–The moral GPS of politics

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the Gap between rich and poor.
•Austerity is the government’s method for widening the Gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

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Politics has no moral GPS. “Right,” “wrong,” “good,” “bad,” “compassion,” “belief” — those words have little meaning in the political circus.

The only words that count: “Win” and “lose.”

It always was thus, but far worse today, with the Tea Party zombies gnawing at the necks of the Republican faithful.

Even children are not exempt from their blood-lust:

Judge rules illegal immigrant parents with children should be released

Illegal immigrant parents and children should usually be released rather than held in custody, a federal judge ruled late Friday.

Judge McGee also ruled that the facilities Homeland Security set up to house the illegal immigrant mothers and children that streamed across the border during last year’s surge violate a 1997 agreement, and cannot be used.

Judge McGee cited “widespread and deplorable conditions” in the detention centers, which she said included cold cells, lack of trash cans, and keeping lights on at all times, potentially disrupting sleep patterns.

The amoral among us might say that these are illegals, so treat them like animals. The Americans among us might whisperingly mention that these are human beings, children desperately trying to escape the murder and rape Donald Trump claims to abhor.

Despite Bush/Cheney blithe assurances, torture is an un-American way to deal with any people, least of all, children.

“In light of the voluminous evidence that Plaintiffs have presented of the egregious conditions of the holding cells, the court finds that defendants have materially breached the Agreement’s term that defendants provide ‘safe and sanitary’ holding cells for class members while they are in temporary custody,” Judge McGee said.

“The court’s ruling makes clear that the administration should simply stop locking up children and their mothers in immigration detention facilities,” said Eleanor Acer of Human Rights First, one of the groups that’s protested the detentions.

Most of the attention from last year’s surge went to the more than 68,000 children caught at the border who were unaccompanied by parents, but just as big of a problem were the tens of thousands of children who crossed with a parent. Indeed, 38,845 children traveling with a parent were also caught.

Homeland Security spokeswoman Marsha Catron said they’ll take stock of their legal options.

“We are disappointed with the court’s decision and are reviewing it in consultation with the Department of Justice. We plan to respond to the Court’s order to show cause by August 3,” Ms. Catron said.

President Obama reveals two faces on many issues, this being no exception. One face is that of “Deporter in Chief,” as his administration has deported more immigrants — destroying more innocent lives — than any in U.S. history.

The other face is that of “compassionate protector,” as he has found ways to shelter and absorb many thousands of immigrants.

So, what is going on here?

It’s Politics.

The genetic nature of compassionate, “bleeding heart” Democrats is to protect the less fortunate: The “tired, poor, huddled masses yearning to breathe free, the wretched refuse of a teeming shore, the homeless, tempest-tost” — the people our best-known statue boastfully welcomes to America’s largest city.

But, since the unfortunate disinterment of the Tea Party, and its abduction of the Republicans, a shameful idea has dominated: Win at all costs; damn the people, full speed ahead.

So in what seemingly is political innocence, President Obama repeatedly attempts to play nice with the opposition, hoping that a powerful show of weakness and cowardice will encourage them to play nice with him.

It has worked exactly never, both in his international politics and his domestic politics, punishing friends and emboldening enemies.

The Obama administration decided that in order to deter those with children, Homeland Security would begin locking them up, rather than releasing them.

Secretary Jeh Johnson has said that policy was a success, and the flow of both accompanied and unaccompanied children is down substantially this year.

“The policy was a success.” Torturing children really does work. It prevents them from swimming to our life raft, and instead forces them to remain asea, where they will drown in torment and squalor.

Truly effective.

We have a bifurcated compassionate/cruel administration, which has resulted in the obscene picture of a Democrat administration torturing children in order to reduce the number coming here “yearning to breathe free.”

Is the world’s wealthiest and third-largest nation — a nation of 320 million people, a nation with the unlimited ability to create money, a geographically huge nation populated with immigrants and descendants of immigrants — is that nation unable to absorb a few thousand or even a few million people, whose primary crime is braving a hazardous journey to escape misery and to pursue life, liberty and happiness?

Lacking only a piece of paper with the word “Citizen” stamped on it (a piece of paper that, for no good reason, has been made ridiculously difficult to obtain), are these people to be sent back to torture and death, before being held here in deplorable conditions?

Is that what America is about? Is this who we are?

Does politics require us to lose our humanity, our special place in the world, our moral GPS?

Are we allowed compassion?

Rodger Malcolm Mitchell
Monetary Sovereignty

===================================================================================
Ten 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. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
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. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)
9. Federal ownership of all banks (Click here and here)
10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

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.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–The cost of ignorance goes up, again: Social Security version

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the gap between rich and poor.
•Austerity is the government’s method for widening the gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

You regular readers of this blog know that ignorance of economics created the disaster now known as the euro. You know the euro nations voluntarily surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty.

Because of their economics ignorance, the whole of the eurozone either is, or soon will be, suffering from austerity, i.e the loss of income, jobs, health care, education, housing — in short, the loss of a decent lifestyle that government is supposed to help provide.

Greece may be the most extreme example currently, but not the only and not the last.

We may shake our heads at the ignorance of people who would allow their government to surrender its most valuable asset, but we needn’t feel too superior. Despite the fact that the U.S. federal government retains its Monetary Sovereignty, and therefore cannot run short of dollars, we allow it to act as though it were monetarily NON-sovereig

We allow the government to husband its dollars like some penurious miser, straight out of Dickens.

Social Security disability fund to run dry next year.

The 11 million Americans who receive Social Security disability face steep benefit cuts next year, the government said Wednesday, handing lawmakers a fiscal and political crisis in the middle of a presidential campaign.

The trustees who oversee Social Security and Medicare said the disability trust fund will run out of money in late 2016. That would trigger an automatic 19 percent cut in benefits, unless Congress acts.

The average monthly benefit for disabled workers and their families is $1,017.

Think of it. A disabled person, too ill to work, receives a pittance: $1,017, to support his/her family. But that is too much for the politicians.

The typical beneficiary would see a reduction of $193 a month.

“Today’s report shows that we must seek meaningful, in some instances even urgent, changes to ensure the program is on stable ground for future generations,” said Jo Ann Jenkins, chief executive officer of AARP.

AARP, which supposedly helps seniors and other Social Security beneficiaries, spreads the Big Lie, that taxes fund federal spending.

It’s a lie, because even were FICA to be eliminated, the federal government could continue funding Social Security benefits, forever.

Just as the U.S. federal government never can run short of its own sovereign currency, the dollar, agencies of the federal government never can run short of dollars, unless Congress wills it.

In more bad news for beneficiaries, the trustees project there will be no cost-of-living increase in benefits at the end of the year. It would mark only the third year without an increase since automatic adjustments were adopted in 1975.

Separately, about 7 million Medicare beneficiaries could face a monthly premium increase of at least $54 for outpatient coverage. That works out to an increase of more than 50 percent — for outpatient coverege.

Day by day, month by month, the middle- and lower-income groups are squeezed, just as in Greece, and for no good reason.

The annual report card on the financial health of Social Security and Medicare shows that the federal government’s largest benefit programs are feeling the strain of aging baby boomers as they both approach milestone anniversaries.

“The strain” is another way of saying that more people are growing older, and they need the kind of help a 1st rate government is supposed to provide. Why else would we have a government?

There was some good news in the report: The trustees said Social Security’s retirement fund has enough money to pay full benefits until 2035, a year later than they predicted last year. At that point, Social Security will collect enough in payroll taxes to pay about 75 percent of benefits.

Medicare’s giant hospital trust fund is projected to be exhausted in 2030, the same date as last year’s report. At that point, Medicare taxes would be enough to pay 86 percent of benefits.

The Big Lie continues — the pretense that like you and me (who are not Monetarily Sovereign), the government can run short of dollars to pay its bills. It cannot.

Advocates for seniors say that gives policymakers plenty of time to address both programs without cutting benefits. But some in Congress note that the longer lawmakers wait, the harder it gets to address the shortfall without making significant changes.

Nonsense. It’s not hard at all. Simply acknowledge the federal government’s ability to support Social Security at any desired level, and while making that admission, get rid of the worst tax in U.S. history: FICA.

There is an easy fix available for the disability program: Congress could shift tax revenue from Social Security’s much larger retirement fund, as it has done in the past.

President Barack Obama supports the move. And acting Social Security Commissioner Carolyn Colvin said shifting the tax revenue “would have no adverse effect on the solvency of the overall Social Security program.”

There would be no adverse effect, simply because the U.S. government has the unlimited ability to support Social Security.

But why will Congress not admit this simple truth? Here’s the clue:

Republicans say they want changes in the disability program to reduce fraud and to encourage disabled workers to re-enter the workforce.

In January, Sen. Rand Paul, R-Ky., suggested that a lot of slackers are on disability. Paul, who is running for president, joked that half the people getting benefits are either anxious or their back hurts.

And there you have it. The Republican party of the rich, spreads the cruel lie that disabled people are fraudulent fakers and slackers, who need to be “encouraged” to re-enter the workforce.

Note the simpering laughter of Republican Rand Paul, slandering those unfortunate, disabled people. As if life weren’t difficult enought for them, a liar like Paul has to heep on the scorn. This is the kind of cruelty to the afflicted one has come to expect from Republicans.

Here is Doctor Rand Paul, who grew up in luxury. He received his medical degree from the renowned Duke University School of Medicine. His father also was a doctor, a U.S. Congressman, who ran for President three times. This is the privileged Rand Paul who sneers at the poor, the aged and the disabled, from his lofty perch on high.

If the retirement and disability funds were combined, they would have enough money to pay full benefits until 2034, the trustees said.

Or, the federal government simply could pay the benefits.

The Medicare premium increases would affect Part B, which provides coverage for outpatient services.

For about 70 percent of beneficiaries, premium increases cannot exceed the dollar amount of their Social Security cost-of-living adjustment, or COLA. Because no COLA is currently expected for next year, increased costs of outpatient coverage would have to be spread among the remaining 30 percent.

Translation: The Monetarily Sovereign federal government is running out of money, but the disabled and the poor have plenty of money. So cut federal spending while forcing the people who can afford it least, to pay more.

Why does the government get away with it? Because the electorate is ignorant of economics reality. The people have been brainwashed into believing the federal government can run short of dollars, and/or that any increases in federal spending will cause a Zimbabwe-esque hyperinflation (another part of the Big Lie.)

Just as the Greek people suffer for their economics ignorance, so to do we Americans suffer for ours.
Rodger Malcolm Mitchell
Monetary Sovereignty

THE RECESSION CLOCK

Vertical gray bars mark recessions.

#MONETARYSOVEREIGNTY

–The debt snakes slither in again. Don’t listen.

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the gap between rich and poor.
•Austerity is the government’s method for widening the gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

Adam and Eve learned that snakes are sneaky liars. They not only lie outright, but they twist the truth into lies. And so it is with the debt snakes, as during election time, they once again try to deceive the populace.

Way, way back in 2009, we published, “Federal Debt: A ‘ticking time bomb’.” Here is how the article began:

Popular faith holds that the federal debt is a ticking “time bomb,” ready to explode into inflation and high interest rates, and destroy our economy.

Here are a few references, beginning 70 years ago.

Even with the end of the gold standard in 1971, arguably the most significant economic event since the Great Depression, the language never changes — as though 1971 were a non-event.

Sept 26, 1940, New York Times: “. . . unless an end is put to deficit financing, to profligate spending and to indifference as to the nature and extent of governmental borrowing, the nation will surely take the road to dictatorship, Robert M. Hanes, president of the American Bankers Association asserted today. He said, “insolvency is the time-bomb which can eventually destroy the American system . . . the Federal debt . . . threatens the solvency of the entire economy.”

The post goes on to quote articles from 1960, 1983, 1984, 1985, 1987, 1989, 1992, 1985, 2003, 2004, 2005, 2006 and 2007 (subsequently added, articles dated 2010 and 2011), all referring to the federal debt as a “time bomb.”

Just last year, Forbes ran an article titled:

“Defusing Washington’s Debt Bomb” written by Sen. Rob Portman.

Under the Constitution, only Congress can authorize the United States to borrow money to pay its bills. And since World War I, Congress, recognizing the danger of runaway borrowing, has placed a ceiling on the amount of debt Washington can accumulate.

Going over the debt limit is not the right solution. But neither is simply raising the debt limit without doing anything to address the underlying problem, especially at a time of record debt.

The American people understand this. Think about it as parents: when one of our kids goes over the limit on the credit card, we don’t just pay the bill and ask the bank to raise the limit. We take steps to address the overspending problem and make sure it doesn’t happen again.

And the beat goes on. In May, 2015,The National interest published:

Why America’s Debt Bomb Won’t Explode… Yet

Here we are, 75 (!) years after that 1940 article, still frightened, waiting for that ticking time bomb to explode.

Never mind that the U.S. federal government, being Monetarily Sovereign, never can run short of dollars to pay its bills.

Never mind that even if all federal tax collections fell to $0, the U.S. federal government could continue spending forever.

Never mind, that being Monetarily Sovereign, the federal government creates dollars ad hoc, by paying bills and does not need to borrow — ever.

And never mind that despite massive federal spending, inflation actually is below the federal goal of 2.5%, and easily is controlled by the Fed via interest rates.

Never mind that federal deficits are surpluses for the economy and necessary for economic growth, and that federal surpluses lead to recessions and depressions:

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

NEVER MIND THAT THERE IS NO “DEBT BOMB.” It’s a myth.

Never mind all these facts, because the debt snakes pay no attention to facts.

And here comes another one:

Kasich to push balanced budget amendment in 6-state tour
By JAMES NORD – Associated Press – Wednesday, January 21, 2015

Ohio Gov. John Kasich has kicked off a six-state tour pushing a balanced budget amendment to the U.S. Constitution with a meeting in South Dakota in which he called on state lawmakers to get behind the proposal.

“Who the heck thinks we should keep spending without any regard to the consequences?” Kasich, a Republican, asked the South Dakota gathering. “I don’t care … if you’re a Republican, a Democrat or a Martian. This is not what we should be doing as a nation. It’s irresponsible.”

Exactly why is it “irresponsible,” Governor Kasich? Will the federal government be like Greece and the other euro nations, unable to pay their debts?

No, Greece and the other euro nations are monetarily NON-sovereign. They have no sovereign currency.

Like our cities, counties, states, businesses and people, all of whom also are monetarily NON-sovereign, Greece can run short of the currency it uses.

The U.S. federal government, being Monetarily Sovereign, has the unlimited ability to create its sovereign currency, to pay its bills.

Well Governor Kasich, is it “irresponsible” (and a “ticking time bomb”) because our children will have to pay the federal debt?

No, federal taxes do not pay for federal spending. The federal government creates dollars every time it pays a bill. The federal debt has no effect on the federal taxes our children will pay.

Or is the debt “irresponsible” and a “ticking time bomb” because it will cause inflation?

No, inflation is caused by a multitude of factors, primarily oil prices and low interest rates.

Here is what Kasich’s nonprofit advocacy group, Balanced Budget Forever says:

In just over a year, five states have passed resolutions in support of a convention to set a balanced budget process in motion. Today, there are now 27 states committed to a convention.

Just 7 more states are needed to trigger change.

While a member of Congress, Kasich supported a federal balanced budget amendment and, as chair of the House Budget Committee, successfully led efforts to balance the federal budget in fiscal years 1998, 1999, 2000 and 2001, the first balanced budgets since 1969.

Yes, and those balanced budgets (actually surpluses) led directly to the recession of 2000. (Almost every recession in recent history has been introduced with reductions in federal deficit growth.)

And we’re coming closer and closer to passing a disastrous “balanced budget” amendment, that will push America into the same horrifying austerity problem Greece suffers from.

Knowing that federal deficit spending adds dollars to the economy, and so is stimulative, and the lack of deficit spending leads to recessions and depressions, why do Kasich and his group insist that the U.S. commit financial suicide by eliminating deficit spending?

I believe there are two reasons:

1. He wishes to become President, and in the crowded Republican field, “balanced budget” gives him a talking point. He relies on the public not understanding the difference between the Monetarily Sovereign government vs. you and me (and states, counties and cities) which are monetarily NON-sovereign.

To the economically ignorant populace, debt is bad and surpluses are good. The people don’t realize that federal debt is the economy’s surplus. So Kasich can position himself as a prudent politician, when in fact, his balanced budget would lead to a recession far worse than what we had in 2008 (a severe recession cured by federal deficit spending.)

2. Recessions generally affect the populace more than the super rich. Recessions cause unemployment among the lower paid, which leads to reduced pay, which in turn, leads to higher profits for corporations and wealthy shareholders. (Note how the stock markets rose dramatically after the most recent recession, while employment lagged.)

All of this widens the Gap between the rich and the rest, and it is the Gap that makes the rich rich. (Without the Gap, no one would be rich, and the wider the Gap, the richer they are.)

So it is the super rich, who bribe the politicians (via campaign contributions and promises of lucrative employment later) to widen the Gap. The super rich also bribe the media (via ownership) and the economists (via contributions to universities and “think tanks”) to support a balanced budget — all to widen the Gap.

Now, with the Presidential campaign in full swing, we again see the debt snakes slithering in, to steal our livelihood and our children’s futures, while pretending to be oh, so frugal.

Yes, they are frugal, if being frugal means taking from the poor and giving to the rich.

While both political parties are guilty, the Tea/Republicans especially, work against anything that helps the middle and the poor — Social Security, Medicare, Medicaid, food stamps, aids to housing, aids to education. Even the abortion issue has a money twist, for the rich always are able to obtain abortions, while the poor are forced to give birth to unaffordable children.

The next time you read or hear a politician, economist or media writer promote a federal balanced budget know this: Either he/she is ignorant of economics or has been paid by the rich to impoverish you and yours.

The debt snakes are slithering in again. Adam and Eve were punished severely for listening to a snake. Don’t let it happen to you.

Don’t listen to debt snakes.

Rodger Malcolm Mitchell
Monetary Sovereignty

THE RECESSION CLOCK

Vertical gray bars mark recessions.

#MONETARYSOVEREIGNTY

–Peter Schiff: Wrong in 2009; still wrong.

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

Mitchell’s laws:
•Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
•Any monetarily NON-sovereign government — be it city, county, state or nation — that runs an ongoing trade deficit, eventually will run out of money.
•The more federal budgets are cut and taxes increased, the weaker an economy becomes. .
•Liberals think the purpose of government is to protect the poor and powerless from the rich and powerful. Conservatives think the purpose of government is to protect the rich and powerful from the poor and powerless.
•The single most important problem in economics is the gap between rich and poor.
•Austerity is the government’s method for widening the gap between rich and poor.
•Until the 99% understand the need for federal deficits, the upper 1% will rule.
•Everything in economics devolves to motive, and the motive is the Gap between the rich and the rest..

Way back in 2009, we published the post, “Peter Schiff and the money-supply myth.” We quoted his comment: “Almost every dictionary defines inflation as an expansion of the money supply, not rising prices.”

Of course, he was dead wrong. While libertarians say the formula is: Inflation = Supply, the vast majority of knowledgeable people (and virtually all dictionaries) say: Inflation = Rising Prices = (Demand/Supply).

By leaving Demand out of the equation, Schiff and the libertarians always are able to fret that we are in a perpetual state of high inflation (so we should buy the gold and other nonsense the libertarians love to push.)

The rest of the rational world says U.S. inflation has been down around 2.5% for the past few years, and now hovers around 1.5%.

monetary sovereignty

Now here comes Peter Schiff, again . . . still selling his “sky-is-falling” pitch, and still wrong.

Peter Schiff on Greece, Puerto Rico, and America’s Looming Economic Crisis

“What’s happening in Greece and what’s happening in Puerto Rico is going to happen in the United States,” says investment guru and radio host Peter Schiff, CEO of Euro Pacific Capital.

“Once the Greek creditors began to question the solvency of Greece they demanded higher interest rates,” Schiff explained during a recent interview with Reason’s Matt Welch.

“The minute our creditors figure out we are in the same position as Greece or Puerto Rico, they’re going to demand higher interest rate from us and we can’t pay either.”

Ah, Peter, Peter, Peter, will you never learn the difference between Monetary Sovereignty (the U.S.) and monetary non-sovereignty (Greece)?

See if you can understand this:

1. The U.S., being Monetarily Sovereign, has the unlimited ability to create dollars. It can pay any bill of any size at any time. The U.S. never can run short of its own sovereign currency, the dollar.

2. By contrast, Greece has no sovereign currency. It uses the euro. It does not have the ability to create euros at will. The Greek government can obtain euros only by:
a. Taxing
b. Selling goods and services
c. Borrowing.

So Greece can, and has, run short of euros.

3. The U.S. creates dollars simply by paying bills. It doesn’t need to tax or to borrow its own sovereign currency. Even if all taxes and all “borrowing” (issuance of T-securities) fell to $0, the U.S. government could continue spending, forever.

4. It is the Fed that determines our interest rates, not creditors. (Apparently, Schiff has no explanation for why U.S. interest rates are so low. He must believe our creditors are too stupid to “figure out we are in the same position as Greece.”)

One day, the Fed will decide to raise interest rates. Note the words: “The Fed will decide.” Then, and only then, rates will go up.

Why does Schiff spout such ignorance? I can’t say for sure, but perhaps this is a clue:

Peter Schiff is the President & CEO of Euro Pacific Capital.

Euro Pacific Capital offers a means for American investors to gain exposure to those areas of the global economy that have largely avoided the crushing debt burden that has swamped many developed economies.

Not sure what’s “crushing” about a debt the U.S. government has the unlimited ability to pay.

Based on the irresponsible policies of the Federal Reserve and the continued failure of the United States to put our fiscal house in order, we believe that the U.S. dollar is at risk of falling relative to currencies of more economically vibrant nations.

Changes in currency valuation, often ignored by many investment consultants, could have significant impact on long term results.

In short, Schiff and his team make their money by warning you about the endlessly imminent demise of America. So to protect your money, you should put your investments into their hands.

Heaven forbid I would put even one cent into the hands of someone whose knowledge of economics seems so meager, he doesn’t admit the fundamental differences between a Monetarily Sovereign nation and one that is monetarily non-sovereign.

Peter Schiff: Wrong in 2009; still wrong. But as H. L. Mencken said, “No one ever went broke underestimating the intelligence of the American people,” and lots of people make fortunes.

Right, Peter?

Rodger Malcolm Mitchell
Monetary Sovereignty

#MONETARYSOVEREIGNTY

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