Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●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.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Congress and the President have just discovered what every awake economist has preached for many years: The more budgets are cut and taxes increased, the weaker an economy becomes.

All the media and political lecturing that the federal government’s “deficit and debt are too high,” and the government should “live within its means,” is mere propaganda by the top 1% income group. The deficit is the federal government’s method for adding dollars to the economy, which stimulates the economy, and the federal government, being Monetarily Sovereign, has no “means” to live within. Unlike monetarily non-sovereign states, business and people, it can service any size debt, forever.

The purpose of this deception: To reduce benefits to the lower 99%, thereby increasing the income gap between 1% and 99%.

Now that Congress and the President have convinced everyone of this nonsense, they wish to take it back, for fear the peasants will rise up angrily.

Washington Post
Congress’s debate on year-end ‘fiscal cliff’ sets stage for fall showdowns

(‘Taxmageddon’ could shock the nation’s pocketbook: Thanks to some new taxes, the expiration of other short-term tax laws and other changes, the country’s economy could be dealt a major blow in 2013.)
By Paul Kane, Published: July 19, 2012

Five and half months before the deadline for potential disaster, Congress broke into heated debate this week over a January fiscal meltdown that could lead to nearly $600 billion worth of tax hikes and automatic federal spending cuts next year.

Translation: “Those tax hikes and spending cuts will reduce the federal deficit and debt. We hope you don’t remember it was we who wanted it. Now we take it all back, because frankly, tax increases and/or spending cuts lead to recessions and depressions.”

Democrats accused the GOP of risking economic calamity to the middle class to protect lower taxes for the rich. Republicans accused Democrats of wanting to raise taxes and being soft on national security.

Translation: “The other party did exactly what we wanted, but we deny it’s what we wanted. Hey, if Romney can criticize Obamacare, when he invented Romneycare, why can’t we criticize the deficit reduction we demanded?”

“The president’s small-business tax hike will hit nearly the same time as our military’s being hit with arbitrary cuts that will endanger our security,” House Speaker John A. Boehner (R-Ohio) said 20 minutes earlier. “Now some of those same Democrats are threatening to drive us off the fiscal cliff and tank our economy, all in their quest for higher taxes.”

Translation: “I want lower taxes. I want more spending. I want a reduced deficit. Please don’t think too hard about how that works.”

The situation is driven by the failure last fall of a specially empowered congressional “supercommittee” that had been tasked with finding $1.2 trillion in budget savings as part of a broader deal cut last August. With the supercommittee’s failure, the law requires the first wave of 10 years’ worth of automatic spending cuts to kick in Jan. 1 — at the same time that the income tax cuts approved during the George W. Bush administration, along with a host of other tax benefits, are set to expire.

Translation: “Our supercommittee failed to cut the deficit, so now the deficit will be cut automatically, which will be a ‘fiscal cliff’ disaster. If only the supercommittee had done its job, we would have had the fiscal cliff, but we could have blamed them.”

The combined effect of those tax hikes and spending cuts would send the already limping economy back into a recession, according to the nonpartisan Congressional Budget Office.

Translation: “Tax hikes are bad. Spending cuts are bad. Deficit cuts are good. Keep repeating that until you actually believe it — unless you already do.”

Obama began last week by restating his support for extending the 2001 and 2003 tax cuts only for the first $250,000 in income, offering such an extension for an additional year to buy time for a broader effort to reform the entire tax code next year.

Translation: “All tax increases are bad, because they remove dollars from the economy, which causes recessions. Except tax increases on those making more than $250,000 are good, because they also remove dollars from the economy, which also causes recessions, but we know the public will agree to cut off their own noses to spite their faces.”

“The politics of taxes has changed, and for 30 years Republicans won the argument because they conflated middle-income taxes and wealthy taxes,” Sen. Charles E. Schumer, Dem. (N.Y.), said Thursday. ”And when middle-class incomes were going up, the middle class sort of shrugged their shoulders and said okay. With middle income going down, and with us being a lot smarter about this, we are separating the middle class from the wealthy and for the first time in 30 years winning the tax argument.”

Translation: “I don’t give a damn about the reality that Federal Deficits = Net Private Savings, so are necessary to grow and stimulate the economy. All I care about is blaming the other guy, when we fall over the fiscal cliff.”

In case you’re like Congress and the President, i.e. clueless, here is a brief summary:

1. The federal deficit and debt are too high.
2. Increased taxes and/or reduced spending cut the deficits and debt.
3. But increased taxes and/or reduced spending will send the economy off the “fiscal cliff.”
4. So we want to cut the deficit but do not want to increase taxes and/or reduce spending.

Got it?

Sadly, most of America has no problem whatsoever believing points 1 through 4, and will argue to the death that Monetary Sovereignty and MMT (which say 1 through 4 make no sense) are wrong.

You just can’t make this stuff up.

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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 exports

#MONETARY SOVEREIGNTY

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●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.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Let’s begin with the facts. Mitt Romney is a man who wishes to be President of the United States, but doesn’t really know why — other than ego. He has no plan for the country and he has no core beliefs. He just wants to be — tah dah! — *The President*.

The post, “Which of these three candidates do you support: Barack Obama, Flip Romney or Flop Romney” listed some of the opposing positions Romney has taken:

He loved Romneycare, but hates Obamacare, though the two essentially are identical.

He was for and against increasing the minimum wage. For and against stem cell research. For and against women’s pro-choice. For and against the individual mandate. For and against the auto industry bailout.

He loved and didn’t love Ronald Reagan. He was for and against — then for, again — a pathway to citizenship for immigrants. For and against G.W. Bush’s tax cut plan. For and against a ban on assault rifles.

He does and does not own a gun. He takes both sides of the global warming debate. For and against same-sex marriage. For and against a “no-new-taxes” pledge.

In short, he is the Zelig of American politics, a man who will assume the persona of whomever has a vote or a dollar that can help him be — Tah dah! — *The President*. If character were the sole criterion, Romney would be as fit to be President as Bozo the Clown.

That said, the criticism Romney has received about his role at Bain Capital reflects his critics’ remarkable misunderstanding about the purpose of business.

The fundamental purpose of the typical business is to make money for its owners. A business does this by creating a demand for its product/service and by meeting this demand efficiently.

Businesses do not succeed by employing unneeded people. Efficiency means not paying more than necessary for goods and services. If, as a business owner, you have the choice of buying a widget in the U.S., or buying a much less expensive, identical widget overseas, you would be business-wise to buy overseas.

Compassion and patriotism are praiseworthy traits, but a company’s balance sheet does not list them as line items. Walmart did not succeed by putting compassion and patriotism at the top of its “to-do” list. GE didn’t succeed by tolerating money-losing companies.

While I don’t subscribe to the more extreme forms of Gordon Gekko’s “Greed is Good” philosophy, only the business-ignorant, or those having an ax to grind, criticize Romney for “shipping jobs overseas,” or for firing unneeded people, or for closing unprofitable companies or for (oh my gosh!) making a profit. He was doing — successfully doing — what a good businessman does.

In business, competition means you win and someone else loses. Is that lack of compassion? Using Indian workers and Chinese products means Americans pay less for goods and services, and American shareholders make more money. Is that unpatriotic?

And so far as having money in offshore accounts, Romney was trying to minimize his taxes. God bless him for that. Would you respect him more if he didn’t try to minimize his taxes?

And then there’s the fact that he’s rich, which supposedly means he cannot be President, because everyone knows being poor is a good criterion for leadership — because a rich man doesn’t understand the common people. Right?

Of course, that criterion excludes wealthy Franklin D. Roosevelt, who created the New Deal and Social Security for the common people. And there was wealthy Lyndon B. Johnson, who passed the Civil Rights Act, Medicare and Medicaid. And Jack Kennedy was our third wealthiest president, and the wealthiest of all was — George Washingon. Some pretty good men in that list.

Would Romney make a better President if he was a lousy (though patriotic and compassionate) businessman, who hired too many (American) people, paid them too much, bought too expensively, couldn’t turn a profit, paid too much tax and was broke? Is this the wisdom you would like to see in the Oval Office?

Bain Capital is the least of Romney’s “shortcomings.” Criticize him for being owned by the upper 1% income group. Criticize him for having no core beliefs, no reliable positions, no plans and no ideas not subject to change.

Criticize him for being a crass opportunist, who will say anything and do anything to satisfy his ego-driven urge to be — tah dah! *The President* — but don’t criticize him for being a good businessman.

Good businessmen built America.

[On second thought, not many good businessmen became good Presidents. In fact, almost none of America’s best Presidents were good businessmen. In further fact, good businessmen became some of our worst Presidents: Carter, Harding, Hoover, Bush II.]

Hmmm . . .

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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 exports

#MONETARY SOVEREIGNTY

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●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.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

Here we go again — another benefit program for the lower 99% income group, under siege by the upper 1%.

The excellent blog, Global Economic Intersection, published an article titled “CBO Infographic: Bringing Social Security Disability Insurance Under Control.”

The words “Under Control” provide the first clue, because whenever the old-line economists, in cahoots with the upper 1% income group, worry about “control,” they really mean controlling the lower 99% income group.

Here are the lead paragraphs of the article:

Econintersect: The Social Security Disability Insurance (DI) program is one of the entitlement programs for which costs are spiraling out of control. This program “pays cash benefits to nonelderly adults (those younger than age 66) who are judged to be unable to perform “substantial” work because of a disability but who have worked in the past.”

The Congressional Budget office (CBO) has prepared a study on potential solutions which center on the following options:

increase program revenue
change the disability insurance benefit formula
change how the disability insurance benefits grow over time
change the eligibility rules
change the waiting period for benefits

Translation: “The only solutions to the ‘control’ problem are to cut benefits to the 99% and/or to increase taxes on the 99% — presumably those FICA taxes that mostly punish lower-salaried people.”

You should read the entire article, because it contains several interesting, little-known facts about the DI program. The key issue is simple: Taxes are less than benefits. Where have we heard that oh-so-shocking news, before?

The article includes this bit of information:

The DI program provided $119 billion in benefits to 8.3 million disabled workers in fiscal year 2011, accounting for nearly 18 percent of total Social Security spending. The Congressional Budget Office projects that in 2022, the DI program will provide benefits totally $204 billion to over 12.3 million disabled workers and their dependents.

Translation: “The program is ‘out of control’ because it will do exactly what it was designed to do, i.e. give aid to disabled people and their families, virtually all of whom are in the lower 99% income.”

The article also includes this list:

An entitlement program is one which guarantees access to benefits based on established rights or by legislation. A list of other entitlement programs:

529 or Coverdell
Home Mortgage Interest Deduction
Hope or Lifetime Learning Tax Credit
Student Loans
Child and Dependent Care Tax Credit
Earned Income Tax Credit
Social Security–Retirement & Survivors
Pell Grants
Unemployment Insurance
Veterans Benefits
G.I. Bill
Medicare
Head Start
Social Security Disability
SSI–Supplemental Security Income
Medicaid
Welfare/Public Assistance
Government Subsidized Housing
Food Stamps

Translation: “We’re coming to get you, you of the 99% who receive benefits from the government. Although your federal government is Monetarily Sovereign, and therefore can afford any benefits of any size, we have you brainwashed into believing your Monetarily Sovereign government actually is monetarily non-sovereign, and is in danger of going broke.

“We do this so we can cut and gut your benefits, and in this way increase the income gap between the upper 1% and you lower 99%, thereby increasing our power (aka “control”) over you.

“So all you people who receive benefits from any of the above programs, get ready. One by one, we’ll chip away at your benefits, until we have brought you to your knees, and will do what we tell you to do.”

Because the public does not realize that a Monetarily Sovereign nation can and should pay increasing benefits for the welfare of the public, the 1% is given free rein to cut those benefits.

This is what ignorance of Monetary Sovereignty has accomplished. Like cattle being led into the slaughterhouse, the 99% docilely acquiesces, with hardly a “moo.”

In fact, they resist anyone who warns them not to step into that chute.

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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 exports

#MONETARY SOVEREIGNTY

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●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.
●Austerity = poverty and leads to civil disorder.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
==========================================================================================================================================

The great thing about having readers is they not only offer solutions you might not have considered, but perhaps more importantly, offer questions you are forced to answer. For that I must thank readers Yuu Kim and Woj for their very insightful comments and questions.

Yuu Kim asked the a question, elegant in its simplicity:

If the government is the banker, then what would be the point of making loans to the public?

My answer was:

Not only does the government not need to make a profit, it doesn’t even need to receive the loan money back. The government literally could give money rather than lend it.

The problem then becomes: To whom to give the money, and how much? The credit system provides a method, albeit a method that could be criticized on many fronts: Give (or lend) money to people who have good credit. It’s weak, but it’s a method.

It was a lousy answer, especially since I often have criticized the European Union for lending, not giving, euros to the euro nations. Clearly, loans to people who can’t repay, make no sense.

But Yuu Kim’s question implies, “Does it make any more sense to refuse loans to people who can’t repay — if you don’t need repayment?

Then came Woj, who said:

The (current) credit system, however, works because it is a market in which the profit motive helps different individual/institutions price credit.

Yes, that is partially true — though only partially. Credit card issuers are notorious for not considering credit ratings, whether for granting credit or establishing rates. Mortgage lenders consider credit ratings more on a “go, no-go” basis, than on a rate-setting basis.

That said, nothing would prevent a federally owned bank from setting lending rates according to credit rating — if that were important. We really need to explore the notion that a lender with infinite dollar resources (the U.S. government) should charge interest, or if it does charge interest, scale that interest according to credit rating — or lend at all.

Currently, the government gives, not lends, dollars to people whom the government judges “need” dollars or “are entitled to” dollars. All poverty aid falls into this category. Social Security and Medicare (which, by the way, are not paid for by FICA), are gifts from the government. So are roads, food inspection, military protection and thousands of other valuables.

So I ask:

1. Should a person with poor credit be charged higher interest than a person with good credit, if the lender doesn’t need the loan to be repaid?

2. Should that lender even charge interest, or rather should it lend on a no-interest basis?

3. Should that lender actually lend at all, or should it only give?

4. What should be the determining factors with regard to whether a person or business receives a loan with interest (and what interest rate) vs. a gift?

Currently, the for-profit market makes those determinations, but is that the best, public-interest way? The for-profit market puts roadblocks in the way of “money-needers” having poor credit. But, should all such money-needers be denied money or charged more for it?

What happens to America, when someone wants to buy a house or rent an apartment, build a business, pursue an invention or get an education, but can’t receive an affordable loan? No one knows.

Is there a homeless genius out there, whose ideas could revolutionize the world, but whose homelessness precludes his advancing those ideas? No one knows.

Is there a 180 IQ somewhere, who can’t afford to go to college, not only because of tuition costs, but because she needs to work to support her family? No one knows.

Every year, millions of dollars are destroyed in our economy, as loans are repaid. How much has this money destruction inhibited economic growth and contributed to recessions and depressions, joblessness and misery? No one knows.

Is private banking’s profit motive the best determinant (or even a good determinant) of “who-gets-money“? Is credit rating the best allocation method for America? Currently, the government spends trillions answering that question. But the private banks spend even more trillions.

Consider the criminal banksters who caused the Great Recession. What role in “who-gets-money” should they have? Then consider private credit rating agencies that gave AAA ratings to worthless investments — ratings that helped cause the Great Recession. What should be their role in “who-gets-money“?

Finally, consider our inept, politically driven Congress, President and Supreme Court. Should they be the sole determinants of “who-gets-money,” or do the private sector criminals provide some sort of economic balance against the public sector criminals?

In short, how should America decide “who-gets-money”?

Questions, questions, questions. My intuition (without proof) says:

1. Federally owned banks would be less criminal than the large privately owned, profit-driven banks. Some may believe that small banks would be more responsive to the public, though my personal experience with a local Social Security office (survey of one) has been excellent. A federally owned agency can deal with the public, just as well as a private bank, even on an individual customer basis.

2. Lending, rather than giving, weeds out those who do not have a serious purpose, so though federally owned banks could give, they should lend.

3. The federal bank lending rate should be zero for all. If, according to whatever lending criteria the bank sets, the borrower deserves a loan, that loan should not carry interest. Neither interest payment to the government, nor punishment of borrowers, serves any public purpose.

Consider this a think-piece, and tell me: What do you think?

Rodger Malcolm Mitchell
Monetary Sovereignty

==========================================================================================================================================
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 exports

#MONETARY SOVEREIGNTY