, then let them in. It costs us far more trying to keep them out. (Hello, Arizona) We all are immigrants, and it was much easier back then. Current laws are exclusionary for no reason.

Birth control: I favor abortion rights in the first trimester, and yes, let’s do stem cell research rather than protecting microscopic cells doomed to die, anyway. Or, we can let girls have babies they can’t care for, thereby guaranteeing yet another generation of poverty and crime.

Religion in public venues: Any step toward theocracy, even a tiny step, is a move toward disaster. If you want to pray, close your eyes and pray. God will hear you. Don’t force me to listen to you.

Attitudes about aid to the poor. Recent sneering about “food stamp President” is symptomatic of distaste for people less fortunate. No, the poor are not lazy bums. They are you, but for the grace of God.

Gun control: No more BS. Guns account for most of the murders in America. The 2nd Amendment begins, “A well regulated Militia, being necessary to the security of a free State . . .” I see the guns and the killing, but where is the well regulated Militia to control those guns? The pious right resists any sort of regulation.

Payroll tax cut: FICA should be eliminated, forever. It has no purpose in a Monetarily Sovereign nation. Although most taxes are bad, this may be single worst tax of all. Why is the pious right so resistant to cutting it?

Unemployment insurance: Extend it. What’s the alternative? Let the people starve? Either give them money or give them jobs, but don’t let them die – or riot.

Social Security, Medicare, Medicaid: Why do we talk about limiting them? They are the crown jewels of a modern society. Our Monetarily Sovereign government can afford to pay for these services and the people can’t. I favor free Medicare for every U.S. resident (not just citizen) and untaxed Social Security.

The wealth gap: Cut social services and don’t tax the wealthy? Really? Well, I do agree with not taxing the wealthy – or the un-wealthy, for that matter — but we should expand social services.

Campaign contribution limits: That right wing Supreme Court is simply nuts about the rich. Simply nuts.

Preemptive war: Previous wars belonged to the Democrats, but more recently the Republicans have taken over. George Bush was a lying fool, who cost thousands of Americans their lives and limbs, all in the name of right wing “patriotism” (and to show his father something). What is there about the right that they keep waving the flag?

The environment: We need it; our kids need it. I favor strict pollution controls along with federal aid to affected industries and more federal support for energy research.

I was a conservative, but if all of the above makes me a liberal, so be it. Come to think of it, every great social initiative was passed by liberals. The conservatives have, of late, become the party of hate. Who are these people who vote Republican these days? Why are they so filled with venom?

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

#MONETARY SOVEREIGNTY

–The EU’s solution for Greece — translated.

In case you want to know what the EU and Greek leaders really mean, here are translations:

Greek Parliament Passes Austerity Plan After Riots Rage
John Kolesidis/Reuters

ATHENS — After violent protests left dozens of buildings aflame in Athens, the Greek Parliament voted early on Monday to approve a package of harsh austerity measures demanded by the country’s foreign lenders in exchange for new loans to keep Greece from defaulting on its debt.

Though it came after days of intense debate and the resignation of several ministers in protest, in the end the vote on the austerity measures was not close: 199 in favor and 74 opposed, with 27 abstentions or blank ballots. The Parliament also gave the government the authority to sign a new loan agreement with the foreign lenders and approve a broader arrangement to reduce the amount Greece must repay to its bondholders.

The new austerity measures include, among others, a 22 percent cut in the benchmark minimum wage and 150,000 government layoffs by 2015 — a bitter prospect in a country ravaged by five years of recession and with unemployment at 21 percent and rising.

TRANSLATION: Greece’s leaders sold out their own citizens, and doomed them to abject poverty, just to protect banks, foreign lenders and other members of the 1%.

But the chaos on the streets of Athens, where more than 80,000 people turned out to protest on Sunday, and in other cities across Greece reflected a growing dread — certainly among Greeks, but also among economists and perhaps even European officials — that the sharp belt-tightening and the bailout money it brings will still not be enough to keep the country from going over a precipice.

TRANSLATION: Greece is monetarily non-sovereign. So renegotiating loans and cutting deficits will do zero, zip, zilch to prevent bankruptcy. It only will make people suffer until Greece’s leaders finally admit that returning to the Monetary Sovereignty of the drachma is the only sensible course. But who cares?

Angry protesters in the capital threw rocks at the police, who fired back with tear gas. After nightfall, demonstrators threw Molotov cocktails, setting fire to more than 40 buildings, including a historic theater in downtown Athens, the worst damage in the city since May 2010, when three people were killed when protesters firebombed a bank. There were clashes in Salonika in the north, Patra in the west, Volos in central Greece, and on the islands of Crete and Corfu.

TRANSLATION: You always can rely on the police and military to hammer their friends and neighbors. Soon the police will fire bullets, but don’t worry. No one will be prosecuted. And as the intro at the top of this post says, “Austerity = poverty and leads to civil disorder.” Anyway, why are those people so angry at having their lives ruined?

Greece’s limping economy yields large trade and budget deficits, and none but the European Central Bank, the European Commission and the International Monetary Fund — known collectively as the troika — are willing to lend the nation the money it needs to stay afloat.

TRANSLATION: Greece is hopelessly in debt, so lending them more money would be stupid, non-productive and damaging. That’s why lending is being considered.

The troika is demanding more concessions to placate Germany and other northern European countries, where the bailout of Greece is a hard sell to voters.

TRANSLATION: Greece is down and just about out, so now is the time to kick them. Germany hasn’t changed much from WWII.

In the debate on Sunday night before the vote, Mr. Papademos appealed to lawmakers to do their “patriotic duty” and pass the measures, saying they would be saving Greece from bankruptcy in March, when a bond issue comes due that Greece cannot repay without foreign help.

Mr. Papademos acknowledged on Sunday that the program “calls for sacrifices from a broad range of citizens who have already made sacrifices.” But the alternative, he said, “a disastrous default,” would be worse.

TRANSLATION: “”Patriotic duty” = saving the banks from loss. Bank losses would be “disastrous,” while citizen losses are “patriotic.”

When they meet again on Wednesday, they are expected to sign off on the measures and raise the stakes. A major topic of discussion is expected to be establishing an escrow account that would hold new money lent to Greece, and using it first to pay creditors, before the Greek government can tap it for any other purpose.

The idea, backed by Germany and the Netherlands, may make further loans to Greece more palatable to German voters, but many Greeks see it as a fundamental loss of sovereignty and feel that they are being pushed into poverty to appease banks.

TRANSLATION: See above translations.

Anti-German sentiment is also on the rise in Greece, where memories of the Nazi occupation during World War II are still vivid. “This is worse than the ’40s,” said Stella Papafagou, 82. “This time the government is following the Germans’ orders. I would prefer to die with dignity than with my head bent down.”

TRANSLATION: Where Hitler failed, Merkel will succeed. Papademos is the Greek version of Neville Chamberlain.

If Greece dug itself into a hole by borrowing beyond its means, as many argue, there is also a growing sense that the troika’s austerity regimen of spending cuts and tax increases is burying Greece alive in that hole. “The reason Greece is in this position is because of the strategy the troika imposed upon it,” said Mr. Tilford, of the Center for European Reform.

TRANSLATION: Well, duhhh. Raised taxes and reduced spending (aka “austerity”) always screws an economy. Too bad our own Tea/Republicans don’t understand that.

“They’ve all sold out in there, they should be punished,” said Makis Barbarossos, 37, an insurance salesman, as he waved a cigarette toward Parliament on Sunday. “We should put them in small, unheated apartments with 300-euro pensions and see, can they live like that? Can they live how they’re asking us to live?”

TRANSLATION: That punishment would be far too mild for the incredible horrors the Greek and EU leaders continue to visit on the Greek people. Sadly, the poor will continue to suffer; the rich will continue to prosper; and nothing good will be allowed to happen.

The solution: See: What would happen if Greece were to return to the drachma? Meanwhile, I award the people of Greece one guillotine, to use as you feel appropriate.

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

#MONETARY SOVEREIGNTY

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