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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I have faith. I have faith that one day Monetary Sovereignty will be recognized as the factual description of our economy by the old-line economists, by the college professors and their students, by the media, the politicians and ultimately by the public.

I may be naive, but I believe the truth will out. But I also believe, that when the world comes to its senses, those same old-line economists, college professors and students, media, politicians and members of the public, will deny believing the debt-hawk, Tea Party, bleed-the-patient nonsense that passes for economics, today. They will tell those of us, who do understand fact-based economics, that they really knew it all the time.

So here and now, I am beginning a list titled, W.A.S.T.E.D. (Wrong Again. Still Talking Economic Drivel) memorializing the utter garbage these people spout to the detriment of the United States. The list will be long, and I’ll keep adding to it as the weeks go by. Presumably it could contain the vast majority of the people in the world. So I’ll try to limit it to opinion leaders.

Down the road, watching these people squirm and attempt denials, might provide what President Obama calls “a teachable moment.” And being on this list will help these people establish their legacy for all time.

W.A.S.T.E.D Wrong Again. Still Talking Economic Drivel

8/6/11: Standard & Poors: “ . . . further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed . . . “
8/10/11: President Barack Obama: “The fact is, we didn’t need a rating agency to tell us that we need a balanced, long-term approach to deficit reduction.”
8/10/11: Harold Meyerson, Washington Post: “The payroll tax can’t be suspended indefinitely without compromising Social Security, which it funds.”
8/10/11: Dennis Byrne, Chicago Tribune: “Whoever is to blame for this financial debauch, which started with Ronald Reagan, the first of a line of presidents who borrowed our way to prosperity, the recent political and market convulsions should convince even the most flagrant borrower that we’re reached the end of the line.”
8/10/11: Eric Zorn, Chicago Tribune: “His (Sen. Coburn’s) biggest bite is a $2.64 trillion reductin in Medicare and Medicaid spending over 10 years. . . I am persuaded that we need to trim the growth in these programs and other entitlements . . .”
8/10/11: Rep. Jeb Hensarling (Texas): “Times are tough, and American families have had to make many sacrifices over the last few years. While they didn’t cause this debt crisis, they’ve learned how to make do by tightening their belts and living within their means. It’s time Washington did the same.”
8/10/11: Rep. Dave Camp (Michigan): “If we are successful in curbing the overspending in Washington that has sparked fear in the financial markets and created uncertainty on Main Street, we will start to see the job creation we desperately need.”
8/10/11: Sen Jon Kyl (Arizona): “Chronic joblessness, out-of-control deficits and debt, and an unprecedented credit downgrade represent an historic challenge but also an historic opportunity for lawmakers in Washington to show they can work together on a plan that puts America back on the path to prosperity.”
8/10/11 Rep. Robert Dold (Illinois) ” . . . our current fiscal situation is unsustainable . . . I am dedicated to putting our country on a fiscally sustainable path so that we can pay down our debt, grow our economy, and create jobs here at home.”
8/10/11: Maya MacGuineas, Committee For A Responsible Federal Budget: “Policymakers need to . . . enact more aggressive deficit reduction that results in stabilizing the debt. Failure to do so will result in higher borrowing costs, less budget flexibility, lower longer-term economic growth, and ultimately a fiscal crisis.”
8/10/11: Niall Ferguson, Newsweek (July 4&8/11 issue): “It’s not defense spending that’s bankrupting America; its the spiraling cost of entitlements as the baby boomers retire.”
8/10/11: President Bill Clinton, Newsweek (June 8/11 issue): I’d be happy to go back to the tax rates people at my income level paid when I was president in order to pay for the tax incentives to put more people to work.”
8/10/2011: Sen Rand Paul (Kentucky): “Democrats have to admit that entitlements and welfare need to be reformed. Social spending needs to go down . . .”
8/11/11: John Micklethwait, Editor, The Economist: “As flawed a messenger as S&P is, its message should still be heeded. . . it concluded that America’s debt was rising unsustainably as a share of GDP, in contrast to other AAA-rated countries such as Britain and Germany that have put in place plans to stabilise that ratio. . . . the debt deal in Congress just before the downgrade was plainly inadequate. It focuses its cuts on discretionary spending, which future legislatures can too easily override. More durable deficit reduction means reforming both the tax system and entitlements such as pensions and health care for the elderly. And there is no guarantee that Congress will allow the deal’s spending cuts to occur.”
8/11/11: House Minority Leader, Nancy Pelosi: (The three lawmakers she chose for the bipartisan super committee will) “focus on economic growth & job creation–which reduces deficit.”
8/12/11: Charles Krauthammer: ” . . . without this long ugly process, the debt issue wouldn’t even be on the table. We’d still be whistling our way to Greece. Instead, a nation staring at insolvency is finally stirring itself to action, and not without spirited opposition.”
8/12/11: Michael Gerson: “A country that increases taxes on current workers and encumbers children with debt to maintain unreformed health entitlements is looking backward. ”
8/12/11: Australian economist John Quiggin: “My analysis is quite simple and follows the apocryphal statement attributed to Willie Sutton. The wealth that has accrued to those in the top 1 per cent of the US income distribution is so massive that any serious policy program must begin by clawing it back. If their 25 per cent, or the great bulk of it, is off-limits, then it’s impossible to see any good resolution of the current US crisis.”
8/12/11:Jeffrey Miron:Director of undergraduate studies and a professor of economics at Harvard University: “Policymakers should stop worrying about job growth. Instead, they should focus on eliminating economic policies that impede economic efficiency -— runaway entitlements . . .”
8/12/11: Ira Stoll, editor and founder of FutureOfCapitalism.com.: Congress should stop extending unemployment benefits, and better yet, restructure the unemployment insurance program or block-grant it to the states to allow them to experiment with ways of doing so. The idea is to change the program so it creates an incentive for recipients to get a job, rather than an incentive for them to remain unemployed.”
8/12/11: Sen Ron Paul (Texas),”The country’s bankrupt and nobody wanted to admit it. And when you’re bankrupt, you can’t keep spending.”
8/12/11: Rep Michele Bachmann (Minnesota): “We just heard from Standard & Poor’s, when they dropped our credit rating. What they said is, we don’t have an ability to repay our debt.”
8/12/11: John Mauldin: “What did we learn that we did not already know? The US is headed for a financial crisis if they do not get the deficit under control? This is news? . . . The economy is getting weaker. What can we do? The short answer is, sadly, not much.”
8/14/11: John Kass, Columnist, Chicago Tribune: “It (the Tea Party) changed the debate in Washington by focusing the nation on the debt and on the deficit and profligate spending. If I were speaking gravitas, I’d say that such out-of-control spending dangerously increases the size of government at the expense of individual liberty. But we don’t speak gravitas in Chicago.”
8/15/11: Alan Simpson, former U.S. Senator: “(The debt-ceiling deal) doesn’t get into Medicare, which is on automatic pilot, which is just gonna eat through the whole budget. It doesn’t get into Social Security solvency.”
8/15/11: Treasury Secretary Paul H. O’Neill: ” . . . the tax system . . . should be about raising the revenue we need to pay for the agreed shared needs of U.S. society . . .”
8/15/11: Robert J. Samuelson:”Decide to balance the budget over a decade. ‘Deficit reduction’ isn’t good enough. The case for balance (albeit at “full employment”) is simple: discipline. If people want public services, they should be willing to pay for them. . . Cut Social Security, Medicare and other retiree programs.”
8/15/11: Sen Mark Kirk (Illinois): “Because the federal government currently borrows 40 cents of every dollar it spends, credit rating agencies and leading economists recommended cuts of no less than $4 trillion from future spending and borrowing.”
8/15/11: Sen Dick Durbin (Illinois): “This agreement will begin the process of reducing our deficits and ensuring our long term recovery.”
8/17/11: Rep. Jim McGovern (D-Mass.), believes (a war tax) should be on the agenda of the debt-reduction supercommittee. “These wars ought to be paid for and not put on a credit card so that our kids will have to pay for this in the future,” McGovern said in a recent telephone interview. It’s morally wrong for members [of Congress] to call for support of our soldiers and then not ask the rest of us to pay for it . . . or have it left to the poor and middle-income and seniors to bear the sacrifice along with our soldiers and their families. That’s wrong.”
8/17/11: Gov. Rick Perry, (Texas): “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.”
8/17/11: Roya Wolverson, Time: “At the end of the day, it’s the foreign holders of U.S. debt (China, Japan, etc) we’d want to target to inflate away U.S. debt. But even that could have repercussions, since we might still need foreign creditors to fund our future deficits. And those deficits would be even more troublesome if higher inflation stuck around.”

Read more: http://curiouscapitalist.blogs.time.com/2011/08/17/is-rick-perry-right-about-a-runaway-fed/#ixzz1VJuAUVPF

Welcome to membership in W.A.S.T.E.D. Your undeniable legacy is secure.

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

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

This might be the single most timely (and important) graph in economics, because it addresses the most current issues:

The red line shows the annual percentage changes in federal debt. The blue line shows the annual percentage changea in inflation as measured by official CPI figures. The green line is annual percentage changes in Gross Private Domestic Investment, the key economic measure indicating future, economic, productive capacity.

What makes this graph so important? It demonstrates the falsity of several common debt-hawk myths. These myths have been promulgated by virtually all the newspaper editors, TV correspondents, politicians and old line economists, economics textbooks and Nobel-winning, university teachers. That’s a lot of people spreading the same myths, so of course the public, and even the student economists, believe, too.

Myth 1. Federal debt growth is unsustainable
Except for President Clinton’s ill-fated surpluses (which led to the 2000 recession), the federal debt (red line) has grown (i.e. been above 0) every year for at least 60 years. Being Monetarily Sovereign, the U.S. never has run short of money to pay its bills. Even during the Great Depression, the federal government easily paid all debts. Only misguided actions by a politically driven Congress, not affordability, can limit the government’s ability to service its debt.

So the next time a debt-hawk tells you the federal debt is “unsustainable,” ask him to be specific, then show him this graph.

Myth 2. “Printing” money causes inflation.
Just an tiny fraction of the dollars in circulation are represented by physically printed bills. And even those dollar bills aren’t really dollars. They are receipts for dollars. All dollars all are nothing more than numbers in accounts. There are no physical dollars.

More importantly, the creation of dollars (red line) has had no relationship with inflation (blue line) in at least the past 60 years. If so called “printing” money caused inflation, one would expect peaks in the red line to correspond with peaks in the blue line, while dips in the red line corresponded with dips in the blue line. No such correspondence exists.

It is possible for sufficient money creation to cause inflation (if we have full employment and are using 100% of our production capacity), but that situation almost never arises. Increased world trade makes such situations even less likely. Our inflations have been caused by oil prices.

So the next time a debt-hawk tells you that if the government prints money to stimulate the economy, it will cause inflation, show him this graph.

[By the way, debt-hawks think the mere mention of two hyper-inflated governments, “Weimar Republic and Zimbabwe,” proves deficits lead to hyper-inflation. But Weimar Republic’s hyper-inflation was triggered by the onerous, post-WWI conditions put on Germany by the allies. After two years, the hyperinflation ended, and Germany’s economy proceeded to buy the greatest war machine in history. Zimbabwe’s hyper-inflation was caused by Robert Mugabe, who stole farm land from white farmers, and gave it to blacks who did not know how to farm. The result: A massive, inflationary food shortage.]

Myth 3. Federal deficits do not stimulate the economy.
Notice how when federal deficit growth (red line), declines for years and reaches its nadir, shortly thereafter a recession begins. This repeating pattern fits the fact that every depression in U.S. history began with federal surpluses, which remove money from the economy.

Debt hawks say the stimuli, i.e deficit spending, “didn’t work.” But, federal deficit growth invariably ends recessions. To cure recessions, federal deficit spending is necessary. The next time a debt-hawk tells you the stimuli didn’t work, show him this graph.

Myth 4. Federal deficit spending “crowds out” private investing
Quite the opposite is true. Note how peaks in federal deficit growth (red line) tend to precede peaks in Gross Private Domestic Investment (green line) by about a year, while troughs follow a similar pattern. This indicates that federal deficit spending, which adds money to the economy, provides the basis for private investment spending.

The next time a debt-hawk tells you federal deficits do not help the economy grow, show him this graph.

So there they are: The most common myths expressed by the Tea/Republican and Democrat debt hawks — the rationalizations given for limiting federal spending — exposed in one simple graph as utter nonsense.

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

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

In 2008, when the stock market, and virtually every other market, crashed, President Obama undertook a series of economic stimuli. Though, as I predicted back then, those timid steps were proved to be too little and too late, they did prevent the recession from turning into a depression, and until recently the economy was beginning to creep out of its funk.

Of course, “stimulus” is just another word for deficit spending, i.e. pumping money into an economy that is starved for money. But incredibly, the President of the United States has no idea how the economy works (seems impossible, doesn’t it?), so equally incredibly, he voluntarily surrendered his only tool for saving the economy: Federal deficit spending.

Recently he made a pitiful gesture toward solving the economy’s most financial and emotional problem: Unemployment.

Obama seeks aid to help military veterans get jobs By Julie Pace, The Associated Press, 08/06/2011

WASHINGTON — President Barack Obama on Friday proposed tax credits and training programs to help thousands of U.S. service members returning from wars in Iraq and Afghanistan find jobs in the shaky economy at home.

The president announced his proposals after a report showed the nationwide unemployment rate remained over 9 percent.
[…]
He asked Congress to authorize a “Returning Heroes” credit for 2012-13 that would give companies that hire unemployed veterans a tax credit of up to $2,400. It would be $4,800 if the veteran has been unemployed for six months or more. Obama also called for an extension of the “Wounded Warriors” tax credit, which gives companies hiring vets with service-related disabilities a $4,800 credit. If the veteran has been unemployed for six months, it increases to $9,600.

The administration said the tax credits would cost the government about $120 million.

Oh, please. $120 million! Are you serious? The federal government is projected to spend $3,833,861 million this year. That’s 3 trillion, 833 billion, 861 million, and Mr. Obama would like to take that “all the way up” to $3,833,961 million — a pathetic three thousandths of one percent. Wow, talk about a timid step being too little, too late.

And if I know our President, he will try to convince the Tea/Republican party he really isn’t increasing the deficit, because as everyone knows, he already (foolishly) said he wouldn’t.

But wait, toward the bottom of the same article, we find:

Obama challenged Congress to work after its August recess on legislation to extend a tax break on Social Security payroll taxes, to further extend unemployment insurance and to pass a program for “putting construction workers back to work rebuilding America.”

Could this be the FICA holiday (or better yet, elimination) I called for way back in 2009? (“Ten Reasons To Eliminate FICA” ) And wouldn’t this increase the dreaded deficit Mr. Obama swore not to increase?

And what about extending unemployment insurance: doesn’t that also increase the deficit? And more construction work; further increase in the deficit? OMG, has the President belatedly understood this fundamental economic formula:

Federal Deficits – Net Imports = Net Private Saving.

And does he belatedly understand that deficit growth is the only way to get out of a recession and the only way to grow the economy?

One can hope so, but good luck Mr. President. You already have said the deficit is too high. And you must deal with those economically ignorant Tea/Republicans, not to mention your economically ignorant Democrats, all of whom not only agreed with you that the deficit is too high, but that austerity (aka “poverty”) is the way America wishes to live.

So how are you going to get yourself out of this jail you so foolishly built for yourself? How are you going to add money to an economy that is starved for money and headed for depression, without seeming to add money. How about:

“Pay no attention to that man behind the curtain.”

If you pull this one off in time for the election (that’s all that matters, isn’t it?), you indeed will be the wizard behind the curtain.

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