Mitchell’s laws: Reduced money growth cannot increase economic growth. To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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For those who do not yet understand Tea Party economics, here is a primer. Tea Party economics is the belief that reducing the money supply, by increasing taxes and/or by federal spending reductions, will stimulate the economy.

From Stephen Gandel’s, “State Budget Cutbacks: A Job Market Drag?” 9/19/11: “Even if government doesn’t kick in its normal share of hiring, the economy can still be put on a path of recovery. It’s businesses that matter most and need to be pushed the most to hire.”

O.K., seems reasonable. How do we “push” businesses to hire? Some sort of incentive would be needed. Tax reductions? But tax reductions would increase the deficit.

From Ed O’Keefe’s, “To save money, federal agencies to start buying in bulk” 9/19/11: “Starting this week, several federal agencies and departments will pool their purchases of office printers, copiers and scanners in hopes of collectively saving $600 million in the next four years, administration officials said late Friday.”

I guess we won’t push the manufacturers of office printers, copiers and scanners to hire. When we cut $600 million from their income, they’ll fire.

From Zachary Goldfarb’s, “Obama’s debt-reduction plan: $3 trillion in savings, half from new tax revenue” 9/19/11: “President Obama will announce a proposal on Monday to tame the nation’s rocketing federal debt, calling for $1.5 trillion in new revenue as part of a plan to find more than $3 trillion in budget savings over a decade, senior administration officials said. . . Combined with his call this month for $450 billion in new stimulus . . . “

Ah, so that’s the plan. We’ll take $3 trillion out of the economy; then we’ll add 15% ($450 billion) back into the economy, and call that a “stimulus.”

Maya MacGuineas, president of the Committee for a Responsible Federal Budget: “We believe the Super Committee should ‘go big’ and exceed its mandate and actually stabilize the debt. We appreciate the President’s proposal to ‘go medium’ and that he has laid out real specifics, but clearly, much more will be needed.”

How will stabilizing the debt (aka “spend less and tax more”) “push businesses to hire”?

House Speaker John Boehner: Tax increases “destroy jobs.”

Yep, by removing money from the economy, tax increases destroy jobs, the same way that federal spending cuts destroy jobs.

Chicago Tribune editors, 9/19/11: “Our first preference has been for dramatic deficit reductions, with a 3- or 4-to-1 ratio of spending cuts and revenue increases

Perfect example of Tea Party economics: A dramatic reduction in the money supply . . . to stimulate the economy.

Same Chicago Tribune editors as above: 9/19/11: The immediate problem is low demand and the grim reality is that no one really knows a reliable way to raise it. Given time, it will come back.

Well, the way to raise demand is to put more money into the pockets of consumers. But why do that when the Tribune assures us the economy will come back all by itself – while we raise taxes and cut federal spending to drain dollars from the economy. What, me worry?

More Chicago Tribune. “ . . .(a) more realistic formula (is to) . . . address the spending binge of the last few years, a job that, as Boehner acknowledges, will require curbs in entitlements like Social Security and Medicare.”

Yes, cutting payments to consumers like retired people, sick people, doctors, nurses and hospitals should do a great deal to stimulate the economy.

So now you know what “Tea Party economics” means: Reduce the money supply to stimulate the economy. In short, apply leeches to cure anemia. What a wonderful, magical solution.

I award the Tea Party and all those mentioned above a solid 5 dunce caps (out of 5), for total, unmitigated economic ignorance. By the way, for all you debt hawks: I never will run short of dunce caps, even though I continually run a dunce cap deficit. I am dunce cap sovereign, just as the federal government is dollar sovereign. Get it?

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

Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================================================

Millionaire tax sought by Obama is panned by GOP as ‘class warfare’
Republican leaders accuse President Obama of trying to incite class warfare by proposing the ‘Buffett rule’ — a new tax on people making $1 million or more.
By Jim Puzzanghera, Los Angeles Times, September 18, 2011

Reporting from Washington— Top congressional Republicans on Sunday accused President Obama of trying to incite class warfare with his proposal for a new tax on millionaires and said they would not support the measure because it would hurt economic growth.

Republicans are correct on both counts. Class warfare has been a mainstay of Democrats’ politics for at least 80 years and taxes hurt economic growth by removing money from the economy.

“Class warfare … may make for really good politics, but it makes for rotten economics,” House Budget Committee Chairman Paul D. Ryan (R-Wis.) said on “Fox News Sunday.” “We don’t need a system that seeks to prey on people’s fear, envy and anxiety. We need a system that creates jobs and innovation and removes these barriers for entrepreneurs to go out and rehire people.”

. . . Senate Minority Leader Mitch McConnell (R-Ky.) said wealthy individuals such as Buffett were free to pay more taxes, but the government shouldn’t impose an increase on people who help provide the investments that create jobs . . . “ we don’t want to stagnate this economy by raising taxes.“

Absolutely correct. Tax increases of any kind, whether on the rich or on the poor, remove money from the economy, and are anti-stimulative. And heaven forbid the politicians ever “prey on people’s fear, envy and anxiety.”

But Sen. Lindsey Graham (R-S.C.) said Obama’s millionaire proposal was simply a political move that would do little to reduce the budget deficit. . . .”The truth of the matter is if you raise taxes on billionaires and millionaires it adds a de minimis amount of money to the Treasury to pay off the debt.”

Thank goodness for that. Every dollar of reduced deficit is a dollar stripped from an economy that desperately needs dollars.

Sen. Richard J. Durbin (D-Ill.) showed the tack his party might take when he slammed Republicans for not supporting Obama’s $447-billion jobs bill. “I think his team put together a positive good plan.”

Just one little problem with all this talk: There is no financial difference between a tax increase and a spending cut. Financially, they are identical. Both reduce the deficit; both reduce the money supply. Both are anti-stimulative. Both will result in a recession or depression.

So here we have the Tea/Republicans, the Democrats, the President, the media and the old-line economists all clamoring for debt reduction, but both agreeing the economy needs “jobs and innovation and (removal of) barriers for entrepreneurs to go out and rehire people.”

The Tea/Republicans want spending cuts, while complaining that a tax increase would “stagnate the economy.” The Democrats also want deficit reduction, but with spending increases. If you think you have just fallen down the rabbit hole in Alice’s Adventures in Wonderland, you’re right. There is zero logic being expressed here.

It will be fascinating to see how all the parties, especially the old-line economists, who should know better, play with sophistry, to confuse you into believing:

Tax increases are bad
Spending increases are bad
Deficits are bad
And the economy needs to be stimulated.

A pox on all their houses. I award three dunce caps to all involved, but specifically to President Obama, Representative Paul Ryan, Senator Mitch McConnell, Senator Lindsey Graham, Senator Dick Durbin, the media and the old-line economists (Hello University of Chicago and Harvard Nobel winners.)

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

MONETARY SOVEREIGNTY

Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================================================

Well, my congressman, Robert Dold is trying. He almost, but not quite, gets it. I continue to wonder: Why is this so hard? Here is part of a letter he just sent me:

Last week the President laid out his plan to create jobs. I was pleased to hear that the President joined me in endorsing payroll tax relief – similar to legislation that I have already put forward – as a way to spur the hiring of unemployed workers. My bill is straightforward and helps employers grow and hire. For every unemployed worker a company hires, my legislation would suspend the payroll tax for the business and employee for one year.

Rep. Dold, businesses will not hire people and pay additional salaries, just to get a FICA deduction. Businesses hire people when business improves. Why restrict this to hiring unemployed people? And if it is any incentive at all, it’s an incentive to fire current workers and hire unemployed workers.

This will not only help businesses create more jobs, it will put unemployed people back to work. From my experience as a small business owner, I am confident that this measure will provide a significant incentive that helps American businesses take the calculated step of bringing on a new employee.

He was a small business owner?? Really? And in his small business would he have said, “Hmm, I can hire a worker I don’t need at 6.5% less salary than I ordinarily would not pay. Sounds good”? Or would he have said, “I need an employee, but that 6.5% tax keeps me from hiring”? No wonder he no longer is in business.

While there is still much more work to be done, I am certain that temporarily reducing the payroll tax to 0% would be an effective component of our overall efforts to get this economy moving again.

And why make the cut a temporary reduction. Why not make it a permanent elimination? After all, FICA doesn’t pay for anything — not Social Security, not Medicare, not anything — so why is this most regressive tax continued? It should be abolished, thereby putting money in the pockets of almost all working people and businesses.

Our Monetarily Sovereign government should support Social Security and Medicare. It can and it should.

Even an “experienced small business owner” doesn’t quite get it, but he’s trying. To read “Ten Reasons to Eliminate FICA,” click this link.

Just one little dunce cap for Rep. Dold, who almost is there.

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

MONETARY SOVEREIGNTY

Mitchell’s laws: To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Reduced money growth cannot increase economic growth. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================================================

Have you read about it?

Huff Post Politics, 9/17/11, By Mary Bottari: Janesville, WI — As President Obama gets ready for his big jobs speech Thursday, America’s nurses have a message for him. “Heal America, Tax Wall Street!” the signs read as nurses rallied in front of 61 Congressional offices this week.
[…]
“It’s time for the Wall Street financiers who created this crisis and continue to hold much of the nation’s wealth to start contributing to rebuild this country and for the American people to regain their future,” explained Rosanne DeMoro, Executive Director of National Nurses United, in a press release.

The nurses are joining groups across the nation and around the world calling for a financial transaction fee on high-volume, high-speed Wall Street trades, to tamp down dangerous gambling and to raise revenue for heath care, jobs and other critical needs.
-to-1.

Popular misunderstanding #1: Federal taxes pay for federal spending. Wrong. “Rebuilding this country for the American people” does not require any federal taxes to be increased. Money is the lifeblood of an economy, and a financial transaction fee will reduce the money supply, leaving less available for rebuilding this country.

They found that CEOs are hording their wealth; the gap between what workers are paid and what their CEOs are paid is rising fast. In 2009, it was 263-to-1. In 2010, it was 325.

Popular misunderstanding #2: Taxing the rich helps the poor. Wrong. The only thing that helps the poor is increasing the incomes of the poor. Reducing the incomes of the rich doesn’t do that. It does the opposite, by reducing the money supply.

. . . at 25 of these firms, CEO compensation was greater than the company’s entire federal corporate income tax bill. Corporate free-loader, Prudential CEO John Strangfeld, made $16.2 million in 2010, but his entire company got a $722 million refund from the federal government.

Popular misunderstanding #3: A business’s taxes should to exceed the pay of any one employee. Wrong. There is no connection between the two. In fact, business taxes should be eliminated. They are the ultimate anti-stimulus. How taxing business helps the economy is a question never answered.

“Where’s the shared sacrifice?” asked the nurse who cited the study in front of Wisconsin Representative Paul Ryan’s Janesville office. . . . Nurse Dena McEwen . . . discussed the hard times that have hit so many families. Her 40-year-old sister nearly died of gangrenous gall bladder infection because she was out of work and without health care. A neighbor tried to commit suicide when she could not afford medications.

Popular misunderstanding #4: The wealthy should suffer if the poor have to suffer. Wrong. If you lose your bladder, having a wealthy person lose his bladder will not help you. What will help you are programs that will keep you from losing your bladder – more medical research, better health care for everyone, more and better doctors and nurses – programs the Tea/Republicans wish to cut.

All of these misunderstandings have existed for decades, but it took the Tea/Republicans to solidify them into a powerful movement for ignorance, a movement that is destroying America. The nurses say they must work harder, because Americans coming to them are sicker, the result of losing jobs that provided health care insurance.

As I read these pitiful articles, I repeatedly am reminded of yesteryear’s medical quacks who applied leeches to treat anemia, thereby killing their patients. The Tea/Republicans are removing the lifeblood of our economy – money – thereby killing America.

Out of ignorance, the anemic patients went along with their medical quacks, and out of ignorance the American voters are going along with their economic quacks. We, our children and our grandchildren all will suffer for our ignorance.

As an aside, many of my own friends, mostly college graduates and some with advanced degrees, don’t get it. They mouth the same ignorance as one would expect from the uneducated: “The debt is too big.” “The deficit can’t grow forever.” “The government is broke.” Explanations of why a Monetarily Sovereign government is different from monetarily non-sovereign people, are met with glassy eyes or even anger. Thankfully, my wife gets it completely, and whenever she hears a politician spew his ignorance, she looks at me, smiles and rolls her eyes. Thank God, I married a brilliant woman.

Anyway, sorry for the digression. I’ll just end with:

Ignorance kills.

Unlike the politicians, the nurse’s hearts are in the right place. So, I award the nurses just one, very sympathetic dunce cap.

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

MONETARY SOVEREIGNTY