–The Obama non-spending spree and the road to depression

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. Until the 99% understand the need for deficits, the 1% will rule. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty 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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TPM published an article titled, “An Obama Spending Spree? Hardly” by Sahil Kapur

As a defense against Republican charges that President Obama spent too much, the article really should be called, “With friends like these, who needs enemies.”

Some excerpts:

A dominant theme of the national political discourse has been the crushing spending spree the U.S. has ostensibly embarked on during the Obama presidency. That argument, ignited by Republicans and picked up by many elite opinion makers, has infused the national dialogue and shaped the public debate in nearly every major budget battle of the last thee years.

But the numbers tell a different story.

Obama’s policies, including the much-criticized stimulus package, have caused the slowest increase in federal spending of any president in almost 60 years, according to data compiled by the financial news service MarketWatch.

During the worst recession since the Great Depression, the Obama administration oversaw “the slowest increase in federal spending of any president in almost 60 years.” And this is supposed to be a defense of the President?? At just the time when increased spending is most needed, spending increases were smallest? Yikes!

Obama — unlike his Republican and Democratic predecessors — signed a law in February 2010 necessitating that new spending laws are paid for.

Here, Mr. Kapur parrots the popular ignorance that Monetary Sovereignty is the same a monetary non-sovereignty. Unlike state and local government spending, the spending by a Monetarily Sovereign government is not “paid for” by anything. There is no vault from which dollars are extracted and sent to creditors. The government merely instructs banks to mark up checking accounts. The government can send these instructions endlessly, regardless of tax collections.

Not understanding the difference between Monetary Sovereignty and monetary non-sovereignty is absolute proof one does not understand economics.

In addition, Obama last year signed into law over $2 trillion in debt-reduction over the next decade.

Thereby, converting the United States into Greece. Debt reduction is guaranteed to cause a depression:

1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.

. . . the President has put hundreds of billions in cuts to Medicare, Medicaid and Social Security on the table in deals that have been derailed, thanks in no small part to the GOP’s resistance to raising new tax revenues to help bridge the budget shortfall.

There’s irony for you. The Democrat wants to slash programs for the 99%, while the Republicans “derail” the deal.

You simply cannot make this stuff up. A pox on both your houses.

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. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–The solution to the income gap in less than 1000 words.

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty 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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So far, it’s been a great week for the public, a great week for Chicago and a great week for America. We can be proud.

The public has used its First Amendment voice, the Chicago police controlled the situation, with scant violence, while being spat on, called names and had bottles and batteries tossed at them. America demonstrated a tolerant democracy.

In reality, it’s been a terrible week, because after much sound and fury, nothing much was accomplished. At great expense and effort, NATO did little it couldn’t have done by staying home. Virtually all the work was done before they got here. And the protesters will go home to a world identical with the one they left.

As I watched the protesters in Chicago, my heart went out to them. I personally agree with most of their beliefs about big business, government and particularly the 1% tyranny over the 99%. Yet, I feel their message is confused, unfocused and devoid of solutions, and their method is self defeating. And like most people, I look upon war as a disgrace. So?

Surely, the marches didn’t change many minds. The people who agreed with the marchers’ arguments, still agree. Those who disagreed think the marchers are a bunch of naive rabble-rousers, using the NATO conference as a substitute for wild Spring Break in Florida.

The politicians ignore the protesters, because there is no bribe money on the table. And the 1% sit in their summer homes and laugh at the futility.

A peaceful protest is like a non-embryonic pregnancy – much effort with no results. A violent protest leads, often as not, to either a more violent push-back by the 1%, or by an even harsher totalitarianism.

Protests have a bad track record for long-term accomplishment.

The Chicago protests seemed to involve two desires: An end to war and an end to income inequality. The end-the-war segment had its humorous moments: the Syrian contingent asking NATO to impose a no-fly zone over Syria (to help prevent the massacres by the Syrian government), standing next to the pacifist group asking NATO to stop shooting at people. How NATO is to do both, was not explained.

The end-income-inequality group seemed somewhat misplaced, as NATO’s relationship to the income gap seems tenuous at best. In short, the protests meant little, will accomplish little, and if anything, will help the media impart a negative impression of the protesters’ causes.

Theoretically, the 99%, having the voting power, should be able to enforce their will. But, the politicians, realizing the 99% doesn’t know what their will is, continue to nominate 1% sympathizers. Voting for Romney is a disaster for the 99%. Voting for Obama is somewhat less a disaster, but a disaster nevertheless. And in America, 3rd party candidates seldom win.

So what’s to be done?

I cannot speak to the anti-war marches, because the reasons for war are so diffuse, different in every situation. But I will speak to the #Occupy complaint about the income gap between the 1% and the 99%.

The fundamental problem facing the 99% is this: They do not understand Monetary Sovereignty. They actually believe the federal government is broke, the federal deficit must be reduced, the federal debt is a burden, social services need to be cut and additional federal spending will cause inflation.

Based on these beliefs, the 99% is in perfect harmony with the 1%. They are like a woman who believes being raped is a proper punishment for being pretty. The 1% enjoys raping the 99%, and the 99% believe rape is necessary.

Since the problem is ignorance, the solution is to teach the facts. And that begins with the media. Because the media are owned by the 1%, merely contacting the media isn’t enough. It helps, and we should continue to write, Email and call, but it isn’t enough. The media have to be forced to listen, embarrassed not to listen.

The protests should not target NATO, which doesn’t care, or the government officials, who care even less. The protest marches should target the media.

A plan outline:

First, #Occupy leaders must learn Monetary Sovereignty, not just learn but be prepared to defend and to teach it. They must learn how and why:

1. The federal government became Monetarily Sovereign on August 15, 1971. Its finances are unlike those of state and local governments, business, the euro nations, you and me.

2. Monetarily Sovereign governments create money by spending. This money creation misleadingly is termed “deficits.” It should be called “economic surpluses, ” and economic surpluses are necessary to grow the economy.

3. The federal government neither needs nor uses tax dollars. Unlike state and local taxes, federal taxes do not pay for spending. Federal taxes do not pay for Social Security, Medicare, Medicaid, Congress, the Supreme Court or the White House. Federal spending does not cost taxpayers one cent.

4. The federal government’s ability to spend is limited only by inflation. But, despite huge “deficits,” federal spending never has caused inflation. And inflation can be controlled by interest rates.

Second, the #Occupy leaders must teach Monetary Sovereignty to their members. Formal and informal schooling should be arranged. Contact such educators as Randy Wray, Bill Black, Stephanie Kelton, and Matt Forstater at UMKC. Ask for advice.

Third, #Occupy must target the media. Contact the media repeatedly. Flood with Emails, snail mail, personal contacts. And march against the media. A hundred knowledgeable, sign-carrying people, standing on Chicago’s Michigan Avenue, in front of the Chicago Tribune headquarters, demanding that the Tribune print the Monetary Sovereignty facts, will do more than all that has been accomplished to date.

Force the media to educate the public, which will give the 99% the information and the voice they have been missing. And when the 99% has a voice, the politicians will listen.

The result: An informed public, a generous Social Security, Medicare for all, more support for education, research, infrastructure, ecology, a healthy, growing economy, and a smaller gap between the 1% and the 99%.

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

#MONETARY SOVEREIGNTY

–How did the 1% convince the 99% to lose the war?

That a real war has existed between the 1% and the 99% cannot be doubted. And that the 99% has lost, also cannot be doubted.

So the question becomes, with 99% of the votes in this democracy, how did the 99% manage to lose — and badly? Answer: The same way any small force wins against a large force: By convincing the large force to work against itself.

First came money. The media are owned by the 1%, and while in the past, the media had leaned toward the liberal, i.e. toward the 99%, that was back in the days when the media were ruled by morality.

No more. With the advent of the Internet, the media found themselves in financial difficulty, so they felt they were obliged to forsake morality, and today, the media are ruled by money.

But money alone does not win elections; ultimately issues, supported by money, win. So, conveniently, along came Al Queda and Iraq’s Saddam Hussein, the 1%’s gift from heaven. And just in time, too, for Russia, as bogey man, was beginning to wear thin, with the end of the Soviet Union.

Yes, with money, the 1% could convince the 99% that America was in imminent danger from little Iraq’s non-existent Weapons of Mass Destruction. And when a nation is in danger, the people turn to the politician perceived to be toughest, no matter how clearly inept that politician may be.

Enter tough guy, cowboy, George W. Bush, of the Republican Party, which also was the party considered to be tougher.

He had been in office less than a year, when fate sent him another miracle: The al Qaeda 9/11 attack. This allowed President Bush to convince the 99% to surrender many of their Constitutional rights — for “security” — and a huge battle in the war was lost by the 99%.

Later, GWB appointed John G. Roberts, Jr to serve as Chief Justice, and Samuel Alito. Roberts was only 50 and Alito only 56, so both men had long, long careers ahead of them. The Chief Justice would be a representative of the 1% for perhaps 40 years! The next battle was lost.

But then the next biggest battle began, and it began with the 2008 recession. Security remained as a phony issue, but it was replaced as the prime issue, by economics.

The banks, owned by the 1%, caused the recession, but the blame had to be pointed elsewhere, and this “elsewhere” was the federal deficit. The money-backed media pounded on the notion that the U.S. government was just like you and me. It had to live within its “means.”

Never mind that the U.S. government, being Monetarily Sovereign, has no means, simply because it has the unlimited ability to create dollars. Forget facts. The media told the 99% three things:

1. Taxes needed to be cut, because taxes hurt economic growth (true.)
and
2. Federal spending needed to be cut, because spending increases the federal deficit (also true).
and
3. Just like personal debt, federal debt is a danger, and needed to be reduced (true about personal debt, false about federal debt).

What the bought-and-paid-for media refused to acknowledge is:

1. Income tax cuts benefit the 1% far more than the 99%, many of whom pay no income tax, but are hurt most by the unnecessary FICA tax.
and
2. Federal “deficits” are nothing more than an accounting term for the dollars the federal government adds to the economy, and a growing economy requires a growing money supply.
and
3. Federal finances are not like personal finances, the opposite in fact. The federal government never can run short of dollars.

So to accomplish the “need” to reduce deficits, Congress repeatedly voted to cut government benefits for the 99% — taxes on Social Security benefits, older starting dates for benefits, increased FICA payments, cuts in Medicaid support, reduced payments to doctors, who then began to opt out of SS, and hundreds of other cuts in social programs, all under the lie of “fiscal prudence.”

Another battle lost.

The brainwashed 99% began to believe the media propaganda, and voted for Tea/Republican candidates, who as a solid voting block, prevented money supply growth and the growth of social programs.

Meanwhile, the Republican-dominated Supreme Court, decided that 1%-owned corporations should be allowed to spend unlimited sums of money to influence elections. Recently, the head of the family that owns the Chicago Cubs, considered spending the astounding sum of $10 million dollars (!) just to support a smear campaign against President Obama. When his nefarious plan came to light, he immediately denied it, but do not believe for one second, that his plan won’t be replaced by one equally sinister. He is, after all, part of the 1%.

Another battle lost.

Today, in addition to members of the 99% voting against their own interests, we now have one of America’s wealthiest men running for President. He is a man whose words have no meaning, as what he says on Mondays, Wednesdays and Fridays, bear no resemblance to what he says on the other days. He is without core values or beliefs, the perfect puppet for the 1%, as well as being part of the 1% himself.

With the 99% repeatedly voting against their own interests, the 1% controlling the media, the Supreme Court and one house of Congress (with Senate rules allowing the 1% to control the other house), the 1% finds itself firmly in control.

All that remains is for the 99% physically to battle itself. Having lost so much power, as the income gap grows amazingly, the 99% is frustrated. The people needed something, anything, to feel they have at least a modicum of control over their lives.

And here the National Rifle Association steps into the power vacuum. It’s message essentially is: “Sure, you’re poor slaves to the 1%, and probably will sicken and die for lack of health care, and go broke for lack of retirement, and meanwhile be unemployed, or if employed, wasting your precious life hours, doing something menial you hate with a boss you hate. But we can give you power. We can give you guns.“

“Pay no attention to the first half of the 2nd Amendment, ‘A well regulated militia being necessary to the security of a free state . . .’ It has no meaning. All that counts is you can own guns, all kinds of guns. You can shoot them at each other.”

And with that, the war was lost to the 99%. No longer would the 1% need to fear that gigantic majority. The people will battle and kill each other, while the 1% remain happily above the fray.

Killing each other not only helps them forget it’s the 1% that made them miserable, but the more who die, the fewer will remain to vote against the 1%.

It’s the perfect solution.

Yes, the war is lost. Incredibly, 1% of the population has defeated 99% of the population, not just with money, but by outwitting them, and convincing them to vote against themselves.

Today, if I try to explain the facts to a 99%er, so he/she can understand how the war was fought, and perhaps regain a bit of power, I likely will be greeted with anger and sarcasm. That’s how deep the brainwashing has gone.

Such is the irony of ignorance, and the brilliance of the 1%.

Congratulations.

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

#MONETARY SOVEREIGNTY

The utter failure of the International Monetary Fund, and why it damages the world.

The (IMF) touts its mission this way: “The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”

Mostly, it has done the exact opposite. The fundamental reason is the IMF’s ignorance of Monetary Sovereignty, the basis for all modern economics.

A Monetarily Sovereign government has the power to create unlimited quantities of its own sovereign currency. It is constrained neither by taxes nor by borrowing. Federal taxes and borrowing could fall to $0, and federal spending could double or triple or grow with no limit at all – constrained only by inflation.

So while the U.S. federal government never can be “broke,” as John Boehner famously lied, nor must it live within its “means,” (it has no “means”) as so many pundits falsely claim, there is but one limit to money creation, and that limit is inflation.

Yet, contrary to popular belief, reaching that limit is extremely rare, perhaps one of the rarest events in modern economics.

The International Monetary Fund maintains a website devoted to educating the public about economics. I cannot recommend this site. The IMF lives in a world of obsolete economics, while the rest of us work within the current realities of Monetary Sovereignty.

The sole reason to visit the site is to understand the popular (false) wisdom of the day, and in this way, to understand the failure of the IMF to reach its stated goals. For example, here are excerpts from their site, regarding inflation:

What creates inflation?

Long-lasting episodes of high inflation are often the result of lax monetary policy. If the money supply grows too big relative to the size of an economy, the unit value of the currency diminishes; in other words, its purchasing power falls and prices rise. This relationship between the money supply and the size of the economy is called the quantity theory of money, and is one of the oldest hypotheses in economics.

Yes, this is exactly what the public believes, i.e, when the government “prints” too much money, the U.S. has inflation.

First, the government doesn’t “print” money; money has no physical existence, so it can’t be printed, touched, mailed, smelled, burned, crumpled or stored. No one on earth, ever has seen money.

Money is nothing more than an accounting notation. A dollar bill is not money. It merely is an official statement that the holder owns money.

“Print” is yet another word used incorrectly in economics (along with “debt,” “deficit,” etc.) that misleads, because its popular meaning differs from its economic meaning. In economics, “print” really means “create.”

That said, the real question is: Does “printing” or creating money cause inflation? Is inflation really, as the common expression goes, “Too much money chasing too few goods and services?”

The answer is, “Yes and no.” Yes, if the U.S. federal government immediately created (by deficit spending) $900 trillion, I suspect there would be a world-wide inflation. But barring that extreme example, there simply has been no relationship between federal deficit spending and inflation.

The inflation fears of the debt hawks have no basis in reality. While “too much money / too few goods” may sound logical, it is not historically factual. It can exist only in some hypothetical, extreme, almost never-seen situation.

The reason has to do with the new, worldwide markets. “Too few goods” seldom can exist, today. If one nation runs short of something, buyers get it from another nation. The world has changed, while IMF economics has not changed with it.

The IMF’s “educational” site also says:

How policymakers deal with inflation

The right set of anti-inflation policies, those aimed at reducing inflation, depends on the causes of inflation. If the economy has overheated, central banks—if they are committed to ensuring price stability—can implement contractionary policies that rein in aggregate demand, usually by raising interest rates.

This too is a popular belief, that high interest rates reduce demand, and it too is false. If high rates did inhibit demand, we would expect to see a correspondence between high rates and reduced Gross Domestic Product (GDP).

Yet, we see no such thing. In fact, to a slight degree, we see the opposite: High rates actually stimulate demand:

The probable reason: High rates force the federal government to pay more interest, thereby pumping more money into the economy, which is stimulative.

The Fed does raise interest rates too fight inflation, not because they reduce the demand for goods and services but because high rates increase the reward for owning money, thereby increasing the demand for money. Making money more valuable fights inflation.

The bottom line: The IMF subscribes to obsolete bits of popular wisdom about economics, which explains why it tries to solve the indebtedness of monetarily non-sovereign nations by lending them even more money, when these nations cannot service the debt they already have, then demanding that these nations cease stimulative spending and increase anti-stimulative taxing.

The IMF, having learned little about economics during the past 40 years, prescribes leeches to cure anemia, much to the detriment of the world.

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

#MONETARY SOVEREIGNTY

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