–Sen. McCain (remember him?) writes to me. Creates run on dunce caps.

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. Economic 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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It’s eye-rolling time. Here are excerpts from today’s letter:

If you agree that we need to create jobs in America — long term, meaningful, private sector jobs — then I need you to take immediate action.

Last week, I was joined by a number of my Republican colleagues in the U.S. Senate in introducing an alternative to President Obama’s jobs plan. Our plan, the Jobs Through Growth Act, is focused on growing jobs through American entrepenuership. I am sure you agree with me that its [sic] private sector, not government, that will grow U.S. jobs.

I’m not sure why people believe the “private-business-always-is-better-than-government” myth. Surely, by now, we have learned what such private businesses as banks, derivatives speculators, insurance companies, oil companies, car companies, Madoff et al can do to us. People are people. The good and the bad, the greedy and the generous, the competent and the incompetent, the honest and the dishonest are found in the government and in the private sector.

I will agree to one thing, however. There does seem to be an inordinate number of bad, greedy, incompetent and dishonest people in Congress vs. the private sector. Could that be what Sen. McCain means?

As for jobs, the U.S. census bureau says the federal government employed an average of 3.8 million people through last year, with an estimated salary of $19.6 billion – per month. About $235 billion went from the federal government directly into the pockets of working people — and that doesn’t count the $3+ trillion the government sent to businesses, much of which also goes to salaries.

Of course, this figure probably will decline in 2011. Why? Because Sen. McCain et al believe firing federal employees to cut the deficit, somehow will reduce unemployment. Huh?

Our plan will help give the certainty and confidence that our private sector so badly needs to invest, grow and create jobs again. By cutting taxes, reforming our broken tax code, reducing spending and getting the burden of overregulation off America’s back we can get our economy moving again.

Excuse me, but confidence doesn’t improve business. Improved business builds confidence. Yes, I agree taxes should be cut – starting with FICA. But if “reforming the broken tax code” means some version of a Tea/Republican flat tax to “spread the burden,” it will guarantee the poor will pay more and the rich will pay less.

And then we come to reduced (federal) spending. Does anyone out there understand how reduced spending will reduce unemployment or grow the economy? I’ve asked a great many economists and politicians this question. No one seems to know.

And “overregulation”? Are we really regulated too much? Are the banks, the stock speculators, the insurance companies, the drug companies, the food companies, the water poisoners and air polluters – are they really regulated too much. Was it too much regulation that caused the recession, and will less regulation help prevent the next one?

And now comes the pitch:

If you agree with me, that business-created jobs are the way to lower the unemployment rate, please take a moment to sign this petition in support of our plan by following this link. . . . After you sign our petition today, I ask that you consider making a contribution to help Country First PAC support pro-business candidates up and down the ballot in every area of the country. Your support makes a difference in bringing real change and growth to our economy.

I award Sen. McCain a maximum of 5 dunce caps, not just for today’s ignorance, but for all his ongoing ignorance including, but not limited to, Sarah Palin. Fortunately, my being dunce cap sovereign (a concept Sen. McCain never will understand) means I always will will have plenty to give him in the future plus plenty left for any who may send him political contributions.

(I now am running a dunce cap deficit of 50. Sen. McCain might say I should learn to live within my means.)

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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

–Economy continues to suffer the death of a thousand cuts — and everyone cheers.

Here is how our Monetarily Sovereign government, which has the unlimited ability to create dollars simply by touching a computer key, plans to remove dollars from our economy. As the economy suffers the death of a thousand cuts, everyone cheers.

The Federal Eye, Posted 10/19/2011
Georgetown landmark to be sold by federal government
By Ed O’Keefe and Jonathan O’Connell
A government-owned landmark with a choice Georgetown address is expected to be put up for sale in the next year as part of the Obama administration’s plans to sell excess federal property across the country.

The facility, a largely abandoned art deco-style heating plant owned by the General Services Administration, is situated on a two-acre site amid townhouses and the Four Seasons Hotel at the corner of 29th and K Streets NW. On Thursday, it will be added to a list of 12,000 properties the federal government says it no longer needs, as part of a review ordered by President Obama to save at least $3 billion in government building costs.

Jeffrey Zients, deputy director of the Office of Management and Budget, said the administration will save more than $3.5 billion in building costs by the end of fiscal 2012. The federal government owns 1.2 million properties costing taxpayers more than $20 billion to operate and maintain, Zients said. In addition to the 12,000 excess properties, he said another 50,000 are considered underused.

More accurately, the federal government plans to stop sending $20 billion into the economy annually. This has the same effect as a $20 billion tax increase.

Built in the 1940s, the GSA plant once burned coal and natural gas, but has sat dormant and racked up $3.5 million in maintenance costs in the last decade, Zients said.

. . . Dollars that have been going to maintenance personnel.

Some agencies, including the departments of Homeland Security and Justice, are studying how best to consolidate workers. At Justice, dozens of career attorneys this week threatened to quit if the department goes through with plans to close four regional offices located in southern and midwestern cities.

. . . Thereby exacerbating unemployment.

Even though the White House is set to meet its goal, officials are pushing Congress to pass a bill that would establish a civilian buildings commission to review other sites for closure or consolidation. If the legislation passes, the panel would issue recommendations to Congress for an up or down vote and generate at least $15 billion in savings over there years, Zients said.

That’s $15 billion fewer dollars entering the economy. Removing dollars from the economy is anti-stimulative. Remember: Federal Deficit Spending – Net Imports = Net Private Savings, so reduced federal spending = reduced private savings.

Yes, it could be said the private sector may lose dollars, but it will gain wealth, a nebulous entity that cannot be measured or accurately defined. People use “wealth” to mean all sorts of things. Are educated children part of America’s “wealth”? Is happiness “wealth”? What about a newly written song or poem? Do they contribute to our “wealth”? The Grand Canyon, which has minimal intrinsic value, but immeasurable value in terms of beauty and symbolism – is that “wealth” and if so, how much? No one knows how much wealth there is in America, whether it has grown or declined, and whether one kind of wealth is more economically stimulative than another. “Wealth” is an uncertain word, meaning different things to different people, and so is not a scientifically meaningful term.

But, we do know for certain:

1. Our Monetarily Sovereign government, upon receiving dollars for sales or for taxes, has no use for these dollars. It can create unlimited dollars, ad hoc, by spending. Dollars sent to the U.S. government, simply disappear on arrival. (This is not the case with dollars sent to state and local governments, which are monetarily non-sovereign.)
2. Federal asset sales to the private sector reduce the domestic supply of dollars.
3. Dollar supply reductions lead to recessions.

All of the above relates to The Biggest Economic Question of the Day: “How does a tax increase or spending decrease reduce unemployment or grow the economy?”

The far better alternative would be for the government to give (not sell) unneeded property to the private sector, and not remove dollars from the economy.

I award the Obama administration one dunce cap for believing the federal government needs dollars more than does the private sector.

(If you are one of those who has received a dunce cap from me, don’t bother sending it back. I create dunce caps ad hoc, by awarding them, so I have no use for yours. I now am running a dunce cap deficit of 45 caps. What is my limit?)

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

MONETARY SOVEREIGNTY

–An open letter to #OWS — or in my geographical case, #Occupy Chicago

This is an open letter to the “leaders” of #OWS (are there any?) or, in my geographical case, #Occupy Chicago:

O.K., we get it and we empathize with it. You’re angry. You’re angry at the banks. You’re angry at the politicians and the rich and the corporations. You’re angry at the lying, the cheating. You’re angry at the unemployment, and gap between rich and poor. We get it. We really do. And we’re with you. We’re angry alongside you.

Now, to get from here to there, you have to figure out exactly where “there” is, and that requires focus. Exactly, what do you want to see happen, and who will make it happen?

Wait! Before you answer, it’s important to know what you’re talking about. Which you don’t. Ask any ten of your people in the street, “What’s the problem and how should it be solved?” and I suspect you’ll receive ten different answers, all ridiculous. The reason: They, and virtually all your #OWS followers, do not understand economics. Specifically, you do not understand Monetary Sovereignty.

The President and both parties have appointed a “super committee” whose assignment is to find ways to reduce the deficit, via some combination of tax increases and spending decreases. What do you think of that? Can you answer today’s single most important question in all of economics: How does a tax increase or spending decrease reduce unemployment or grow the economy?

If you understood Monetary Sovereignty, you would know the work of the “super committee” will exacerbate the problem, as will the result of their non-agreement (automatic deficit reductions). You need to be able to articulate to the world why deficit reduction is like applying leeches to cure anemia.

Can you do that?

It’s not enough to be angry. Everyone is angry. Even the rich are angry — at you. You need to promote specific goals and specific means to those goals, like the few I offered at What Is Your Plan?

The goal is not to punish the rich or to destroy businesses, or to eliminate capitalism. The goal is to lift the lower income classes, and the means are:

1. Eliminate FICA (Click here)
2. Provide free Medicare — parts A, B & D — for everyone, from cradle to grave.
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Provide long-term nursing care insurance for everyone
5. Provide free education (including post-grad) for everyone
6. Provide a salary for everyone attending school (Click here)
7. Eliminate corporate income taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America

Begin to institute #1-#9 today, in the order shown, and if/when excessive inflation starts to occur, institute the first inflation-fighting program the Fed always uses: Raise interest rates. If that doesn’t do enough, begin to cut deficit spending.

Perhaps, you have different ideas. Fine. But, more importantly, you need to understand WHY your goals are both important and attainable, and you need to put forth those reasons in a clear manner, so the public will understand. You need to be able to defend against the inevitable retort, “What about inflation?” You need to overcome intuition, your own, your followers’ and the public’s.

How will you do that?

Today, you are seen as leading an amorphous mob, a group threatening to bring down civilization. That’s why the politicians have been slow to back you. They don’t know what you want. You need to focus, focus, focus, so the world can visualize where you want to go, understand why you want to go there and how you will achieve it, and in that way, join you.

You need to understand, then teach, Monetary Sovereignty, first to your followers, then to the rest of the world. Those are your next steps. And there are plenty of us who can teach you. You have but to ask.

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

MONETARY SOVEREIGNTY

–Funniest headline of the month: France’s AAA Credit Rating At Risk, Moody’s Warns

This surely is the funniest headline of the month, perhaps even since the beginning of the recession.

France’s AAA Credit Rating At Risk, Moody’s Warns
From Before Its News, Tue Oct 18 2011

France is at risk of losing its coveted AAA credit rating, according to Moody’s Investors Service.

The rating agency published a report noting that it may issue a negative outlook on the French sovereign debt rating in the next three months if the costs of providing financial assistance to other euro zone nations and/or banks places France’s budget in a precarious position. A negative outlook would indicate that France’s credit rating is at risk of a downgrade in the coming years.

In a statement, Moody’s warned that “The deterioration in debt metrics and the potential for further contingent liabilities to emerge are exerting pressure on the stable outlook of the government’s Aaa debt rating.”

Think about it. France, which is monetarily non-sovereign, and so cannot control its money supply and is in real danger of not being able to pay its bills, has an AAA rating from all three major rating agencies — though the agencies are waiting for “further contingent liabilities to emerge.”

But the United States, which is Monetarily Sovereign, and so has the unlimited ability to pay any bills of any size at any time, and even has the ability to pay off all its “debt” tomorrow, saw its rating reduced to AA+ by S&P. Is that a howler, or what?

But wait, it gets even funnier:

Moody’s also noted that France’s debt metrics are now among the worst of its Aaa peers, although they are still supported by favorable “debt affordability,” or a relatively low interest burden when compared to the level of government revenues.

“Favorable debt affordability”? “Among the worst of its peers”? I suppose their debt is affordable, IF they get bailed out by Germany and/or the EU. Otherwise, France will go down the drain. Meanwhile, the AA+ United States needs no bail out, nor ever will. That is the benefit of Monetary Sovereignty, where all America’s so-called “debts” are denominated in our sovereign currency, which we have the unlimited ability to create.

By contrast, France has no sovereign currency. It’s on a euro standard, and when it runs short of euros, it’s out of luck.

But wait, it gets even funnier, yet:

The warning by Moody’s stands in stark contrast to Standard & Poor’s and Fitch – the world’s other two major ratings agencies – which each reaffirmed France’s’ AAA rating in August and have not since published any additional reports.

These agencies continue to demonstrate to the world their abject ignorance of Monetary Sovereignty. And people actually pay attention to these boobs and believe their ratings. Amazing.

And funny.

And frightening.

I award five dunce caps to the three ratings agencies, not because they are more ignorant than many other groups, but because they have set themselves on a high plateau, from which they clearly have fallen into disgrace.

(Having no dunce cap tax, my dunce cap deficit has reached 44. The media, the old-line economists and the politicians tell me this is “unsustainable” and a “ticking time bomb.” Taking a cue from Congress, I shall appoint a “super committee” to get this political hot potato off my hands.)

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

MONETARY SOVEREIGNTY

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