Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. 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.
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What is the disgrace of America?

Chicago Tribune
Deep cuts loom as state tries to save Medicaid
By Monique Garcia and Ray Long, Chicago Tribune reporters, April 17, 2012

The list of medicines Jason Carrington must take every day to treat his multiple sclerosis and related symptoms is long: Copaxone injections to prevent relapses, primidone to control tremors, Seroquel to stabilize his mood, lamotrigine and Cymbalta to treat depression and anxiety.

The drugs can cost thousands of dollars a day, an expense the state now picks up. But the 32-year-old Wicker Park resident soon could find himself forced to seek another way to pay for his prescriptions.

Scaling back such coverage is on the table as Illinois looks for ways to cut spending on its health care program for the poor. The state’s plan for drastically slashing Medicaid in order to save it is expected to come into sharper focus this week as a group of lawmakers and aides reports back to Gov. Pat Quinn.

The options could range from ending so-called extras such as dental and hospice care to raising cigarette taxes. Other possibilities: asking patients to pay more for services and narrowing eligibility requirements that could see thousands of children and adults lose health insurance.

This is the disgrace of America: Millions of our sick people unable to afford health care, while an economically ignorant federal government withholds the dollars that would pay for that care.

Chicago Tribune
Glimpses of Illinois Medicaid cuts emerge
By Monique Garcia, Ray Long and Alissa Groeninger
Clout Street, April 19, 2012

Glimpses of a plan to slash spending on the state’s health care program for the poor emerged Wednesday, with preliminary ideas ranging from eliminating a discount prescription program for seniors to stricter eligibility requirements that would leave thousands without health care coverage.

The menu of options was outlined in documents obtained by the Tribune that show potential cuts by Gov. Pat Quinn. While plans remain fluid, the draft provides a look at what’s on the table as the Democratic governor prepares to formally unveil his ideas Thursday.

Quinn has said the Medicaid system could collapse next year if spending isn’t slashed by at least $2.7 billion in the budget year that beings July 1. A bipartisan group of lawmakers has been examining ways to reach that figure, but has only been able to reach a consensus on how to cut about half of the governor’s requested amount.

This is the disgrace of America. A nation is measured by its treatment of its poorest. Our Monetarily Sovereign federal government has the unlimited ability to pay any bill of any size, and easily could eliminate FICA, while providing Medicare to every man, woman and child in America.

Instead, we let our fellow Americans sicken and die while the federal government fiddles. This is how a cold-hearted nation dies. We turn away from our sick and starving children in the streets. What was once America, no longer is.

The eulogy of America is being written in cruelty on pages of ignorance.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. 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 inceased, the weaker an economy becomes. 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 following story has had major play, and will continue to have major play, for weeks. Both parties will attempt to spin it in their direction.

The Tea/Republicans will say it demonstrates all sorts of bad things about the Obama administration. The Democrats will say it shows we need more and better regulation. In short, the usual, political lip flap. But, how important is this story, that is, how much does it affect you?

Washington Post
GSA official’s wife accompanied him on trips at taxpayer expense
By Lisa Rein, Published: April 17

The senior government executive who organized the lavish Las Vegas conference at the center of a General Services Administration spending scandal took dozens of trips for the agency. The boss’s wife accompanied him on some of them — and taxpayers picked up the tab.

Deborah Neely wasn’t always just sharing husband Jeffrey E. Neely’s hotel rooms at resorts from Las Vegas to the Pacific islands. She handled party arrangements, directed event planners to spend government money and arranged lodging for relatives on the GSA trip to Las Vegas in 2010, an unusual role revealed in transcripts of interviews that the agency’s inspector general’s office conducted with Jeffrey Neely, as well as in congressional hearings.

Her role as the “first lady of Region 9” — as an investigator called her — shows a management culture in GSA’s Pacific Rim region that not only allowed the $823,000 Las Vegas gathering for 300 people and overspending on other conferences but also openly condoned perks for managers and their family members.

O.K., stealing is stealing. We can’t condone it. But here is a case where the stealing didn’t cost anyone anything. In fact, it was economically stimulative. Hotels and hotel workers received money. Restaurants and restaurant workers received money. Hookers (hey, they’re people too) received money (all but one, who pulled the plug on the entire operation).

Hundreds, maybe thousands, of people received money, and it didn’t cost you or me one cent. When a Monetarily Sovereign government spends it creates the dollars for that spending. It doesn’t use tax dollars. It doesn’t use borrowed dollars. It simply creates dollars.

So if you’re outraged, your outrage must come from envy, not from any personal damage. If you enjoy being outraged, try this article from the Chicago Tribune:

Charges against Dixon comptroller has ‘awakened a sleepy little town’
By Melissa Jenco, Tribune reporter, April 18, 2012

The small northwest Illinois town of Dixon, stunned by charges against its chief financial officer of misappropriating about $30 million in city funds, has placed the employee on unpaid leave a day after her arrest in City Hall by FBI agents.

See the difference? No, I’m not talking about the amount of money stolen. I’m talking about the fact that the federal government is Monetarily Sovereign, so doesn’t spend tax dollars, while state and local governments are monetarily non-sovereign, so do spend tax dollars. In the Dixon case, the taxpayers are stuck with a $30 million bill, and the stealing, most definitely, was not economically stimulative.

While federal stealing has several bad results, at least taxpayers aren’t financially hurt. But state and local stealing directly impacts taxpayers. Regardless of the amount of money involved, I am far more outraged by state and local stealing than by federal stealing. Deborah Neely didn’t cost me a penny. But the stealing where I live, in Illinois and Cook County, costs me plenty.

To find real outrage, look at your crooked town council or your criminal mayor. Look much harder at the guy who steals $10 from your village treasury, than at the guy who steals millions from the federal government. It’s the local guys who take money from your pocket.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. 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 inceased, the weaker an economy becomes. 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.
==========================================================================================================================================

Yesterday’s post contained excerpts from an interview with Christine Lagarde, the managing director of the International Monetary Fund. The post contained many of her comments, but one was so amazing, I repeat it here, to make sure you didn’t miss it:

“When the world around the IMF goes downhill, we

thrive. We become extremely active because we

lend money, we earn interest and charges and all

the rest of it, and the institution does well.

When the world goes well and we’ve had years of

growth, as was the case back in 2006 and 2007,

the IMF doesn’t do so well both financially,

and otherwise.”

Christine Lagarde

In short, the IMF relies on its clients doing poorly. Now, at last, you can see the motivation for the IMF’s truly terrible advice — the push for austerity and the lending to nations that should not borrow. The IMF is a clone of the crooked U.S. banks that gave all those “liars loans,” which caused the great recession.

The above quote should hang on the wall of every politician in the world, as a reminder of what the “cut-government,-raise-taxes” crowd will do to ruin economies, and why they do it.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. 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 inceased, the weaker an economy becomes. 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 are excerpts together with translations:

TIME MAGAZINE: ECONOMY & POLICY
Christine Lagarde: Emerging Market Nations Will Get More Power in the IMF
By KNOWLEDGE@WHARTON | April 16, 2012 |
PABLO MARTINEZ MONSIVAIS / AP

Christine Lagarde, managing director of the International Monetary Fund (IMF), sees no alternative to the strict austerity policies being rosed on many peripheral European countries, says the double dip recessions in Italy and Ireland just announced come as no surprise . . ..

Translation: She sees “no alternative to strict austerity” and is not surprised by the double dip recession in nations adopting strict austerity. It doesn’t even enter her mind that strict austerity is what causes recessions.

After a distinguished legal and consulting career, Lagarde was named France’s Minister for Foreign Trade and then became the first woman to hold the post of Finance and Economy Minister of a G-7 country.Forbes ranks her as the 9th most powerful woman in the world (right behind Michelle Obama) and the 39th most powerful person on the combined men’s and women’s list.

Translation: She’s a lawyer practicing economics, who was promoted way beyond her skill level. Her policy is to lend to those who cannot repay. They cannot repay because she insists they destroy their economies with austerity.

Christine Lagarde: As part of this fragile recovery that we have been seeing since January, we have always considered that Europe and the euro zone in particular would go through a mild recession. The countries that are driving the recession at the moment are clearly countries like Ireland, Greece, Portugal and Italy. So this doesn’t come as a surprise. It’s part of a process that we had anticipated and were forecasting for 2012.

Translation: “Captain, we hit an iceberg and now the ship is sinking.”
“Don’t worry. It’s part of a process I had anticipated before we left port.”

Knowledge@Wharton: Related to that, austerity has been one of the chief policy levers Europe has been using to deal with the crisis. Do you think European leaders have focused on austerity too much and gone too far with it? Should a better balance be struck between austerity and stimulus?

Lagarde: If everybody goes at the same pace with austerity measures, it puts the whole region at risk. What we have advocated consistently now for at least the last six months is that there should be a proper balance within the zone, particularly within the advanced economies. We also need a proper balance between the austerity measures that are necessary and the growth-facilitating measures. So, obviously, it’s not a one-size-fits-all.

Translation: “Austerity” means to spend less and tax more, which always destroys an economy. But some nations are spending less and taxing more too much and some too little. Each nation needs to balance between spending less and taxing more vs spending more and taxing less. We want them to balance growth against shrinkage. If you find this confusing, how do you think I feel?

Some countries can afford to relax a little bit the austerity policy that they had embarked on. Others cannot relax the austerity measures. For instance, Greece is one country that certainly should not relax its measures. Italy is another one.

Translation: The countries in the most desperate economic situation definitely should shrink their economies further, so they can get out of recession and transition directly into depression.

Lagarde: Some countries have to be very, very brutal, in terms of reducing their deficit and bringing sanity to their public finances. The periphery of the core of the euro zone is clearly at stake in that regard.

Translation: As long as my salary continues, I don’t care how brutal the recessions get. By the way, do you have a map. I’m not sure where the “periphery of the core of the euro zone” is. Is it nearer the outside of the inside, or the inside of the outside?

Lagarde: Austerity should not be the exclusive focus of attention. It should not be the underlying general theme across the region in terms of economic policy. I also agree that growth is a key factor to try to not only kickstart, but maintain the recovery that is beginning to take hold in some countries.

Translation: We shouldn’t only use austerity to shrink economies. We also should use growth to grow economies. Got it?

Knowledge@Wharton: Can you have too much austerity in the short term rather than it being spread out more evenly towards the medium and long term?

Lagarde: It depends on the situation. There are some countries in which sharp adjustment is needed in order to be able to bounce back from that situation.

Translation: Rather than answer your question, I’m going to use the same double-talk that made Alan Greenspan fool Congress all those years.

Knowledge@Wharton: You have said that Europe needs deeper integration and bigger firewalls.

Lagarde: I said that when nobody was yet at the table. And now…

Knowledge@Wharton: They’re there.

Lagarde: Almost.

Translation: Don’t think you can pin me down. I’m too slippery for you.

Knowledge@Wharton: The question is, what does deeper integration look like? What would be some medium- and long-term goals for integration?

Lagarde: Deep integration is a recent development. It was much needed in order to consolidate the currency zone. We’ve seen things recently that were totally unexpected and almost unimaginable only 18 months ago. What is important for better integration is a combination of solid fiscal coordination with real discipline imposed upon the partners, including sanctions that are not only applicable, but are also applied if the rules are violated.

Translation: I don’t know what “deep integration” is except I’m all for sanctions, especially if rules are violated — or even if not.

Knowledge@Wharton: Is there a role for the IMF in helping increased integration move forward? Or is this something the Europeans do on their own?

Lagarde: It has to belong to them. It has to be theirs. They should have ownership of all of that. All we can do is identify, demonstrate with the team of great experts, that we have in this institution, the benefits of doing so and the drawbacks of not doing it.

Translation: We tell them to borrow what they can’t repay, and to raise taxes and cut spending, and when this causes the recession we said we expect, it’s all on their heads. Don’t blame us for anything, ever.

Knowledge@Wharton: Is it possible in the medium and long term for the euro zone to keep the common currency without more political integration?

Lagarde: It’s difficult to read into the future. But what we can say is that it would certainly strengthen and make the currency zone much more sustainable and safe. I don’t know whether to call it political integration, but certainly we need much deeper economic and fiscal integration.

Translation: I have no idea what “integration” involves, and I can’t tell whether it would help. Stop asking hard questions.

Lagarde: We all wish there were some magician’s wand we could wave to create jobs. At the end of the day, that is what everybody wants to do. It’s not just about growth in and of itself … it’s about jobs. . . But apart from stimulating growth, apart from an economic situation that warrants the creation of jobs, there is no magical recipe for that.

Translation: Actually, we do have a magical recipe. It’s called “austerity.” We raise taxes and cut government spending, which we know will cause recessions. And that’s how we create jobs.

Knowledge@Wharton: What role could the IMF play in bringing about a better balance between rates of exchange, for example, for a possible re-valuation of the yuan versus the U.S. dollar and the euro?

Lagarde: It’s funny that you would focus exclusively on these currencies, because our job is to assess the appropriate exchange rate — and to actually say what we think of it — for all 187 members of the institution. We do that through appropriate modeling, gathering of data and comparing and taking into account multiple data, including the current account. Probably later in 2012, we’ll be able to come up with a new methodology and model of assessing exchange rates.

Translation: All that data we collect is garbage. We have no idea what the exchange rates should be, we can’t do anything to improve them, whatever improvement involves, and anyway, later this year we’re coming up with a whole new model.

Knowledge@Wharton: Of all the things that you do here, what are you most passionate about? What would you really like to make sure happens? It could be a small thing, it could be a large thing. What is it that really has your heart?

Lagarde: That’s complicated. I think it’s this issue of relevance … that is of real concern to me. You see, this is a very fascinating institution because it’s completely counter-cyclical. When the world around the IMF goes downhill, we thrive. We become extremely active because we lend money, we earn interest and charges and all the rest of it, and the institution does well. When the world goes well and we’ve had years of growth, as was the case back in 2006 and 2007, the IMF doesn’t do so well both financially and otherwise.

Translation: My job is to screw up the world as much as possible so that my employer, the IMF does well. How am I doing so far?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

==========================================================================================================================================
No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. 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