That horrible, terrible, frightening trade deficit Saturday, Jun 9 2018 

It takes only two things to keep people in chains:Related image


The ignorance of the oppressed
And the treachery of their leaders

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

Ooooh, that horrible, terrible, frightening monster trade deficit; it scares everyone, especially our President.Image result for scary monster

Here are excerpts from a recent article in Forbes Magazine:

Total debt for the five largest U.S. banks have grown by 4.3% over the last twelve months – above the industry-wide growth figure of under 4%.

This is a large increase by these banking giants, given their massive debt base which averaged more than $5.3 trillion in Q3 2017.

This represents a share of more than 40% of the $13.2 trillion U.S. debt market, and this figure is likely to trend even higher.

Sounds frightening, doesn’t it? Our largest banks have gone into debt by an additional 4.3%. Time to pull your money out?

Well, I didn’t lie, but I misled. The actual article read:

Total deposits for the five largest U.S. banks have grown by 4.3% over the last twelve months – above the industry-wide growth figure of under 4%.

This is a commendable feat by these banking giants, given their massive deposit base which averaged more than $5.3 trillion in Q3 2017.

This represents a share of more than 40% of the $13.2 trillion U.S. deposit market, and this figure is likely to trend even higher as the largest banks continue to outperform the overall industry.

In the banking world, deposits are bank debt. And though you never hear any bank boasting about the size of its debt, banks often boast about the size of their deposits.

I told you this little story to demonstrate how deceptive the word “debt” can be, depending on circumstances.

Well, there is another word that can be equally deceptive and that is the word “deficit,” especially when used in the phrase “trade deficit.”

U.S. trade deficit falls in April, but still up for year
The U.S. trade deficit with China grew 8.1 percent in April, though it fell slightly overall. (Julie Jacobson/AP ) By Paul Wiseman Associated Press

WASHINGTON — Record exports shaved the U.S. trade deficit in April for the second straight month. But so far this year, the deficit is up 11.5 percent from a year ago despite President Donald Trump’s vow to close the gap through new tariffs on imports and renegotiated trade deals.

The president has proposed tariffs on up to $150 billion in Chinese imports. The Chinese have targeted $50 billion in U.S. products in retaliation.

Talks to head off a trade war between the world’s two largest economies have so far failed to produce a resolution even though China has offered to step up purchases of U.S. farm and energy products.

Trump is also trying to renegotiate the North American Free Trade Agreement with Canada and Mexico. The administration is also taxing imports of steel and aluminum.

The president views trade deficits as a sign of economic weakness that can be brought down by more aggressive trade policies.

What exactly is a trade “deficit” and why does President Trump worry about it?

You should know the answer. Every time you go to your local store, or buy something online, you run a “trade deficit,” which is nothing more than buying more than you sell.

Running a trade deficit is no problem for you, so long as you have sufficient income to pay for what you buy.

And running a trade deficit is no problem for the U.S. Because it is Monetarily Sovereign, it has the unlimited ability to pay for goods and services. The U.S. government never can run short of dollars.

Blue line is Gross Domestic Product. Red line is the amount of the trade deficit. Not only is the trade deficit a tiny fraction of GDP, but we have one almost every year, with no measurable negative effect on GDP growth.

Most economists say trade deficits are caused by bigger economic forces, mainly the fact that the United States consistently spends more than it produces.

The trade gap has continued to rise since Trump entered the White House partly because the U.S. economy is strong and American consumers have an appetite for imported products and the confidence and financial wherewithal to buy them.

The whole concept of a trade deficit is silly at best and deceptive in reality:

If you and another person exchanged items of equal value, which of you has run a trade “deficit”? Or said another way: If you give someone a dollar, and he gives you something worth a dollar, which of you has run a deficit?

Take it a step further: Imagine you own a machine that can print infinite dollars and you grab a big boxful of those dollars and exchange them with a foreigner for a car.

The foreigner gives you a car — something that cost him time, labor, and valuable materials to produce — and you give the foreigner some dollars, of which you have an infinite supply and which cost you nothing to produce.

Who received the better deal, you or the foreigner? Would you look up that exchange as a “deficit”?

I have just described the U.S. trade “deficit.” Dollars are free to the U.S. government, and in exchange for those free dollars, we receive valuable assets. Yet Trump and many others fret about the U.S. trade “deficits.”

If Illinois runs a trade deficit, that might worrisome. Illinois does not own that money-printing machine. It cannot create infinite income the way the federal government can. It must rely on other income sources, notably taxes. The same is true for Cook County and for Chicago.

And you, too. You must have sufficient income, either from earnings, gifts, or borrowing, to pay for goods and services. But the federal government needs none of these.

Being Monetarily Sovereign it merely creates dollars by pressing computer keys.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

St. Louis Federal Reserve: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills.”

So tell me, again, Mr. President, since “trade deficit” means the U.S. exchanges dollars it produces at no cost, for valuable goods and services, why are you concerned? Isn’t a trade deficit the greatest benefit imaginable?

Getting much more value than we give — that’s not a deficit. If anything, it’s a surplus.

What traditionally has been misnamed a “trade deficit,” more properly should be called a “trade surplus,” when referring to the Monetarily Sovereign U.S. government.

Then, everyone could stop wringing their hands in worry.

“Debt” and “deficit” are the most misused and misunderstood words in all of economics, when applied to our Monetarily Sovereign government.

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

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

Are you paying for Trump’s tariffs? Saturday, Jun 2 2018 

It takes only two things to keep people in chains:Image result for treachery

The ignorance of the oppressed
And the treachery of their leaders

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

A May 31, 2018, CNN headline began: Trump hits allies with metal tariffs.

Why should you care? Aside from the fact that the headline claims we are hitting our own allies, with Trump as president, we really don’t have allies anymore, do we?

And the rest of the headline is: “Mexico, EU, and Canada vow to retaliate.” Well, that “retaliate”  word doesn’t sound very good. It sounds like war.

But Trump has assured you that, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.

Thus, you are faced with four questions:

  1. Are you actually paying for Trump’s tariffs?
  2. Do tariffs help domestic industries grow?
  3. Is the U.S. losing many billions of dollars on trade?
  4. Are trade wars good and easy to win?

The CNN article tells us:

President Trump is imposing steep tariffs on steel and aluminum from three of America’s biggest trading partners — Canada, Mexico and the European Union.

The trade penalties, 25% on imported steel and 10% on imported aluminum, take effect at midnight, Commerce Secretary Wilbur Ross told reporters Thursday.

Who will pay for those tariffs? It’s a trade war,  and in any war, you assume your government is shooting at the enemy.

In this case, the “enemy” is Canada, Mexico, and the European Union.

Image result for backwards shooting gun

Shoot at your own people

So you may assume that Canada, Mexico, and the EU will pay those tariffs, right? Wrong.

  1. Are you actually paying for Trump’s tariffs?
    A trade war is not like any war you ever have known.

    In a trade war, your government shoots at you, because it is you who pays the tariffs. Canada, Mexico, and the EU will not pay one cent.

When the imported products arrive in America, they arrive with their usual price.

Then the U.S. government adds a tariff to that price, and that increased price is what you pay.

Steel and aluminum are used widely: Cars, planes, appliances of every type. Are you thinking of buying a car, house, a refrigerator, a TV, a computer, a phone, any canned good?

Even your gas and oil will cost more because the oil industry and energy utilities use steel and aluminum extensively.

Steel and aluminum prices affect almost every product and service you buy, so prepare to pay more here, more there, more everywhere.

2. Do tariffs help domestic industries?
Existing American factories cannot supply U.S. needs. So new factories would have to be built and/or old factories be re-opened.

But consider the realities. Trump changes his mind, minute-by-minute. Would you invest millions or billions of dollars, and years of effort, to build a new factory, or to re-open old ones, when tomorrow Trump might decide that, “No, there won’t be tariff increases”?

At best, current factories might be able to ramp up production somewhat, which will increase profits but have a negligible effect on employment. More likely, they simply will raise prices, because they won’t have to compete with foreigners.

Meanwhile, U.S. manufacturers who use aluminum and steel will have to keep importing and paying the duties. That will require them to cut profits or raise prices, both of which will negatively affect Americans.

Even if an American manufacturer buys from domestic steel mills or aluminum smelters, those companies would raise their prices because they wouldn’t have to worry about competition from low-priced imports.

Under any circumstances, you would pay more, while the federal government takes dollars out of the private sector. No matter what happens, there would be scant benefit from a trade war and substantial punishment to the American economy.

3. Is the U.S. losing many billions of dollars on trade?
When Trump says “the U.S. is losing many billions of dollars on trade,” he means the U.S. is running a “trade deficit.” But a trade deficit is not the same as “losing” dollars.

Related image

The man receives money; the woman receives food. The woman is running a “trade deficit,” but neither one is “losing.”

When you shop at your local grocery store, you give them dollars and they give you goods and services.

In reality, you run a trade deficit with that store, but do you consider that to be “losing money”?

When you buy shoes that were made China, you run a trade deficit with China, but are you “losing money”?

Would you prefer not to run a trade deficit with your grocery store, and instead grow or manufacture all your groceries, yourself?

The vast majority of Americans would answer “No,” to both questions. We buy from foreign nations because the things we buy there either are better or cheaper, or both.

It benefits us to buy better and cheaper goods and services.

Further, when dollars flow out of the U.S., this is no problem for our Monetarily Sovereign government, which has the unlimited ability to create dollars.

Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Sending dollars to Canada, Mexico, the EU, China, et al, does not make the U.S. even one cent poorer. It merely strengthens the dollar’s position as the world’s go-to currency.

That is why, for many years, the U.S. has been able to run billions of dollars in trade deficits, with no adverse effect on our economy. In fact, our economy has grown massively.

Being Monetarily Sovereign, we can continue to run trade deficits forever, and the only result will be that we will receive better, and/or less expensive, products and services than we can produce domestically.

4. Are trade wars good and easy to win?
For the U.S., a trade war is stupid. There is no better way to say it. Stupid.

The Democrats know it. The Republicans know it. Our foreign friends know it. Our foreign enemies know it. The vast majority of economists knows it. Only Trump seems not to know it.

He likes conflict, especially when he can bully others, so he has begun an “I-can-cut-off-America’s-nose-faster-than-you-can” trade war.

Contrary to Trump’s statement, trade wars are not good, and no one wins.

Imagine, for instance, that Trump “triumphs” over China, and China agrees to reduce its deficit with the U.S. It can accomplish this in two ways: It can sell less to us and/or it can buy more from us.

If it sells less to us, we either will have to buy elsewhere (which makes no change in our trade deficit) or we can make the goods ourselves. But if we were able to make those goods better, or at a better price, we already would be doing so.

We either will have to settle for higher prices or for lower quality.

If China buys more from us, that means China will send us more dollars than it previously had.

But the U.S. does not need more dollars from China. Being Monetarily Sovereign, we already can create unlimited dollars.

The irony is that the GOP wants China to send us more dollars by purchasing goods and services, but does not want China to send us more dollars by “lending dollars” to us.

The GOP worries about the federal “debt” to China, which is nothing more than China converting yuan to dollars, then depositing those dollars into U.S. Treasury-security accounts.

If China were to increase its purchases from us, that would increase the U.S. dollar supply in the same way that federal deficit spending does. But the GOP worries (wrongly, as it turns out) about increases in the U.S. dollar supply causing inflation.

So, in actual effect, the Trump/GOP debt hawks support the same thing they oppose: An increase in the U.S. money supply.

In summary:

1. Trump’s tariffs will cost you money.
2. Trump’s tariffs will not help domestic employment or businesses.
3. The U.S. is running a trade deficit, but it is not “losing many billions of dollars on trade.”
4. Trade wars not good and not easy to win. No one wins a trade war.
5. In the unlikely event a trade war is “successful,” i.e. adds dollars to the U.S. economy, it does nothing the federal government can’t do without costing Americans higher prices and a poorer selection of products.

After failing to destroy health care for the poor and middle income groups, and failing to make Mexico pay for his wall, Trump is desperate to claim an accomplishment that people care about.

Unfortunately, all he will accomplish is inflation, a poorer availability of products, and job loss.

Now you understand why American banks no longer will deal with Donald Trump, and before he became president, he and his family were forced to go overseas for business funds. He is not trusted by anyone.

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

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………..

The single most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Guaranteed Income)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.

MONETARY SOVEREIGNTY

The great trade-deficit hoax Friday, Apr 6 2018 

It takes only two things to keep people in chains:
The ignorance of the oppressed and the treachery of their leaders.Image result for in chains——————————————————————————————————————————————————————————————————————————————————————————–

Here is a direct quote from one of President Trump’s recent tweets:

“From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!”

It is a classic example of how selective facts can produce a wrong conclusion.

Here is the other side of that coin:

Fact check: Is Trump right about the size of trade deficit?

Trump persistently miscasts the trade balance, citing the U.S. deficit in goods and ignoring the U.S. surplus in services. The actual trade deficit last year was $566 billion.

As for manufacturing, Trump leaves out what is widely regarded as the main reason for the decline in factory jobs — automation and other efficiencies.

What he doesn’t say is that despite the loss of those 5.5 million factory jobs, the U.S. economy overall has added a net total of about 40.6 million jobs in that time. 

Bottom line: The U.S. has been moving from “brawn” factory jobs toward “brain” office jobs. Is that a bad thing?

O.K., so Trump is ignorant and a compulsive liar.  You already knew that. But what about that trade deficit. Would you say it is harmful or beneficial?

Think of where you’ve spent your money, this year. You’ve shopped at grocery stores, drug stores, clothing stores. You’ve gone to movie theaters, restaurants, ballparks, retail malls. Perhaps you bought a car. You might have shopped online.

In each case, you gave them money and in return, they gave you goods and services.

In short, you ran a “trade deficit” with every grocery, drug, and clothing store — with every movie theater, restaurant, mall, car dealer, ballpark, and online provider.

That is exactly what a “trade deficit” means. One party gives another party money in exchange for goods and services. After the exchange, which party “WINs” (to borrow Trump’s term), and which party loses?Image result for trade

Clearly, both parties win. It’s an even exchange, which both parties desire.

When you bought that loaf of bread, did you feel that you “lost”? If you had, you wouldn’t have bought the bread.

You wanted bread; the retailer wanted dollars; you both got what you each wanted.

That exchange just as easily could be termed a trade “surplus” as a trade “deficit,” since you came out with a surplus of bread.

When the U.S. runs a trade “deficit” with the rest of the world, which we do almost every year, it doesn’t mean we have “lost.” It means we have received valuable goods and services in exchange for dollars, which our Monetarily Sovereign government can create endlessly, at the touch of a computer key and at no cost.

When you personally engage in overly large trade deficits, i.e. buy too much stuff, you can run short of dollars to pay your bills. You even can go bankrupt, as Trump’s companies often have. The reason: You are monetarily non-sovereign.

Similarly, cities, counties, states, and businesses cannot run trade deficits endlessly, because being monetarily non-sovereign, they can run short of dollars.

But the U.S. is Monetarily Sovereign. It never can run short of its own sovereign currency the dollar. America never can run short of dollars.

The early settlers of our nation built and maintained their own houses; they grew and prepared their own food; they sewed their own clothing; they even taught their own children, in the home. They mostly were self-sufficient.

Now, in our modern society, you purchase your houses from home builders; you purchase your food from farmers and processors; you purchase your clothing; you pay people to do your plumbing, carpentry, landscaping, sewage removal, and road paving. You pay schools to teach your children.

When Americans were self-sufficient, they didn’t run trade deficits.  They didn’t buy things. Today, you run trade deficits; you buy most of what you want from people who more efficiently can supply these things.

You buy from China, the things it can produce better or more cheaply, than comparable things, made here in America. Would it benefit you to purchase “Made in America” goods and services, if these goods and services were more costly or less useful than those made in China?

Trump claims that the U.S. should be a net importer of dollars.

If instead of having a trade deficit, we had a trade surplus, we would become a net importer of dollars — the very last thing this Monetarily Sovereign nation needs.

We would be sending our precious assets overseas in exchange for the one thing of which we have an infinite amount: U.S. dollars.

Finally, tariffs — both import and export — are not paid by China or the rest of the world. They are paid by you.  The tariffs on imported goods are dollars added to the price. Those dollars leave the U.S. private sector and are sent to the federal government.

The same President who boasted about how much his tax cuts would benefit the economy now proposes tariff tax increases to  — you guessed it — benefit the economy. 

How increased taxes, which take dollars from the private sector and give them to the federal government, which has no need for them, can benefit our economy has yet to be explained.

And when China, and the rest of the world, institute their retaliatory tariffs against our goods,  our factories and farmers either will have to cut profits to remain competitive or lose sales. Either way, the U.S. workers will be hurt.

I can understand why Trump wants this trade war. He is a stupid, vindictive, semi-literate man, who obtains his ideas from the stupid, vindictive people of Fox and Friends.

I even can understand why Trump’s followers buy into this economic catastrophe. They don’t understand the realities of international trade; they believe whatever their failed hero tells them.

What I cannot understand is the GOP members of the Senate and the House. These people know America will be hurt, but are too spineless to fight. They would rather see the people of America suffer than to displease this egomaniacal President.

In that sense, they choose their party over country, which makes them traitors to America.

May they be damned to eternal fires, especially the religious right, who while claiming morality, have sold their souls to the devil.

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

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The most important problems in economics involve the excessive income/wealth/power Gaps between the have-mores and the have-less.

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of The Ten Steps To Prosperity can narrow the Gaps:

Ten Steps To Prosperity:
1. ELIMINATE FICA (Ten Reasons to Eliminate FICA )
Although the article lists 10 reasons to eliminate FICA, there are two fundamental reasons:
*FICA is the most regressive tax in American history, widening the Gap by punishing the low and middle-income groups, while leaving the rich untouched, and
*The federal government, being Monetarily Sovereign, neither needs nor uses FICA to support Social Security and Medicare.
2. FEDERALLY FUNDED MEDICARE — PARTS A, B & D, PLUS LONG TERM CARE — FOR EVERYONE (H.R. 676, Medicare for All )
This article addresses the questions:
*Does the economy benefit when the rich can afford better health care than can the rest of Americans?
*Aside from improved health care, what are the other economic effects of “Medicare for everyone?”
*How much would it cost taxpayers?
*Who opposes it?”
3. PROVIDE A MONTHLY ECONOMIC BONUS TO EVERY MAN, WOMAN AND CHILD IN AMERICA (similar to Social Security for All) (The JG (Jobs Guarantee) vs the GI (Guaranteed Income) vs the EB (Economic Bonus)) Or institute a reverse income tax.
This article is the fifth in a series about direct financial assistance to Americans:

Why Modern Monetary Theory’s Employer of Last Resort is a bad idea. Sunday, Jan 1 2012
MMT’s Job Guarantee (JG) — “Another crazy, rightwing, Austrian nutjob?” Thursday, Jan 12 2012
Why Modern Monetary Theory’s Jobs Guarantee is like the EU’s euro: A beloved solution to the wrong problem. Tuesday, May 29 2012
“You can’t fire me. I’m on JG” Saturday, Jun 2 2012

Economic growth should include the “bottom” 99.9%, not just the .1%, the only question being, how best to accomplish that. Modern Monetary Theory (MMT) favors giving everyone a job. Monetary Sovereignty (MS) favors giving everyone money. The five articles describe the pros and cons of each approach.
4. FREE EDUCATION (INCLUDING POST-GRAD) FOR EVERYONE Five reasons why we should eliminate school loans
Monetarily non-sovereign State and local governments, despite their limited finances, support grades K-12. That level of education may have been sufficient for a largely agrarian economy, but not for our currently more technical economy that demands greater numbers of highly educated workers.
Because state and local funding is so limited, grades K-12 receive short shrift, especially those schools whose populations come from the lowest economic groups. And college is too costly for most families.
An educated populace benefits a nation, and benefitting the nation is the purpose of the federal government, which has the unlimited ability to pay for K-16 and beyond.
5. SALARY FOR ATTENDING SCHOOL
Even were schooling to be completely free, many young people cannot attend, because they and their families cannot afford to support non-workers. In a foundering boat, everyone needs to bail, and no one can take time off for study.
If a young person’s “job” is to learn and be productive, he/she should be paid to do that job, especially since that job is one of America’s most important.
6. ELIMINATE FEDERAL TAXES ON BUSINESS
Businesses are dollar-transferring machines. They transfer dollars from customers to employees, suppliers, shareholders and the federal government (the later having no use for those dollars). Any tax on businesses reduces the amount going to employees, suppliers and shareholders, which diminishes the economy. Ultimately, all business taxes reduce your personal income.
7. INCREASE THE STANDARD INCOME TAX DEDUCTION, ANNUALLY. (Refer to this.) Federal taxes punish taxpayers and harm the economy. The federal government has no need for those punishing and harmful tax dollars. There are several ways to reduce taxes, and we should evaluate and choose the most progressive approaches.
Cutting FICA and business taxes would be a good early step, as both dramatically affect the 99%. Annual increases in the standard income tax deduction, and a reverse income tax also would provide benefits from the bottom up. Both would narrow the Gap.
8. TAX THE VERY RICH (THE “.1%) MORE, WITH HIGHER PROGRESSIVE TAX RATES ON ALL FORMS OF INCOME. (TROPHIC CASCADE)
There was a time when I argued against increasing anyone’s federal taxes. After all, the federal government has no need for tax dollars, and all taxes reduce Gross Domestic Product, thereby negatively affecting the entire economy, including the 99.9%.
But I have come to realize that narrowing the Gap requires trimming the top. It simply would not be possible to provide the 99.9% with enough benefits to narrow the Gap in any meaningful way. Bill Gates reportedly owns $70 billion. To get to that level, he must have been earning $10 billion a year. Pick any acceptable Gap (1000 to 1?), and the lowest paid American would have to receive $10 million a year. Unreasonable.
9. FEDERAL OWNERSHIP OF ALL BANKS (Click The end of private banking and How should America decide “who-gets-money”?)
Banks have created all the dollars that exist. Even dollars created at the direction of the federal government, actually come into being when banks increase the numbers in checking accounts. This gives the banks enormous financial power, and as we all know, power corrupts — especially when multiplied by a profit motive.
Although the federal government also is powerful and corrupted, it does not suffer from a profit motive, the world’s most corrupting influence.
10. INCREASE FEDERAL SPENDING ON THE MYRIAD INITIATIVES THAT BENEFIT AMERICA’S 99.9% (Federal agencies)Browse the agencies. See how many agencies benefit the lower- and middle-income/wealth/ power groups, by adding dollars to the economy and/or by actions more beneficial to the 99.9% than to the .1%.
Save this reference as your primer to current economics. Sadly, much of the material is not being taught in American schools, which is all the more reason for you to use it.

The Ten Steps will grow the economy, and narrow the income/wealth/power Gap between the rich and you.


MONETARY SOVEREIGNTY

–The trade deficit myth Thursday, Oct 14 2010 

The debt hawks are to economics as the creationists are to biology.

WASHINGTON (AFP) 10/14/10: The US trade deficit ballooned in August as the gap with China hit a fresh record, official data showed Thursday, suggesting further weakness in the economic recovery.

The Commerce Department said the August trade deficit rose nearly nine percent from July to 46.3 billion dollars. That was far worse than economists predictions of a 44.5 billion dollar gap. […] “The ongoing, American job-destroying leakage of national wealth to China confirms the House’s wisdom in passing the anti-currency manipulation bill last month,” said Alan Tonelson, a research fellow at the US Business and Industry Council.

“President Obama finally needs to wake up as well, urge Senate passage, and help American businesses and their employees fight foreign protectionism,” he said.

Look at the pejorative words used to describe the trade deficit: “Ballooned,” “weakness,” “far worse,” “job-destroying,” “leakage of national wealth,” “foreign protectionism.” Sounds like we are one step from financial disaster, and the trade deficit is pushing us there.

But what does “trade deficit” mean? Simple: It means foreign countries send fewer of our dollars to us, than we send to them. Where did the dollars we send to foreign countries come from? We created them out of thin air. And were did the dollars foreign countries send to us come from? We created them too, also out of thin air.

The U.S. is monetarily sovereign, meaning the U.S. federal government has the unlimited ability to create dollars – as many as it wants, whenever it wants. Given that unlimited ability, why would we care how many U.S. dollars foreign governments send us?

Further, our imports help supply us with the world’s best, cheapest, most convenient, most desirable goods and services, else we wouldn’t import them. We get the best of everything, and all we have to do is give the world our dollars, which we create at the touch of a computer key. So what’s the problem?

“But,” you say, “all this importing destroys American jobs.” Oh, really?

First, let’s be honest, it really isn’t jobs we want. We want money. Not that Americans are lazy, but for the vast majority of people in this world, jobs merely are a means to an end, and the end is acquisition ability.

So when we bemoan unemployment, we really bemoan lack of income. Unemployment and employment figures should be replaced with acquisition-ability figures. If domestic unemployment were 90%, but every man, woman and child had the financial ability to acquire everything he/she wanted, we would be a wealthy country. (Think of a nation with all the citizens living on generous, guaranteed pensions, and all the work being done by foreigners – something similar to an extreme Saudi Arabia.)

Today, the problem is not that the economy is starved for jobs. The problem is that the economy is starved for money. Ironic isn’t it, when you consider that our own government can create all the money we need.

Second, the main inhibition of job creation is not foreigners working for low wages and receiving “strong” money. The main problem is taxes. We want our businesses to be more competitive, so what do we do? We tax them.

We want businesses to hire more people, so we make them pay a FICA tax on every single hire. And we make them pay a tax on the profits they otherwise could use for expansion and hiring.

Then we tax the employees, so they have less to spend on goods and services. And we want more investment, so we tax the profits on investment. And when the federal government is finished taxing, the states levy more taxes, and the counties levy even more and the cities levy more, yet.

And when every American is taxed, taxed and taxed again, we blame foreigners for ruining our economy.

Rather than railing against foreign protectionism, our first step should be to cut taxes – especially since the federal government, the unlimited creator of dollars, neither needs nor uses tax money.

If the federal government immediately would eliminate FICA, and support Social Security and Medicare by deficit spending, the recession would end, today. And if the federal government would send each state a flat amount of money according to population – say $10,000 per person – we would have instant prosperity for all states, counties and cities.

Trade deficit merely means sending more dollars overseas than “overseas” sends to us. This leaves us “starved” for dollars, and all the while we are the sole creators of dollars. Does this make sense?

And oh yes, deficit spending has not caused inflation since we went off the gold standard in 1971. Not only are we a long way from inflation, but inflation easily is cured. So let’s not use phony fears of inflation as an excuse for keeping those economy destroyers called “taxes.”

Oh, you don’t believe me about inflation? Well consider this. The effect of exports is to bring dollars into the U.S. economy, which is identical with what federal deficit spending does. So if you like exports, you should like federal deficit spending, for exactly the same reason.

“The fault is not in our foreign neighbors, but in ourselves.”

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

No nation can tax itself into prosperity

 

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