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.
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Here is yet another example of pitiful, self-styled “experts” who have no idea what they are talking about, so they use intuition and popular belief to support what should be science. If anyone reads Robert J. Samuelson’s columns, you might try to clue him in (though I suspect you will fail in the attempt).

Bye-bye, Keynes?
By Robert J. Samuelson, Published: December 18, Washington Post

“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” — John Maynard Keynes, 1936

This quote from Keynes is hilarious in context. Samuelson printed the quote and as you will see, he doesn’t realize it refers to him!

When Keynes wrote “The General Theory of Employment, Interest and Money” in the mid-1930s, governments in most wealthy nations were relatively small and their debts modest. Deficit spending and pump priming were plausible responses to economic slumps.

They also were on a gold standard, and so were monetarily non-sovereign. The U.S. is Monetarily Sovereign. Samuelson doesn’t understand the difference.

Standard Keynesian remedies for downturns — spend more and tax less — presume the willingness of bond markets to finance the resulting deficits at reasonable interest rates. If markets refuse, Keynesian policies won’t work.

True for monetarily non-sovereign nations; not true for Monetarily Sovereign nations.

Countries then lose control over their economies. They default on maturing debts or must be rescued with loans from friendly countries, the International Monetary Fund (IMF), government central banks (the Federal Reserve, the European Central Bank) or someone. There are other reasons why Keynesian policies might fail or be weakened. But they pale by comparison with the potential veto now posed by bond markets. Ironically, the past overuse of deficits compromises their present utility to fight high unemployment.

Not only does Samuelson not understand the differences between the Monetarily Sovereign U.S. and the monetarily non-sovereign PIIGS, but he thinks the Federal Reserve has to rescue the U.S. by lending it money! Yikes!

Excuse me, Mr. Samuelson, but how do you think the Federal Reserve gets dollars? Total ignorance of federal finances, yet he writes a weekly economics column in a major newspaper.

And by the way, how does one “fight high unemployment” by reducing deficit spending? Can’t be done.

There is no automatic tipping point beyond which a country’s debt — the sum of past annual deficits — causes bond markets to shut down. But Greece, Portugal and Ireland have already reached that point, with gross debt in 2011 equal to 166 percent, 106 percent and 109 percent of their national incomes (gross domestic product), according to IMF figures. Heavily indebted Italy and Spain could lose access to bond markets.

Thankfully, the United States is not now in this position. Interest rates on 10-year Treasury bonds hover around 2 percent; investors seem willing to lend against massive U.S. deficits. Just why is unclear. It’s not that U.S. budget discipline is noticeably superior.

Mr. Samuelson, it’s “unclear” to you because you have no understanding of economics. Lenders buy Treasury bonds because the U.S. has the unlimited ability to service them. The PIIGS do not.

. . . some economists urge more “stimulus.” In a paper, Christina Romer — former head of President Obama’s Council of Economic Advisers — argued that scholarly studies support the administration’s view that its $787 billion stimulus in 2009 cushioned the recession. Another big stimulus “would be very helpful . . . to really create a lot of jobs.”

I am less sure. For the record, I supported Obama’s stimulus — though disliking some details — and, under similar circumstances, would again. The economy was in a tailspin; the stimulus provided a psychological and spending boost. But how much is less clear. As Romer notes, estimating the effect is “incredibly hard.” For example, the Congressional Budget Office’s estimate of added jobs from the stimulus ranged from 700,000 to 3.3 million for 2010.

Suppose a new stimulus — beyond renewal of the payroll tax cut — did succeed at significant job creation. By piling up more debt, it would still risk aggravating a larger crisis later. There is no long-term plan to curb deficits. Americans seem to think they’re invulnerable to a bond market backlash.

The U.S. has no need to issue bonds, so is invulnerable to any sort of bond market “backlash.” If no one wanted U.S. bonds, this would not affect by even one penny, the federal government’s ability to spend.

Economist Barry Eichengreen, a leading scholar of the Great Depression, is dubious:

“Given low interest rates and the still-weak U.S. economy, it will be tempting for the U.S. government to continue running deficits and issuing additional debt. At some point, however, investors will recognize this behavior for the Ponzi scheme it is. … If history is any guide, this scenario will develop not gradually but abruptly. Previously gullible investors will wake up one morning and conclude that the situation is beyond salvation. They will scramble to get out. Interest rates in the United States will shoot up. The dollar will fall. The United States will suffer the kind of crisis that Europe experienced in 2010, but magnified.”

Total, unmitigated bullsh*t. Messrs. Samuelson and Eichengreen, you acknowledge stimulus does create jobs but you think it’s a Ponzi scheme?? Do you even know what a Ponzi scheme is? (It’s a system by which later investors pay earlier investors, collapsing when there are not enough later investors.) By contrast, federal debt is paid by federal money creation, which a Monetarily Sovereign nation can do, endlessly. No later investors are asked to pay earlier investors.

Governments have ceded power to bond markets by decades of shortsighted behavior. The political bias is to favor short-term stimulus (by lowering taxes and raising spending), which is popular, and to ignore long-term deficits (by cutting spending and raising taxes), which is unpopular.

Of course it’s “unpopular.” It destroys an economy.

Debt has risen to hazardous levels, undermining Keynesian economics as taught in standard texts. Were Keynes alive now, he would almost certainly acknowledge the limits of Keynesian policies. High debt complicates the analysis and subverts the solutions. What might have worked in the 1930s offers no panacea today.

Right, and what couldn’t work in the 1930’s is exactly what would work today. What most certainly cannot, does not, and will not work is deficit reduction and austerity.

You can add the names Robert J. Samuelson and Barry Eichengreen to the flat-earth society membership roll.

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

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.
==========================================================================================================================================

A fundamental equation in economics: Federal Deficits – Net Imports = Net Private Savings Think about that before reading further.

Census Shows 1 in 2 People are Poor or Low-Income
Middle class shrinks as unemployment stays high
by: Hope Yen | from: The Associated Press | December 15, 2011

The new measure of poverty takes into account medical, commuting and other living costs. Doing that helped push the number of people below 200 percent of the poverty level up from 104 million, or 1 in 3 Americans, that was officially reported in September.

Broken down by age, children were most likely to be poor or low-income — about 57 percent — followed by seniors over 65. By race and ethnicity, Hispanics topped the list at 73 percent, followed by blacks, Asians and non-Hispanic whites.

Even by traditional measures, many working families are hurting.

Following the recession that began in late 2007, the share of working families who are low income has risen for three straight years to 31.2 percent, or 10.2 million. That proportion is the highest in at least a decade, up from 27 percent in 2002, according to a new analysis by the Working Poor Families Project and the Population Reference Bureau, a nonprofit research group based in Washington.

Among low-income families, about one-third were considered poor while the remainder — 6.9 million — earned income just above the poverty line. Many states phase out eligibility for food stamps, Medicaid, tax credit and other government aid programs for low-income Americans as they approach 200 percent of the poverty level.

The majority of low-income families — 62 percent — spent more than one-third of their earnings on housing, surpassing a common guideline for what is considered affordable. By some census surveys, child-care costs consume close to another one-fifth.

Paychecks for low-income families are shrinking. The inflation-adjusted average earnings for the bottom 20 percent of families have fallen from $16,788 in 1979 to just under $15,000, and earnings for the next 20 percent have remained flat at $37,000. In contrast, higher-income brackets had significant wage growth since 1979, with earnings for the top 5 percent of families climbing 64 percent to more than $313,000.

A survey of 29 cities conducted by the U.S. Conference of Mayors being released Thursday points to a gloomy outlook for those on the lower end of the income scale.

Many mayors cited the challenges of meeting increased demands for food assistance, expressing particular concern about possible cuts to federal programs such as food stamps and WIC, which assists low-income pregnant women and mothers. Unemployment led the list of causes of hunger in cities, followed by poverty, low wages and high housing costs.

Across the 29 cities, about 27 percent of people needing emergency food aid did not receive it. . . Among those requesting emergency food assistance, 51 percent were in families, 26 percent were employed, 19 percent were elderly and 11 percent were homeless.

“People who never thought they would need food are in need of help,” said Mayor Sly James of Kansas City, Mo., who co-chairs a mayors’ task force on hunger and homelessness.

This is what is happening in the United States of America. Now remind me again why the federal deficit should be reduced.

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.
Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

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.
==========================================================================================================================================

Despite the misguided rulings by the the Supreme Court justices, all of whom are part of the wealthy 1%, and Mitt Romney’s incessant backing and filling, corporations are not people. They employ people. They are owned by people. But a corporation, in of itself, is not a person.

Nor is a PAC (political action committee) a person. It too employs people and is owned by people and is beholden to people, but a PAC is not a person. Nor is any other group of people a person.

Corporations cannot vote, nor can they run for office. Corporations do not have citizenship; they don’t carry passports. They can’t adopt a child, attend elementary school, or be on the football team.

If a corporation is put out of business, the right-to-lifers will not protest its death. If a corporation is doing poorly, it will not enter a hospital. Corporations cannot read, write, run, dance, sing or speak. You cannot even see a corporation. You cannot touch a corporation. You cannot hear or smell a corporation, even when they stink. They are non-physical entities, that exist only as legal filings.

The notion that a corporation, which has no ability to speak, write or even think, is entitled to Constitutional, freedom of speech protections, as though it were a person, is patently ridiculous. This treatment of corporations is part of the wealthiest 1%’s ongoing efforts to control the other 99%, by flooding elections with money.

Although Congress makes a great pretense of trying to solve the contribution unfairness problem, the solution is dazzlingly simple: Just as every adult citizen is entitled to one vote in each election for one office seeker in each office, every adult citizen should be entitled to one contribution limit in each election for one office seeker in each office.

Period.

Is that so difficult?

As a citizen, you might be entitled to contribute no more than, for instance, $1,000 to your Representative’s campaign, $1,000 to each of your two Senators, and $1,000 to the one Presidential candidate of your choice. And no contributions would be allowed to the campaigns of anyone for whom you would not be allowed to vote.

Local elections could be handled similarly, and all contributions could go through one central clearing house in each state, to monitor the process.

Folks, this is not rocket science. It is a simple, straightforward way to give each citizen an equal voice, and to prevent the deep-pocket 1% from controlling every election.

And that is why it never will be adopted. Heaven forbid the poor have an equal voice with the wealthy.

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
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

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.
==========================================================================================================================================

Living creatures continually are faced with survival decisions based on the “greater threat.” African animals often are at their most vulnerable to attack by lions or crocodiles, when bending over a river to get a drink. But they do it because the greater survival threat is dehydration, so they choose the immediately, lesser threat.

Consider cancer, for which there are four common treatments: Surgery, radiation, chemotherapy and do nothing. From the time of birth, we all have cancer cells in our body, but we do nothing because the body’s existing immunity system captures and kills those cells.

If the cancer eludes our natural immunity, “do nothing” may not be our option of choice – it may be a greater threat — and we may elect more aggressive treatments, all of which have risks. We then may decide that, for instance, cancer is a greater threat than surgery, radiation or chemo.

Every law passed by every government poses one or more threats. At the very least, every law threatens your freedom, as it requires you to do something you might not wish to do. But you obey the law because disobedience is a greater threat. There are laws against driving faster than certain speeds. You obey those laws because either danger, or more often, being arrested, pose a greater threat than does the loss of your freedom to drive fast.

A threat may be considered “greater,” because of its immediacy, its severity or its likelihood. People smoke cigarettes, because though the threat of early death is severe, smokers don’t perceive it to be immediate or even likely.

Our ability to assess immediacy, severity and likelihood often is flawed. People, who are afraid of airplanes, willingly drive cars. Though statistically, the threat of death is greater when driving a car, it is perceived to be less likely or immediate than it really is.

All of the above is a prelude to the following brief discussions:
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Which is the greater threat today: Recession or inflation?

Inflation occurs when there is a shortage of certain (or all) goods and services, compared with the amount of money available to buy them. In modern America, the shortage of goods and services actually has narrowed to a shortage of oil, the price of which affects the prices of all other goods and services.

Inflation is a measure of supply and demand, or more accurately, a comparision between the supply and demand for goods and services versus the supply and demand for money. This leaves us with four methods for preventing/curing inflation:

1. Increase the supply of goods and services.
2. Decrease the demand for goods and services.
3. Decrease the supply of money.
4. Increase the demand for money.

Every effort to fight inflation involves one or more of the above four methods.

Recession, a general slowing of business activity, has many specific causes, but all relate to insufficient consumer spending. For a very short period, the insufficiency of available products can cause recession. But, particularly in today’s world economy, product shortages generally are short-lived. Because the total of human desires never is satisfied, insufficient consumer spending generally results from insufficient available spending money.

The federal government affects the money supply by spending and taxing. Spending adds money to the economy and taxing removes money. When government spending exceeds government taxing, that is called “deficit spending.”

Fighting recession requires an increase in net consumer spending, and with the federal government being the single largest consumer, the prevention/cure for recession requires increased federal deficit spending.

All of the above brings us to the original question: Which is the greater threat today, recession or inflation? To assess “greater,” look at immediacy, severity and likelihood.

Immediacy: Most economists acknowledge that we are very close to another recession, or even in a continuation of the past recession, while inflation has, for many years, been well controlled by the Fed. (“Well controlled” meaning close the Fed’s desired range of 2% – 3%.) Recession is far more immediate than inflation.

Severity: One can debate whether the ultimate of a recession (depression) is worse than the ultimate of an inflation (hyper-inflation). Depending on specific circumstance, they both are devastating and can be considered equally severe.

Likelihood: The U.S. never has had a hyper-inflation and has had at least six depressions, perhaps more, depending on definition. The likelihood of depression is greater than of hyper-inflation.

All things considered – immediacy, severity and likelihood – recession is a greater threat than inflation. Unfortunately, our federal government’s restrictions on deficit spending, work against low-threat inflation, while exacerbating high-threat recession. Like the driver who is afraid to fly, our government’s assessment of inflation’s threat versus recession’s threat is flawed. And this will take us into more and more “car crashes” — more and more severe recessions.

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Which is the greater threat today: Domestic terrorism or loss of freedom?

Compared to America’s population, our losses to domestic terrorism have been minuscule. Add all the deaths caused by the 1995 Oklahoma City bombing plus all the losses, twelve years later, from the 9/11/11 flights, and you get the approximate number of people killed in auto accidents, every two months, year after year after year in America. (http://www.census.gov/compendia/statab/2012/tables/12s1103.pdf)

And this remarkably low terrorism figure was achieved with the level of government control that existed during the times of Al Qaeda’s greatest power. Now that Osama bin Laden and a great many other Al Qaeda leaders have been killed, the risks of domestic terrorism have declined to the point where you have about the same chance of being killed by a cow as by a terrorist. http://tierneylab.blogs.nytimes.com/2009/07/31/dangerous-cows/

Yet illogically, the laws against terrorism keep getting stronger and stronger. And as with all laws, increasing the strength of laws reduces our freedoms. The most recent NDAA bill represents another step toward restricting our freedoms versus fighting domestic terrorism.

The Tea Party Patriots is a group devoted to “constitutionally limited government.” Why limited? Because they rightly believe government over-regulation is oppressive. Yet illogically, the same people most enamored with Tea Party principles, support the federal government’s over-regulation in fighting the so-called “war on terrorism.”

Realistically, the United States is too powerful to be defeated in war. No country can invade us, take over our government and rule us by force. There is only one way we, as a people, can lose our freedom, and that is if our own government takes it from us.

Look around the world, and everywhere you find freedom crushed, you’ll see it crushed from within – by the nation’s own military, its own police, its own government. Excessive government regulation against perceived, domestic terrorism is the greatest threat to America, and to our freedom.

All things considered – immediacy, severity and likelihood – loss of freedom is a greater threat than domestic terrorism. Unfortunately, our federal government’s more recent legislation restricts the freedom of every American, while doing little against the comparatively low threat to each American, of domestic terrorism.

Again, like the driver who is afraid to fly, our government’s assessment of domestic terrorism’s threat to each American versus that American’s loss of freedom, is flawed. And, as each law binds us, like one more rope around our wrists, our future is to awaken one day to find we have lost everything.

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Whenever any government, local or national, considers a law, the question must always be asked, “Which is the greater threat, the problem this law addresses or the dangers inherent in the law itself?

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
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY