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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The opening paragraph of this article made me think that at last, Time Magazine knew the difference between monetary non-sovereignty and Monetary Sovereignty.

Time Business
Does the World Believe America Will Pay Its Debts?
By Christopher Matthews | April 5, 2012 |

If you spend any time reading about economics on the internet, you’re aware of the many virtual pamphleteers who loudly portend the impending downfall of the American government and global financial system in general. It’s become somewhat fashionable to proclaim America a banana republic, arguing that she is financing her debt with central bank purchases of government bonds, a strategy that is unsustainable and often ends in a blaze of hyperinflation and economic collapse.

No serious observer really believes that the U.S. faces this fate in the near term.

O.K., lookin’ good . . . except for that “unsustainable” thing. But, we can cut them some slack.

Perhaps much of this hyperbolic rhetoric is merely an effort to get the U.S. to reign in its debt – something, long term, it certainly needs to do. But a strand of this thinking has made its way into the mainstream and is distorting the debate about the federal government’s attempts to steer the economy out of a recession.

Huh? “Needs to do”? Why? “Reining in the debt” is the worst thing the government could do. The economy cannot grow without growing federal deficits, and though federal debt is a meaningless relic of the gold standard days, deficits are necessary (And no, debt is not the functional result of deficits.)

But they’re right that this debate does interfere with the federal government’s attempts to steer the economy out of a recession.

Lawrence Goodman opined in the Wall Street Journal last week that, “Demand for U.S. Debt Is Not Limitless.” In the piece, Goodman takes aim at those who have argued that demand for U.S. debt is strong, and that regardless of what the rating agencies say, the marketplace believes the U.S. will pay its bills.

Hilarious . . . or sad. Demand for debt is meaningless. If the U.S. did not sell one more T-security, it would have zero effect on the government’s ability to create dollars and pay its bills. Remember this whenever you think, read or talk about economics: There is no relationship between federal debt (i.e. the creation of T-securities) and federal bill paying. Zip, zilch, nada..

In particular, he highlights the “stunning” fact that in 2011 the Fed purchased 61% of the debt issued by the Treasury, up from negligible amounts prior to the 2008 financial crisis. This, he added, “not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits.”

Deficits not only are necessary for economic growth (That’s the way the government creates dollars), but functionally do not cause debt. With a minor tweak in the law, there could be deficits without T-securities and there could be T-securities without deficits.

Most people don’t understand how a majority of the debt issued by the U.S. government last year could be purchased by an arm of the very same government. It is the effect of the much-talked-about “quantitative easing” program the central bank began in the wake of the financial crisis to suppress interest rates.

By purchasing these bonds, the Fed drives up the price of government debt and drives down the interest rate the government pays on that debt. The purpose of this is not to “subsidize U.S. government spending” as Goodman suggests, but to drive down rates for the rest us and stimulate the economy.

Correct. That is one way the Fed controls interest rates, especially long-term rates. Short term rates are controlled via the Fed Funds rate.

(Lewis Alexander, Chief Economist at Nomura Securities said) that nobody in American government is arguing that, in the long run, debt isn’t a problem. Both Democrats and Republicans have recently proposed budgets that would put us on a sustainable fiscal path . . .

What is a “sustainable” fiscal path? Is it a path on which the federal government always will be able to pay its bills and no federal check ever will bounce?

Not only are we on the path, but we’ve been on that path since August 15, 1971, when the U.S. government became Monetarily Sovereign.

Sadly, Time Magazine, Christopher Matthews and Lewis Alexander don’t understand that.

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

The private sector just paid $3.5 billion in taxes that were not counted as taxes.

Yahoo Finance
Regions Financial, Last of Huge TARP Banks, Repays $3.5 billion
By Daniel Gross

The deficit for the current fiscal year just shrunk by $3.5 billion. Regions Financial, the Birmingham, Ala.-based bank that was one of the largest recipients of TARP funds, this week bought back the preferred shares it sold Treasury in November 2008 for the full face value of $3.5 billion.

On March 14, it raised $900 million by selling common stock to the public. And on April 2 it completed the sale of its Morgan Keegan investment banking unit for $1.2 billion to Raymond James. Those actions, combined with its own cash, enabled it to present a $3.5 billion check to Treasury.

But the account isn’t entirely closed. When Treasury bought preferred shares in banks as part of the Capital Purchase Program, it also received warrants. Treasury still owns the warrants and will likely sell them at some point this year. Judging by past experience, that could bring in another $200-$300 million.

Regions was the last remain multi-billion dollar TARP recipient to pay back its funds. Synovus Financial, which owes $967 million, now bears the unwanted status of the largest remaining institution in the Capital Purchase Program.

That $3.5 billion, plus previous and future payments, is identical with tax payments. Like all federal taxes, these payments deduct dollars from the private sector, and do nothing for the federal government, which being Monetarily Sovereign, neither needs nor uses dollars sent to it.

While most people seem to cheer when the federal government reduces the money supply, that is due to ignorance of Monetary Sovereignty and the economic need for a growing money supply.

Applying leeches is a poor way to cure anemia.

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

I thought the Supreme Court’s worry about mandatory broccoli had reached the apex of foolishness, but I was wrong. Dennis Byrne, a columnist printed in the Chicago Tribune has exceeded that mark. I publish excerpts from his article only because (alas) he echoes some commonly held sentiments.

Chicago Tribune
The imagination goes wild: Paying for the health care of the irresponsible
Dennis Byrne, April 3, 2012

One thing last week’s historic U.S. Supreme Court oral arguments about Obamacare clarified: You healthy people will be paying more for juicers, addicts, gangbangers, smokers, fatsos, drunken drivers and other assorted careless, thoughtless creatures.

There are more than 30 million people who can’t afford insurance and many millions more who have pre-existing conditions that all but prevent them from obtaining affordable insurance. The primary purpose of “Obamacare” is to cover these uninsured people and their children.

To Dennis Byrne, poor people, who can’t afford insurance, are “juicers, addicts, gangbangers, smokers, fatsos, drunken drivers and careless, thoughtless creatures.” Where he gets his data is not important; being a columnist, therefore needs no data.

Dennis wants all 30+ million to be punished for their misdeeds by early death, or to go to emergency rooms, where they will cost the paying public even more than Obamacare.

Tellingly, Obamacare does not affect those rich, who may be juicers, addicts, etc. They already can afford insurance. It just helps the poor and middle classes.

The central idea of the Patient Protection and Affordable Care Act — the formal name of the Obamacare law — emphasized in the hearings is to spread the cost of health care to ever-larger pools of Americans. In particular, to those who pay low health insurance premiums, the young who choose to have no insurance and the healthy.

As Justice Samuel Alito pointed out, a typical healthy young adult annually may pay $854 for health care, but under the Obamacare mandate to buy insurance, he could end up paying $5,800 in premiums.

Pul-eeze! Does Justice Alito really believe Obamacare will give license to insurance companies to raise rates 680%? No, he doesn’t. He’s just being a typical extremist, tossing out all kinds of nonsense (remember “death panels”?) for political, not truthful, reasons.

Much of that money, of course, will fund such expensive services as end-of-life care. But will uncounted billions — trillions over a decade — be funneled into hospital emergency rooms to, for example, patch up Maniac Latin Disciples? To care for the increasingly large host of obese people?

Or for drivers who were ejected through a windshield because they refused to buckle up? For injured kids whose parents couldn’t be bothered with child-restraint seats? For helmet-less motorcycle riders whose brains were scrambled when their bike hit loose gravel at 70 mph? For those with repeated traffic violations?

For those whose reward for engaging in unsafe sex is a sexually transmitted disease? For alcoholics and the drug addicted? For smokers who won’t kick the habit?

Dennis, first allow me to deplore the obvious and contemptible, racial profiling bigotry of “Maniac Latin Disciples.”

Back to cases, I hate to break this to you, but Obamacare would decrease the use of those costly, hospital emergency rooms, which now are used by uninsured, poor people who know they cannot be refused service there. But never let the facts get in the way of a good story.

How will the secretary of the Department of Health and Human Services and her bureaucrats allocate those costs? How will the Independent Payment Advisory Board, created under Obamacare, resolve that problem when slicing $500 billion out of Medicare? What about Medicaid?

People who show up at a hospital emergency room without insurance go on other patients’ tabs. Obamacare advocates would assign the allocation job to omnipotent panels of unelected experts, unresponsive to marketplace realities and unaccountable to the public.

Dennis, you and others of your ilk, can’t have it both ways. You want to eliminate the cost of insuring “irresponsible” behaviour, but you decry “omnipotent panels” (aka the aforementioned “death panels”), who will judge what constitutes “irresponsible” behavior. Make up your mind, boy.

Consider what a cut in benefits might mean for irresponsible Americans who refuse to use certain preventive services. How would they handle intravenous drug users who continue to irresponsibly share needles? Send them to economy-class wards in the hospital?

Would the mandarins resort to trying to “incentivize” behavior change (further increasing everyone’s costs) or employ behavior modification methods that I’ll leave to your imagination? Would the mandarins begin asking people whether they used condoms when they are tested (also required) for HIV? Would single, pregnant women be asked if they used contraceptives? If not, will they have to pay their OB-GYN a higher deductible?

The imagination reels at the possibilities.

Dennis, you call that imagination? Hah! It pales in comparison to the crazy inventions of the Supreme Court extremeists who imagine mandatory broccoli as an outcome of an Obamacare decision.

Sure, you can say I’m scare mongering; no government would resort to such extremes.

Right, Dennis. You’re scare mongering. Proud of it?

Unless the government is in the hands of those hated right-wingers who would “impose their morals on America.” Who, in the interests of the greater good, would drag single women to “abstinence only” classes to be eligible for maternal benefits?

Who, indeed? Congratulations Dennis, on creating the most ridiculous straw men in the history of irrational debate. Maybe your imagination really is as good as that of Roberts, Scalia, Thomas, Kennedy and Alito.

Should the government force responsible people to pay more for health insurance so that irresponsible people can pay less?

That phony issue is no issue at all. Define “irresponsible.” Who will make that judgement? Out of the total number of uninsured people in America, how many are “irresponsible”?

Here, for your convenience, I have created a sample, Dennis Byrne, “irresponsible” definition test, for readers to answer:

1. Have you, or anyone in your family, ever smoked?
2. Has there ever been a time when you did not have a working fire alarm and burglar alarm in your house? (Same question for radon and CO detectors.)
3. Have you, or anyone in your family, ever not worn a seat belt while in a moving car, truck, bus or airplane?
4. Have you, or anyone in your family, ever ridden on a motorcycle while not wearing a helmet and/or leather clothing?
5. Have you, or anyone in your family, ever taken any recreational drug or taken too much of any drug, legal or otherwise?
6. Are you, or anyone in your family, overweight or underweight?
7. Have you, or anyone in your family, ever been diagnosed with any disease or disability, that continues today?
8. Have you, or anyone in your family, ever become inebriated?
9. Have you, or anyone in your family ever climbed a mountain, flown an airplane, bungee jumped, zip lined, had a fight or committed any traffic violation like speeding, illegal turn, burned out light bulb, etc.?
10. Have you, or anyone in your family, ever done anything that anyone might consider irresponsible, like having sex without a condom, eating fatty foods, not washing your hands before dinner, failure to have a flu vaccination, failure to have a shingles vaccination, living in a high-crime neighborhood – that kind of stuff?
11. Can you afford health insurance?

If you answered “yes” to any question, 1-10, you are guilty of “irresponsible” behavior, and deserve no insurance. You and your kids can die early, for all I care. However, if you answered “yes” to question 11, don’t worry about 1-10. You’re our kind of people.
Sincerely, Dennis Byrne
==================================================================================================
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.
==========================================================================================================================================

Fools rush in where angels fear to tread, so you know what that makes me, for I am about to rush in to a discussion of (yikes!) religion.

I suspect that virtually all religions are based, at least partly, on morality, and morality usually is based on the Golden Rule. Despite what fundamentalists sometimes do, the fundamentals of religion are not how you dress, but how you act toward others – not how many prayers you recite, but how many people you help – not how often you attend a house of worship, but how often you put the welfare of others before your own.

In the previous post, How President Obama surrendered the principles of the Democratic Party, and lost the health care battle, I criticized the President for not emphasizing the morality of Obamacare, but rather being diverted into a discussion of cost. Yet, what is the real purpose of the program?

The real purpose is not to cut costs. We easily could do that by reducing coverages. Rather, the purpose is to care for people who otherwise would have difficulty caring for themselves. The purpose is to aid people who have pre-existing conditions, or sudden, unexpected health events. The purpose is to help our fellow Americans who need our help.

And that is why I am so disappointed in the religious right. If anyone should understand and empathize with the desire to help the poor and the sick, it should be the religious. And the most religious should understand and empathize the most. Yet, it is the religious right who object most strongly – most selfishly, I should add – to the program.

And they object for the thinnest of excuses: Because a few people don’t want to “be forced to” buy health care insurance, and would rather . . . I don’t know what. That’s the reason?

Charity is a foundation of most religions. And yes, I know; charity begins at home. But it doesn’t end at home. And I simply can’t get it through my mind that people who pride themselves on being God-loving and God-fearing, could be so callous toward their fellow human beings.

I can’t get it through my mind that a guy who is apoplectic about pornography, is unmoved about real human suffering. I can’t get it through my mind that people who are angry about the illegality of aliens care nothing about the immorality of preventable sickness. I can’t get it through my mind that people incensed about gay marriage, are not equally incensed about dying children.

Who is at fault? It begins with the clergy. They are our teachers, the moral leaders of our community. Yet, where are their voices? Where are the demands that our underclass be helped? Where are the marches for the poor? How can the clergy stand before their flocks, preach goodness and mercy in the abstract, yet not care that people are sick and dying needlessly?

Did the recession make us cold? I think not. When other forms of misery occur in America – floods, hurricanes, tornadoes, blizzards, fires – we rush out to help the misfortunate. Why not now? Is it politics? Is winning an election so important that it overrides compassion and human decency?

This is an appeal to America’s clergy. If you know a better way to help the sick and handicapped, fine. What is it? Speak up, now. One way or another, let the world hear your voices. Let the world see America as a kind, generous, religious nation, not just a pious one.

Clergy, please do your job. And if you don’t know what that is, ask your god.

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