Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Hide your wallet. The idiot patrol (aka The Committee for a Responsible Federal Budget) is on the loose, again.

Committee for a Responsible Federal Budget | 1899 L Street, Suite 400 | Washington | DC | 20036
House and Senate Join Together in “Go Big” Effort November 16, 2011

Today, in a rare bipartisan, bicameral showing, Republican and Democratic members of the House and Senate joined together to call for the Super Committee to think big on debt reduction. In recent weeks, 100 members of the House and 45 senators from both sides of the aisle have urged the Super Committee to propose at least $4 trillion in savings over ten years, well above the Committee’s $1.2 trillion mandate.

“If it wasn’t clear before that there’s a serious bipartisan and bicameral effort in support of a $4 trillion savings package, then it is now,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “What the Super Committee is working on by putting everything on the table in search of a compromise is so important, and those 12 lawmakers should know that they are supported by a large group in the House and Senate on both sides of the aisle.”

Today’s renewed support for a Go Big approach to debt reduction comes as the 12 members of the Super Committee enter the final days of negotiations. The Committee has until November 23 to vote on a final package of reforms.

“It’s up to the Super Committee and leaders in Congress to heed the calls that so many of their colleagues are making and to capitalize on this unique opportunity of a fast-track process and the undivided attention of the American public,” added MacGuineas. “But this group of lawmakers is not alone — there are business leaders, small business owners, everyday Americans, former government officials, economists, policy experts, and many others also supporting this effort to ‘Go Big.’ This is such an important moment, and with the world watching, failure just cannot be an option. Getting a big deal passed may actually prove to be easier from a political perspective, and it has the added benefit of being what we need to do for the fiscal and economic health of the nation.”

Hey, you call $4 trillion “big”? That’s nothing. Why not $10 trillion? Or $20 trillion? Why not really bankrupt the nation?

But, I continue to fret about one small question. I almost hate to mention it, but: How do deficit cuts reduce unemployment or grow the economy? We never see any answers to that question.

As a reminder, here are charter members of the idiot patrol: Bill Frenzel, Jim Nussle, Tim Penny, Charlie Stenholm, Maya MacGuineas, Barry Anderson, Roy Ash, Erskine Bowles , Charles Bowsher, Steve Coll, Dan Crippen, Vic Fazio, Willis Gradison, William Gray, III, William Hoagland, Douglas Holtz-Eakin, Jim Jones, Lou Kerr, Jim Kolbe, James McIntyre, Jr., David Minge, June O’Neill, Paul O’Neill, Marne Obernauer, Jr., Rudolph Penner, Peter Peterson, Robert Reischauer, Alice Rivlin, Chuck Robb, Martin Sabo, Alan Simpson, John Spratt, Gene Steuerle, David Stockman, John Tanner, Laura Tyson, George Voinovich, Paul Volcker, Carol Cox Wait, David M. Walker, Joseph Wright, Jr.

At some point in the future, they all will deny having any association with the idiot patrol, and will admit that cutting the money supply to stimulate economic growth is like applying leeches to cure anemia.

Five dunce caps, not just for failure to understand Monetary Sovereignty, but for ignorantly lending their names to an organization whose efforts could help destroy our nation:

That brings to 1083 the total dunce caps awarded. Soon, I expect members of the idiot patrol to demand I “go big” by reducing my unsustainable dunce cap awards.

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

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Here is a picture of a 3rd world country. Millions of people without health care insurance, and the Tea/Republicans trying to scuttle the plan that would insure these people.

Will the right wing succeed? The right-wing Supreme Court will evaluate all intricate technicalities to determine whether the Constitution has been violated.. What they will not evaluate: The effect on America.

My feeling: The Tea/Republicans should pray the Supreme Court does not vote right wing this time, or there will be hell and Tea/Republicans to pay. I have faith that one day very soon, a tipping point will be reached, and the public will understand that refusing health insurance for the poor is the way a nation dies. And so unnecessary.

Meanwhile, what a disgrace for America. 50 million people uninsured! That’s abysmal. Shameful. The 1% living like princes, and even the 99% undecided about whether to help those 50 million uninsured. Talk about an “I’ve got mine” mentality!

Sadly, this isn’t the America from WWII, that dove in and saved the bacon of the European and Eastern nations. This isn’t the America that instituted the Marshall plan. No way would that happen in today’s America. Today’s America builds border fences, not bridges.

This isn’t the magnanimous-in-victory America that paid to help Japan recover, despite the memories of Pearl Harbor. This isn’t the America that paid to airlift Berlin, despite memories of Naziism.

No, this is the selfish, me-first, Tea Party, fascist America, that looks away when someone begs for help. We are ruled by the “I can’t hear you; I can’t hear you.” so-called “patriots,” flag wavers who neither understand nor even want to understand Monetary Sovereignty, and so insist they as taxpayers are forced to fund federal spending, and helping their unfortunate neighbors simply is not on the list.

Millions of people suffer and even the 99% has been brainwashed into not giving a damn. But they will, when their own children and grandchildren inherit a Social Security and Medicare that have been gutted by “super committee” ignorance and callousness.

Hello, America. Knock, knock. The federal government is Monetarily Sovereign. It can support Medicare for everyone. It can support a more generous Social Security. It can eliminate poverty.

Why don’t you care?

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

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Here is what President Obama said regarding the federal deficit:

Mon, 11/14/2011 – Associated Press

“It feels as if people continue to try to stick with their rigid positions rather than solve the problem,” Obama said of the 12 members of the bipartisan deficit committee. . .

“My hope is that over the next several days, the congressional leadership on the supercommittee go ahead and bite the bullet and do what needs to be done, because the math won’t change. There’s no magic formula. There are no magic beans that you can toss on the ground and suddenly a bunch of money grows on trees. We got to just go ahead and do the responsible thing.”

Obama spoke as lawmakers on the specially created committee appeared deadlocked with a Nov. 23 deadline fast approaching to find more than $1 trillion in deficit cuts or trigger harsh spending cuts across federal programs including the Pentagon.

Has greater ignorance of economics ever been expressed by a President than, ”There are no magic beans that you can toss on the ground and suddenly a bunch of money grows on trees”? Where does Mr. Obama think dollars come from? Is he really saying the federal government is not Monetarily Sovereign and does not have the unlimited ability to pay its bills? Is he really saying federal finances are limited as are personal finances?

I simply cannot believe that a Harvard graduate, a seemingly otherwise intelligent human being, surrounded by the best minds in America, could be so unremittingly ignorant about the most important subject of his administration. And because I can’t believe it, I think there is an underlying cause, and that cause is crass politics.

As I see it, he probably understands the foolishness of his comment, but is trying to appeal to his audience, which repeatedly has been told the deficit is too high and the rich should be taxed. Mr. Obama displays neither the courage or the honesty to tell them the truth, lest they not vote for him. He would much prefer to make the nation suffer than risk his election loss – at least, that’s my take on it. What else could it possibly be?

As I’ve said previously, a person who would injure America for his own personal benefit – that’s the definition of a traitor. So I award President Obama 1 traitor symbol:

Anyway, in the unlikely event he and/or his followers one day might read this post with minds open to learning, along with spirits open to lifting their fellow Americans, here is a simple formula they might understand, accept or reveal to the world:

A= B + C

For those who know basic algebra (I assume President Obama is one of them), it means whatever you do to the right side of the “equals” sign, also is done to the left side. So, if you decrease B without increasing C equally, A will decrease. Basic algebra.

Turning to our economy, how do you know whether it is shrinking or growing, and by how much? The most often used measure of economic growth is GDP or Gross Domestic Product. It measures the dollar value of all final goods and services produced in a country, usually for a 12-month period. One formula for GDP is:

GDP = private consumption + government spending + gross investment + net exports

Again, whatever you do to the right side of the formula, automatically happens to the left. Government spending is one of the four parts of GDP. As in the A = B + C formula, if we decrease government spending, GDP will fall (i.e. the economy will shrink), unless we also increase gross investment, private consumption or net exports by an equal amount.

President Obama seemingly has no plan for how to would increase gross investment, private consumption or net exports. He speaks only of his desire to reduce government spending, which taken alone must decrease GDP. Further, I know of no mechanism by which a reduction in federal spending will increase investment or consumption.

In fact, federal spending reductions tend to reduce investment and consumption. A feedback mechanism multiplies the effect of federal spending changes. See the graph, below.

Looking incrementally, as you did in “Want to stimulate the economy” you can see that the peaks and valleys of the blue line (federal deficit spending) correspond with or precede the peaks and valleys of the red line (private investment) and the green line (personal consumption) by 1-2 years.

Going back to President Obama’s statement, what he really has said is: “We got to just go ahead and do the responsible thing: Reduce GDP, reduce our economy, have a nice big ‘responsible’ depression.’” If he succeeds, a depression is exactly what we will have.

I award President Obama three dunce caps, the 1078th dunce caps I’ve awarded. (He actually deserves more than three, but do you think dunce caps grow on trees?)

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

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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity breeds austerity and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Changes in federal debt seem to foretell changes in per capita GDP.

The following chart depicts the entire period, from the time the U.S. became Monetarily Sovereign until the most recent data:

To get a closer look, I’ve divided the above chart into segments. Here’s 1972 – 1975:
Federal debt and real GDP per capita changes both peak in 1973.
Federal debt and real GDP per capita changes both trough in 1974

1975-1978:
Federal debt and real GDP per capita both peak in 1976

1980 – 1993:
Federal debt and real GDP per capita both peak in 1981.
Debt troughs in 1981; GDP troughs the next year, in 1982.
Debt peaks in 1983. GDP peaks the next year, in 1984.
Debt troughs in 1989; GDP troughs the next year, in 1990.

2000-2006:
Federal debt troughs in 2000; real GDP per capita changes trough the next year, in 2001.
Federal debt and real GDP per capita changes both peak in 2004

2007 – 2010:
Debt troughs in 2007; GDP per capita troughs in 2009
Debt peaks in 2009 then drops precipitously; GDP per capita rises in 2010.

GDP per capita data is not yet available for 2011, but total GDP direction may give us a hint, as it peaks in 2010:

In summary, changes in federal debt correspond with, or closely precede the same changes in per capita GDP. What does that tell you about the “super” committee’s efforts to reduce federal deficit spending?

(See a related post at “Oh, you want to cure unemployment?“)

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. The key equation in economics: Federal Deficits – Net Imports = Net Private Savings

MONETARY SOVEREIGNTY