–That other “rich-guy” lie you often hear, but seldom hear about.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive, and the motive is the gap.
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If you have been reading this blog, you know about the BIG LIE, the tale told by the rich, that federal financing is like personal financing.

According to the BIG LIE, our Monetarily Sovereign government, and its agencies, can run short of its own sovereign currency, unless taxes are increased or spending decreased.

The President of the United States repeatedly has expressed the BIG LIE (“Washington has to live within its means . . . Both parties agree that we need to reduce the deficit. . . “). Speaker of the House, John Boehner, famously expressed the BIG LIE when he said, “Let’s be honest. We’re broke.”

Of course, a government having the unlimited ability to create its own sovereign currency, cannot run out of that currency, so cannot be broke, and does not have a “means” to live within.

The purpose of the BIG LIE is to make you believe your social benefits (Social Security, Medicare, Medicaid, food stamps et al) must be reduced, while regressive taxes (FICA, sales taxes) must be increased.

The BIG LIE is sponsored by the rich to widen the Gap between the rich and the rest.

There are other lies sponsored by the rich. There’s the myth that the rich are the “makers” while the poor are the “takers.” (Never mind that the rich take all those gigantic tax-saving government benefits and hide their fortunes in foreign islands.)

And there’s the myth that obscenely high salaries are necessary to attract the best business talent. (Never mind that the Highest-Paid CEOs Are The Worst Performers)

But there is one other lie, you often have heard or read — a lie that seems to be accepted on its face, though it is wrong, wrong, wrong. The lie was expressed by that notorious, right-wing shill, John Kass, in the September 5th edition of the Chicago Tribune.

In discussing the merits of Bruce Rauner, the billionaire Republican candidate for Governor of Illinois, Kass said:

“A guy that rich can’t be bought.”

So there you have it, the “rich-guy’s favorite lie: Rich people are honest, while poor people are criminals.

It is a most wonderful lie. It provides one of the excuses for refusing to allow poor Latinos entrance into the U.S., and for deporting them. (How many rich people are refused entrance or deported?)

It is a lie that provides the excuse for Florida’s criminal governor, Rick Scott, to drug test the poor before they could receive poverty benefits.

It is a lie that ignores the wealthy traders (yet to be prosecuted), whose unlimited and ongoing greed caused the Great Recession, and the greed of the wealthy politicians who solicit campaign contributions.

Remember, Rauner is a billionaire, who easily could afford to finance his entire campaign out of his own pocket, but whose personal greed causes him to ask for contributions from people who have much less money than he does.

The rich love to pose as pure and clean, as people who are above avarice and criminality. It is the poor, filthy masses who can’t be trusted.

The fact: There is no amount of money, no amount of wealth, no amount of power that will satisfy a glutton, no matter how much that person already has.

The sole difference between the rich and the rest: The rich know how to avoid punishment for their enormous thefts.

Just ask the Department of Justice about bankers.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

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:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Two more examples of your brain being washed about taxes and bribery.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Today, in the Email I received an appeal from Professor Robert Reich, asking me to sign his petition. As background:

Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration.

Here is what Professor Reich said:

Sign my petition: Burger King’s craven tax dodge

Did you hear the news about Burger King? A few days ago, Burger King announced merger talks with Tim Hortons restaurant — a so-called “tax inversion” dodge to lower its U.S. taxes by claiming it’s a Canadian company, headquartered in Canada.

The pending deal is welcome news to investors, who sent its stock up nearly 20 percent the day it was announced.

But it’s a lousy deal for you and me and other Americans because we’ll have to make up for the taxes Burger King stops paying.

We’re already subsidizing Burger King because it refuses to raise the pay of its frontline workers. That means we’re paying for the food stamps, Medicaid, and wage subsidies Burger King employees need in order to stay out of poverty.

If Burger King deserts America to cut its tax bill, we’ll be paying twice. That’s a whopper of a slap at America — and another blow to the fight against income inequality.

Please sign my petition calling for Burger King to reverse their plans to abandon America. If Walgreens can change their mind, so can Burger King.

Working together with a coalition of progressive partners, DFA members across the country successfully pushed back on Walgreens to drop similar plans to desert the United States.

Burger King, like Walgreens, is highly visible to consumers. With your help, we can generate enough pressure to stop this bad deal for America and prevent other companies from taking similar steps. Corporate greed can’t be stopped, but even greedy corporations depend on the goodwill of their consumers.

Join me in calling for Burger King to kill their outrageous deal to dodge American taxes.

Burger King wishes to pay less federal taxes. So do you; so do I. Over the years, I have followed the tax laws. For instance, given the alternative of taking long-term gains vs. short-term gains on stock, I have opted for long term. Why? Lower taxes.

That, according to Professor Reich, means I am “greedy” and helping cause “income inequality.”

I also have a tax-deferred IRA, which apparently means I am taking a “slap at America” and essentially am “deserting America.”

Are you an equally “craven” tax “dodger”? Or are you patriotic by paying more taxes than the law demands?

Ridiculous, huh?

Now let’s get to the facts:

First: Paying federal taxes does not help America; in fact it hurts America by reducing the money supply. The federal government, being Monetarily Sovereign, neither needs nor uses your tax dollars. The more taxes Burger King pays, the less money there is in the economy, and the less they will have for growth and payrolls.

Increased taxes widens the gap between the very rich and the rest. Asking American business to pay more taxes is about as unpatriotic as it gets.

And remember, businesses are not the actual payers of taxes. They merely collect tax dollars from employees and customers, and pass the dollars on to the government.

The very first step in the “Ten Steps to Prosperity is: “1. Eliminate FICA.” Why, because FICA is a federal tax that drains dollars out of the economy, and particularly out of the middle- and lower income groups.

Second: Implying that a company (or an individual) is unpatriotic if it legally pays as little federal tax as possible, is ridiculous. Think of your accountant telling you, “You’re entitled to this deduction, but don’t take it, because the federal government needs the money.”

There are only three reasons why Professor Reich would circulate such a petition:
1. He is stupid or or otherwise addled, or:
2. He is ignorant of the facts, or:
3. He has been bribed by the upper .1% income/power/wealth group.

I doubt he is stupid.

Not being an economist (He’s a politician), he may be ignorant of the differences between a Monetarily Sovereign government and a monetarily non-sovereign government.

And as a politician paid by a university — a university that makes a massive effort toward money collection — he may have been bribed by his job. That is one of the two ways politicians are bribed.

As I long have stated, politicians are bribed via campaign contributions and promises of lucrative employment later. Clearly, soliciting and receiving millions of dollars to vote in a way beneficial to a “donor,” could not conceivably be considered anything but a bribe.

Only a bought-and-paid-for liar like Justice Scalia, could claim campaign contributions constitute “free speech.” I’d like to be able to buy food, housing or a new car with “speech.”

But what about when a politician leaves office and those lovely campaign contributions (uh … “free speech”) end. That’s when the promises of lucrative employment kick in.

Eric Cantor’s Raise Is Paid For By Low-Wage Workers

On Wall Street, America’s mighty job creators are finally reaching out to the recently-unemployed, by creating a job for ex-Rep. Eric Cantor. He’ll be a new vice chairman for the investment firm Moelis & Co.

How nice that they’re going to take a chance on a guy with no experience in the industry, and start him off at a decent living wage:
Moelis will pay him an annual $400,000 base salary … Cantor also received a $400,000 cash payment and $1 million in restricted stock that will vest after his third, fourth and fifth anniversaries with the company.

In 2015, Cantor will receive a minimum incentive payment of $1.2 million in cash and $400,000 in restricted stock, the filing said.

This $3.4 million payday — which doesn’t count a stipend to cover the cost of a Manhattan apartment — shouldn’t be considered entirely as compensation for all the grueling work he’s going to do for the firm. It’s more like a reward for services rendered over his congressional career.

Eric Cantor spent his career buttering up wealthy donors, meeting with wealthy lobbyists for powerful industries, and writing policies to their specifications. All along, he knew that at the end of the road he’d have a chance to join the ranks of the people on whose behalf he’s been working (albeit earlier than he expected).

Cantor’s new $3.4 million job is a hearty thank-you from the constituents he really cared about. And it’s a strong signal to other politicians of what’s in it for them if they act like Cantor.

Bottom line: Do and say as the rich want you to do and say, and they will take care of you and your loved ones, forever.

The very rich receive little, if any, income from salaries, and percentage-wise, they spend less of their income on taxed consumption. So, the very rich always are happy to see business employees and customers pay more taxes. That helps widen the Gap between the rich and the rest, and it is the Gap that the rich treasure most.

That is why they brainwash the populace into believing federal taxes are necessary, and paying more federal taxes is patriotic (except for the very rich, of course).

Too bad Walgreens caved. Had they saved tax dollars, they might have expanded more, hired more people, lowered prices and helped maintain more dollars in the economy — much to the benefit of the middle- and lower-income groups.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARYSOVEREIGNTY

–Absolute proof you will not rise up in anger, no matter how much the rich steal from you.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

One of our readers — tetrahedron720 — wrote:

“The 1% fear loss of control and power over the minions. In the final analysis it may take continued austerity to elevate our problems to such a degree that we induce failure and collapse. Then, faced with no other choice, society will be forced to have to find functional finance as the only solution. Emerge by means of emergency.

The solution MAY be the elevation of the problem.

My response was:

“Look around you at all the bad economies, from North Korea, to Gaza to Haiti to many of the African nations. There, the economies are in shambles, but the rich lead luxurious lives and maintain power, while the rest lead lives of misery.

“It can take generations or even centuries, for the poor to acquire enough willpower to rise up against the rich. Meanwhile the poor suffer. Much better to narrow the Gap via the ’10 Steps to Prosperity.’

“I do not subscribe to the philosophy, ‘Things have to get worse before they get better.’”

And here is a bit of evidence to back that up:

Big Banks Fined Mega-Billions; CEOs Remain Untouched, Above the Law
By Michael Payne

Get arrested for robbing a bank or shoplifting and you will go to prison. Get caught selling cocaine or steal a car and you will do jail time. But if you are a CEO of one of the biggest banks in America and that bank is fined mega-billions for fraudulent practices you need not worry because the U.S. Justice Department will give you a free pass; you are, in effect, above the law.

That is a clear travesty of justice, but it has become commonplace in America. Just look at the following list of U.S. and some foreign banks that have been fined billions of dollars. Not one of their top executives has been prosecuted in connection with the violations of the law that led to these fines:

$25 billion – Wells Fargo, J.P. Morgan Chase, Citigroup, Bank of America, BAC, and Ally Financial – 2012
$13 billion – J.P. Morgan Chase & Co. — 2013:
$9.3 billion – Bank of America, Wells Fargo, J.P. Morgan and 10 others — 2013:
$8.5 billion – Bank of America — June 2011:
$2.6 billion – Credit Suisse AG — May 2014:
$1.9 billion – HSBC Holdings, HSBA – 2012
$1.5 billion — UBS, AGUBSN – 2012
$1.4 billion – 10 Wall Street firms including Goldman Sachs, Morgan Stanley, and J.P. Morgan — 2003

The above criminal enterprises were only too happy to pay fines. To them, these are akin to jaywalking tickets — paid by their employers.

The leaders of these criminal enterprises paid nothing — not money, not jail — nothing. In fact, most of them received bonuses from their companies and from the Obama administration.

That is how crime is discouraged: By rewarding it.

And how big an issue is this for you, the voting public? How many of you are so outraged, you have marched the streets, to protest? How many of your have bothered to write the President or your Congressperson, to express your anger?

How many of you even care that wealthy criminals have been, and continue, raping you and your children, while going unpunished?

Now compare that with how angry you feel about foreign children coming across our border. And how you are incensed that you might not be able to carry a big, loaded gun in public. And you are so-o-o-o-o enraged that the poor receive food stamps. And you are foaming at the mouth that gay people are allowed to marry.

Yes, those are the things you care about and vote about. Those are the things that take bread out of your mouth, and impoverish your children. Right? Oh, sure.

Those are the things you’ll go into the street and protest-march against. But, rampant criminality by the rich? You don’t even notice, much less care.

Why?

Like magicians, the rich have misdirected you with phony issues — guns, immigrants, foodstamps, so that you don’t even see their slight-of-hand (in your pocket).

You don’t even see the Gap between the rich and you growing wider and wider, and if you see, you don’t really care enough to protest that.

No, you care that the unemployed might get too much compensation. That’s your big issue, because that is what the rich have told you to care about.

So you go stand in the road holding stupid signs, to stop a bus filled with child immigrants. You go demand to carry your military grade weapons into every store on main street. You’re so angry, you want to shoot an abortion doctor and intimidate a girl who visits one. You demand that the poor be made to starve, because it’s “their own fault.”

But you don’t demand that Congress and the President enforce the law. You don’t demand that rich criminals go to jail. No marches for you. You’ll vote as you’re told.

After all, the rich are entitled to do whatever they want, including bribe Congress and the President..

Your Congressperson doesn’t care about rich criminality. Why should he? You never contacted him. You never marched.

For the same reasons, Obama doesn’t care, either.

Why should you?

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARYSOVEREIGNTY

–More “Who’da thunk?” Europe’s austerity doesn’t work, either.

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Quoting from the previous post:

Austerity, aka deficit reduction, stems from the belief that a government’s income pays for government spending. This is belief is correct for monetarily non-sovereign entities: Cities, counties, states, businesses and people.

You and I need outside sources of income in order to spend. So do our local governments. We all are monetarily non-sovereign.

By contrast, Monetarily Sovereign entities, such as: U.S., UK, Canada, China, Japan et al, do not need outside sources of income.

A Monetarily Sovereign entity is sovereign over its own sovereign currency, and so, has the unlimited ability to create its currency. A Monetarily Sovereign entity never can run short of its own currency, and never needs to ask anyone for its own currency.

So, a Monetarily Sovereign entity never needs to tax or borrow, in order to obtain its own sovereign currency. It is sovereign.

That is a fundamental economic truth, though all our politicians, most notably the Tea Republicians, refuse to acknowledge it. Debt and deficit limitation is the set of actions responsible for our unnecessarily slow recovery.

And now we come to poor, euro-smashed Europe, with its twin problems: The euro and austerity:

Divisions Grow as a Downturn Rocks Europe
NY Times, By LIZ ALDERMAN and ALISON SMALEAUG. 29, 2014

Germany, the Continent’s economic engine, contracted in the second three months of the year, while the bloc of 18 European Union nations that use the euro failed to grow at all.

While the per capita Gross Domestic Product of the U.S. has risen following the Great Recession, the euro nation’s recovery not only has stalled, but has declined for the past two years.

The eurozone is in the midst of what is known as “a recession” — headed toward a full-fledged depression.

United States = Solid Line (left); Euro Area = Dotted Line (right)

The decline has not been fairly distributed among nations, of course. But even the mighty Germany now has leveled off and begun its fall.

France = Solid Line (left); Germany = Dotted Line (right)

Why has the U.S. grown (albiet too slowly, because of deficit reduction) while the eurozone has faltered? Monetary non-sovereignty.

When the eurozone nations adopted the euro, they surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty, i.e., the unlimited ability to create its own sovereign currency, and thereby pay any debt denominated in that currency.

The monetarily non-sovereign eurozone nations need endless deficit reduction to avoid debt defaults, while the Monetarily Sovereign U.S. does not need deficit reduction and never will default on dollar-denominated debts. Having the unlimited ability to create dollars prevents default (despite John Boehner’s famous lie, “Let’s be honest. We’re broke.”)

One result of less austerity in the U.S.: Our unemployment rate is falling much faster:

The U.S. = Solid Line (left); The Euro Area = Dotted Line (right)

Yet another effect of monetarily non-sovereign austerity: Dreaded deflation. While the inflation rate in the U.S. remains very close to the Fed’s target rate of 2.5%, the eurozone’s lack of money has sent it into a deflationary slump.

The U.S. = Solid Line (left); The Euro Area = Dotted Line (right)

Deflation is felt to be anti growth, because it encourages consumers to delay spending until prices fall further. If you know products will be cheaper tomorrow, you’ll wait until tomorrow before purchasing. This delay evolves to “no-purchase-at-all,” which impacts GDP.

The eurozone provides the perfect test of deficit reduction (austerity). The test demonstrates how deficit reduction leads to recessions and depressions:

U.S. depressions tend to come on the heels of federal surpluses.

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

Recessions tend to come on the heels of reductions in federal debt/money growth (See graph, below), while debt/money growth has increased when recessions were resolving. Taxes reduce debt/money growth. No government can tax itself into prosperity, but many government’s tax themselves into recession.

Deficit reduction causes economic destruction. But deficit reduction often is necessary for monetarily non-sovereign governments, which cannot create the money to pay their bills. Long term, such governments can survive only if they have money coming in from outside their borders.

The euro nations need the EU (which, by the way, is Monetarily Sovereign) to give (not lend) them continual infusions of euros. Similarly, the U.S. states (which are monetarily non-sovereign) need continual infusions of dollars.

For a euro nation, the additional euros can come from a positive balance of payments — importing more euros than exporting. But few euro nations can be net exporters. They need help from the EU.

Again similarly, the U.S. states either must be net dollar importers (via tourism or sales of goods and services) or they must receive dollar infusions from the federal government — federal deficit spending.

Counties and cities, also being monetarily non-sovereign, need continual infusions from their states. The obvious implication is that states must run deficits to support their cities and counties, and in turn, states must be supported by federal deficits.

Bottom line: Barring uncontrollable inflation (which the U.S. never has experienced) austerity, i.e. deficit reduction, always is harmful to an economy. Anyone who tells you the U.S. federal deficit and debt are too large either is ignorant of economics or is a liar. Those are the only two options.

As for the euro nations, they either need to re-adopt their own sovereign currencies, or join politically into something resembling a United States of Europe, in which the EU gives (not lends) euros to member nations as needed.

Perhaps things to get much worse, before the euro nations have the willpower and the desire to implement one of these solutions. After all, reductions in government spending negatively affect the lower income people far more than the upper income people. That is why the upper .1% income/wealth/power group loves austerity: Austerity widens the Gap between the rich and the rest.

Being bribed and controlled by the very rich, the EU and the International Monetary Fund consistently advocate for deficit reduction and Gap widening.

In fact, one may safely assume that Gap widening has been the fundamental purpose of the euro, all along.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARYSOVEREIGNTY

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