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.
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The Chicago Tribune editors, who refuse to learn economics, but continue to pontificate about economics, did it again. Here are some excerpts from their 9/8/11 editorial titled, “The confidence game.”

What if (President Obama) told the American people that returning to prosperity inevitably will be a long rugged path. That government can’t “fix” the economic malaise by creating jobs.

Actually, returning to prosperity needn’t be a “long rugged path” if the government will forget about cutting the deficit, and focus on stimulation. And the government can “fix’ the economic malaise by creating jobs, simply by buying more goods and services — roads, bridges, education, food and rents for the poor, police, disaster recovery, Social Security, Medicare for all, and the million other beneficial things the government has the power to do. And by eliminating some taxes, (first FICA), and reducing others (first increase the standard income tax deduction).

His signature policy — the $787 billion fiscal stimulus of 2009–failed to deliver the job growth he promised. It plunged the nation deeper into debt.

Yes, the stimulus, being too little, to late, didn’t provide job growth, but it did prevent further job losses. Had it been about five times as large, there would have been job growth. The starving patient needs more than one spoonful of porridge to return to health.

And what the Tribune refuses to learn: Federal debt could be eliminated, tomorrow, simply by crediting the checking accounts of T-security holders, and debiting their T-security accounts — a push of a button.

It will take years to climb out of the hole. If the U.S. government piles on regulation . .

Depends on the regulation. Clearly, better regulation of the financial institutions is needed. I’m surprised the Tribune hasn’t learned that. Well, O.K., I’m not surprised.

. . .Misallocates resources with temporary spending schemes . . .

In Tribune-speak, a “spending scheme” is any spending to stimulate the economy.

. . .and allows a crazy-quilt tax code to go ever-crazier, it will be a longer climb.

I’d agree, except for one detail. Every proposal at “tax simplification,” has been regressive, involving more taxes on the lower classes. Even Obama, the great defender of the poor, talks about “broadening the base,” which is code for sticking it to all those people who have so little income, they currently pay no taxes.

There have been suggestions to institute a value added tax, which would be regressive in that poorer people spend more of their income on goods and services. I discuss various tax schemes at Which Taxes are Fairest

. . . the nation will do better if Obama can inspire the private sector to have more trust that government won’t impose more obstacles.

To accomplish that, Obama must commit to a deliberate course of action that will lower the cost of doing business over time. he must avoid introducing more of the dizzying uncertainties that his presidency to date has delivered en masse. He has to resist “stimulus” ideas that will pile on more federal debt.

Yes, we certainly wouldn’t want stimulus ideas. And of course, the federal debt is so big, the government is unable to pay its bills. Right? All those federal checks bouncing prove the government is “broke” (according to John Boehmer). Where is the Tribune fact-checker when we need her?

In the most certain terms he can muster, he needs to convince the risk-takers, doers and makers of things — the jo-creators — that he has their interests at heart. Let them know that at long last he’s on their side. They need the confidence to take a risk, do something new, make something useful — put someone to work.

What lovely words, so much sound and fury signifying nothing. It’s the apt title of the Tribune editorial, “The confidence game.” The “confidence myth” goes like this: If magically you give business confidence, then they will create jobs and lift the economy by its bootstraps. How to do that never is spelled out, so let me assist:

Business gains confidence and hires people when people begin to buy goods and service. People buy when they have jobs and money. It’s a circle. So unless the government puts money into people’s pockets, by lowering taxes and/or increased spending — i.e. by increasing the deficit — we’ll just play ring around the rosie, and keep sinking.

For this editorial, I award the Chicago Tribune editors three dunce caps.

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

The long-standing, though currently Tea/Republican inspired, desire to reduce federal spending and deficits, is based on the erroneous beliefs that:

1. Federal taxes pay for federal spending so that by cutting spending, we can cut taxes. Fact: This was true before 1971, when we were on a gold standard. Today, there is no financial relationship between federal taxes and spending. Were taxes to fall to $0 or rise to $100 trillion, our Monetarily Sovereign federal government could pay any bill of any size.

2. Big government burdens our individual freedoms. Fact: A big nation needs a big government to provide the myriad benefits its big and diverse population desires. Federal laws can be burdensome, but federal spending is not. It is a gift of a Monetarily Sovereign government, the most brilliant form of government financing ever created.

That said, there is something insidious, essentially invisible, that happens when federal spending is reduced. The absence of benefits sneaks up on us, like the butterfly killer that leaves no clue, until one day there are no butterflies. You never will know how your life and America’s future will be affected by:

1. Reduced federal support for education. What child genius will not grow to invent the cancer cure or the unlimited, pollution-free fuel or the food that does not require farming? How many great scientists and artists and builders will not be created? You never will know.

2. Reduced federal support for health services. How many future leaders will not live to fulfill their potential? How much suffering will result? Which of your own relatives will die prematurely or live nonproductive lives? What preventable “black death” next will scourge the human race? You never will know.

3. Reduced police/military support. How many soldiers will die from inadequate equipment? How many civilians will be murdered for the lack of a cop-on-the-beat? How many investors will be cheated because federal agencies did not have the funds for proper supervision? You never will know.

4. Reduced aid to the poor. How many children will poverty turn to crime? How many great minds will be dulled by starvation before making their contribution to America and the world? How much of America’s potential will be lost to homelessness or to the struggle for bare existence? You never will know.

The list goes on and on: The lame who might have walked. The blind who might have seen. The children who might have given to America. The tornados and hurricanes and earthquakes that might have been foreseen. The money that investors might have saved. The inventions never invented. The recessions and depressions that might have been avoided. The wars that might have been won or prevented. The life-saving drugs that might have been developed. The people who might not have died too soon. The beauty never created. The ideas lost. The better world that might have been. You never will know.

And we trade all this potential for the reality of a meaner, uglier, less elegant life, especially for the lower classes, who will be affected most by deficit reduction, though we all will be affected. What a waste, given the tools we’ve been given, that we intentionally should deprive ourselves and our children and our grandchildren of the benefits a society can offer, and instead retreat toward the days of hardscrabble anarchy.

What have we lost? What will we lose tomorrow? You never will know.

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

Excerpts from a Washington Post story, by Ed O’Keefe, dated 9/6/11:

The White House will include a financial rescue plan for the U.S. Postal Service as part of a broader $1.5 trillion deficit reduction package due to Congress in the coming weeks, it said Tuesday.

The White House will rescue the Postal Service, while reducing the deficit? How will they do that?

In advance of those recommendations, the Obama administration is asking lawmakers to give the Postal Service a 90-day extension to pay billons of dollars in mandatory annual retirement payments that are due at the end of its fiscal year Sept. 30.

Ah, you see, they will delay payments to retirees. As you know, these retired workers have more money than does the federal government, so they can support the Postal Service, while the federal government cannot.

The U.S. Postal Service wants to cut 120,000 jobs as it reports another loss in revenue.

And not just the retired workers. We need to save the federal government and help the nation’s unemployment problem by cutting 120,000 jobs.

The White House declined to detail what a postal rescue package might include, but one senior administration official said the plan would be “consistent with the Postal Service’s mission and its obligations to all of its stakeholders, including its workers.”

Let’s see: Its stakeholders are:
Users: But the plan is to cut service
Employees: But the plan is to cut employees.

Any other stakeholders you can think of? (Don’t say, “taxpayers.” Taxes don’t pay for federal spending.)

Sen. Joseph I. Lieberman (I-Conn.), who chaired Tuesday’s Homeland Security and Governmental Affairs Committee hearing on the issue, said his panel would draft legislation to address the concerns.

Two of the panel’s members, Sens. Thomas R. Carper (D-Del.) and Susan Collins (R-Maine), are pushing competing proposals, but both signaled Tuesday that they are willing to collaborate on a plan. Carper’s bill would give the Postal Service the flexibility to cut Saturday mail deliveries, close thousands of post offices and give USPS access to money it has overpaid for decades to federal retirement funds. Collins, who opposes curtailing mail deliveries because of potentially adverse effects on rural and far-flung areas, wants to overhaul the Postal Service’s payments to pre-fund future retiree benefits, which cost USPS about $5.5 billion annually.

Got it. Cut service; cut employees; cut pensions. Cut, cut, cut: The Tea Party mantra, via Obama.

The Postal Service is a self-funding entity drawing revenue from the sale of stamps and shipments . . .

Why is the U.S. Postal Service self-funding? The army isn’t. The Congress isn’t. The White House isn’t. The Department of Homeland Security isn’t. In fact, none of the thousand federal agencies are self funding. Why the Postal Service? Anyone?

In addition to structural reforms, Sen. Claire McCaskill (D-Mo.) suggested that USPS should mount a national advertising campaign promoting the value of printed mail.

“You cannot get money by text message,” McCaskill said. “I really think that there is a longing out there right now, especially in these uncertain times, for some of the things that have provided stability over the years.”

Donahoe said such a campaign is in the works. Aides said it will debut for the holiday shopping season.

Lieberman voiced his support, suggesting, “We should be writing more passionate letters to those we love.”

O.K., problem solved. Spend advertising money the Postal Service doesn’t have, to encourage people to write passionate letters.

Now let’s get real. Cutting service will beget reduced usage, which will force more service cuts, which will beget further reduced usage, until over time, we will be left with one letter carrier, working out of one post office, carrying one letter – a passionate love letter from Sen. Lieberman.

If America wishes to have a postal service, the federal government must support it, the same way the federal government supports every other vital service. This self-funding nonsense – a relic of the pony express – is a ticket to mail oblivion.

But then, how can a Monetarily Sovereign government, with the unlimited ability to pay any bills of any size at any time – a government that has no problem supporting troops all over the world, from South Korea to Germany and points in between, all without raising taxes – how can such a government not afford to support the U.S. Postal Service?

It’s just another “Obama compromise.”

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