–What is your ideal for the most powerful job in the world: President of the United States?

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 = 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 problem the Republicans face is quite simple: They pander to lunatics. They claim to be patriots, while divorcing themselves from everything America stands for:

“Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!“

They worship the wealthy and denigrate the poor. They wish to cut Social Security, Medicare, Medicaid, food stamps and unemployment compensation, while maintaining tax cuts for the wealthy.

This was a party I once believed in and voted for, because I felt it had a better handle on business, the foundation of the American economy. Today, they have allowed themselves to be drawn into an unholy blend of Tea Party, ultra-right, fascist, deregulation, anarchy – a mentality that benefits the wealthiest and increases the income gap, while endangering the middle class and the poor.

Sadly, the Democrats have been drawn to the right, and are neither liberal nor neoliberal. They comes closest to neoconservatism, though in truth they are an amalgam of ill-fitting ideas designed – like the Republicans – to gain support from whichever extreme groups can provide the most money, now.

Today’s politicians replace personal morality with a cynical win-at-all-costs drive, having nothing to do with patriotism, family, freedom, America or the American people. Is it any wonder that today’s politicians have the lowest job approval ratings in history? (Just 13 percent of Americans in the latest ABC News/Washington Post poll approve of the way Congress is handling its job, while 84 percent disapprove – its worst rating in poll results since 1974. Sixty-five percent disapprove “strongly,” a vast level of high-intensity criticism. – http://abcnews.go.com/blogs/politics/2012/01/congress-hits-a-new-low-in-approval-obama-opens-election-year-under-50/ )

The above diatribe was provoked by the following article:

COMMENTARY MAGAZINE

Will Romney Regret Immigration Stance?
Seth Mandel, 01.17.2012

What happens when the presumptive GOP nominee is taking fire on immigration from Republican groups, and even a Republican governor who has attracted speculation she might be considered for the vice presidential nomination? The Wall Street Journal reports:

Mitt Romney’s embrace of Kris Kobach, the man behind a spate of laws intended to rid states like Arizona of illegal immigrants, is drawing fire from Hispanic Republicans and immigrant advocates who say the GOP front-runner has damaged his chances of attracting Latino voters in the presidential election.

“Romney committed political suicide when he received Kobach’s endorsement,” said DeeDee Garcia Blase, founder of Somos Republicans, a grassroots Latino Republican group.

Romney has chosen immigration as one area to run to the right of his rivals to shore up his conservative credibility. But as a general-election issue, Romney may have put himself in a box. Romney is not just to the right of Gingrich and Perry on the issue; he’s to the right of every Republican presidential nominee in recent history.

If you support hard-line policies to curb illegal immigration, at some point you have to ask yourself whether your plan really calls for the deportation of 6.4 million adults (out of the 10.2 estimated total) who have been in this country for at least a decade, almost half of whom have children under the age of 18. If the answer is yes, you are left with two follow-up questions: Can this in any way be considered realistic? And presuming you do not accomplish this (for a host of reasons), have you just told 3 million parents in the demographic that accounted for 56 percent of the nation’s population growth in the last decade that your party wants them and their children out?

Here would be an honest speech for any of today’s candidates:

“I deeply and irrevocably always have believed whatever you want me to believe, so long as you have votes and/or money, but I someone comes along with more money and/or votes, and wants me to change my deeply-felt, unchanging convictions, I’ll turn on a dime. Are you for or against abortion? Me, too. Same if you’re for or against tax increases, immigration, religion in schools, divorce, gay marriage, stem cells, Israel, marijuana, food stamps, guns or any other single issue you can name.

Your brain can’t hold two things simultaneously, so I know you’ll vote for just one issue and the most stupid, lying politician you can find.” Hey, that’s me.

We voters have only ourselves to blame, because we have become narrow, one issue dolts. Don’t believe me? Look at the losers who have the gall to run for the most powerful job in the world, the President of the United States of America. There actually are people who have supported these fools, but like the politicians, now have changed their minds.

Watch for Romney to change his position, whatever it may be.

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

–Ever so slowly, the mainstream media realization sets in. Even Michael Schuman is starting to get it. Maybe.

Can it be that the mainstream press, after being blind for all these years, is just now, almost, on the verge of, perhaps, possibly beginning to get it?

What S&P’s Downgrades Mean for the Euro’s Future
Time Magazine, By Michael Schuman, January 16, 2012

By focusing primarily on fiscal austerity and liquidity support, Europe has entered a race to the bottom. The more budgets get cut and taxes go up, the weaker economies become.

Hello, Tea/Republicans. Hello, Democrats and the President. Hello, media and old-line economists. Hello, all you who are calling for smaller government and reduced federal deficit spending. Did you understand that? Michael Schuman’s words should be in bright neon, on every road leading to Washington, D.C.: The more budgets get cut and taxes go up, the weaker economies become.

That makes it harder to meet fiscal targets or stabilize debt, leading to more cutting and tax hikes and even slower growth, and so on and so on. Economies enter recessions (which is already happening across Europe), making reform more difficult and spooking investors, causing borrowing rates to rise and putting more pressure on national finances.

It’s a deadly spiral. By simply imposing more rules on fiscal policy – the basis of a German-inspired vision for a more integrated euro zone – Europe’s leaders are setting targets many members can only meet through extensive suffering, and thus, the new drive for reform of the euro zone can make the debt crisis worse, not better.

What’s missing in the reform equation is the other side of integration – not just more dictates and rules, but deeper policy coordination to spur growth and help weaker economies. Instead of an “austerity union” now being pursued, the euro zone needs a true fiscal union, one that doesn’t just penalize rule-breakers, but also uses tax and budgetary coordination to assist debt-ridden economies return to health.

That could include a “eurobond” or other methods towards at least partial debt consolidation. Along with a beefier bailout fund, the euro zone must engage in policy changes across its members to reduce imbalances and aid less competitive economies find growth. We’re not seeing any of this happen.

Unfortunately, Mr. Schuman proposes debt “consolidation,” which is another word for “more-debt, pay-later.” What he should propose is Monetary Sovereignty, which means: Debt is money, and in a Monetarily Sovereign government, increasing government debt, i.e. increasing the money supply, is required for economic growth.

He ends his article with:

Until the leaders of Europe find a way to share sacrifices and allocate losses, the debt crisis will continue to spiral downwards and Europe will remain the biggest threat to global economic stability. If the current direction continues, it may only take a few more rounds before the debt crisis finally delivers the knock-out punch to the euro, and Europe’s dream of integration.

Yikes! “Share sacrifices and allocate losses? Isn’t this the race to the bottom he scoffed at? Instead of sharing sacrifices and allocating losses, how about Monetary Sovereignty, in which sacrifices and losses become unnecessary.

There are two, and only two, long-term solutions for the euro nations:

1. Return to Monetary Sovereignty by re-adopting your own sovereign currency
or
2. Become a quasi-United States of Europe, with the EU giving (not lending) euros to member nations.

There are no other long-term solutions.

So, Mr. Schuman is almost, but not quite, there. One day, he’ll get it, at which time he’ll say (you know what’s coming), “I knew it all the time.”

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

#MONETARY SOVEREIGNTY

–Whither the “war savings” and Alice in Wonderland logic

“Everyone” knows the federal government, the debt and the deficit should be reduced. President Obama knows it. Congress knows it. The media and old-line professors know it. Your next-door neighbor knows it.

And, of course, they all are wrong. Reductions in federal spending lead to recessions and depressions, simply because a growing economy requires a growing supply of money, and the strength of a Monetarily Sovereign government is its ability to create an unending supply of its sovereign currency.

Which brings us to the following article:

How To Easily End The ‘Doc Fix’ Problem — And Why House GOP Is Opposed
Sahil Kapur, 1/16/2012

One of the items Congress extended for two months in the December payroll tax package is current Medicare payment rates to physicians, averting a steep 27.4 percent cut. Although a yearlong “doc fix” is seen as likeliest when lawmakers return to town this week and begin negotiating pay-fors, even that would merely be punting an issue in need of a permanent fix.

Over the last few months there’s been serious talk in Congress of buying out the “doc fix” issue once and for all with war savings from troop withdrawals in Iraq and Afghanistan, estimated at over half a trillion dollars.

“I absolutely would not be in favor of offsetting Overseas Contingency Operations money [for a doc fix] when it was going to end anyway,” said Rep. Phil Gingrey (R-GA), a physician, when I asked him about the idea.

And why?

“That is funny money. That spending was going to go away anyway. That does not reduce the size of government,” Gingrey explained. “So you grow it on the one hand and then you rob Peter to pay Paul but Peter doesn’t have any money. It’s just a Ponzi scheme and the American people are sick of that.”

Sen. Mark Kirk (R-IL), who’s also not a fan, joked that it would be like counting all the trillions the US has not spent since World War II as budgetary savings.

In Rep. Gingrey’s and Sen. Kirk’s Alice-in-Wonderland logic, if after many years, you finally pay off your $1000 per month mortgage, you really won’t have more money to spend on other things, because your mortgage expenses “were going to end anyway.”

Huh?

But getting to the more fundamental problem: How will the U.S. economy be affected if the government stops spending, what Mr. Kapur claims will be “over half a trillion dollars”?

Let’s assume that figure may be misleading:

Federal Times, Marcus Weisgerber, June 24, 2011

DoD spent $162 billion — $100 billion on Afghanistan and $62 billion on Iraq — in 2010, according to budget documents. The Pentagon is projected to spend about $149 billion — $113 billion on Afghanistan and $46 billion on Iraq — in 2011.

The Pentagon’s 2012 budget proposal, sent to Capitol Hill in February, requested $118 billion — $107 billion for operations in Afghanistan and another $11 billion in Iraq. All U.S. troops are scheduled to leave Iraq by the end of 2011.

“We look at it coming down about $30 billion or $40 billion a year based on the strategy that’s played out,” Adm. Michael Mullen, chairman of the Joint Chief of Staff, told House Armed Services Committee members during a June 23 hearing.

By whatever the real figure turns out to be, the federal government will pump that much less into the economy. It will buy less equipment, less food, less clothing and fewer weapons from U.S. businesses, hurting those business’s profits and their suppliers’ profits and their suppliers’ suppliers’ profits, not only adding to unemployment, but slowing the overall economy. And the military will employ fewer soldiers, also adding to unemployment, and slowing the economy.

No matter how Congress and the President present the figures, the troop drawdown will be an anti-stimulus — especially because our leaders not only want to cut federal spending, but feel this cut is not really a cut, because “we were going to do it anyway.”

The only question remaining: How soon until the next vertical gray bar?

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

#MONETARY SOVEREIGNTY

–The world parade: Europe marches over the cliff. America follows. Tea Party cheers.

Latest news on the world parade:

Merkel vows faster eurozone reform after S&P downgrades
Yahoo Finance, Reuters 1/14/12, By Robin Emmott and Brian Rohan

European leaders promised on Saturday to speed up plans to strengthen spending rules and get a permanent bailout fund up and running as soon as possible, a day after U.S. agency S&P cut the ratings of several euro zone countries’ creditworthiness.

In a conference call with reporters and analysts after downgrading nine of the euro zone’s 17 countries, Standard & Poor’s said it saw continued risks from the debt crisis that has overshadowed Europe for the past two years and said the single currency area was heading towards recession.

It also warned that France, which suffered a downgrade to AA+ from the top-notch AAA, was at risk of further cuts if a recession further inflates its debt and budget deficit.
“The policy response at the European level has in our view not kept up with the rising challenges in the euro zone,” S&P credit analyst Moritz Kraemer said on the call, forecasting a 40 percent chance of euro zone gross domestic product contracting by up to 1.5 percent in 2012.

Hmmm . . . I wonder why a group of nations, each having surrendered their single most valuable asset — their Monetary Sovereignty — would suffer GDP contraction.

(German) Chancellor Angela Merkel said the downgrades underlined why a so-called ‘fiscal compact’ must be signed by member states quickly, and the next bailout mechanism, known as the ESM, should be funded soon.

“We are now challenged to implement the fiscal compact even quicker … and to do it resolutely, not to try to soften it,” she said at a meeting of her conservative Christian Democrats (CDU) in the northern city of Kiel.

The “fiscal compact,” which I refer to as the “suicide pact,” mandates more centralized EU control over national budgets and sanctions for countries that do not meet deficit and debt reduction targets. Just what anemic nations need: Blood removal.

European Central Bank policymaker Joerg Asmussen warned that Europe’s drive to tighten fiscal rules was being softened, considering the latest draft of the agreement a “substantial watering down” of budgetary discipline because it would allow extra spending in extraordinary circumstances, the Financial Times Deutschland reported.

It’s hard to know whether to laugh or to cry.

Leaders including Merkel have urged countries to tighten their belts with higher taxes and deep spending cuts to rein in massive budget deficits. But that has heightened market concern about their ability to grow their way back to health, pushing borrowing costs even higher for heavily indebted governments.

By what economic mechanism can higher taxes and deep spending cuts rescue an economy? Tea Party insanity has infected Europe as well as the U.S.

S&P said it was not working on the assumption of a euro zone break up, although it blamed its leaders for focusing too much on cutting debts and not sufficiently on competititeveness. “We think that the diagnosis of policymakers regarding the crisis is only partially recognising the origin of the crisis,” said Kraemer, mentioning the focus on budget austerity.

“The proper diagnosis would have to give more weight to the rising imbalances in the euro zone in terms of the external funding positions, current account positions, much of it is based in diverging trends of competitiveness,” he said.

Total gobbledgook. S&P favors austerity — and also doesn’t favor austerity. It straddles the fence, and later, when the whole thing comes crashing down, will say, “I told you so.”

“The downgrade is bad news for Austria but it should wake everyone up when such a thing happens,” Finance Minister Maria Fekter said. “Now everyone recognises that this … is a matter of debt and deficits, not primarily of the economy.”

Huh?

“The downgrade is far too broad, it effects too many countries, it effects the very credibility of the euro,” (Spain’s) Treasury Minister Cristobal Montoro said on the radio.

The euro has credibility?? Since when? Readers of this blog remember the line, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.”

I said it on June 5, 2005, in a speech at the University of Missouri, Kansas City.

Germany’s Merkel backed a proposal to reduce the reliance of institutional investors on ratings agencies. The idea would be to introduce legislation to allow institutional investors to evaluate risk themselves and make decisions independent from the U.S.-based agencies.

Don’t like the ball game score? Change umpires. Ironically, while the euro nations are angry at S&P, if anything, the ratings are too high, and absolutely, positively will continue to be lowered, unless the EU gives (not lends) euros to member nations.

European leaders are set to meet at a summit on January 30 to discuss how to boost growth and jobs, and Merkel’s words on Saturday suggest she will also be looking for faster progress on tighter common fiscal rules.

That’s the guaranteed-to-fail plan: Try to boost growth and jobs with more austerity. Help a runner by cutting off his feet. Sadly, that’s the same plan the U.S. Congress and President have borrowed from the Tea Party.

However, Merkel is no fool. Austerity will weaken the rest of the euro nations, making Germany even more dominant. That’s the real plan, and the euro nations are falling for it.

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

#MONETARY SOVEREIGNTY

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