–There are two, and only two, long-term solutions for Greece and the other euro nations.

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 news about Greece grows louder.

In giving up the drachma, and taking on the euro, Greece voluntarily surrendered the single most valuable asset any nation can have: Its Monetary Sovereignty.

Greece now is monetarily non-sovereign. There is an absolute rule in economics: No monetarily non-sovereign government can survive long term without money coming in from outside its borders. Germany, another nation that gave up its most valuable asset, the mark, and also is monetarily non-sovereign, survives on exports.

Nevada, which also is monetarily non-sovereign, survives mostly on tourism (aka gambling). No monetarily non-sovereign can survive long-term on internal taxes or borrowing.

By contrast, Monetarily Sovereign nations do not need money coming in from outside their borders, because they create unlimited money simply by paying bills.

For Greece and the other euro nations, long term survival requires one of two, and only two, events:

1. Adopt some form of a sovereign currency, and become Monetarily Sovereign
or
2. The EU give (not lend) euros to its member nations as needed.

There are no other solutions. None. All the running in circles by the European financial geniuses will be to no avail. Each day they come up with some new lending plan, and the next day abandon it in favor of some other lending plan.

But none of these plans has any long-term benefit. The euro nations are like rats in a cage, scurrying in all directions, with no hope of freedom. But still they scurry, at top speed.

If you read about any plan that does not include #1 or #2 above, know that it will fail.

Those who do not understand Monetary Sovereignty do not understand economics (and that goes for the U.S. politicians, media and old-line economists, who still claim to believe the pre-1971, anti-debt economics.)

I have been awarding one to five dunce caps for economic ignorance, but now the ignorance has grown so pervasive, with the euro nation leaders and our own Tea/Republican, Democrats, and the media and the columnists and the old-line economists –none of whom admit that what happened in August 1971 completely changed economics — I feel even five dunce caps does not do justice to the universal economic ignorance.

So today, I award 1000 dunce caps to all the self-styled experts, who blather on and on, spouting intuitive economics, but know nothing of the facts Monetary Sovereignty exposes.

———-1000———-

There is a second reason I award 1000 dunce caps: To demonstrate what sovereignty can do. I can create all I wish. I never will run short. I cannot be forced into dunce cap bankruptcy. I don’t have to “live within my means.” I don’t need a balanced budget. I don’t need to tax or borrow dunce caps. I don’t need to be dunce cap prudent. I am dunce cap sovereign.

In that sense I am identical with the United States government which is dollar sovereign. It too can create all the dollars it wishes, never will run short, cannot be forced into bankruptcy, doesn’t have to “live within its means,” doesn’t need a balanced budget, doesn’t need to tax or borrow and doesn’t need to be dollar prudent.

I now have awarded 1065 dunce caps. Because I levy zero dunce cap taxes, I have run a total deficit of 1065 dunce caps. If there were a dunce cap clock, it would read “1065 caps.” My children and grandchildren will not have to “pay for” my dunce cap deficit.

Attention American debt-hawks and euro nations: Is there any way I could draw a clearer picture for you? Now wake up. Your stubborn ignorance is killing your countries.

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

–Osama bin Bowles’s plan to destroy America.

Last month, the Chicago Tribune printed this letter I wrote:

”The ‘supercommitte’ needs to answer only one question: ‘How will a tax increase or spending decrease (also known as a ‘deficit cut’) reduce unemployment or grow the economy?’ If they, or the people who gave them their assignment, are unable to answer that question, the supercommittee should pack up and go home.

If their work will not reduce unemployment or grow the economy, what is their purpose?”

Short, sweet and specific. Yes, what is the purpose of the supercommittee if it won’t reduce unemployment or grow the economy? Here’s what Erskine Bowles thinks:

Supercommittee must not ‘fail the country,’ Bowles says, offering his own plan
Washington Post, By Lori Montgomery, Published: November 1

Erskine Bowles, the former White House chief of staff who has worked for months to tame the national debt . . .

“Tame the national debt” is a synonym for “reduce money growth,” which in turn is a synonym for “hamstring the economy.”

. . . bluntly warned members of a congressional panel Tuesday that they will “fail the country” if they do not break the impasse over taxes that is blocking a far-reaching agreement.

Bowles then surprised the committee by laying out a path to compromise that would split the difference between the competing debt-reduction proposals each side offered last week. He challenged Democrats to accept deeper cuts to federal health programs and Republicans to embrace $800 billion in new taxes, as House Speaker John A. Boehner (R-Ohio) did during this summer’s negotiations over the federal debt limit.

In other words, screw the less-than-wealthy (the people most in need of health care support), and screw everyone by raising taxes, thereby removing dollars from the economy.

Added to previous budget cuts, such a deal would slice $3.9 trillion from projected borrowing over the next decade, Bowles said . . .

Worried about borrowing, Mr. Bowles? How about simply stop borrowing. As a Monetarily Sovereign nation, with the unlimited ability to create dollars, why does the U.S. continue to borrow dollars?

. . . stabilize the debt as a percentage of the economy. . .

Completely nonsensical. By “the economy,” I assume he means Gross Domestic Product. But GDP = government spending + private consumption + investment + net exports. Because government spending is one of the elements of GDP, a reduction in government spending reduces GDP. Is that what we want – a reduced GDP? Will that help reduce unemployment or grow the economy?

Further, what is the magic “percentage of the economy” he wants, and what is his evidence there is any such ideal percentage? He has no evidence of anything, so he speaks in broad, sweeping (i.e. ignorant) terms.

“You all know what we have to do,” added Republican former senator Alan Simpson (Wyo.), who served with Bowles, a Democrat, as co-chairmen of President Obama’s fiscal commission last year. “In your gut, you know what we have to do.”

And that’s the problem. These people are dealing with their intuition, rather than with the facts of Monetary Sovereignty, and intuition about economics has not changed in hundreds of years, though economics itself changed diametrically in 1971.

. . . former Clinton White House budget director Alice Rivlin and former senator Pete Domenici (R-N.M.) . . . urged the supercommittee members to set aside their differences on taxes and entitlements and craft a plan that would achieve as much as $4 trillion in savings, warning that nothing less than the country’s economic future is at stake.

Remember the formula for GDP? Visualize what a $4 trillion cut in federal spending would do. GDP would drop not just by $4 trillion. No, there is a multiplier effect, in which federal spending goes into the pockets of individuals and businesses, whose spending in turn, goes into other pockets. So a $4 trillion cut is guaranteed to sink the U.S. economy by far more than $ trillion.

In short, Mr. Bowles et al, have no concerns about unemployment or economic growth. Those problems are not even on their radar. All they know is: Federal debt is bad and federal spending is bad. They don’t know why. They just feel it in their guts. Now if only some of them would begin to use their brains . . .

Give Erskine Bowles his way, and he will do more damage to America than Osama bin Laden ever could have dreamed. Call him, “Osama bin Bowles.”

I award Mr. Bowles 5 dunce caps for true economic ignorance by a man who not only should know better, but has the influence to cause so much damage.

I now have awarded 65 dunce caps. Though I am dunce-cap sovereign, Mr. Bowles demands I cut my dunce cap awards to a more sustainable level. He wants me to “go big” and balance my dunce cap budget. He feels this in his gut.

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

MONETARY SOVEREIGNTY

–The magic of executive orders. How the President circumvents Congress and plays politics with the law

You don’t often hear about Presidential executive orders, but they have the force of law. The Supreme Court has ruled that executive orders must clarify or further an existing law, and not make law, so Presidents always point out how their executive orders do exactly that. The effect might be quite different, however.

President Franklin D. Roosevelt issued an executive order that interned Japanese-American citizens for the entire World War II. Such an order would encounter a violent reaction today, but it was considered the law back in those paranoid days.

You probably weren’t aware of this, but President Obama has issued dozens of executive orders, all of which are listed in the Federal Register.

This list gives you an interesting view into the mind of the President. For instance, take the first executive order listed, EO13535 (Abortion; enforcing and implementing restrictions in the Patient Protection and Affordable Care Act:). The purpose of this EO is “to ensure that Federal funds are not used for abortion services (except in cases of rape or incest, or when the life of the woman would be endangered). Why would a Democrat issue such an order? For political purposes, as part of an earlier deal with Republicans, or is this what Obama truly believes?

Then there is EO 13526, which lists the ways documents may be classified (according to secrecy), and how these classifications may be challenged and removed. The media probably has spend thousands of hours studying this EO, and other related EOs.

Or consider EO 13491, which says, in effect, torture of military prisoners is limited to what is contained in Army Field Manual 2–22.3. Page 5-21 of this big manual has a section that prohibits waterboarding. The next page gives this guidance for prohibited activities:

• If the proposed approach technique were used by the enemy against one of your fellow soldiers, would you believe the soldier had been abused?

• Could your conduct in carrying out the proposed technique violate a law or regulation? Keep in mind that even if you personally would not consider your actions to constitute abuse, the law may be more
restrictive.

The list of EOs is long and detailed, but fascinating, because it shows you more about this President than is contained in his speeches. Though the language sometimes can be obscure, I found myself drawn into this document, as I tried to visualize the real meanings and purposes of each EO.

The more I read, the “better” (worse?) it was.

Read through a few, and you may feel the same.

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

MONETARY SOVEREIGNTY

–Foolishness across the ocean. Will the UK attempt mass economic suicide?

I came across a website called The Robin Hood Tax. It seems to have originated in the U.K., but the goal is to spread the idea around the world. In their own words:

A tax on banks that would give billions to tackle poverty and climate change, here and abroad.

This tax on the financial sector has the power to raise hundreds of billions every year globally. It could give a vital boost to the NHS, our schools, and the fight against child poverty in the UK – as well as tackling poverty and climate change around the world.

Remember now, the UK brilliantly did not surrender its Monetary Sovereignty. It did not adopt the disastrous euro. It retained the pound. So the UK, like the U.S., has the unlimited ability to create its sovereign currency. It can pay any bill of any size at any time. It never can be forced into bankruptcy.

However, the UK, like the U.S., is burdened with politicians, media and economists who still live in the pre-1971, gold standard days. Though economics changed dramatically in 1971, the economists still spew the same, debt-hawk, gold-standard nonsense. It’s as though upon discovering the world is round, not flat, sailors still worried about falling off the edge.

Here, again in their own words, is how the Robin Hood tax would work:

In a nutshell, the big idea behind the Robin Hood Tax is to generate billions of pounds – hopefully even hundreds of billions of pounds. That money will fight poverty in the UK and overseas. It will tackle climate change.

Hundreds of billions of pounds pulled out of the economy. This is supposed to be beneficial? And “poverty and climate change”? How did those two initiatives get to be the focus of this tax – a tax that most assuredly will not reduce poverty or prevent climate change? (No tax could.)

A tiny tax on the financial sector can generate £20 billion annually in the UK alone. That’s enough to protect schools and hospitals. Enough to stop massive cuts across the public sector. Enough to build new lives around the world – and to deal with the new climate challenges our world is facing.

Now it’s £20 billion? And, now it’s “schools and hospitals,” too? And building “new lives around the world”? Have they left anything out? How about motherhood and the American – oops – the British way of life?

As a result of the financial crisis, the International Monetary Fund (IMF) has calculated UK government debt will be 40% higher. That 40% equates to £737 billion pounds, or £28,000 pounds for every taxpayer in the country. Having to pay back that debt means cuts in vital services on which millions of people around the country rely.

No, paying that debt will cut nothing. The British government, being Monetarily Sovereign, can pay any debt. No vital services need be reduced. Pure scare tactics. What is the British word for “bullsh*t”? Poppycock?

Total cost to the UK of financial crisis in terms of lost output according to the IMF was 27% of 2008 GDP.

Yes, the financial crisis caused reduced output – which has absolutely nothing to do with UK debt. I’m surprised they didn’t blame British debt for causing starvation in Armenia, and the bird flu.

So it’s time for justice. It’s time for justice for ordinary families and businesses. For the one in five British families faced with a choice between buying food or paying the heating bill. For the millions of people around the world forced into poverty by a financial crisis they did absolutely nothing to bring about.

The Robin Hood Tax is justice. The banks can afford it. The systems are in place to collect it. It won’t affect ordinary members of the public, their bank accounts or their savings. It’s fair, it’s timely, and it’s possible.

Ah, yes. The old class-warfare ploy. Justice = soak the rich. And who are the geniuses behind the Robin Hood Tax? The usual suspects. According the their web site:

We are charities, green groups, trade unions, celebrities, religious leaders and politicians.

Who could doubt the expertise of that bunch? But wait, now we get to the real winners:

President Sarkozy of France, Chancellor Merkel of Germany, Prime Minister Zapatero of Spain

Hmm, France, Germany and Spain. Aren’t those three countries that each voluntarily surrendered the single most valuable asset any nation can have – its Monetary Sovereignty – and are now in a crisis of their own making? By all means, let’s follow them over the cliff.

FSA Chairman Lord Turner, George Soros, Warren Buffet

Just shows money and economic knowledge don’t always go together. Turner has called for more central planning ala the communist countries. Buffet wants a tax increase on the wealthy, which would reduce the money supply.

And here are my favorites:

Nobel Prize winners Joseph Stiglitz and Paul Krugman, Earth Institute Director Jeffrey Sachs and 1,000 other economists from across the world.

Therein lies the problem. People, who are completely ignorant of Monetary Sovereignty, award prizes to other people, who are completely ignorant of Monetary Sovereignty, who then teach the media, the politicians and the public how to be ignorant of Monetary Sovereignty. It’s the most vicious of vicious circles.

So you have it. Yet another group of debt-hawks believing taxes are beneficial. If anyone can explain how removing money from the economy can reduce poverty, reduce unemployment or grow the economy, I sure would like to hear it.

I award 1 dunce cap to The Robin Hood Tax. It would be more, but they are just one more debt-hawk group of which there are dozens. And as any debt-hawk will tell you, if I give out too many dunce caps, I could have an unsustainable dunce cap deficit, which would lead to a huge dunce cap debt, and I’d need to start taxing people dunce caps – or I might need to borrow dunce caps from a bank.

Makes sense?

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

MONETARY SOVEREIGNTY

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