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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A persistent message on this blog is that calls for deficit reduction have nothing to do with fiscal prudence, but rather are attempts to increase the gap between the upper 1% and the middle to lower income classes.

Again and again, the media and the politicians tell you the government, like you, must “live within its means,” or “can’t afford” something, whether it be Social Security, Medicare, health insurance, housing and food for the poor, federal employment — the list goes on and on. What they’re really saying is the middle and lower classes either must do with less, or pay more.

Here’s but one of many examples:

Washington post

What the Republican payroll tax plan would mean for federal workers
Federal unions oppose House GOP payroll tax plan
By Ed O’Keefe

House Majority Leader Eric Cantor (R-Va.), left, and House Speaker John A. Boehner (R-Ohio) announced a plan to extend the payroll tax reduction. Talk about timing: Just as most federal employees were leaving the office Friday afternoon, House Republicans announced the details of a plan to extend the payroll tax reduction that would force feds to face another year of frozen pay and to increase contributions toward their retirements.

The broad package would extend the tax cut for another year. It also would extend unemployment insurance and reimbursements for doctors who see Medicare patients . . .
Under the plan, federal workers would face a one-year extension of the current two-year pay freeze, meaning no raise until January 2014 at the earliest, and a 1.5 percent increase in employee pension contributions that would be phased in over three years starting in 2013.

For those who retire in 2013 or later, the government would eliminate the Social Security supplement for workers who retire before 62, unless the employee is in a position with a mandatory retirement age (including law enforcement personnel, for example).

The bill also would create new retirement rules for federal workers hired beginning in January 2013 who have less than five years of previous government service. Those employees would be forced to pay 3.2 percent more of their salaries toward their retirement savings starting in 2013 (although they would not be subject to a further increase as higher contributions are phased in for everyone else). Their retirement benefits would be based on their highest five years of compensation, rather than the highest three, with the net effect that those employees would be paying more for less.

[…]Colleen M. Kelley, president of the National Treasury Employees Union, said it is “outrageous” that Republicans “would single out hard-working middle-class federal employees to bear such a disproportionate burden while continuing to oppose even the smallest sacrifice by the most affluent.”

And then there’s this article:

Christian Science Monitor

Republicans will tax anyone but the rich
By Robert Reich, Guest blogger / December 6, 2011

For years, Republicans have been telling us tax cuts pay for themselves by promoting growth. If they believe what they say, why should they worry about paying for a one-year extension of the payroll tax holiday?
[…]
Here are the details: The payroll tax will increase 2 percent starting January 1 – costing most working Americans about $1,000 next year – unless the employee part of the tax cut is extended for another year.

Democrats want to pay for this with a temporary – not permanent – surtax on any earnings over $1 million, according to their most recent proposal . . . . Republicans say no to the surtax. “The surtax is something that could very much hurt small businesses and job creation,” says John Kyl of Arizona, the Senate’s second-ranking Republican.
[…]
Not even a resolute, doctrinaire follower of GOP president Grover Norquist has any basis for preferring millionaires over the rest of us.. . . So Republican leaders are trying to get rank-and-file Republicans to go along with an extended payroll tax holiday . . . According to their latest proposal, they want to pay for it mainly by extending the pay freeze on federal workers for another four years — in effect, cutting federal employees’ pay even more deeply — and increasing Medicare premiums on wealthy beneficiaries over time.

For years, Republicans have been telling us tax cuts pay for themselves by promoting growth. So if they believe what they say, why should they worry about paying for a one-year extension of the payroll tax holiday? Surely it will pay for itself.

The upper 1% want to increase the gap because widening the distance between them and the 99%, enlarges their power. They can use this augmented power to solidify their control over an already bought-and-paid-for Congress. Absolute wealth is far less meaningful than comparative wealth, so keeping the 99% down is as important as lifting the 1% – at least to the 1%.

This has the support of a right-wing Supreme Court which, for instance, ruled recently that corporations have the same Constitutional rights as American citizens. (Remember, the largest corporations are groups run by tiny and wealthy cabals, whose personal interests may not reflect the interests of their shareholders or employees.)

In short, all the misleading talk about fiscal prudence, discipline and austerity, merely is a covert attempt to put a wise face on a worldwide effort to grow the gap and steal the freedoms of the middle- and lower-classes.

The payroll tax debate is a tiny piece of an ongoing war. You’ll see evidences again and again. The next time you read or hear any debate about national finances, ask yourself: “Is this liable to increase the gap, that is will it help the 1% more or damage the 1% less, than the 99%?”

Keep your eyes open and you’ll see most Congressional money decisions, whether regressive taxes like FICA or regressive tax cuts like capital gains, or efforts to eliminate the health insurance law, all manage to increase the gap. Remember, those Congressional and Presidential votes have been paid for by the 1%.

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
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

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

The single, most valuable asset any nation can have is Monetary Sovereignty – the unlimited ability to create its sovereign currency, the unlimited ability to pay any bill any time and the unlimited ability to grow economically.

Monetary Sovereignty is more valuable than all the land and all the buildings in a nation. Until now, “only” 17 out of the 27 members of the EU had voluntarily surrendered their Monetary Sovereignty – their most valuable asset. Many are paying the price. Now, all but Britain seem to have joined them in a monumental fiscal suicide pact.

Washington Post:
European Union leaders agree to forge new fiscal pact; Britain the only holdout
By Anthony Faiola, Published: December 9/ 11

BRUSSELS — A landmark summit of the 27-nation European Union ended here Friday with both a pledge and a wedge: A pledge among nations to work toward a new treaty binding them more closely in a pact to save the euro, and a wedge between the continent and Britain, which opted to sit it out.

Rather than trying to save the euro, these nations should be trying to save their economies. Classic tail wagging the dog

In a summit portrayed by leaders as a make-or-break moment in the decades-long march toward European unity after World War II, the outcome signaled the growing clout of Germany and a potentially wayward path for Britain.

In euro-speak, “wayward” describes a nation with the sense not to destroy its own sovereign currency, over which it has total control, in exchange for the failing euro, over which it has no control.

After marathon talks, nations unveiled a deal to quell a debt crisis that is threatening the global economy. The summit organizers announced early Friday that they had agreed to try to forge a new pact centering on strict caps on government spending and borrowing to shore up the euro’s foundations.

In other words: Strict caps on your economic growth together with no ability to recover from recessions and depressions, together with loss of control over your money supply. What could be wrong with that?

But the veto by British Prime Minister David Cameron, a Conservative euro-skeptic who cherishes the pound and looks askance at a heavy European hand in British affairs, underscored his nation’s long unease with relinquishing national powers to the E.U. and left London isolated in a region now moving toward deeper integration without it. His move left Britain’s Guardian newspaper asking, “Will it be splendid isolation or miserable?”

One day, the British will erect a statue of Minister Cameron, alongside that of Churchill and Nelson, and celebrate him as a man who saved Britain.

Without Britain on board, the 26 other E.U. nations face potentially complicated legal obstacles to meet one of the prime objectives of a new treaty: giving fresh powers to E.U. institutions to slap automatic penalties on governments that recklessly spend and borrow.

Rather than coming up with a plan to help nations grow, the EU developed a plan to do the exact opposite, and to enforce that recession-generating plan with penalties. Sort of reminds me of the U.S. Congress and the terrible debt ceiling. Apparently, the Atlantic is no barrier to ignorance.

Leaders have tried, and repeatedly failed, to come up with grand plans to fix the region’s two-year-old debt crisis, allowing troubles that began in Greece to spread to much bigger economies such as Italy and Spain.

As I’ve said repeatedly, there are two, and only two, long-term solutions for euro nations:

1. Return to Monetary Sovereignty by re-adopting their sovereign currencies, or
2. The EU to give (not lend) euros to member nations as needed.

Hungary, the Czech Republic and Sweden agreed to Friday’s deal at the last minute. Along with Denmark, Latvia, Poland, Lithuania, Romania and Bulgaria, they committed only to the possibility of taking part in a treaty after consulting with their national parliaments.

Six more lemmings dive over the cliff. Let us pray these nations’ parliaments have more intelligence than do the negotiators, who have traded their absolute guarantee of eternal solvency for a guarantee of future insolvency.

The leaders of Germany and France, the anchors of the 17 nations that share the euro and the two largest economies in the European Union, hailed the accord as a “breakthrough” that would restore confidence in the euro.

Ah, the “confidence fairy” rears her lovely head. Note to EU: Confidence is something you earn, after you have proven solvency, not before. Reminds me of the guy who dives out a window, and on the way down, shouts, “So far, so good.” That’s the EU brand of confidence.

German Chancellor Angela Merkel declared herself indifferent to whether Britain signed or not. (She) said she had no intention of giving in to a British demand — a written promise that Britain would be free from potentially cumbersome European rules and regulations that could hamper London’s vast financial district. Instead, her message to the British was clear: If you want to be part of Europe, you must submit to its rules.

“I have achieved what I wanted to achieve,” Merkel said.

Yes, Chancellor, if you wanted to achieve the financial destruction of Europe, you’re doing a fine job, perhaps better even than that noted, historic countryman of yours.

French President Nicolas Sarkozy was less delicate, suggesting that the rest of Europe was growing weary of Britain’s independent streak.

What? A Frenchman who doesn’t like another nation’s “independent streak.”?

Cameron, who is one of Europe’s leading advocates of austerity and has enacted historic cuts at home, is actually seen as more moderate on Europe than many fiercely anti-E.U. members of his Conservative Party. . . . In recent days, he had incurred the wrath of his party by suggesting that his primary consideration now should be helping his neighbors save the euro. . . .

Uh oh. Cameron is a leading advocate of austerity? His primary consideration is saving the euro, not saving the pound? There goes his statue. Sic transit gloria.

Rodney Barker, professor emeritus of government at the London School of Economics, said Cameron was in a “precarious position.” While trying to placate his party’s right wing, which wants less involvement in Europe, Cameron also risked making Britain irrelevant with its neighbors.

“You can’t leave a club then complain you’re not involved in its meetings,” Barker said.

What a “risk.” Being “irrelevant” to a group of nations wearing suicide vests. A few years from now, as the euro nations continue to battle insolvency, recession or even depression, and assuming Britain is wise enough to use its Monetary Sovereignty for growth, the British won’t have to worry about “irrelevancy.” They will be the most powerful nation in Europe, and the euro nations will beat a path to their door.

Addressing the problem of high borrowing rates in countries such as Italy, though, may require greater intervention from the European Central Bank, which could print money to lend to countries at affordable rates, or from Germany, which could allow countries to borrow money with guarantees from the full euro zone.

Merkel has previously hinted that she might accept euro bonds — regionwide instruments like U.S. Treasurys that could require German taxpayers to back up the debts of Greeks and Italians — but only as long as other countries bind themselves to deep fiscal overhauls.

Clever: Lend more money to insolvent nations, thereby increasing their insolvency, while simultaneously preventing them from growing. Visualize your brother-in-law, who has maxed out credit cards, now coming to you for a loan – and you give it on the condition he doesn’t invest the money! That’s the EU solution.

The craziness of the EU negotiators qualifies them to run for U.S. Congress, or even the U.S. Presidency, where ignorance of Monetary Sovereignty seems to be a condition of election.

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
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY

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

Under the “Misery loves company” banner, the euro nations, having indulged in a spate of self-mutilation by adopting the euro, are really, really angry at Britain for remaining whole. Unfortunately, like naive teenagers who mindlessly join their peers in folly, Britain yet may succumb.

New York Times
Britain Suffers as a Bystander to the Euro’s Crisis
By Sarah Lyall and Stephen Castle, December 7, 2011

LONDON — No matter what happens at the European summit meeting on the euro in Brussels that begins Thursday, Britain is sure to lose.

There is looming recognition at 10 Downing Street that if the euro falls, Britain will sink along with everyone else.

Total myth. A Monetarily Sovereign nation never needs to “sink” financially. In the crazily extreme case where every last citizen and every last bank in Britain saw their eurobond holdings drop in value to zero, Britain still could exchange pounds for those worthless bonds, and just keep on sailing.

But if Europe manages to pull itself together by forging closer unity among the 17 countries that use the euro, then Britain faces being ever more marginalized in decisions on the Continent.

Many Europeans have been irritated by British Conservatives’ quiet satisfaction throughout the crisis with the decision not to join the euro (the United Kingdom ostentatiously kept its currency, the pound), particularly when juxtaposed with the panic over Britain’s inability to have any significant impact on Europe’s biggest crisis since the end of the cold war.

Sure they’re irritated. They blindly gave away the single most valuable asset any nation can have – their Monetary Sovereignty – and now they look with envy at a nation that was not so foolish. The euro nations resemble the followers of Harold Camping, that guy who repeatedly predicted the end of the world. These folks gave away all their money and worldly possessions, and undoubtedly are angry at those who weren’t so nuts.

“Germany is the unquestioned leader of Europe,” said Charles Grant, director of the Center for European Reform. “France is definitely subordinate to Germany, and Britain has less influence than at any time I can recall.”

Yes, Germany is the unquestioned leader of the broke, battered and busted. Weep for Britain, which being Monetarily Sovereign, can pay any bill of any size at any time, and does not need to come hat-in-hand to the EU, begging for euros. How sad for Britain.

Despite all that is at stake, Prime Minister David Cameron’s coalition government looks doomed to be cast in the role of impotent bystander, torn between anti-Europe forces and European leaders’ moves toward greater fiscal integration on the Continent — with or without Britain.

Yes, “doomed” to have money, while the euro nations continue to struggle with half-baked solutions to their mounting problems. There are two, and only two, long-term solutions for the euro nations:

1. Return to Monetary Sovereignty by re-adopting their sovereign currencies (just like Britain).
or
2. The EU to give (not lend) euros to member nations as needed (just like the U.S. can and should do for its states).

There are no other long-term solutions. None.

On Wednesday, Mr. Cameron told a fractious Parliament that his main goal in Brussels was to “seek safeguards for Britain” and “protect our own national interest” by resisting measures like a proposed financial transaction tax. But such Britain-centric rhetoric has annoyed the brokers of Europe’s future, Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France, who are trying to find a way to save the euro while imposing legally binding fiscal discipline on the Continent’s floundering southern economies.

In short, Merkel and Sarkozy scream, “Help, we’re drowning, because we drilled holes in our ship of state and then threw away our life preservers. So Britain, we want you to drill holes in your own boat, and jump in with us losers – or we’ll be angry at you.”

They have not been shy about expressing their frustration. Just six weeks ago, after Mr. Cameron tried to inject himself into talks about the euro, Mr. Sarkozy said bluntly, “You have lost a good opportunity to shut up.” He later added: “We are sick of you criticizing us and telling us what to do. You say you hate the euro and now you want to interfere in our meetings.”

In even shorter, “We screwed up, and now we’re drowning. We can’t swim, things are getting worse by the minute, and we have no idea what to do. But we resent your advice. Glub, glub, glub.”

“Said Alexander Stubb, Finland’s minister for European affairs. “When we look at future E.U. rules, it is the triple-A countries that are running the show.”

Perfect. Monetarily non-sovereign France, which would go broke without EU help, has an AAA rating. The Monetarily Sovereign U.S., which cannot go broke, and needs no help, not only is rated AA by S&P, but has been threatened with further downgrades. That tells you nothing about the U.S., but speaks volumes about S&P (the guys who gave an AAA rating to worthless mortgage securities, and still haven’t admitted to being stupid or crooked.)

France and Germany have already made it abundantly clear that they will go ahead with their plans for the euro zone without regard to the needs or interests of Britain.

The explosive debate in Britain, while never welcome, comes at an unusually inopportune time for Mr. Cameron. The so-called special relationship with the United States is not looking all that special right now, and enormous cuts in defense spending are making it hard for the British military to maintain its status as America’s right hand.

The austerity budget is fraying at the edges, amid strikes and protests over layoffs and rising fees. Growth has been slowing, despite Mr. Cameron’s insistence that businesses would pick up the pace when it became clear that the government’s finances were sound. And now Britain looks to be in an unusually poor position to defend its interests in Europe.

And that is the saddest paragraph of all. Britain is Monetarily Sovereign, but as in the U.S., its leaders have convinced the populace they are monetarily non-sovereign. So, they subject their people to grinding austerity for no reason whatsoever.

Most dangerous to Mr. Cameron was the unwelcome intervention of the mayor of London, Boris Johnson, a potential wild-card rival for the Conservative leadership. Mr. Johnson, who is perhaps Britain’s most popular politician, enjoys injecting himself into questions of foreign policy when the spirit moves him.

If Britain was asked to sign a treaty creating “a very dominant economic government” across Europe, he told BBC radio, then Mr. Cameron should veto it. “And if we felt unable to veto it, I certainly think that it should be put to a referendum,” he said. He added that in rescuing the euro, there was a danger of “saving the cancer, not the patient.”

Exactly correct. There is no benefit for Britain, or any other Monetarily Sovereign nation (the U.S. included), in merging with the deadbeats of the eurozone. They may call Britain bad names, as they “tempt” the British with a nice, fancy suicide belt, but Britain was the smart one.

I pray the citizens of Britain soon understand the massive advantages they have in being Monetarily Sovereign. Too bad the citizens of the U.S. have not yet learned that lesson.

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
b>Gross Domestic Product = Federal Spending + Private Investment + Private Consumption + Net exports

#MONETARY SOVEREIGNTY