Tag: Rodger Malcolm Mitchell

–More debt-hawk injuries to America

An alternative to popular faith

Here is yet another example of many such instances (See: DAMAGES) showing the continuing damage debt-hawks cause America and our poorest citizens:
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By Greg Hitt and Sara Murray, WASHINGTON, 6/25/10: “Spooked by concern about deficits, the Senate shelved a spending bill that included an extension of unemployment benefits, suddenly cutting off a federal cash spigot opened by President Barack Obama when he took office 18 months ago.

“The collapse of the wide-ranging legislation means that a total of 1.3 million unemployed Americans will have lost their assistance by the end of this week. It will also leave a number of states with large budget holes they had expected to full with federal cash to help with Medicaid costs.”
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What is the evidence large federal deficits harm America? There is none. Yet, based solely on mystical faith and unsupported belief, the debt hawks have managed to punish millions of our poorest Americans.

The debt-hawks have heads of stone. They have hearts of stone, too.

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

No nation can tax itself into prosperity

–Japan: Debt/GDP = 218%. So?

An alternative to popular faith

In a previous post, I told you the Federal Debt/GDP ratio was an apples/oranges statistic, often quoted, but completely meaningless. (See: Debt/GDP). According to debt hawks and old-line economists, a high ratio portends inflation, recession and any number of other terrible economic outcomes. Of course, there is no evidence for this; it’s just popular faith unsupported by facts.

Read this article:

Associated Press; 6/22/10: TOKYO – “Japan’s economy, the world’s second largest, will expand at a faster pace in the current fiscal year than previously forecast as robust exports to Asia and improving corporate earnings are underpinning a broadening recovery.

“The Cabinet Office said Tuesday that Japan’s gross domestic product will rise 2.6 percent in the year to March 2011. “The upward projection was due to brisk growth in exports, especially to Asia. The forecast was also upbeat thanks to a recovery in capital spending and improving corporate earnings,” said Takashi Hanagaki, an official from the Cabinet Office.

“Earlier in the month, Japan upgraded its economic growth in the January-March quarter to an annualized pace of 5 percent from 4.9 percent in a preliminary report. But the encouraging figures, including Tuesday’s upward GDP revision, are tempered by persistent deflation and other negatives, including a lackluster labor market.

“Japan is also one of the most indebted countries in the world. Its public debt reached 218.6 percent of GDP last year, according to the International Monetary Fund.”

So here is Japan, with its 218% Debt/GDP ratio. It’s growth is anywhere between 2.6% and 5%. It’s large national debt has not caused the inflation debt hawks predict. On the contrary, Japan is fighting deflation. Further, the large national debt has not taken the place of capital spending as debt hawks also predict, but actually has facilitated capital spending as well as earnings.

Those are the facts, all of which will be disregarded by the debt hawks, the traditional economists and the media, who just know in their hearts that debt is bad, facts be damned. In fact, the AP article ended with this amazing sentence:

“Tackling the ballooning national debt is among most pressing tasks for Japan’s new Prime Minster Naoto Kan.”

Wrong. And that is why economics is a religion, not a science.

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

–BP’s Adventures in Wonderland

An alternative to popular faith

Congressmen hate the truth. They don’t understand it. Why, they wonder, would anyone tell the truth when a lie is so much more convenient. So, you’ll get no greater outrage than when someone not only tells the truth, but does so in a politically risky manner.

Congressmen sitting on those high perches, pointing their talons down at businessmen, and demanding full genuflection. Congressmen express shock, “Shock, I say,” and indignation too. How dare these business people desire money, when that act is expressly reserved for politicians?

So when Rep. Joe Barton said, “I do not want to live in a country where any time a citizen or a corporation does something that is legitimately wrong is subject to some sort of political pressure that is – again, in my words, amounts to a shakedown. So I apologize,” Washington showed its outrage at this truth.

Yes, BP’s executives, and those down the line, made horrible decisions in the name of profits. And they should be punished. But wasn’t the federal government at least partly responsible? All those regulators who were accepting bribes to look the other way. Weren’t they aiding and abetting?

The Mineral Management Service, that was supposed to supervise offshore drilling, but instead accepted numerous gifts and even bedroom service – weren’t they a federal agency working for President Obama?

So when Mr. Obama threatened BP chairman, Carl-Henric Svanberg, with the full weight of the U.S. government, Mr. Svanberg caved, and bravely responded something to the tune: “We’ll set up a $20 billion damages fund and we’ll take the money from our shareholders.” Ah, courage.

Now Mr. Obama trumpets about how he forced BP to give money to some people by taking it from other people. Oh, and by the way, he also caused more people untold damage and misery by ending offshore drilling for six months, but please don’t mention it.

BP’s CEO Tony Hayward has spent hours and hours being grilled by Congress, because after all, isn’t the CEO of a giant company supposed to know every detail of every action by every employee every minute of the time? Sure, and under the same logic, why isn’t President Obama sitting in front of those same Congressmen, answering questions about his Mineral Management Service’s failures? Why is Obama able to point his finger at Hayward, while Hayward can’t point at Obama?

In summary: Joe Barton told the truth and was punished by Washington. BP took money from one group of people to pay another group, and Washington thinks that’s fair. Tony Hayward admitted fault and was vilified by Washington. President Obama admitted nothing and then caused even worse problems, and was applauded by Washington. Meanwhile, Washington, which was partly at fault, and has the unlimited ability to create money, while taking nothing from people, has not created a damages fund, but rather sits back and points fingers.

Lewis Carroll would love it.

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

No nation can tax itself into prosperity

–I’m angry with the Chicago Tribune

An alternative to popular faith

I live in Chicago, and I’m angry with the Chicago Tribune. It continues to be clueless about economics. In a June 15th editorial, the Tribune said, “With 79 percent of Americans rating (the federal debt) ‘extremely serious’ or ‘very serious,” it tied with terrorism for the top (‘scariest threat’). So what does the Obama administration plan to do about it? It proposes to pile on more debt. . . . Americans have good reason to be so worried about the . . . that someone will have to repay.”

Does the term “exploding national debt” sound familiar. If you go back and read TICKING TIME BOMB , MORE BOMB NONSENSE and DEBT BOMB REDUX you will see that the Tribune and its media friends have been referring to the federal debt in explosive terms for the past seventy years! Think about it. For seventy years the media has told you a debt bomb is been ready to explode, and today we are no closer to any of those dire forecasts than we were in 1940.

Does daily failure of prediction stop the Tribune? Nope. Tribune readers keep following their prophet up the mountain to await the end of the world. When the world fails to end, do they ever begin to question their leader? No, they march back down, and sit mesmerized as their prophet repeats the same old predictions – for more than seventy, long years.

Here is what outrages the Chicago Tribune today: “$50 billion in emergency spending to help state and local governments . . . avert massive layoffs of teachers, police and firefighters . . . Block a 21 percent scheduled cut in reimbursements to doctors who treat Medicare patients.”

Yes, helping avert layoffs of teachers, police, firefighters and doctors truly is awful, especially when compared with the unsupported, unproven, patently wrong “risk” of a federal debt that in the Tribune’s misguided words, “someone will have to repay.”

If you read some of the posts on this blog, starting with SUMMARY you will see there is no “someone” who has to pay. Taxpayers neither owe nor service the federal debt. There is no relationship between federal income and federal spending. The so-called “debt” merely is a balance sheet calculation of net money created by the federal government, a calculation that neither inhibits, nor is inhibited by, federal spending.

A curse be upon the person who first labeled this balance sheet column “debt” rather than the correct, “net money created.” Incorrectly calling it “debt” has misled millions of otherwise intelligent people, and worse, has prevented important programs (See: CHILDREN & GRANDCHILDREN) of benefit to us all.

I’m angry with the Tribune, not because they are clueless. Each of us is clueless about many things. I’m angry with them because they have such power to make a positive difference in our economy, but instead they are too intellectually lazy to learn, preferring to parrot the popular myths of the day. What a waste.

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

No nation can tax itself into prosperity