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

The headlines are dramatic:

In new “cliff” bid, Obama seeks $1.2 trillion in revenue

Obama, Boehner move close to ‘fiscal cliff’ deal

With New Offers,Cliff Talks Narrow

They are designed to make you believe there is a dramatic struggle between the forces of good and evil – the powerful President of the United States and the Senate on one side, and House Speaker John Boehner on the other — to determine the fate of America.

It’s all theater. Both sides want, and are paid to achieve, exactly the same thing: To widen the gap between the rich and the rest.

As we have seen in previous posts, the President has the power to eliminate all federal debt, bypass the debt limit, and pay for all federal services, while decreasing federal taxes and preventing inflation.

He can do all this at the stroke of his pen, without even asking permission from Congress. And he knows he can do it. But he does not.

Instead, he and the Speaker of the house engage in a charade.

Why? Because the rich pay for this service, via campaign contributions, aided and abetted by the Supreme Court’s decision which allows the rich to bribe politicians as much as the politicians wish to be bribed.

A person considers himself rich, not because he owns a great deal, but because he owns a great deal more than others. It’s the “more” that counts, and how much “more” determines how rich you feel you are. The rich focus on the comparison, not on absolute numbers.

So they bribe politicians to widen the gap, and the politicians oblige. We discussed this in more detail at: “No, it’s not your imagination. The upper 1% really are screwing you more”

Here is one of the graphs from that post, showing you how the income gap has grown (Higher numbers mean a wider gap):

Here you see a dramatic increase in the gap between the rich and the rest, all orchestrated by a series of bought-and-paid-for Presidents and Congresses.

Bottom line: Don’t believe the headlines. Both Obama and Boehner, the Democrats and the Republicans, are using the mythical “debt crisis” to do the bidding of the upper .1% income group. Their “good cop, bad cop” act is just that: An act.

Had they merely come out and said, we are going to cut the spending that benefits the lower 99.9%, you would have been outraged. But by making the results a “grand bargain,” a hard-fought “compromise” to “solve a serious problem,” they make you feel all is fair — grateful even.

Of course, since deficit reduction (also known as “austerity”) not only is unnecessary, but very harmful, and since that austerity always hurts the 99.9% more than it does the .1%, every outcome will push you down further.

And as for that proposed top rate tax increase on the rich: They never pay the top rate. Just ask Warren Buffett, whose tax rate is lower than his secretary’s. Ask Mitt Romney, who has parked his money overseas, and had to fake his tax return, just to get his rate up to 14%.

It’s all Kabuki theater that damages you and America. I hope you enjoy the show. You’re paying for it.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY

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

The euro nations, like the U.S. states, counties and cities, are monetarily non-sovereign. Unlike the U.S. government, which is Monetarily Sovereign, they cannot create their sovereign currency; they have no sovereign currency to create. The euro is an “alien” currency, used by courtesy of the European Union.

As has been discussed often on this blog, a monetarily non-sovereign government, being unable to create money, needs money coming in from outside its borders. U.S. states survive either by receiving dollars from the U.S. government, or by net exporting to receive dollars.

This blog has stated there are two, and only two, long-term solutions for euro nations. Either:

1. Revert to their own sovereign currencies
or
2. Join together in a fiscal union (ala the United States), in which the EU supplies euros to member nations, as needed.

There are no other long-term solutions, and certainly not the “solution” currently being used: Repeated loans to excessively indebted nations plus insistence on economy-crushing austerity.

Given that those are the only two solutions, the euro nations have selected a third “solution,” a non-solution: A banking union. It supposedly will protect banks and their depositors, but will do nothing for the nations themselves or for their citizens.

The Guardian
Eurozone moves a decisive step closer to banking union
European leaders seal agreement to put the European Central Bank in supervisory authority over financial institutions in the single currency area
Ian Traynor in Brussels
The Guardian, Thursday 13 December 2012

European leaders were expected to push ahead with plans for winding up or shoring up weak eurozone banks on Thursday night, hours after sealing agreement to put the European Central Bank in supervisory authority over financial institutions in the single currency area.

In what was being hailed as one of the most important and systemic responses in three years of battling to save the currency, finance ministers early on Thursday embarked on the first stage of a eurozone “banking union”, burying acute Franco-German differences to establish the first single banking supervisor.

But more ambitious schemes, drawn up by the summit chair, president Herman Van Rompuy, to move towards a eurozone fiscal and political federation were watered down and delayed amid strong German resistance to any pooling of risk and costs among the currency’s 17 countries.

Translation: “The most important goal is to save the euro, the banks, and the wealthy, not to save the euro nations. After all, banks are owned by rich people, so we must defend them. As for the nations, who cares if the citizens suffer.”

The European commission was told to draw up legislation for dealing with weak banks over the next year and the law should come into force in 2014. There was also talk of a common eurozone deposit guarantee scheme, the third plank in the banking union scheme, safeguarding people’s savings anywhere in the single currency area.

After more than 14 hours of fractious negotiations, the ministers agreed on the single supervisor as the first stage of a more comprehensive banking union. The next two stages may turn out to be more difficult to realise because of German-led reluctance to bow to the mutualisation of risk involved. But without them, it will also be difficult to see the new regime being effective, officials and diplomats say.

It will be another 15 months before the new regime starts operating properly.

Translation: “We have taken the most minute baby step toward fiscal union, but even that baby step will take more than a year.”

Merkel did not rule out supplying “financial incentives” for eurozone countries pledging to undertake structural reforms of their economies, policed by Brussels. But she added: “This should not be misunderstood. This can’t be used as a pretext for delivering new sources of money. That’s not on for Germany.”

The leaders also disbursed more than €34bn in bailout funds to Greece, six months after it was due, while postponing a decision on a bailout for Cyprus until next month.

Translation: “God forbid we allow the EU to provide euros to impoverished nations, though this would cost nothing and is the only rational solution to maintaining the euro. Instead, we’ll lend Cyprus, a nation that can’t pay its debts, even more money to renege on later.”

Perhaps we should view any move toward real merger, however slight, as good news, although the citizens of the euro nations will continue to suffer for many years.

Meanwhile, the ministers, the bankers and their wealthy friends will do just fine, thank you.

Because of austerity, the euro nations will continue to be the “sick men” of the world, just as the U.S. will be when deficit cutting proceeds.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY

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

Here are your handy recession predictors. Save the link to this page. The graphs automatically will update.

We tend to have recessions when the year-to-year percentage change of Gross Private Domestic Investment goes down, especially when it falls below zero:

We tend not to have recessions when the percentage change is rising.

We tend to have recessions when the total of Private Investment and Saving is on the downswing:

We tend to have recessions when the percentage change in the annual ratio between Gross Private Domestic Investment and Gross Private Savings is falling, especially when it falls below zero.

And, as we’ve seen in past articles, recessions tend to follow years of decreasing Federal Debt:

Finally, Federal Deficits – Net Imports = Net Private Savings
and
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

Given that the federal government is determined to reduce the federal deficit, which will involve reducing Federal Spending and increasing federal taxing, what do you think will happen to Gross Private Investment, the total of Investment and Saving, the ratio between Investment and Saving, and Federal Debt? What effect will there be on GDP?

You can pose that question to your favorite Congressperson and newspaper.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY

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

Excerpted from the Washington Post:
The GOP’s problem: The cuts they want aren’t the cuts they can get
Posted by Ezra Klein on December 13, 2012

The Republicans know President Barack Obama will not agree to cut in the area they want to cut: aid to the poor. Obama is willing to cut Medicare and Social Security, and Republicans are internally conflicted over those programs.

Translation: “We politicians are employed by the rich, so we don’t care that every day, Americans die from inadequate health care, and every day, families are destroyed by poverty – more death and destruction than are caused by war.

“The Republicans want to start with the lowest income group and work their way up. Unfortunately, a poor person can vote – though the Republicans have been attempting to change that.

“The Democrats want to cut the old people first, and screw the poor later. Unfortunately, those old people insist on voting.”

Think back to Mitt Romney’s proposed budget. The only big cuts Romney ever proposed were to programs that aid the poor. He wanted to cut Medicaid, food stamps, and housing assistance. He wanted to get rid of the tax cuts enacted in the stimulus to help the poor — his tax plan raised taxes on the poorest Americans. He wanted to repeal all the spending in Obamacare, most of which goes to lower-income Americans.

About two-thirds of the cuts in Rep. Paul Ryan’s budget came from programs for the poor.

That leaves Medicare and Social Security. It’s possible that the negotiators will enact a backdoor, but significant, cut to Social Security by changing the government’s measure of inflation. But they’re not going to come at Social Security from the front. It’s too politically potent. Even Ryan’s budget left Social Security alone.

Just imagine if the politicians had the courage and the honesty to admit that deficit reduction (austerity) destroys more American lives and families than war. There would be no need to cut Medicare, no need to cut Social Security, no need to cut food stamps, housing assistance or other aids to the poor, no need for crumbling roads, bridges and dams, no need to cut public broadcasting – and no need for high federal taxes. . .

Every man, woman and child could have good health care insurance, adequate food and shelter, a good education. America’s roads, bridges and dams could be repaired. The hurricane damaged East Coast would not have to suffer the Republicans’ delay in providing funds. Our military could upgrade. The post office would not have to cut service and employees. More intensive financial supervision could eliminate crooked banks and brokers.

All these and more, would be possible. Instead, we watch as our nation is whittled down by the budget cutters, whose goal is not to strengthen America, not to “save” Security and Medicare, not to “get our fiscal house in order” – no, the sole purpose is to increase the gap between the rich and the rest.

We have a chance to make a difference. We can spread the truth . We can influence the future of America. Write, call, march, demand, threaten. Make our feelings known. We can keep the rich from taking over our lives.

Or we can just follow along and let it happen to us. Just as the wealthy want.

“Never send to know for whom the bell tolls; It tolls for thee.”

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================

Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%

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

#MONETARY SOVEREIGNTY