Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal 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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When someone can’t understand a simple concept, it’s because they don’t wish to understand.

Though Monetary Sovereignty can be complex, its fundamental concept is simple: A Monetarily Sovereign government has the unlimited ability to create its sovereign currency. That is why a Monetarily Sovereign government never needs to ask anyone else for that currency. It never can run short of money.

Think of owning a dollar-creation machine. Your machine allows you to create endless dollars. Would you ever need to ask anyone to give or lend you dollars? The U.S. is Monetarily Sovereign. It can create endless dollars. It never needs to ask anyone for dollars.

Could anything be simpler?

Yet, there are educated people who claim not to understand that simple concept. Congress and the President fret over the federal debt. Surely, anyone with even modest intelligence, can understand that a nation with the unlimited ability to create dollars, doesn’t need to borrow dollars. I am certain Congress and the President know this.

Yet the Speaker of the House, John Boehner, famously lied, “America is broke.” A nation owning a dollar-creation machine is “broke”???

Both political parties feign concern about the “unsustainability” of the debt, though no one seems to know what “unsustainable” means. The hundreds of editors of all major newspapers pretend we are in a debt crisis, though no one seems to know what that crisis is. The Federal Reserve publishes articles indicating none of their executives understands that the U.S. owns the money-creation machine.

Meanwhile, adherents to Modern Monetary Theory (MMT) and Monetary Sovereignty (MS), write books, articles and blog posts, trying to simplify the concept enough for all these college-educated people. It’s a fools mission.

We cannot force someone to “understand” something they do not want to understand. So the real question becomes, “Why do these people pretend ignorance, when even the least intelligent among them, understands perfectly?” The answer is money and power.

The politicians and the media are paid not to understand. Their jobs depend on their not understanding.

Money is comparative. Owning $1 million might make you the richest man in the room. Everyone in the room would admire your “wealth.” You not only would have their admiration to stroke your ego, but you would have the power to encourage or even force people in that room to do things, say things or even believe things.

Or, owning $1 million might make you the poorest man in the room. No one in the room would admire your wealth. Your power would be negligible.

Your power and admiration would be based on something called the “gap.” Whether a wealth gap or an income gap, the size of the gap, rather than the absolute value of your dollar holdings, is the key to your power.

The gap can be widened either by increasing the dollar holdings of the rich, and/or by decreasing the dollar holdings of the not-rich. Either approach will accomplish the same end.

Reducing the federal debt demands that federal spending be decreased and/or taxes be increased. The vast majority of federal spending benefits the not-rich more than the rich: Social Security, Medicare, Medicaid, aid to education, food stamps, disability care – all have far more meaning for the middle and lower classes. So cuts in federal spending, which reduce the federal deficit, widen the gap.

Many taxes also hurt the less affluent: FICA, income taxes on Social Security benefits, tolls, sales taxes, all reduce the deficit and widen the gap.

Clearly, telling the populace that federal deficits and debt should be reduced, is in the best interest of the wealthiest among us, and it is to the detriment of those less wealthy. Is it any wonder then, that the politicians who owe their jobs to rich donors, and the media, which are controlled by rich owners, repeatedly decry the federal debt?

What can be done? Trying to educate the politicians and the media is hopeless. They already know. But, in essence, they have put their hands over their ears, and are yelling, “I CAN’T HEAR YOU..”

I believe we must educate the public, directly.

We have been blessed with a medium the rich can’t control: The Internet. You users of Facebook and Twitter should direct your friends and followers to appropriate postings about Monetary Sovereignty. You need to build an ever-branching tree of fact. When enough people understand the basic truth, the politicians and the media will jump on the train.

It’s our only hope.

Rodger Malcolm Mitchell
Monetary Sovereignty

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

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Until the 99% understand the need for federal 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.
==========================================================================================================================================

First question: How much economic data is there? The Federal Reserve Bank of St. Louis’s “FRED” service lists the following data categories:

Money, Banking, & Finance (3,812)
National Accounts (704)
Population, Employment, & Labor Markets (2,234)
Production & Business Activity (1,331)
Prices (1,613)
International Data (5,046)
U.S. Regional Data (31,376)

That’s about forty five thousand categories, with each category having thousands of individual data points – many millions of individual pieces of data – and that’s just from FRED alone.

Now add all the economic data from every nation on earth. Add all the data from every stock, commodity and financial exchange. Add all weather data from around the world. And all patent data. And all river/lake/ocean data. All geographical data. Add the compositions of the atmospheric layers. Add every position of the moon and the sun.

The list goes on and on, trillions upon trillions of individual data points — more than the number of water drops in the ocean (that too, is a data point).

Second question: Which of these data and combinations of data, has zero effect on the U.S. economy? There is reason to believe economics is a chaotic system, in which small changes can have large effects. In meteorology, which is a chaotic system, they call that the “butterfly effect,” whereby a butterfly flapping its wings in Africa can cross a tipping point that causes a hurricane to hit the New Orleans.

If economics is indeed a chaotic system, then all data – all trillions upon trillions of data points – affect the U.S. economy.

I again thought about that when I saw an article in the Global Economic Intersection describing The Conference Board’s Leading Economic Index (LEI) and Coincident Economic Index (CEI). They look like this:

The LEI has 10 categories and the CEI has 4 categories — at most a few thousand data points between them — an infinitesimal fraction of the data that affects the current status and the future status of the the U.S. economy. And because that tiny data is insufficient, the best the users can hope (emphasis on the word “hope”) to do is predict some generalizations about the economy, perhaps a couple months in advance.

In meteorological terms, this is like predicting the possibility of rain, two minutes in advance — virtually useless.

The problem is not a shortage of data. We have the data. We have the communications systems that can assemble the data. We have the ability to plug all this data into a multiple regression formula:

MULTIPLE REGRESSION ANALYSIS
by Amit Choudhury (2009)

Multiple regression analysis is a powerful technique used for predicting the unknown value of a variable from the known value of two or more variables- also called the predictors. More precisely, multiple regression analysis helps us to predict the value of Y for given values of X1, X2, …, Xk.

For example the yield of rice per acre depends upon quality of seed, fertility of soil, fertilizer used, temperature, rainfall. If one is interested to study the joint affect of all these variables on rice yield, one can use this technique.
An additional advantage of this technique is it also enables us to study the individual influence of these variables on yield.

In multiple regression analysis, adding variables generally increases accuracy. That is why the federal government is spending many millions of dollars to build a huge super-computer (100 racks of servers and 72,000 core processors, so many parts that they must be delivered in the back of a 747. It will be capable of performing 1.5 quadrillion calculations — a quadrillion is a 1 followed by 15 zeros — every second).

Unfortunately (for economists), the supercomputer will be used my meteorologists.

The Jun 12 2012 post titled, “Which is more important to our lives: Meteorology or Economics?” ended with this: “Considering its affect on human lives, economics is the most important science of all. So where are the super computers? We want that next machine. We need that next machine. The American people need us to have that next machine. My question is: Who in the world of economics, is asking for that next machine?”

Today, the science, most immediately to our lives, science uses a prediction system based on ten categories. Ten categories! It’s pitiful.

By its dollar allocation, the federal government seems to tell us, “Predicting the economy isn’t all that important. Understanding the future effects of present day Congressional decisions isn’t meaningful. The President really doesn’t need to know what his signing or vetoing of a bill will do to the economy, now or in the future.”

Wearing blindfolds, Congress and the President play darts. Their speeches assure us, they know exactly where their darts will land. Because of political considerations, they toss their darts in all directions. When the public complains that the darts have missed their target, Congress and the President, still wearing blindfolds, tell the Fed to move the dart board, somewhere. Then they throw again.

And this is how our economy is managed: Blindfolded.

The great nation of the United States of America needs to evaluate the future economic effects of present-day decisions. Just as with weather prediction, evaluating a handful of data won’t do it. We need to evaluate millions, even trillions, of data points.

So I ask again, “Who in the world of economics, is asking for that next super-computer?”

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

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

Mitchell’s laws: The more budgets are cut and taxes increased, 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.
==========================================================================================================================================

Yikes! No sooner did I publish my most recent posts, Why does the 1% upper income FIGHT the war against the 99%? and Why does the 1% upper income WIN the war against the 99%?, but the New York Times publishes an article demonstrating the gist of those posts.

Here are some excerpts:

Distaste for Health Care Law Reflects Spending on Ads
By Abby Goodnough, Published: June 20, 2012

DOYLESTOWN, Pa. — Erika Losse is precisely the kind of person President Obama’s signature health care law is intended to help. She has no health insurance. She relies on her mother to buy her a yearly checkup as a Christmas gift, and she pays out of her own pocket for the rest of her medical care, including $1,250 for a recent ultrasound.

But Ms. Losse, 33, a part-time worker at a bagel shop, is no fan of the law, which will require millions of uninsured Americans like herself to get health coverage by 2014. Never mind that Ms. Losse, who makes less than $35,000 a year, would probably qualify for subsidized insurance under the law.

“I’m positive I can’t afford it,” she said.

Why is she positive she can’t afford it? Because the Republicans told her so and the Democrats don’t deny it.

A Supreme Court ruling on the constitutionality of the health care law is expected any day now, but even if the Obama administration wins in the nation’s highest court, most evidence suggests it has lost miserably in the court of public opinion. National polls have consistently found the health care law has far more enemies than friends, including a recent New York Times/CBS News poll that found more than two-thirds of Americans hope the court will overturn some or all of it.

“The Democrats have done a very poor job of selling the program,” said Gary Schiff, 65, a retired teacher and businessman here. “All you hear about it now is the Republicans saying what’s wrong with it: that it’s socialism, that it’s going to bankrupt the country. I’ll give them credit; they’re great at framing the debate.”

That success may stem in large part from more than $200 million in advertising spending by an array of conservative groups, from the U.S. Chamber of Commerce ($27 million) to Karl Rove’s Crossroads GPS ($18 million), which includes the billionaire Sheldon Adelson among its donors, and the American Action Network ($9 million), founded by Fred V. Malek, an investor and prominent Republican fund-raiser.

In all, about $235 million has been spent on ads attacking the law since its passage in March 2010, according to a recent survey by Kantar Media’s Campaign Media Analysis Group. Only $69 million has been spent on advertising supporting it.

On the other side, the 60 Plus Association, a conservative lobbying group for older Americans, has targeted Democratic senators up for re-election with about $10 million in ads warning that under the law, “unaccountable bureaucrats” will be able to “ration care.”

In contrast, most advertising spending in support of the law has come from the Department of Health and Human Services. Appearing mostly on national and cable networks, the agency’s ads are bland, explaining aspects of the law.

“Did you know with your health insurance, you may now have some preventive benefits with no co-pays or out-of-pocket costs?” one asks.

Nearly everyone said the nation could not afford the law’s goal of insuring about 30 million Americans, mostly through a vast expansion of the Medicaid program and federal subsidies to help others who cannot afford to buy coverage on their own. A striking number of people also said the law would limit patient choices and lead to rationing of care — a fear that has been stoked by conservative lawmakers, talk-radio hosts and commentators on networks like Fox, in addition to the political action committees that have run ads attacking the law.

These commentators know they are telling the Big Lie, but they do it anyway. They are obedient soldiers for the 1%.

Thus, the upper income 1% brainwashes the 99% with its Divide and Conquer strategy, urging the 99% to vote against their best interests. A cynical observer might say the 99% deserve the loss of benefits they seem to want. I, for one, am sad for these people, who have been so brainwashed by the Big Lie that “the government can’t afford it,” they do not understand what is good for them and what is bad.

Today, the health care law, tomorrow Social Security, the next day, Medicaid, food stamps, aid to education, tax reductions, housing — going, going gone.

And the 99% will wonder how it all could have happened to them.

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

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

Mitchell’s laws: The more budgets are cut and taxes increased, 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.
==========================================================================================================================================

WHY THE 1% FIGHTS THE WAR AGAINST THE 99%

In the previous post, Why does the 1% upper income FIGHT the war against the 99%? we discussed the reasons why the rich want to extend the gap between them and the less rich. The reasons have to do with the psychology of money.

Once the basic needs of food, clothing, shelter, health and security are satisfied, the desire for more money to buy more goods and services, begins to morph into having more money for self image. While dollars in of themselves do not inflate the ego, comparative dollars do; the greater the income gap, the greater the ego inflation.

An income gap also translates into a power gap; the rich have power over the less rich, which has practical benefits as well as further massaging the ego.

From the standpoint of the rich, the true goal is not to acquire more dollars; the true goal is to extend the gap, which can be accomplished by raising the rich and/or by lowering the less-rich.

This is why the budget initiatives, of virtually all Republicans, and many Democrats, involve such gap extenders as reduced Social Security, Medicare and Medicaid benefits, reduced federal employment, extension of FICA, broadening the tax base, taxing Social Security benefits and reducing food stamps and other aids to the poor.

All of these are stated as the false goals: Reduce the federal deficit and debt.

The 1% correctly care nothing about deficit and debt reduction. They know the federal government, not only could service unlimited debt, but could eliminate the entire debt (i.e. T-securities) tomorrow. They also know the federal deficit is the government’s method for adding dollars to the economy – necessary for a growing economy. Federal debt and deficit are no problem whatsoever, for a Monetarily Sovereign government.

However, the 1%’s wrap gap-increasing initiatives in the semantic misdirections: “reduce the debt,” “reduce the deficit,” “balance the budget,” “be frugal,” “be sustainable” and “live within our means – all meaningful for personal finances, but destructive of a Monetarily Sovereign nation’s finances. Thus, they hide their evil in a false veil of noble intent. They label the poison bottle, “Honey.”

WHY THE 1% WINS THE WAR AGAINST THE 99%

They are only 1%, with 1% of the vote, while 99% of the people presumably would like to see the gap reduced. So why do the 1% manage to win the voting war?

Every nation, whether totalitarian or democratic, is ruled by a small elite, and they all use the same methods. In that sense, America resembles Hitlerian Germany, Stalinist Russia and Kim Jong-il’s North Korea. How, in all these nations, does a tiny minority rule the great masses?

DIVIDE AND CONQUER

It begins with the simplest of concepts: Divide and Conquer. And this too is based on the gap.

Each of us, no matter how poor, has a self image, which, in part, relies on being superior to some group that is poorer or less respected. Dictators control their armies by fostering a gap between soldiers and the average citizens. Within the army, officers maintain a gap between themselves and their soldiers, and even the lowest soldiers maintain a power gap between themselves and the civilians – a gap they will defend fiercely with guns and machetes. As it happens, this defense actually is a defense of the 1%.

It is why the soldiers of Syria willingly bomb and maim and murder their neighbors. In a dictatorship, the 1% Divides to Conquer. It enlists the 99%, to do the dirty work.

A democracy works much the same way, though here the power is in the vote rather than the gun. The 1% convinces the higher levels of the 99% – the upper-middle class – to vote against the best interests of the middle class, which in turn votes against the best interests of the lower classes.

And this division occurs, even when classes share best interests.

In the coming elections, millions of people from the middle classes will vote Republican, despite Republican philosophy having extended the gap between the middle classes and the 1%. They will vote Republican to extend the gap between themselves and the lower classes.

THE BIG LIE

The 1% successfully divides the 99% to conquer them, and the method is control of the media, which promulgates the Big Lie, which includes:

1. The poor are criminals, dangers to society, who will destroy what we have built.
2. The poor are lazy, do not wish to work, and any benefits they receive addicts them to further benefits (unemployment compensation, food stamps, health insurance, housing).
3. Our taxes pay for federal spending. The government spends taxpayer money.
4. We and our children owe the federal debt.
5. Like us, the federal government should run a balanced budget.
6. Immigrants are poor, lazy, uneducated and criminal (though supposedly smart enough to take our jobs).
7. Small government is better than big government.

By continuously pounding away at these lies, the media and the politicians convince the 99% to vote against their own best interests, and to extend the gap. The 99% agrees to raise the qualification age of Social Security and to tax its benefits, which will hurt the 99% and their children. The are told by the media to eliminate “Obamacare,” despite its benefits for the vast majority.

In the name of “deficit reduction,” the 99% agrees to limits on spending, education, homelessness, hunger, health care, infrastructure, sustainable energy, government employment and services, and all types of R&D – all of which would help close the gap. The 99% votes against their own best interests, just to open the gap.

The income gap is not just about money and ego; it is about power. Being on the upper side of the gap, gives you power over those on the lower side. With a word or finger twitch, you can make people grovel and scurry – an addictive feeling for many.

In short, the 1% never does its own dirty work. To survive, it must divide the 1% into warring groups, each trying to align itself with the 1% in opening the gap between them and those below. Thus does “Divide and Conquer” have the entire nation working and voting on behalf of the 1%. It is true in America; it is true in every society on earth.

THE SOLUTION

The overall solution? There is none. The gap is in our nature. But we do have the power to moderate it, which requires knowledge and a leader. The leader must support the knowledge, and the knowledge must support the leader.

The knowledge is understanding why the Big Lies are indeed lies, and the leader must be willing and able to articulate the knowledge believably. He must be a uniter, not a divider. He must embrace the usually incompatible attributes of leadership and modest ego needs.

We thought it might be Mr.Obama, but he long ago succumbed to the 1%. The siren songs of banker and Hollywood money have seduced him.

The leader certainly isn’t Mr. Romney, who not only is part of the 1%, but is a man with neither core beliefs nor morality, who will say anything and “believe” anything to gain power. His mutually incompatible beliefs on every key issue, would be humorous if they were not so disgusting.

Something tells me Hillary Clinton might have been that leader, but we missed our chance to find out. Could she have been a great leader? I don’t know. No one does. But losing a potentially great leader is no trivial matter. Imagine America without Washington or Lincoln.

So the 1%, Divides and Conquers, using the BIG LIE, which compels 99% to vote to extend the gap and to act against their own best interests. And that is why the war is lost. Our only hope: To gain the knowledge and to find the leader, and meanwhile to vote for, not against, our best interests.

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

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