–At last: The great Washington compromise.

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.
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We all should very happy. Washington has moved away from angry, Tea Party, take-no-prisoners, destroy-America-to-save-it rhetoric, and now is in compromise mode.

Ryan pleads with conservatives as budget deal heads to Senate
Republicans plan to use debt ceiling fight as a bargaining chip in 2014
By Jacqueline Klimas-The Washington Times Sunday, December 15, 2013

As the bipartisan budget deal moves to the Senate, where it faces opposition from some Republicans, Rep. Paul Ryan is telling those on the right that the compromise is good for core conservative values.

(“Bipartisan” is a much-loved word these days, as supposedly it stands for something good, though no one knows what.)

O.K., so it’s not exactly the friendliest of compromises, but at least it’s better than all that fighting. At least something will get done. Right?

“Look at the details, I say to those who are criticizing it. This is keeping our principle intact: no tax increases, net deficit reduction, permanent spending cuts in place of the across-the-board approach,” Mr. Ryan said on “Fox News Sunday.”

The Wisconsin Republican joined Sen. Patty Murray, Washington Democrat, last week to announce the two-year, $1.012 trillion plan, which would alleviate some of the sequester cuts and reduce the deficit by $23 billion over 10 years.

In August of this year, we published The Recession Clock. It showed two graphs and asked four questions:

1. What does the federal government do in the years leading up to recessions? (Answer: Cut growth in deficit spending)

2. What does the government do that cures recessions? (Answer: Increase deficit spending growth)

3. What is the government doing now? (For a clearer picture, here is a closeup of the most recent past):

4. Why is the government cutting deficit spending growth, despite overwhelming evidence this causes recessions? (Because of the false premises that the federal government can run short of dollars, or by creating dollars, could cause inflation.)

Now the Republicans and the Democrats, in the spirit of collegiality, plan to compromise. They will reduce the deficit. The Republicans want to kill us by shooting, and the Democrats want to kill us by poisoning. The compromise is all about how best to kill the lower and middle income groups.

So we head toward another recession, which will impact the poor far more than it impacts the rich (as recessions always do). It will be a wholly avoidable, entirely unnecessary recession. For our Monetarily Sovereign nation, the deficit is no burden. Your children will not pay the federal debt.

The federal deficit is the economy’s surplus. The deficit stimulates economic growth. (GDP = Federal Spending + Non-federal Spending + Net Exports)

On average, the U.S. negative balance of trade is $40 billion per month. We import $40 billion more each month than we export. Month after month, $40 billion flows out of America.

This means, that just to break even, i.e. for Net Exports to = $0, the federal government needs to run a $40 billion monthly deficit — a $360 billion annual deficit.

What is our current deficit?

Six hundred billion . . . and dropping fast.

So, the “compromise” is a cousin to President Obama’s rightfully scorned “grand bargain.” Like the “grand bargain,” the “compormise” will continue to reduce the deficit with massive cuts to spending.

What exactly will be cut? I don’t yet know. But this is absolutely, positively certain: The cutting will affect the lower and middle income groups far more than the top .1%

The rich will get richer. The poor will get poorer. The middle will fade away. The politicians will prance and preen and congratulate themselves on how they made a bipartisan deal to save America (i.e. save their rich donors).

And the public, will buy into the myth that helping the poor makes them lazy “takers”, unmotivated and deserving of their suffering, while the rich are hard working, beneficial “makers,” deserving of their wealth, and even deserving of thanks for allowing the little people enough to keep alive.

It’s a lie, a Big Lie. The poor are not lazy. They are not sloths looking for handouts. Their lives are hard and unrewarding. Their hopes are diminished. It’s a daily effort just to get by. It’s a Big Lie promulgated by the rich.

And as for those “makers,” the presidents and top executives of General Motors or A.T.&T. or General Electric or Exxon or Apple — they haven’t made anything or hired anyone. It’s the corporation that does the making and the hiring.

The executives themselves were hired by the corporations to do jobs, for which they are well rewarded. These executives, these well-paid employees, are the ultimate takers, receiving massive benefits from the toil and sweat of their subordinates, and from the government.

It’s not the rich executives who pull 100 boxcars filled with freight. It’s the engine. All the executives do is pull the levers and watch the scenery. Is their job so much harder than yours, that they should be paid 10, 100, 1000 times more than what you earn?

Unless you’re among the very rich, cutting the deficit hurts you. It widens the gap between you and the rich. That is what the rich want, and to effect it, they gave you the Big Lie.

If you’ve bought the Big Lie, you and your children will spend the rest of your lives paying for it.

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine 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. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
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. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (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

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

–The five little words that doom the American middle class

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

Recently, someone asked me, “What’s wrong with the economy”?

I’ve been at this for almost 20 years, and that little, five-word question, stopped me. I’ve written two books and almost 1200 posts on this blog, given talks, argued, discussed — all trying to answer that question. And now I was fumbling for a succinct answer.

You know how sometimes a long story can be summarized in a single great line? I was looking for that great line.

The ethic of reciprocity (aka the “Golden Rule”) is the basis for most religions. (In 100 BC, Hillel the Elder said, “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is the explanation.“) The Golden Rule is a great line.

When General Sherman said, “War is hell,” he told the entire story of war. Everything else is the details.

Abraham Lincoln said, “If slavery is not wrong, nothing is wrong,” which says all one needs to know about slavery and slave holders.

A personal favorite is, “Happy wife; happy life,” which is the shortest formula I know, for a successful marriage.

And then came John Boehner who, in December, 2012 said these five little words: “Let’s be honest. We’re broke.”

The irony of John Boehner mouthing the words “Let’s be honest,” cannot be improved upon, except when followed by the Big Lie, “We’re broke” — what a perfect description of the fall of the American middle class and the increased gap between the rich and the rest.

“Let’s be honest,” meaning, “All this time I haven’t been honest, but at long last I’m going to be honest,” only to be followed by yet another lie. And the public again believes it.

Think of Lucy repeatedly pulling the football away, just as Charlie Brown tries to kick it. Charlie never learns. The American public never learns, in fact, refuses to learn.

Five little words tell of bribed politicians, smug in their confidence they can lie and lie and lie, knowing there will be no punishment — knowing they will be rewarded by their real constituency, the super-rich.

Five little words speak of a media, bought, paid for and owned by the super rich — a media that long ago has forgotten they exist to inform, and now believes they exist only to make money.

Five little words tell of scientists — university and media economists — so cowed from top to bottom, they can’t bring themselves to fight the “company” line. University and media economists so slavishly act as mouthpieces for the rich, they refuse to rise up and tell the truth.

The truth: Our Monetarily Sovereign U.S. government is not “broke,” cannot be “broke,” and never will be “broke.” Its finances are not at all like your finances. The U.S. government, unlike Greece, Italy and local governments, has the infinite ability to pay its bills, and even could do so without collecting a penny of tax from you or from your grandchildren, or by borrowing a penny from China. Austerity is the way to widen the gap between the rich and the rest. That is the truth.

But, in a second irony, if “broke” means “broken,” Boehner actually would be correct. The government has been broken by the rich, the likes of the Koch brothers, Pete Peterson et al, who bribe the media, the politicians and the universities. The government has been twisted and broken by a dishonest Supreme Court, which long ago gave up any pretense of following law, but rather invents law to widen the gap between the rich and the rest.

And then, in yet a final irony, “We’re broke” comes around as the truth, only now the “we’re” doesn’t refer to the government, as Boehner intended, but rather refers to the American people.

We the American people are broke. Lucy continues to pull the football away, and we continue to fall for it. Our wealth has been taken from us. We no longer resist. The Big Lie has taken its toll. We have no strength. We accept our fate.

Let’s be honest. We’re broke.

Rodger Malcolm Mitchell
Monetary Sovereignty

—–

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

The 5 ways to eliminate wasteful federal spending.

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

Two questions:

Exactly, what is federal wasteful spending, and why is it bad?

Imagine there are only two men in America. Our Monetarily Sovereign, federal government pays one man $10 to dig a hole, and pays the other man $10 to fill it in. Is this an example of wasteful spending? If so, why?

The word “wasteful” is a pejorative. Anything labeled “wasteful” is bad by definition. So yes, wasteful federal spending would be bad — if it existed. But does wasteful federal spending really exist?

Keep in mind that our federal government is Monetarily Sovereign. This means:

*The federal government, unlike state and local governments, has the unlimited ability to create dollars. It never can be forced to run short of dollars.

*The federal government creates dollars by spending. To pay a bill, the government instructs vendors’ banks to increase the balance in the vendors’ checking accounts. This is how the federal government creates dollars.

*Thus, unlike state and local taxes, federal taxes do not pay for federal spending. Even if federal taxes were $0, the federal government could continue to instruct vendors’ banks to increase the balance in vendors’ checking accounts, i.e. the federal government could pay its bills.

*Therefore, taxpayers do not pay for federal spending.

*And federal spending for one purpose does not replace federal spending for another purpose.

So again, exactly what is federal “wasteful” spending?

The Heritage Foundation, a mouthpiece for the notorious, right-wing, billionaire activist Koch brothers, offers:

Six Categories of Waste

1. Programs that should be devolved to state and local governments;
2. Programs that could be better performed by the private sector;
3. Mistargeted programs whose recipients should not be entitled to government benefits;
4. Outdated and unnecessary programs;
5. Duplicative programs; and
6. Inefficiency, mismanagement, and fraud.

Numbers 1 and 2 merely represent the Koch’s attempt to shift spending from the federal government (which can afford anything) to burden the state and local governments and the private sector with unaffordable spending. The purpose: To widen the gap between the rich and the rest by eliminating government spending, the vast majority of which benefits the non-rich.

Widening the gap gives the rich even more power over the rest, and power is what the rich want.

Number 3 reveals its purpose by the use of the word “entitled.” To the rich, no one but the rich is entitled to anything. Social Security, Medicare, Medicaid, food stamps and other aids to the middle and poor all are “mistargeted entitlements.”

But surely, “outdated,” “unnecessary,” “duplicative,” “inefficient” and “mismanaged” programs must be examples of federal wasteful spending, and they would be except for one detail, and that goes back to the first question in this post: Exactly, what is federal wasteful spending?

Or said another way: Is it possible to “waste” something for which there is an unlimited supply?

Your rowboat floats in the middle of Lake Michigan. You have a bucket of fresh water, which you now use for cleaning your boat. Have you “wasted” the fresh water?

Or: Your boat floats in the middle of the Atlantic ocean. Again you use your bucket of fresh water to clean your boat. Have you wasted the fresh water?

In the first case, there is no waste. You’re in the middle of a giant lake, having unlimited fresh water, and you now have a clean boat. In the second case, there is waste, because you’re in the middle of a salt-water ocean, and that lost fresh water is irreplaceable. It was wasted.

And that is how the Monetary Sovereignty of the federal government differs from the monetary non-sovereignty of state and local governments and the private sector.

I submit that the term “wasteful” cannot apply to federal spending. Yes, some federal spending may be more productive than other federal spending, but no federal spending precludes other federal spending. It simply is not correct to say that federal spending for “A” could have been used for “B.”

All federal spending has one huge advantage for the economy: All federal spending adds dollars to the economy, which grows the economy. (GDP = Federal Spending + Non-federal Spending + Net Exports)

What about Heritage/Koch’s final caveat, “fraud”? Is fraud an example of wasteful spending?

It depends. If the fraud steals dollars from someone in the private sector, it is wasteful. But if the fraud steals dollars from the federal government, it may be criminal, but it isn’t wasteful. In fact, it adds dollars to the economy.

Even counterfeit dollars grow the economy. So long as they are not caught, they add to private sector buying power.

Let’s get to motivation. Why does Heritage/Koch, and all the bought-and-paid-for politicians and equally bought-and-paid-for university economists stress about federal waste?

The primary financial motivation of the rich is to widen the gap between themselves and the non-rich. It is the gap that makes them rich. Without the gap, no one would be rich, and the wider the gap, the richer they are. What the rich call “waste,” are benefits to the non-rich.

As Heritage/Koch said,

“It is possible to reduce spending and balance the budget. In the 1980s and 1990s, Washington consistently spent $21,000 per household. Simply returning to that level would balance the budget by 2012 without any tax hikes.

The Kochs et al, want reduced federal spending — reduced Social Security, reduced Medicare, etc., etc., etc. The goal is to deprive the non-rich and to widen the gap.

The best way to rationalize reduced federal spending is to call it “wasteful.” Nobody likes waste. Even the people most affected by cuts in federal programs feel obliged to agree that “waste” must be eliminated. As Heritage/Koch says:

“Lawmakers seeking to rein in spending and budget deficits should begin by eliminating this least justifiable spending while also addressing long-term entitlement costs.”

And there you have it: “Long term entitlement costs.” Get rid of entitlements and the rich will have even more power over the rest.

Should there be any limit to so-called “wasteful” spending by the federal government? Yes, that limit is an inflation that cannot be prevented or cured by interest rate increases.

So, what are the 5 ways to eliminate wasteful federal spending?

1. Target all federal spending toward the goal of narrowing the gap between the rich and the rest.

There are 4 additional ways, but to recite them would be wasteful.

Rodger Malcolm Mitchell
Monetary Sovereignty

—–

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

Government spending is good. Government taxing is good. It’s all good.

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

In June, we published Government/media disinformation. You won’t learn this from your morning paper.

The article quotes Reuters “news” service. You know Reuters, that climate-change-denying, terrorism denying, owned-by-the-rich “news” source.

I you read the Reuters article, you’ll see that it claims the government’s purchase of General Motors stock stimulated the economy (by adding dollars to the economy), while the government’s subsequent sale of GM stock benefited taxpayers (by taking dollars from the economy).

Apparently, there is no difference between federal purchases and sales of private sector stocks, an amazing duality of benefit in which no matter what the federal government does, it’s good.

Now today, Time published:

U.S. Treasury Sells Final Shares in General Motors
The U.S. helped bail GM out with $49.5 billion in investments in exchange for an ownership stake
By Anita Hamilton

The United States Treasury has sold off the last bit of the 912 million shares in General Motors it received when it bailed out the automaker in 2009 under the Troubled Asset Relief Program (TARP).

General Motors said in a press release that the bailout saved 1.2 million jobs. However, taxpayers wound up paying approximately $10 billion to save GM, according to the Detroit News.

Translation: The federal government pumped $10 billion into the economy, which saved 1.2 million jobs. Taxpayers payed an additional $10 billion although no new taxes were levied. No one can explain this.

President Barack Obama also released a statement on the sale.

“Today, we’re closing the book by selling the remaining shares of the federal government’s investment in General Motors. GM has now repaid every taxpayer dollar my Administration committed to its rescue.”

The government’s total recovery from all TARP investments is about $432.7 billion.

Translation: The government has benefited taxpayers by taking $432.7 from the private sector. The fewer dollars taxpayers have, the better off they are.

The government will continue to benefit taxpayers by reducing the federal deficit. This will require adding fewer dollars to the private sector, while taking more tax dollars from the private sector.

Since taxpayers constitute the private sector, adding fewer dollars together with taking more dollars, impoverishes the private sector, which somehow benefits taxpayers.

And this is good for the economy.

Please do not ask for an explanation from Time or Reuters, or from the wealthy people who own these “news” services or from the bought-and-paid-for politicians and main stream economists.

And by the way, just because austerity impoverishes the poor far more than the rich, this all has nothing much to do with widening the gap between the rich and the rest. Nothing at all.

If you need an explanation, ask George Orwell.

Rodger Malcolm Mitchell
Monetary Sovereignty

—–

As the federal deficit growth lines drop, we approach recession, which will be cured only when the lines rise.

#MONETARY SOVEREIGNTY

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