Tag: monetary non-sovereignty

How the Rich Use the Big Lie to Cheat You: Chapter V: Taxes

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

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“Nothing is certain but death and taxes.” You’ve heard it so many times it has become ingrained in our psyches that there must be taxes.

But why?

“To pay for the government,” comes the ready answer.

None of us likes paying taxes, but few of us even can imagine a government that does not levy taxes.

And it’s all part of the Big Lie. In it’s simplest version, the Big Lie is: “Federal taxes fund federal spending.”

We’ve discussed the Big Lie so many times, we won’t go deeper into it here, other than to say this: Monetarily non-sovereign governments like states, counties, and cities do need taxes to fund spending. The Monetarily Sovereign U.S. government neither needs nor uses taxes to fund spending.

Even if all federal tax collections fell to $0, the U.S. government could continue spending, forever. That is a fundamental econnomics truth, which you can read about at any of the numerous posts detailing the features of Monetary Sovereignty.

Why then, do we have taxes?

Some history: Being Monetarily Sovereign, the U.S. government has the unlimited ability to create its own sovereign currency. But it was not always so.

The one thing every government has is the ability to pass laws. And some of these laws may reduce the nation’s own Monetary Sovereignty. (The euro nations passed laws completely eliminating their Monetary Sovereignty.)

Deciding to be on a gold standard, where each unit of a nation’s sovereign currency must be matched by a unit of gold, cancels the nation’s unlimited ability to create its money.

During much of our history, the U.S. government has been on some sort of metal standard, and at those times, we were not Monetarily Sovereign. Our government needed to ask our citizens or foreigners for dollars.

This all changed on August 15, 1971 (“the Nixon shock”), when we freed ourselves from the restrictive chains of a gold standard.

Why then, do we still have taxes?

There are four reasons — the first two of which are offered by Modern Monetary Theory (MMT) — reasons MS disputes:

1. To provide Demand for, and therefore, Value to, the dollar.

There is some debate about whether Professor Randy Wray (UMKC), a leading proponent of MMT, believes taxes are necessary for this purpose, or merely helpful. He seemingly has supported both positions.

There can be little doubt that requiring Americans to pay their taxes with dollars, does help increase the Demand for dollars.

There is much doubt, however, about whether taxes are necessary to create Demand. The massive size of America’s economy, America’s huge export and import business, the availability of Treasury Securities as safe-harbor investments, the dollar’s position as a world reserve currency, and the worldwide trust in America’s full faith and credit, all combine to create Demand for the dollar — without the need for taxes.

2. Related to point #1.: The use of taxation to prevent inflation, another position supported by MMT.

In the formula Demand/Supply = Value, increasing Demand and/or reducing Supply will defeat inflation. Taxation reduces inflation partly by increasing the Demand for dollars, but mostly by decreasing the Supply of dollars.

Federal tax dollars are sent to the U.S. Treasury, where they are destroyed. Some critics of MS claim tax dollars are not destroyed, but the evidence for destruction is quite clear. If tax dollars were not destroyed, the U.S. Treasury would have billions of dollars. Yet there are no accounting records that show the U.S. Treasury to have any dollars at all.

Try to find the answer to the question, “How many dollars does the U.S. Treasury have”? and you will come up empty. The U.S. Treasury does not own tax dollars, and cannot provide spending money to the other branches of the government.

To pay a bill, the government (i.e. its agencies) sends instructions (not dollars), in the form of checks or bank wires, to the creditor’s bank. The instructions tell the bank to increase the balance in the creditor’s checking account.

At the moment (not before) the creditor’s bank obeys those instructions, dollars are created. Banks are the mechanism for all dollar creation, much of it is on the instructions of the U.S. government. (Banks also create dollars by lending.)

While taxation reduces inflation by reducing the money supply, taxing cannot efficiently be used as an inflation-prevention or cure device.

Preventing and curing inflation requires a mechanism that can be applied quickly, will act immediately, and can be implemented in small, measurable increments.

Taxation, by contrast, is slow, political and does not lend itself to small, measurable increments.

Visualize the U.S. Congress, faced with impending or actual inflation, trying to force all political parties to pass tax laws that can be implemented in small, measurable increments, and immediately will affect inflation.

If you were in Congress, which tax change would you be able to get through all the vested interests, and have immediate, incremental, measurable effects?

By contrast, the Fed instantly can raise interest rates by tiny increments, and these higher rates quickly will increase the Demand for dollar-denominated securities and for dollars themselves.

(MMT disagrees, claiming that higher rates increase business costs, thereby inflating prices. But the proof, as is said, is in the pudding. The Fed effectively has used interest rate to controls inflation, for a hundred years).

3. The third purpose of taxes is to guide behavior. “Sin” taxes on alcohol and cigarettes, reduce the usage of these harmful products by making them more expensive.

4. The fourth, most important reason we still levy unnecessary taxes, is to widen the Gap between the rich and the rest.

Consider the most extreme case of an unnecessary tax designed to widen the Gap: The FICA tax. This tax supposedly funds Social Security and Medicare, though no tax funds federal spending. FICA is a tax that applies only to wages, salaries, tips and self-employment income, and for most of the tax, it applies only to wages below $119K.

FICA does not apply to all sorts of income other than wages, salaries, tips and self-employment income (interest, capital gains and various forms of passive income — i.e. the income the very rich have)

In short, the rich pay a negligible amount of FICA, if at all, compared with their incomes. FICA is the perfect tax for widening the Gap between the rich and the rest.

Now consider sales tax. While there is no general federal sales tax, the federal government does levy taxes on alcohol, tobacco, guns, and ammunition. The cost of purchasing these products constitutes a greater percentage of middle- and low-incomes than of high incomes. In that way, these federal sales taxes widen the Gap (although the primary purpose is to control and limit consumption).

More serious, however, are local sales taxes. Being monetarily non-sovereign, Cities, counties, and states claim they need sales taxes to fund spending. These sales taxes constitute a huge proportion of middle- and low incomes and are greatly regressive.

Are local sales taxes really necessary, as the local governments claim? Yes and no.

Yes, if local tourism, business taxes, property taxes and other forms of income are insufficient to pay for local government spending.

No, if the federal government will simply use its unlimited ability to create dollars, and use those dollars to pay economic bonuses. (See Prosperity Step #3: Provide an Economic Bonus to every man, woman, and child in America, and/or every state a per capita Economic Bonus.)

SUMMARY:
1. Federal taxes do not fund federal spending. They are destroyed upon receipt. Federal spending is funded ad hoc, with new dollars created at federal agency instructions.
2. Federal taxes cannot function as an inflation control. They are too slow, too political and not precise or incremental enough. The Fed successfully has used interest rates to control inflation.
3. To justify federal taxes, the rich have co-opted Congress, the media, the economists. The purpose: To widen the Gap between the rich and the rest.

Federal taxes can, and should be, dramatically reduced, while spending on social issues is increased. That is, the deficit should be increased. This is the point of the Ten Steps to Prosperity.

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 Click here
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
========================================================================================================================================================================================================================================================================================================

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

Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
 Recessions are cured by a rising red line.

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.

————————————————————————————————————————————————————————————————————————————————————————————————-

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 the rest..
•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..

MONETARY SOVEREIGNTY

If you wonder how the Holocaust happened . . .

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

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If you wonder how the Holocaust happened . . .

If you wonder how a nation of otherwise intelligent, law-abiding people could have fallen for ridiculous lies and been made insane with hatred and bigotry against an entire group of people . . .

If you believe such a monstrous thing could not happen in America . . .

Read this:

Latest polling sheds light on South Carolina primary
02/16/16 By Steve Benen

The State newspaper in Columbia published the results of its new poll, conducted by Public Policy Polling.

1. Donald Trump: 35%
2. Ted Cruz: 18%
2. Marco Rubio: 18%
4. John Kasich: 10%
5. Jeb Bush: 7%
5. Ben Carson: 7%

The same data found that 60% of South Carolina Republicans support a ban on Muslims entering the United States; 29% support shutting down mosques; 47% want to see a national Muslim database; and one in four GOP voters in the state are on board with outlawing Islam altogether.

Any questions?

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 Click here
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
========================================================================================================================================================================================================================================================================================================

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

Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
 Recessions are cured by a rising red line.

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.

————————————————————————————————————————————————————————————————————————————————————————————————-

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 the rest..
•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..

MONETARY SOVEREIGNTY

 

When did Justice Scalia visit your house?

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

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Simple question. When did Justice Scalia visit your house?

What? Never?

What about Justice Thomas, Justice Alito or any of the other Supreme Court members?

Again, never? Don’t feel bad. They never have been to my house either.

Here’s a little hint: Don’t wait up for them. They’re not coming. Not today. Not tomorrow. Not ever . . . unless you’re rich.

And that is the point.

Some Justices may be able to resist the allure of money and moneyed people. Justice Scalia was not one of those. He delighted in hanging with the rich and famous.

SunSentinel, 2/15/16: CREEK RANCH, Texas
When Texas millionaire John Poindexter invited Justice Antonin Scalia to his remote ranch near the Mexican border, it was for a private party with about 35 other guests, a weekend of hunting and sightseeing on his painstakingly restored and cultivated 30,000-acre spread.

Are you a Texas millionaire? Do you own a “painstakingly restored and cultivated 30,000-acre spread”? Do your friends? If not, no need to wonder why Justice Scalia never paid a visit.

(Despite the proximity to Mexico, it’s doubtful whether any non-celebrity Mexicans were among the guests, either.)

Poindexter became concerned and went to (Scalia’s) room, which has its own outdoor fire pit and a wall of windows overlooking the 22-room adobe ranch hotel, a lake and surrounding peaks of the Chinati Mountains.

It was Scalia’s first visit to the storied ranch, and his death is already becoming part of the lore at Cibolo Creek, a site steeped in Southwest history and frequented by what Poindexter’s consultant George Van Etten called “a lot of Hollywood people and captains of industry.”

Guests have included Mick Jagger, Julia Roberts, and Tommy Lee Jones.

Poindexter said he invited Scalia to the ranch on the suggestion of a mutual friend, a lawyer, who came with Scalia.

He declined to identify the lawyer or any of the other guests, except to say that they were “very substantial business people,” but not big names in politics.

“There is no political angle here,” he said. “It was strictly a group of friends sympathetic to the justice’s views.”

See, it’s like this. There was no political angle. Just people who were sympathetic to Scalia’s political views.

These rich people had plenty of time to express their political views to a sympathetic jurist, who would be ruling on cases of great financial importance to these rich people.

Of course, a man like Scalia would not be swayed by such ex parte communications. The common ethics rule goes something like this:

A judge shall not initiate, permit, or consider ex parte communications, or consider other communications made to the judge outside the presence of the parties or their lawyers, concerning a pending or impending matter.

If a judge inadvertently receives an unauthorized ex parte communication bearing upon the substance of a matter, the judge shall promptly notify the parties of the substance of the communication and provide the parties with an opportunity to respond.

Clearly, the Honorable Justice Scalia would scrupulously avoid any hint of unethical behavior (though what is the purpose of meeting a group of people “sympathetic to the justice’s views”?)

Scalia engendered criticism in the past over his choice of partners on hunting trips. In 2001, he went on a pheasant hunting trip with the dean of a Kansas law school who was the lead attorney in two cases that were about to come before the Supreme Court.

And in 2004, he went duck hunting with then-Vice President Dick Cheney — flying with him on a plane that served as Air Force 2 — while the high court was considering a case that challenged the secrecy of an energy task force led by Cheney.

Is Scalia so rude as not to know how to say “Thank you” to his benefactors?

Scalia simply enjoyed killing ducks and flying Air Force 2, and hey, what’s the good of being a judge if you can’t accept gifts from the plaintiffs who come before you?

“I spent quite a bit of time talking to him — about nothing official, just pleasantries: Texas scenery, outdoors, what life is like in Washington,” Poindexter said. “He didn’t come to have a long conversation about jurisprudence.”

Right. You invite a leading Supreme Court justice for a free weekend, to hobnob with “substantial people” who have similar views, and then you talk about Texas scenery.

Sounds reasonable.

Then there was Justice Thomas joining Scalia at the trough:

When the conservative financier Charles Koch sent out invitations for a political retreat in Palm Springs later this month, he highlighted past appearances at the gathering of “notable leaders” like Justices Antonin Scalia and Clarence Thomas of the Supreme Court.

A leading liberal group, Common Cause, filed a petition with the Justice Department on Wednesday asking it to investigate whether Justices Antonin Scalia and Clarence Thomas should have recused themselves in the case, involving Citizens United, because of their attendance at past retreats organized by the conservative financier Charles Koch, whose company operates a foundation that is a major contributor to political advocacy groups.

You remember Citizens United, don’t you? That’s the case in which Scalia ruled that “money is free speech, and the more free speech the better.”

Apparently, rich people are entitled to more free speech than other people, so they can spend all they want to sway elections.

Although Scalia may have been one of the more blatant flouters of normal judicial ethics, he was not unique:

At the Supreme Court, conflicts of interest are just a day at the office

Justice Samuel A. Alito’s sister is a high-powered labor attorney who represents management in disputes with workers. Justice Elena Kagan’s brother, a teacher at an elite public school in New York, has protested the school’s admissions process because of low minority enrollment. And Justice Stephen G. Breyer’s son co-founded a tech company that broadcasts civil court proceedings.

Does having relatives involved in labor disputes, affirmative action battles and cameras in courtrooms affect how Supreme Court justices decide cases and manage their institution? They say no, and we’re supposed to take them at their word.

But is “trust us” really good enough for the nation’s highest court?

A confluence of recent events has made the Supreme Court the most powerful, least accountable public institution in the country. It is time to make the justices more accountable to the American people.

In spite of this vast power, the justices have little accountability. Not only do they decide for themselves when to recuse themselves from cases in which they have conflicts; they also aren’t bound to a code of ethics the way the rest of the federal judiciary is.

They can decide how much information on investments and travel to release in their annual financial disclosure reports, and they determine when and where people can demonstrate near their building.

Unlike the consensus required to make changes in Congress, the Supreme Court is largely in charge of its own rules — and Chief Justice John G. Roberts Jr. himself could usher in most of the vital changes needed, including tightening requirements on recusals, requiring the justices to adhere to the Code of Conduct for U.S. judges, posting disclosure reports online, providing advance notice for public appearances and permitting live audio and video in the courtroom.

Will the Supreme Court of the United States ever adopt the ethics rules by which all other judges in America are bound?

My prediction: Not with Roberts or any other conservative as Chief Justice. By nature, liberals are more tuned to fairness and ethics — that’s what makes them liberals — so we probably will have to wait until then.

There is a blog that addresses the issue: http://fixthecourt.com/ You absolutely should read it and keep it at ready access.

Meanwhile, do you see why laws always seem to benefit the rich at the expense of the rest of us?

Not only are the politicians bribed with campaign contributions and promises of well-paying jobs, and the media are bribed via ownership, and the economists are bribed by contributions to their universities, but the Supreme Court itself is bribed by conflict-of-interest.

Yes, it always has been this way, and yes, both parties are subject to this bribery at your expense, but does that make it O.K.?

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 Click here
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
========================================================================================================================================================================================================================================================================================================

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

Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
 Recessions are cured by a rising red line.

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.

————————————————————————————————————————————————————————————————————————————————————————————————-

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 the rest..
•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..

MONETARY SOVEREIGNTY

How the Rich Use the Big Lie to Cheat You: Chapter IV: Bank Fraud

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

============================================================================================================================================================================================================================================================

The notorious bank robber, Willie Sutton, was (probably falsely) reported to have answered the question, “Why do you rob banks?” with: “Because that’s where the money is.”

And whether he said it or not (He denied it), the answer is correct. Banks indeed are where the money is, and wherever there is money, there will be fraud. And wherever there is big money, there will be big fraud.

Big money and big fraud go together like a man and woman dancing, with the big money leading and the big fraud closely following.

Not only does big money create big temptation, but big money gives big bribes to crooked politicians and a crooked legal system to look the other way. Examples: President Barack Obama and his Department of Justice (DOJ), who to date, have not prosecuted, let alone convicted, even one CEO of a bank criminal enterprise.

In Obama-world, a shoplifter of $25 may go to jail; the CEO of a major bank criminal enterprise, who has stolen billions of dollars, and personally received hundreds of millions, keeps his job, receives bonus money and otherwise is punished not at all.

Bank criminals have well-bribed friends in the White House.

Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the nation’s best economics department — The University of Missouri-Kansas City — may be the most informed economist when describing bank fraud.

In addition to his book, he has written many articles on the subject. I recommend you read him whenever you can. To give you just a taste of his writing, here are a few excerpts:

The Inaugural Financial Fraud Lemons of the Week Award Goes to DOJ

This first column in a series we will do on DOJ’s refusal to prosecute the scores of senior bankers that led Morgan Stanley’s criminal enterprise will focus on DOJ’s press release.

Morgan Stanley was one of the largest criminal enterprises in the world and committed tens of thousands of acts of fraud that cost the American people billions of dollars in losses.

DOJ refused to make clear statements about Morgan Stanley’s massive fraud schemes. This column focuses on only four, spectacularly dishonest aspects of DOJ’s press release (regarding Morgan Stanley’s “punishment” of a $3.2 billion fine):

“Today’s settlement holds Morgan Stanley appropriately accountable for misleading investors about the subprime mortgage loans underlying the securities it sold,” said Acting Associate Attorney General Stuart F. Delery.

“The Department of Justice will not tolerate those who seek financial gain through deceptive or unfair means, and we will take appropriately aggressive action against financial institutions that knowingly engage in improper investment practices.”

How can a bank be held “appropriately accountable” for tens of billions of dollars in fraudulent mortgage sales? We can’t imprison a bank or shame it.

The bank is inherently incapable of being held “appropriately accountable” because that is a moral concept and a bank has no soul to damn.

“Those who contributed to the financial crisis of 2008 cannot evade responsibility for their misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

“This resolution demonstrates once again that the Financial Institutions Reform, Recovery and Enforcement Act is a powerful weapon for combatting financial fraud and that the department will not hesitate to use it to hold accountable those who violate the law.”

DOJ held no Morgan Stanley official “appropriately accountable” while claiming that its settlement did the opposite.

Delery claims that DOJ “will not tolerate those who seek financial gain through deceptive or unfair means.”

The settlement proves the opposite, for DOJ “tolerated” Morgan Stanley’s senior officers being made wealthy through leading a massive fraud scheme – with zero accountability imposed on those officers.

Delery claims DOJ “will take appropriately aggressive action against financial institutions that knowingly engage” in fraud.

A “financial institution,” cannot “knowingly engage” in fraud except through vicarious liability for the actions of its officers.

Delery is admitting that Morgan Stanley’s officers “knowingly engage[d]” in fraud and became wealthy by doing so, but DOJ took no “action against” those officers, much less “aggressive” prosecutions.

Mizer’s claim that DOJ’s settlement with Morgan Stanley proves that “those who contributed to the financial crisis of 2008 cannot evade responsibility for their misconduct.”

DOJ, once more, refused to prosecute these elite frauds, did not require that they be fired, did not require them to give back their bonuses and other compensation that they received due to fraud, did not sue them, and did not even name them.

Mizer then extended his lie by claiming that “the department will not hesitate to use [the law] to hold accountable those who violate the law.”

Today’s settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered billions of dollars arising from misconduct related to the financial crisis.

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis.

We have agreement from DOJ, collectively through its pathetic settlements, that Bernie Sanders’ charge is correct. Agencies of the United States, after investigation, have confirmed at virtually every enormous bank that the business plan was fraud.

Moreover, DOJ admits that the fraud epidemics by the world’s largest banks were leading causes of the financial crisis and the Great Recession.

All of Professor Black’s articles, and his book, say essentially the same things: The major banks are criminal enterprises, perhaps the biggest the world ever has known, making Bernie Madoff look like a piker.

They have stolen billions from the public.

The gangsters, who run these criminal enterprises, reaped billions, but having bribed our political leaders, they received rewards rather than punishment.

And the public neither knows nor cares what has been done to them.

You’ll notice that during the political debates, neither party and no candidate (perhaps with the exception of Bernie Sanders) has made an issue of these crimes. The reason: Both parties and all candidates have been bribed.

Consider the Clintons:

$153 million in Bill and Hillary Clinton speaking fees, documented

Hillary Clinton and her husband, former President Bill Clinton, combined to earn more than $153 million in paid speeches from 2001 until Hillary Clinton launched her presidential campaign last spring, a CNN analysis shows.

In total, the two gave 729 speeches from February 2001 until May, receiving an average payday of $210,795 for each address.

The two also reported at least $7.7 million for at least 39 speeches to big banks, including Goldman Sachs and UBS, with Hillary Clinton, the Democratic 2016 front-runner, collecting at least $1.8 million for at least eight speeches to big banks.

The analysis was made at a time when Hillary Clinton has been under scrutiny for her ties to Wall Street, which has been a major focus of Vermont Sen. Bernie Sanders on the campaign trail.

If you believe the banks gave Hillary $1.8 million just to hear her talk eight times, then I have some costume jewelry I’d like to sell you.

The banksters use money stolen from the public, to bribe the politicians. Do the Democrat or Republican candidates for President of the United States care about your losses? Not that you would notice.

What the politicians do care about is your vote, and they think your vote depends on such issues as gay couples marrying, and Mexican children coming here, and poor mothers receiving food stamps.

Your politicians believe you are oblivious to the billions being stolen from you, and that you are more concerned with cutting the (necessary) federal deficit and the (meaningless) federal debt.

Now, eight years after having caused one of the greatest recessions in American history, the unpunished banksters have learned not to fear the DOJ or the public.

As you read this article, they repeat their crimes, while bribing politicians to weaken any remaining laws that might prevent such criminality.

 

The Ten Steps to Prosperity, listed at the bottom of every post on this blog, include as #9. “Federal ownership of all banks” Here are some excerpts from the various posts on this subject:

The end of private banking: Why the federal government should own all banks.

Global Economic Intersection:
Dallas Fed: Break Up the TBTF
March 30th, 2012

The Federal Reserve Bank of Dallas and its president Richard Fisher are generally known as conservative, hard money proponents. Often conservative economic thinkers are strong laissez-faire proponents.

That is why the 2011 annual report of the Dallas Fed, released this month, has been such a surprise.

A focal point of the report is very interventionist, calling for direct government action to force the break-up of the nation’s largest banks, the so-called TBTF (Too Big To Fail) institutions.

The focus of the report is an essay by Harvey Rosenblum, Executive Vice President and Director of Research. Key points by Rosenblum include:

[Dodd-Frank] may not prevent the biggest financial institutions from taking excessive risk or growing ever bigger.

TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy.

Here, the FRB Dallas attributes bank problems to bank size. But even dividing the monstrous banks into mere big banks is unlikely to solve the basic problem: Greed, the profit motive and the access to punishment-free stealing.

TBTF undermines equal treatment, reinforcing the perception of a system tilted in favor of the rich and powerful.… virtually nobody has been punished or held accountable for their roles in the financial crisis.

… zero interest rates are taxing savers to pay for the recapitalization of the TBTF banks whose dire problems brought about the calamity that created the original need for the zero interest rate policy.

The final paragraph makes an interesting point. With zero interest rates, savers receive nothing so virtually are taxed.

But the more important point is that privately held banks control vast sums of money, and the profit motive provides vast temptations to steal.

Federal bank ownership would all but eliminate this problem. (I’ve not heard of the Federal Reserve Banking system, which also controls vast sums of money, engaging in criminal practices.)

While federal employees are fundamentally no more honest than private employees, the opportunities and desire for theft decrease markedly with a federally owned bank that has little-to-no profit motive.

Some people believe the banking problem can be solved with effective and strictly enforced laws and supervision. That may partially be true, but the ultimate in effective and strictly enforced laws and supervision is federal ownership and management.

Some people believe banks should be public utilities. I suggest that solves few problems. “Public” utilities actually are private enterprises. Making banks public utilities merely would move banks from their current set of government regulators to a different set of government regulators.

There is no public purpose being served by private banking. None. All banks should be federally owned.

For more thorough discussions, I recommend you read the various posts listed https://mythfighter.com/, with the word “Bank” in their title.

Rodger Malcolm Mitchell
Monetary Sovereignty

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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 Click here
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 grow the economy, and narrow the income/wealth/power Gap between the rich and you.
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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

Recessions begin an average of 2 years after the blue line first dips below zero. A common phenomenon is for the line briefly to dip below zero, then rise above zero, before falling dramatically below zero. There was a brief dip below zero in 2015, followed by another dip – the familiar pre-recession pattern.
 Recessions are cured by a rising red line.

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.

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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 the rest..
•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..

MONETARY SOVEREIGNTY