–Get big government off our backs. Now, who will pay?

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity 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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The Tea/Republicans want to get the federal government off our backs. They want to cut federal regulations and federal services, until we have a much smaller federal government.

The question is, who will pay for this much smaller government with fewer regulations and services? Here’s just one of a thousand examples to consider:

Mentally ill flood ER as states cut services
By Julie Steenhuysen and Jilian Mincer

CHICAGO/NEW YORK (Reuters) – On a recent shift at a Chicago emergency department, Dr. William Sullivan treated a newly homeless patient who was threatening to kill himself. “He had been homeless for about two weeks. He hadn’t showered or eaten a lot. He asked if we had a meal tray.”

Across the country, doctors like Sullivan are facing a spike in psychiatric emergencies – attempted suicide, severe depression, psychosis – as states slash mental health services and the country’s worst economic crisis since the Great Depression takes its toll.

This trend is taxing emergency rooms already overburdened by uninsured patients who wait until ailments become acute before seeking treatment.

“These are people without a previous psychiatric history who are coming in and telling us they’ve lost their jobs, they’ve lost sometimes their homes, they can’t provide for their families, and they are becoming severely depressed,” said Dr. Felicia Smith, director of the acute psychiatric service at Massachusetts General Hospital in Boston.

Visits to the hospital’s psychiatric emergency department have climbed 20 percent in the past three years.
[…]
On top of that, doctors are seeing some cases where the patient’s most critical need is a warm bed. “The more I see these patients, the more I realize that if it’s sleeting and raining outside, the emergency room is the only place they have,” said Dr. R. Corey Waller, director of the Spectrum Health Medical Group Center for Integrative Medicine in Grand Rapids, Michigan.
[…]
More than 70 percent of emergency department administrators said they have kept patients waiting in the emergency department for 24 hours, according to a 2010 survey of 600 hospital emergency department administrators by the Schumacher Group, which manages emergency departments across the country.

So, I ask again. Who will pay for uninsured people using emergency rooms as their “doctor of first choice”? And while I’m asking, who will pay for insufficient regulation of food, drugs, air and water quality? Who will pay for unregulated financial institutions?

Who pays for bad schools? Crime? Who pays for poverty? Who pays for bad roads, bridges and dams? Who pays for uncontrolled disease? Weak healthcare research? Natural disasters? Who pays for overcrowded courts and jails?

Who will pay if our military is weak? Who will pay for the lack of government?

Yes, big government needs to get off our backs, but who will pay when it does?

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

–If nation A owes B, and B owes A, and both owe their own citizens, too, is this a debt problem?

International Monetary Fund’s Managing Director Christine Lagarde tells us there is a “debt crisis.” She says there is too much debt in the world.

Yahoo News
IMF’s Lagarde warns global economy threatened

PARIS (Reuters) – The head of the International Monetary Fund said the world economy was in danger and urged Europeans to speak with one voice on a debt crisis that has rattled the global financial system. In Nigeria last week, IMF Christine Lagarde said the IMF’s 4 percent growth forecast for the world economy in 2012 could be revised downward, but gave no new figure. “The world economy is in a dangerous situation,” she told France’s Journal du Dimanche in an interview published on Sunday.

The debt crisis, which continues into 2012 after a European Union summit on December 9 only temporarily calmed markets, “is a crisis of confidence in public debt and in the solidity of the financial system,” she said.

European leaders drafted a new treaty for deeper economic integration in the euro zone, but it is not certain that the accord will stem the debt crisis, which began in Greece in 2009, and now threatens France and even economic powerhouse Germany. “The December 9 summit wasn’t detailed enough on financial terms and too complicated on fundamental principles,” said Lagarde. “It would be useful for Europeans to speak with a single voice and announce a simple and detailed timetable,” she said. “Investors are waiting for it. Grand principles don’t impress.”

Part of the problem, she said, has been national calls for protectionism, making it “difficult to put in place international coalition strategies against it.” Lagarde added: “National parliaments grumble at using public money or the guarantee of their state to support other countries. Protectionism is in the debate, and everyone for themselves is winning ground.” She did not specify which countries she was referring to.

Emerging countries, which had been growth engines for the world economy before the crisis, have also been affected, said Lagarde, citing China, Brazil and Russia. “These countries, which were the engines, will suffer from instability factors,” she told the newspaper.

Here is what Ms. Lagarde means:
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  CIA World Factbook 2011

  Nation   Debt in $Trillions
     USA	  $ 9,133	 
     Japan	  $ 8,512	
     Germany	  $ 2,446	 
     Italy	  $ 2,113	
     India	  $ 2,107	 
     China	  $ 1,907	 
     France	  $ 1,767	 
     UK	          $ 1,654	 
     Brazil	  $ 1,281	 
     Canada	  $ 1,117	 
     Spain	  $   823	 
     Mexico	  $   577	 
     Greece	  $   454	
     Netherlands  $   424	 
     Turkey	  $   411	 
     Belgium	  $   398	
     Egypt	  $   398	 
     Poland	  $   381	 
     South Korea  $   331	 
     Singapore	  $   309		
     Taiwan	  $   279

CIA’s World Factbook lists percentage of GDP, the debt amount and per capita is calculated with GDP (PPP) and population figures of same report. (https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html)

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Lots of debt, everywhere you look. To whom is all this debt owed? Mostly, to two groups: Domestic public and private parties, and foreign public and private parties.

If every nation owes every other nation, what exactly is the “debt crisis”? And if some of a government’s debt is owed to its own citizens, what is the crisis?

Here’s the answer: She really isn’t referring to the fact that some nations owe more than others. And, it’s not a debt crisis. It’s a systems crisis.

The word “debt,” when applied to nations, measures the money that nation’s government has created. The U.S. government’s “debt” is $10 trillion. All that means is the U.S. government has created $10 trillion net of taxes collected.

Is there a “too-much-money crisis” in the world’s economies? I see no evidence of that. One bit of evidence would be world-wide, uncontrollable inflation, but that doesn’t seem to be happening. More accurately, there is a “too-little-money crisis in the world, though I question whether that is what Ms. Lagarde means by a “debt crisis.”

I can only speculate, but I think she may mean:

“We really screwed the pooch. We stood by while the euro nations gave up their most valuable asset — Monetary Sovereignty — and now they can’t grow their economies. We always tell everyone to reduce their debt, and for monetarily non-sovereign nations, this means reducing their money supply, which is anti-growth. That’s why our scolding, combined with lending to nations with excessive debt, never seems to work.

“So, we actually have a monetarily non-sovereignty crisis, but no way am I going to admit that, because it would make us look like fools. Better to say it’s a “debt crisis,” which puts the blame on the countries, instead of on us. This way we keep our jobs, and the pay is good.

“As for the U.S., Canada, the UK, China, Australia et al, they are Monetarily Sovereign, so I know they can pay any debt. But we have to scold them too, or we’d look inconsistent. And anyway, Standard & Poors reduced the U.S. rating to AA+ — you know Standard & Poors, the guys who gave a AAA rating to worthless mortgage securities and who still rate France AAA(!) S&P’s ignorance gives us cover for our ignorance, which is nice.

“And yes, I know we always encourage auserity, and I even know austerity = poverty, but why should I care? As I said, the pay is good.

Note to all: Any time you read or hear someone equating U.S. finances with the finances of the euro nations or with our states, counties and cities, mark that person as ignorant of economics.

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

#MONETARY SOVEREIGNTY

–Italy tries to grow its economy by taking money from its economy. Huh? U.S. debt hawks do the same.

As you read this article, remember this equation. It’s a fundamental equation in economics: Gross DOMESTIC Product = Federal Spending + Private Investment and Consumption + Net exports. This formula tells you a domestic economy (GDP) cannot grow unless the domestic money supply grows. That’s simple math.

New York Times
Italy Tries Raising the Social Stigma on Tax Evaders
By Rachel Donadio and Elisabetta Povoledo

ROME — On a recent morning, Maurizio Compagnone, an employee of Italy’s internal revenue service, stood before a classroom of middle school students in a leafy neighborhood here, preaching the virtues of paying taxes.
[…]
Mr. Compagnone is one soldier in a battle — often uphill — to persuade Italy’s famously tax-evading citizens to pay up. Such efforts, along with a new blitz of public service announcements trying to raise the social stigma on tax evasion, have become crucial as Italy struggles to reduce its $2.5 trillion public debt and fend off speculative attacks.

The tax authorities say Italy loses an estimated $150 billion a year in undeclared revenues, while the national statistics authority places the underground economy to be about 17.5 percent of gross domestic product — the third highest in Western Europe after Malta and Greece but before Spain. Other experts place the percentage much higher.

To tackle the issue, Prime Minister Mario Monti’s new $40 billion austerity package, which received final approval on Thursday in the Senate, includes tougher measures that will allow tax officials to peer into Italians’ bank accounts to check declared income against bank deposits — not to mention yacht, car and home ownership — under a new cross-referencing initiative.

Italy is a monetarily non-sovereign nation. It uses the euro, over which it has no control. The statement, “Italy loses an estimated $150 billion a year in undeclared revenues. . .,” is incorrect. When Italians pay taxes, euros flow from the private sector to the public sector. But Italy, as a nation, neither gains nor loses euros.

Remember, Italy’s GDP = Federal Spending + Private Investment and Consumption + Net exports. To grow the economy, it is necessary to increase overall spending, which requires adding to the money supply. Sending money from the private sector to the public sector does not increase GDP.

A Monetarily Sovereign nation easily is able to increase GDP, i.e. increase overall spending, via increases in government deficit spending, which increases the supply of its sovereign currency. Italy (and indeed all monetarily non-sovereign governments) has no way to increase its supply of currency other than by increasing exports.

Increasing government tax collections may temporarily help solve government debt problems, but it impoverishes the private sector. Austerity = poverty.

Many Italians approach tax evasion with true delight, taking pride in outsmarting the system, aided by books sold online and by Italy’s 113,000 tax accountants. Many Italians say rule-breaking is a question of survival. “When I first opened my restaurant, my accountant sat me down and told me that if I wanted to pay all my taxes, I might as well close up shop immediately,” said Giuseppe, a restaurant owner in Rome who said he was a basically honest person who had been “forced to evade taxes” because of Italy’s costly fiscal system.

The above is a succinct statement of the problem for monetarily non-sovereign governments. They cannot survive long term without having money come in from outside their borders or by impoverishing their own citizens.

Business associations have urged the (Italian) government to reduce the tax burden for companies and workers and raise it on assets. This month, the governor of the Bank of Italy, Ignazio Visco, said that Italy’s tax burden had risen to 45 percent over all and called for urgent reforms to help lower it.

Visualize a group of starving people locked in a room with 1 lb. of food. The Italian “solution” is to move the food from one side of the room to the other. No matter how many times they move the food, there still isn’t enough food. Collect more taxes and there still won’t be enough euros in Italy.

Massimiliano D’Angeli, a criminal defense lawyer, said he believed that if more services like those provided by lawyers, plumbers and electricians were tax deductible rather than subject to the nation’s 23 percent value-added tax, people would have an incentive to ask for receipts. Instead, many workers and professionals offer a “VAT (Value Added Tax) discount” for payment under the table.

In spite of Mr. Monti’s approval ratings, there is widespread skepticism that the anti-evasion measures will work. Asked why Italy had had so much trouble cracking down on evasion, Bruno Tinti, a former prosecutor turned journalist specializing in the black economy, had a simple answer: “Tax evaders vote, that’s the problem.”

VAT is a government’s desperate effort to collect take money out of the private sector, with the least appearance of a tax increase. Like most taxes, it hits the lower income classes heaviest, because they spend proportionately more on taxable goods and services, while the upper classes spend more on investment products.

The euro nations’ problem is not that of tax collection. It is a very simple truth: GDP growth requires money growth, and taxing does not grow the domestic money supply. Period.

There are but two methods for growing the money supply:

1. Be a net exporter, which all nations cannot do, simultaneously
or
2. Central government deficit spending, which monetarily non-sovereign nations are unable to do for very long.

This is a lesson the deficit-cutters in America have not yet learned. GDP growth requires domestic money growth, which requires federal deficit spending. If you don’t grow the domestic money supply, it mathematically is not possible to grow GDP.

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

#MONETARY SOVEREIGNTY

–Gee, all we wanted is to end voter fraud.

Washington Post: Justice Dept. rejects South Carolina voter ID law, calling it discriminatory
By Jerry Markon, Published: December 23

The Obama administration entered the fierce national debate over voting rights, rejecting South Carolina’s new law requiring photo identification at the polls and saying it discriminated against minority voters.

Friday’s decision by the Justice Department could heighten political tensions over eight state voter ID statutes passed this year, which critics say could hurt turnout among minorities and others who helped elect President Obama in 2008. Conservatives and other supporters say the tighter laws are needed to combat voter fraud.

Is there vote fraud? Of course there is lots of it. But it’s fraud committed by the politicians. I’m talking about gerrymandering, losing ballots, miscounting ballots, tampering with voting machines, threats against voters, accompanying voters into voting booths, inconveniently located polling places, filling out ballots for voters, closing polling places early, voting machines that “don’t work,” paying for votes and on and on. Those constitute the real fraud, none of which is prevented by poll taxes, quizzes, I.D.s and the dozens of other little schemes designed to keep the poor from voting.

In its first decision on the laws, Justice’s Civil Rights Division said South Carolina’s statute is discriminatory because its registered minority voters are nearly 20 percent more likely than whites to lack a state-issued photo ID. . . . “The absolute number of minority citizens whose exercise of the franchise could be adversely affected by the proposed requirements runs into the tens of thousands,” Assistant Attorney General Thomas E. Perez said in a letter to South Carolina officials.

This must come as a complete surprise to S.C. officials.

South Carolina Gov. Nikki Haley (R) called the decision “outrageous” and said she plans to seek “every possible option to get this terrible, clearly political decision overturned so we can protect the integrity of our electoral process and our 10th Amendment rights.”

The law, passed in May and signed by Haley, requires voters to show one of five forms of photo identification. The state can now try to get the law approved by a federal court or seek reconsideration from Justice.

South Carolina cited the need to fight voter fraud in defending the measure. Whether election fraud exists to any significant degree and how extensive it may be is the subject of a divisive national debate. Some conservatives have long argued that fraud is a serious problem, but Perez said that South Carolina’s submission “did not include any evidence or instance” of fraud not already addressed by state laws.
[…]
The voter-identification measures, enacted mostly by Republican legislatures, also impose restrictions on early voting and make it harder for former felons to vote. One study estimated that the changes could keep more than 5 million voters from the polls. But the laws have proven popular, according to some surveys. Last month, Mississippi voters easily approved an initiative requiring a government-issued photo ID at the polls.

What? Republicans voting for a law hurting the poor? Mississippi and South Carolina voting against blacks? Hmmm . . .

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

#MONETARY SOVEREIGNTY

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