–They, who caused America’s decline, meet to urge America’s fall

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. Economic austerity causes civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Here is an Email I recently received. I share it with you so you can understand the depths of debt-reduction madness in America, and learn who the participants are. As America sinks from its once-lofty status as “The Greatest Nation In The World,” you’ll know whom to blame.

Urging the Super Committee to GO BIG: $4 Trillion and Beyond

The “Super Committee” has been charged with making recommendations that would reduce deficits by $1.5 trillion over the next 10 years. Unfortunately, more is needed to fix the budget and put the debt on a sustainable path. In order to meaningfully address our nation’s fiscal challenges, the Super Committee should go much further.

The Committee for a Responsible Federal Budget along with the Concord Coalition and the Bipartisan Policy Center invite you to attend a forum that will bring together leaders from across the spectrum to discuss the path ahead for the Super Committee and the reasons it should ‘Go Big.’

Moderators:
Peter Cook, Chief Washington Correspondent, Bloomberg Television
Maya MacGuineas, President, Committee for a Responsible Federal Budget

Panel 1 — Going Big: Why the Super Committee Must Exceed Its Mandate

Erskine Bowles, Co-chair, National Commission on Fiscal Responsibility and Reform
Jim Nussle, Co-chair, Committee for a Responsible Federal Budget and Former Director, Office of Management and Budget
Senator Mike Crapo (R-ID)
Dave Cote, CEO, Honeywell International
Alice Rivlin, Former Director, Congressional Budget Office and Former Director, Office of Management and Budget

Panel 2 — Public Response and Special Interests: The Politics of Going Big

John Spratt, Former Chairman, House Budget Committee
Pete Domenici, Former Chairman, Senate Budget Committee
Charles Kolb, President, Committee for Economic Development
Dave McCurdy, President and CEO, American Gas Association
Bill Novelli, Former CEO, AARP
Andy Stern, Senior Research Fellow, Georgetown Public Policy Institute

Panel 3 — Deficits and Growth: The Political and Economic Picture Today and Tomorrow
Senator Mark Warner (D-VA)
Governor John Engler, President, Business Roundtable
Alan Greenspan, Former Chair, Federal Reserve Board
David Stockman, Former Member of Congress and Former Director, Office of Management and Budget
Jane Harman, President, CEO, and Director, Woodrow Wilson International Center for Scholars, Smithsonian Institution and Former Member of Congress

I award the participants five dunce caps for abysmal failure to understand even the basics of Monetary Sovereignty.

Anyone who does not understand the great damage these people are causing America, should investigate the unnecessary losses to Social Security, Medicare, FEMA, research and development in all sciences, the ecology, homeland security, the military, aid to the poor, the middle class, the postal service, the arts, roads and bridges, food and drug inspection and myriad other federal services.

Because of these people, and like-minded others, you and your children and your children’s children now have, and will continue to have, worsening lives. That is the future these people have given us.

(Note to all of the above participants: I am running a large dunce-cap deficit, but am in no danger of running short – just like dollars and the federal government.)

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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

–Debt reduction madness: How Congress continues to diminish America

Washington Post: “Obama backs ending Saturday mail as part of deficit proposals”

“9/20/11: By Ed O’Keefe: The Obama administration inserted itself Monday into a years-old fight over the future of the U.S. Postal Service, backing proposals to end Saturday mail delivery and to raise postage rates beyond the rate of inflation.”

The support for the proposals came as part of broader White House ideas to pay down the federal deficit. . . . But Rep. Darrell Issa (R-Calif.), who is pushing competing proposals, called Obama’s ideas a “thinly veiled attempt to offset continued operating losses with a taxpayer-funded bailout.”

Sen. Susan Collins (R-Maine), another lawmaker closely tracking postal affairs, said ending Saturday mail “will only make matters worse and accelerate the Postal Service’s death spiral.”

Never mind that taxpayers do not pay for federal spending. And never mind that the postal service, a vital part of the American economy, is being sacrificed to deficit (i.e. money) reduction madness.

Washington Post: Senate to try to force confrontation with House over FEMA dollars

9/21/11: By Rosalind S. Helderman: Senate Democrats plan to add billions of dollars for disaster relief to a House-authored measure to fund government when the fiscal year ends at the end of September, a move that could force House Republicans to decide whether to hold-up the must-pass bill over additional dollars for disaster victims.

The House will vote Wednesday on a continuing appropriations measure designed to fund government through Nov. 18.
[…]
The House measure includes $3.65 billion for the Federal Emergency Management Agency’s disaster relief fund, which has run almost dry as a result of a series of tornadoes, fires and storms.
[…]
In their version of the bill, $1.5 billion of FEMA funding, which would become available to the agency immediately upon the bill’s passage, would be balanced out with a cut to a program that offers loans to auto manufacturers to encourage the production of energy efficient cars.
[…]
“I was disappointed to see the House shortchanged the Federal Emergency Management Agency,” Senate Majority Leader Harry M. Reid (D-Nev.) said on the floor of the Senate Tuesday, announcing he would move to amend the House resolution with additional dollars.
[…]
Democrats will need the support of Senate Republicans who backed boosted FEMA funding last week to send the bill back to the House. Assuming they get it, the House will then have to decide whether to accept the funding or reject it, as the possibility of a shutdown no one wants looms.

So here is Congress, debating whether to reduce postal service or to help victims of tornadoes, fires and storms or to encourage production of energy efficient cars. Why must we choose? Why must our Monetarily Sovereign nation – once the greatest nation in the world, with the unlimited ability to pay any bill of any size — now repeatedly be forced to make such decisions? Why has our America become so feeble and hesitant?

Because Congress is victim to debt-reduction madness, and we are victim to Congress. It’s as though children were voting the best way to do brain surgery. And everyone is surprised we, the patients, are dying.

“Down and down we go
We’re in a deadly spin
Hating this spin we’re in
Our helpless panic grows
Down and down and down we go.”
(Alice Cooper: “Deeper”)

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

MONETARY SOVEREIGNTY

–Are we the next Japan? Ask Richard Koo

Richard Koo is chief economist for the Nomura Research Institute. He is one of the very few prominent economists, not with the University of Missouri, Kansas City, who understands Monetary Sovereignty. Recently, he was interviewed by MONEY magazine senior editor, Kim Clark. The interview ran in the October 11th issue. I urge you to read it.

According to Clark, Koo says:

“Government spending is the key to getting the economy back on track — and that 2009’s massive stimulus package didn’t go far enough.”

Actually, I predicted back in an April 9, 2008 letter to the Chicago Tribuen, that the various stimulus plans were too little, too late.

Here are some excerpts from the Koo interview:

Clark: Some people look at Japan and say the government spent huge sums on public projects and there was no real growth, so spending didn’t really cure the economy.
Koo: The early ’90’s recession in Japan was far worse than people realize. Commercial real estate prices nationwide in Japan fell 87% from the peak. Imagine U.S. housing prices down 87%. The fact that the Japanese government halted what could have been an enormous drop in GDP in the early ’90’s speaks to the success of its economic policies.

Clark: But Japan did suffer a major recession again in 1997.
Koo: The Japanese made a horrendous mistake in 1997. The Organization for Economic Cooperation and Development and the International Monetary Fund said to Japan, “You are running a huge fiscal deficit with an aging population. You’d better reduce your deficit.” When the government cut spending and raised taxes, the whole economy came crashing down. I see exactly the same pattern in the U.S. today. If the government acts to cut the deficit while people are continuing to pay down their debts, then we could have a second leg of decline that could be very, very ugly.

Sound familiar? Japan cut its deficit and a major recession resulted. This is why I have predicted a major U.S. recession or depression for 2012.

Clark: So are you saying that the stimulus package didn’t go far enough?
Koo: Obama kept the economy from falling into a Great Depression. . . The economy is still struggling, so people say that money must have been wasted. Not true. The expiration of the package is behind the economy’s weakness now. Yes, the Bush tax cuts were extended . . but tax cuts are the least efficient way to support the economy . . .because . . . a large portion will be . . . used to pay down consumer debt. Government spending is much more effective.

Clark: Congress recently committed to slash our defict by $2.5 trillion . . .
Koo: (In Japan), the cutback caused a second recession. Think about the Great Depression; war spending is what finally pulled the economy out. The Japanese government didn’t do enough spending in the early 1990s and added another 10 years to the problem. If the U.S. avoids that mistake, maybe in a couple of years you will be out of this mess.

Here we have Japan, a Monetarily Sovereign nation just like the U.S., that went through exactly what we are going through, and made exactly the same mistakes we are making. What have our politicians, media and old-line economists learned from Japan’s experience. Apparently, nothing.

Are you angry enough to write to your political leaders and your favorite media? If not, when?

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

MONETARY SOVEREIGNTY

–Tea Party economics explained

Mitchell’s laws: Reduced money growth cannot increase economic growth. To survive, a monetarily non-sovereign government must have a positive balance of payments. Economic austerity causes civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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For those who do not yet understand Tea Party economics, here is a primer. Tea Party economics is the belief that reducing the money supply, by increasing taxes and/or by federal spending reductions, will stimulate the economy.

From Stephen Gandel’s, “State Budget Cutbacks: A Job Market Drag?” 9/19/11: “Even if government doesn’t kick in its normal share of hiring, the economy can still be put on a path of recovery. It’s businesses that matter most and need to be pushed the most to hire.”

O.K., seems reasonable. How do we “push” businesses to hire? Some sort of incentive would be needed. Tax reductions? But tax reductions would increase the deficit.

From Ed O’Keefe’s, “To save money, federal agencies to start buying in bulk” 9/19/11: “Starting this week, several federal agencies and departments will pool their purchases of office printers, copiers and scanners in hopes of collectively saving $600 million in the next four years, administration officials said late Friday.”

I guess we won’t push the manufacturers of office printers, copiers and scanners to hire. When we cut $600 million from their income, they’ll fire.

From Zachary Goldfarb’s, “Obama’s debt-reduction plan: $3 trillion in savings, half from new tax revenue” 9/19/11: “President Obama will announce a proposal on Monday to tame the nation’s rocketing federal debt, calling for $1.5 trillion in new revenue as part of a plan to find more than $3 trillion in budget savings over a decade, senior administration officials said. . . Combined with his call this month for $450 billion in new stimulus . . . “

Ah, so that’s the plan. We’ll take $3 trillion out of the economy; then we’ll add 15% ($450 billion) back into the economy, and call that a “stimulus.”

Maya MacGuineas, president of the Committee for a Responsible Federal Budget: “We believe the Super Committee should ‘go big’ and exceed its mandate and actually stabilize the debt. We appreciate the President’s proposal to ‘go medium’ and that he has laid out real specifics, but clearly, much more will be needed.”

How will stabilizing the debt (aka “spend less and tax more”) “push businesses to hire”?

House Speaker John Boehner: Tax increases “destroy jobs.”

Yep, by removing money from the economy, tax increases destroy jobs, the same way that federal spending cuts destroy jobs.

Chicago Tribune editors, 9/19/11: “Our first preference has been for dramatic deficit reductions, with a 3- or 4-to-1 ratio of spending cuts and revenue increases

Perfect example of Tea Party economics: A dramatic reduction in the money supply . . . to stimulate the economy.

Same Chicago Tribune editors as above: 9/19/11: The immediate problem is low demand and the grim reality is that no one really knows a reliable way to raise it. Given time, it will come back.

Well, the way to raise demand is to put more money into the pockets of consumers. But why do that when the Tribune assures us the economy will come back all by itself – while we raise taxes and cut federal spending to drain dollars from the economy. What, me worry?

More Chicago Tribune. “ . . .(a) more realistic formula (is to) . . . address the spending binge of the last few years, a job that, as Boehner acknowledges, will require curbs in entitlements like Social Security and Medicare.”

Yes, cutting payments to consumers like retired people, sick people, doctors, nurses and hospitals should do a great deal to stimulate the economy.

So now you know what “Tea Party economics” means: Reduce the money supply to stimulate the economy. In short, apply leeches to cure anemia. What a wonderful, magical solution.

I award the Tea Party and all those mentioned above a solid 5 dunce caps (out of 5), for total, unmitigated economic ignorance. By the way, for all you debt hawks: I never will run short of dunce caps, even though I continually run a dunce cap deficit. I am dunce cap sovereign, just as the federal government is dollar sovereign. Get it?

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

MONETARY SOVEREIGNTY

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