●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
Today, our politicians are struggling to find a way to reduce the federal deficit. They want to increase taxes (without increasing taxes) and reduce federal spending (without reducing spending). Reducing the deficit is known as “austerity” and austerity has had consistent results, down through the years. It causes new recessions and deepens existing recessions.
Here is a graph of federal deficits from 1901 through 2012. If you squint and count carefully, you’ll see we have had 22 recessions, an average on one recession every five years. (When the blue deficit line rises, deficits are being cut. When the blue deficit line goes above 0, we are in a surplus.)
1901 through 2012
22 recessions: On average, one recession every 5 years.
Although our economy is complex, and each recession has unique causes, Monetary Sovereignty posits that deficit reductions and federal surpluses have negative effects on the economy, by reducing money growth. Further, the politicians and media, being in the employ of the top 1% income group, tell you deficits should be reduced.
You might find it interesting to see facts, rather than to rely on intuition and the BIG LIE. You might like to see past deficits and surpluses graphed against recessions.
I’ve broken the years into segments, so you can see the individual recessions and what precedes them.
1901 through 1915
4 recessions; preceded by 2 surpluses; 1 reduced deficit
1915 through 1922
2 recessions; 0 surplus; 1 reduced deficit
1922 through 1933
3 recessions: 3 surpluses
1933 through 1949
3 recessions; 1 surplus; 1 reduced deficit
1949 through 1970
4 recessions; 2 surpluses; 1 reduced deficit
1970 through 1983
3 recessions; 2 reduced deficits
1983 through 1992
1 recessions; 1 reduced deficit
1992 through 2012
2 recessions; 1 surplus; 1 reduced deficit
Of the 22 recessions, 9 were introduced by federal surpluses and 8 others were introduced by deficit cuts. Only 5 came when deficits were increasing.
This post began, “Today, our politicians are struggling to find a way to reduce the federal deficit, also known as “austerity.” The growth rate of the U.S. economy this year has averaged a bit over 2%.
The euro nations’ politicians keep applying austerity. The result: Their economic growth rate this year is less than zero: a -.1% (minus growth rate).
Our politicians are working very hard to turn the U.S. into the eurozone and to lead us into another, probably worse, recession. President Obama’s “grand bargain” will accomplish that.
And he knows exactly what he is doing.
Rodger Malcolm Mitchell
Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America’s 99%
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 Imports