–Get this. The employees of the Treasury don’t know why they sell T-securities

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Here is a letter I just received from the Division of Customer Service, Bureau of the Public Debt, Office of Retail Securities, Parkersburg, WV, 26106;

December 22, 2011
Dear Mr. Mitchell, This refers to your letter dated November 24, 2011.

Article 1, Section 8 of the Constitution empowers Congress to borrow money on the credit of the United States. This authority has been delegated to the Secretary of the Treasury. As an organizational entity withing Treasury’s Fiscal Service, the Bureau of the Public Debt is authorized to conduct such borrowing for the federal government.

So far, so good.

The Bureau of the Public Debt borrows the money needed to operate the federal government and account for the resulting debt. We borrow by selling Treasury bills, notes and bands, as well as U.S. Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investor’s securities. Every time we borrow or pay back money, it affects the outstanding debt of the United States.

We trust that this information will be of assistance.
Sincerely,
Division of Customer Assistance.

So there you have it. The people, who do the so-called “borrowing,” think they “borrow the money needed to operate the federal government.” They have no clue about what happened on August 15, 1971. Although going off the gold standard was the single most momentous financial change in the past century, to the Treasury, absolutely nothing happened then.

I would give Richard Nixon’s Treasury Secretary, John Connally props for encouraging the end of the gold standard, but he also encouraged the disastrous wage and price controls. So give him 1/2 half a prop, which still puts him way ahead of Timothy Geithner.

My next letter to the Treasury will read something like this:

“Thank you for your note in which you said, ‘The Bureau of the Public Debt borrows the money needed to operate the federal government.’ On August 15, 1971, the U.S. went off the gold standard, thus giving the federal government the unlimited ability to create money. So, why do you continue to borrow?”

I don’t expect a coherent answer, but anyway . . .

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

==========================================================================================================================================
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

–So, you want to know why Congress favors taking benefits from the poor and middle classes, even though the poor and middle classes make up the vast majority of voters?

The answer is quite simple:

Washington Post
Growing wealth widens distance between lawmakers and constituents

By Peter Whoriskey, Monday, December 26, 1:54 PM

BUTLER, Pa. — One day after his shift at the steel mill, Gary Myers drove home in his 10-year-old Pontiac and told his wife he was going to run for Congress. . . . Three years later, he won.
[…]

The financial gap between Americans and their representatives in Congress has widened considerably since then, according to an analysis of financial disclosures by The Washington Post. Between 1984 and 2009, the median net worth of a member of the House has risen 2 1 / 2 times, according to the analysis of financial disclosures, rising from $280,000 to $725,000 in inflation-adjusted dollars.

Over the same period, the wealth of an American family has declined slightly, with the median sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

Very few rich people can truly empathize with the problems of the not-rich. Worrying about tomorrow’s meal, how to afford schooling, being unemployed and broke, and knowing you never will retire voluntarily are not on the rich person’s radar. (“You mean you never have bought a new car?!!”)

The growing disparity between the representatives and the represented means that there is a greater distance between the economic experience of Americans and those of lawmakers.

Myers, the son of a bricklayer, had worked his way through college to a bachelor’s degree in mechanical engineering, and looked at issues of work and security at least partly through the lens of his own experience. For example, he bucked other Republicans to vote to raise the minimum wage and favored expanding a program to aid workers affected by foreign imports. He said he understood the need for what was then called “the safety net.”

“It would be hard to argue that the work in the steel mill didn’t give me a different perspective,” said Myers, now 74 and retired in Florida, said. “I think everybody’s history has an impact on them.”

Today, this area of Pennsylvania just north of Pittsburgh is represented in Congress by another Republican, Mike Kelly, a wealthy car dealer elected for the first time in 2010.

Kelly, on the other hand, focuses on the hard work he and his family have done to build the dealership. The government should be run more like a business and laws must be fair to people who strive and succeed. He opposes the estate tax, the inheritance tax levied on the wealthy, because, among other things, he feels he has been overtaxed already. He says unemployment checks make some less willing to go back to work. And asked about tax breaks for oil companies, he notes that when corporations profit, people with pensions and portfolios do, too.

Moreover, he favors the so-called Ryan budget plan, which seeks to eliminate tax loopholes and lowers the income tax on the highest earners from 35 percent to 25 percent.

Note the belief that the wealthy deserve their wealth and by implication, that the poor deserve their poverty.

About a decade ago, academics studying the effect of income inequality on politics noticed a striking fact: The growth of income inequality has tracked very closely with measures of political polarization, which has been gauged using the average difference between the liberal/conservative scores for Republican and Democratic members of the House. The scores come from a database widely used by academics.

“The proximity of these trends is uncanny,” according to a 2003 paper by researchers Nolan McCarty, Keith T. Poole and Howard Rosenthal. “Remarkably, the trends of economic inequality and elite political polarization have moved almost in tandem for the past half-century.”

Wealthy people favor conservatives, and since there are more wealthy people in Congress, the edge always goes to money, and the income gap grows wider.

Asked how long the government should pay jobless benefits, Kelly suggests that the government checks keep some of the unemployed from returning to work. He interviews some of the jobless for openings at (his car) dealership.

“They say, ‘When are you looking to hire somebody?’ I say, ‘Right now — that’s why we have an ad in the paper.’ They say, ‘Well, I still have about six weeks left on my unemployment. Will you still be looking for somebody then?’

Classic rich man’s attitude toward unemployment. He owns the dealership and can’t relate to people who can’t find jobs, so he justifies his attitude with his little story about an incident that may have happened once, if then.

“Let’s stop railing against the really wealthy because I got to tell you something, as a guy who has had to pay his own way his whole life, I am greatly offended by the idea that somehow someone in Washington knows how to spend my money better than I do,” Kelly said.

Guess how he will vote on cutting Social Security, Medicare, Medicaid, aid to the poor and all other benefits for the 99%. Sadly, with the aid of the media editorial writers (also wealthy people), the 99% have been sold the bill of goods that these social programs are going broke, so the benefits must be cut. See: “How the politicians convince you to take money from your pocket and flush it.”

Congress is rich because being rich helps one get elected. Then the rich Congress votes for the rich, which makes the gap grow. And, the not-rich, through ignorance of economics, collude in their own demise. They are the turkeys who vote for Thanksgiving.

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

#MONETARY SOVEREIGNTY

–Get big government off our backs. Now, who will pay?

The Tea/Republicans want to get the federal government off our backs. They want to cut federal regulations and federal services, until we have a much smaller federal government.

The question is, who will pay for this much smaller government with fewer regulations and services? Here’s just one of a thousand examples to consider:

Mentally ill flood ER as states cut services
By Julie Steenhuysen and Jilian Mincer

CHICAGO/NEW YORK (Reuters) – On a recent shift at a Chicago emergency department, Dr. William Sullivan treated a newly homeless patient who was threatening to kill himself. “He had been homeless for about two weeks. He hadn’t showered or eaten a lot. He asked if we had a meal tray.”

Across the country, doctors like Sullivan are facing a spike in psychiatric emergencies – attempted suicide, severe depression, psychosis – as states slash mental health services and the country’s worst economic crisis since the Great Depression takes its toll.

This trend is taxing emergency rooms already overburdened by uninsured patients who wait until ailments become acute before seeking treatment.

“These are people without a previous psychiatric history who are coming in and telling us they’ve lost their jobs, they’ve lost sometimes their homes, they can’t provide for their families, and they are becoming severely depressed,” said Dr. Felicia Smith, director of the acute psychiatric service at Massachusetts General Hospital in Boston.

Visits to the hospital’s psychiatric emergency department have climbed 20 percent in the past three years.
[…]
On top of that, doctors are seeing some cases where the patient’s most critical need is a warm bed. “The more I see these patients, the more I realize that if it’s sleeting and raining outside, the emergency room is the only place they have,” said Dr. R. Corey Waller, director of the Spectrum Health Medical Group Center for Integrative Medicine in Grand Rapids, Michigan.
[…]
More than 70 percent of emergency department administrators said they have kept patients waiting in the emergency department for 24 hours, according to a 2010 survey of 600 hospital emergency department administrators by the Schumacher Group, which manages emergency departments across the country.

So, I ask again. Who will pay for uninsured people using emergency rooms as their “doctor of first choice”? And while I’m asking, who will pay for insufficient regulation of food, drugs, air and water quality? Who will pay for unregulated financial institutions?

Who pays for bad schools? Crime? Who pays for poverty? Who pays for bad roads, bridges and dams? Who pays for uncontrolled disease? Weak healthcare research? Natural disasters? Who pays for overcrowded courts and jails?

Who will pay if our military is weak? Who will pay for the lack of government?

Yes, big government needs to get off our backs, but who will pay when it does?

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

#MONETARY SOVEREIGNTY

–If nation A owes B, and B owes A, and both owe their own citizens, too, is this a debt problem?

International Monetary Fund’s Managing Director Christine Lagarde tells us there is a “debt crisis.” She says there is too much debt in the world.

Yahoo News
IMF’s Lagarde warns global economy threatened

PARIS (Reuters) – The head of the International Monetary Fund said the world economy was in danger and urged Europeans to speak with one voice on a debt crisis that has rattled the global financial system. In Nigeria last week, IMF Christine Lagarde said the IMF’s 4 percent growth forecast for the world economy in 2012 could be revised downward, but gave no new figure. “The world economy is in a dangerous situation,” she told France’s Journal du Dimanche in an interview published on Sunday.

The debt crisis, which continues into 2012 after a European Union summit on December 9 only temporarily calmed markets, “is a crisis of confidence in public debt and in the solidity of the financial system,” she said.

European leaders drafted a new treaty for deeper economic integration in the euro zone, but it is not certain that the accord will stem the debt crisis, which began in Greece in 2009, and now threatens France and even economic powerhouse Germany. “The December 9 summit wasn’t detailed enough on financial terms and too complicated on fundamental principles,” said Lagarde. “It would be useful for Europeans to speak with a single voice and announce a simple and detailed timetable,” she said. “Investors are waiting for it. Grand principles don’t impress.”

Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.” Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.” She did not specify which countries she was referring to.

Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia. “These countries, which were the engines, will suffer from instability factors,” she told the newspaper.

Here is what Ms. Lagarde means:
==============================================================================================================================================================================

  CIA World Factbook 2011

  Nation   Debt in $Trillions
     USA	  $ 9,133	 
     Japan	  $ 8,512	
     Germany	  $ 2,446	 
     Italy	  $ 2,113	
     India	  $ 2,107	 
     China	  $ 1,907	 
     France	  $ 1,767	 
     UK	          $ 1,654	 
     Brazil	  $ 1,281	 
     Canada	  $ 1,117	 
     Spain	  $   823	 
     Mexico	  $   577	 
     Greece	  $   454	
     Netherlands  $   424	 
     Turkey	  $   411	 
     Belgium	  $   398	
     Egypt	  $   398	 
     Poland	  $   381	 
     South Korea  $   331	 
     Singapore	  $   309		
     Taiwan	  $   279

CIA’s World Factbook lists percentage of GDP, the debt amount and per capita is calculated with GDP (PPP) and population figures of same report. (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html)

==============================================================================================================================================================================
Lots of debt, everywhere you look. To whom is all this debt owed? Mostly, to two groups: Domestic public and private parties, and foreign public and private parties.

If every nation owes every other nation, what exactly is the “debt crisis”? And if some of a government’s debt is owed to its own citizens, what is the crisis?

Here’s the answer: She really isn’t referring to the fact that some nations owe more than others. And, it’s not a debt crisis. It’s a systems crisis.

The word “debt,” when applied to nations, measures the money that nation’s government has created. The U.S. government’s “debt” is $10 trillion. All that means is the U.S. government has created $10 trillion net of taxes collected.

Is there a “too-much-money crisis” in the world’s economies? I see no evidence of that. One bit of evidence would be world-wide, uncontrollable inflation, but that doesn’t seem to be happening. More accurately, there is a “too-little-money crisis in the world, though I question whether that is what Ms. Lagarde means by a “debt crisis.”

I can only speculate, but I think she may mean:

“We really screwed the pooch. We stood by while the euro nations gave up their most valuable asset — Monetary Sovereignty — and now they can’t grow their economies. We always tell everyone to reduce their debt, and for monetarily non-sovereign nations, this means reducing their money supply, which is anti-growth. That’s why our scolding, combined with lending to nations with excessive debt, never seems to work.

“So, we actually have a monetarily non-sovereignty crisis, but no way am I going to admit that, because it would make us look like fools. Better to say it’s a “debt crisis,” which puts the blame on the countries, instead of on us. This way we keep our jobs, and the pay is good.

“As for the U.S., Canada, the UK, China, Australia et al, they are Monetarily Sovereign, so I know they can pay any debt. But we have to scold them too, or we’d look inconsistent. And anyway, Standard & Poors reduced the U.S. rating to AA+ — you know Standard & Poors, the guys who gave a AAA rating to worthless mortgage securities and who still rate France AAA(!) S&P’s ignorance gives us cover for our ignorance, which is nice.

“And yes, I know we always encourage auserity, and I even know austerity = poverty, but why should I care? As I said, the pay is good.

Note to all: Any time you read or hear someone equating U.S. finances with the finances of the euro nations or with our states, counties and cities, mark that person as ignorant of economics.

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

#MONETARY SOVEREIGNTY

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