[jeffkrol]

At least to my way of thinking..................

–Why the Democrats’ ignorant plan is better than the Tea/Republicans’ ignorant plan Monetary Sovereignty – Mitchell

That said, I favor Obama’s plan to the Tea/Republican “plan.” Before you faint, let me explain. Both plans are equally ignorant in that they begin with the false assumption federal deficit spending must be reduced. In the Economics Common Sense and Knowledge race, both parties come in last.

However, they have convinced the innocent public of this falsehood, which forces on us a lesser-of-two-evils choice, and Obama’s plan is less evil. Why? Because raising tax rates on the rich not only will satisfy the jealous public, and not only will preserve the various benefits of federal spending, but in reality, will not collect much more in taxes.

We already have learned that higher taxes beget better tax “loopholes.” Remember, rich people know how to bribe politicians better than do poor people. So as those rates rise, the deductions will rise, too. A (for instance) 10% increase in tax rates on those making more than $250K per year, will not net a 10% increase in taxes collected from the rich – maybe not even 5%. Depending on the effectiveness of the bribery, a tax rate increase actually could net less money, because better deductions could be worth more than the marginal rate.

Bottom line, the Obama plan will make everyone happier. The poor will benefit; the rich won’t care and the economy will be less injured by losing money.

As an aside, if I were running for office, my opponent would tell the voters I voted in favor of tax increases, and this is why the politicians find themselves surrendering to their party, rather than thinking.

Rodger Malcolm Mitchell

Every depression in U.S. history and every recession in the past 40 years followed periods of reduced federal deficit growth, and every recovery as been associated with increased federal deficit growth.

The media and the politicians suffer from federal debt paranoia, which is responsible for more misery in America than all the crime and illness combined. Federal debt paranoia keeps us from providing universal health care, fully funded Social Security and improved education, military, infrastructure, energy and policing.

I call it “paranoia,” because, history indicates large federal deficits do not cause inflation, recession or any other negative economic effect. On the contrary, large and growing deficits stimulate the economy. We keep falling back into recessions because of federal debt paranoia.

[jeffkrol]

I'm sorry. I have to post this for those who will probably never get to nor believe Mr. Mitchell........ I think I found my soul mate..

In the previous post, we saw that federal debt is a bookkeeping number based on an obsolete law requiring the Treasury to issue T-securities in the amount of federal deficits. The “debt” is functionally just the total of outstanding T-securities, not the total of deficits. We saw that, in a Monetarily Sovereign nation, there can be deficits without debt, and there can be debt without deficits.

The major, ongoing news story of the day, is the battle between Tea (formerly Republican) Party members and the Democrats concerning the debt ceiling. You should find this battle amusing:

With rare exception, every speech, every comment, every article, every editorial you read or hear concerning the federal debt is based on ignorance.

Neither those who argue for an increase in the ceiling, nor those who argue against an increase, know what they are talking about. The federal debt is unnecessary, and so, the federal debt ceiling is unnecessary. To argue about modifications to a law that is fundamentally obsolete, is like arguing about the proper number of times a witch should be dunked.

There neither should be an increase, a decrease or a maintenance of the debt ceiling. All the arguments for or against involve discussions of the federal deficit. Those against increasing the debt ceiling argue that it helps prevent excessive deficit spending by the federal government. Those who argue for an increase in the debt ceiling claim increased deficit spending is necessary.

They both are wrong for different reasons. Empirical evidence shows the debt ceiling has done nothing to prevent federal spending. And while increased federal deficit spending is necessary for a growing economy, federal deficit spending does not require the creation of T-securities (aka “federal debt”).

So while the self-proclaimed economics experts in Congress and in the media waste their time and yours, exploring all the reasons to, and not to, increase the debt ceiling, you can sit back and laugh (or cry), thinking “What fools these be. They are arguing over something that could be eliminated with one touch of a computer key and/or one minor change in an obsolete law.”

In short, if you don’t find it hilarious, when the President of the United States gives an impassioned speech about the need to improve a nonsensical law, and the Speaker of the House gives an equally impassioned speech about the need to maintain that nonsensical law, then you are a tough audience, indeed. I, myself, find it comical – and sad.

Enjoy the debates and the clowns.

Rodger Malcolm Mitchell

more fun:
http://curiouscapitalist.blogs.time.com/2011/04/11/u-s-debt-the-biggest-trouble-is-yet-to-come/
http://curiouscapitalist.blogs.time.com/2011/04/07/another-piig-to-slaughter...#ixzz1KP1gOSBi

Hi Dirk,

Back at it? Still predicting inflation? Still without a clue about Monetary Sovereignty?

The federal debt has risen an astounding 3,600% since we became Monetarily Sovereign in 1971, yet in that 40 years, there has been no relationship between the deficit and inflation. What has caused inflation? Oil prices.

There are two things about debt hawks that never change.
1. They always predict hyperinflation if the federal government continues to run deficits
and
2. They never provide any data to support their doomsday assertions.

Welcome to the Glenn Beck club.

Rodger Malcolm Mitchell

MAn this is good stuff.. Funny a brief cruise of the internet really doesn't show any challengers to Mr. Mitchell.. Even the rebuttals usually start w /fed/state/county budget yadda yadda yadda which instantly belies their ignorance between constrained economies and our country one..

[GeneV]

I am still only putting my toe in the MMT water, but I do agree 100% that inflation in the last 40 years is linked firmly to oil prices, rather than deficits or surplus. If MMT could lead our politicians to realize that the performance of the economy should revolve around real products, services and commodities rather than obsessing on artificial numbers, then it will have served an invaluable purpose.

[reeftool]

Like probably most of the country, I really don't understand all the ins and outs of the economy but I agree totally on his oil price statement. The recession of the late 70's/early 80's ended when fuel prices stabilized and finally began dropping. Much of the forum is too young to remember those days. I remember my boss, back in 1973, saying he was out of business if gas hit 50 cents a gallon. We snicker about that price today but remember that $3.00 an hour was good pay. In my adult lifetime (I'm 60), the economy has risen and fallen for the most part on the price of oil. There was the dot com bubble that burst and the real estate bubbles but it's always oil that breaks the camels back. I have been an advocate of developing alternative energy for many years not solely on environmental issues but because the worldwide competition for oil is going to result in devastating war, probably Armageddon. We have the knowledge and know how but like junkies we going back to that gooey crap to the point where now, we consume almost a gallon of fuel for every gallon we produce. The real answer is not lower prices. There is only so much oil and we are consuming it faster than we can pump it. We need to wean ourselves off of it. My prediction is that oil prices will drop soon because the economy is going to break again soon. Most of the country is recovering from cabin fever after a long and cold winter but by mid summer, consumers are going to realize what it is going to cost to heat their homes next winter and the wallets of the American consumer are going to close up.

[Parallax]

I am still only putting my toe in the MMT water, but I do agree 100% that inflation in the last 40 years is linked firmly to oil prices, rather than deficits or surplus. ...........

Yep. In some oil producing countries, gas is really cheap. I wish I lived in an oil producing country.

Saudi Arabia Riyadh $0.91
Kuwait Kuwait City $0.78
Egypt Cairo $0.65
Nigeria Lagos $0.38
Venezuela Caracas $0.12

The main factor in price disparities between countries is government policy

[GeneV]

Yep. In some oil producing countries, gas is really cheap. I wish I lived in an oil producing country.

Saudi Arabia Riyadh $0.91
Kuwait Kuwait City $0.78
Egypt Cairo $0.65
Nigeria Lagos $0.38
Venezuela Caracas $0.12

The main factor in price disparities between countries is government policy

Of course, given that it is a world market and the oil could be sold for much more, those prices are cheap because of government subsidies and restrictions.

Egypt is a very minimal oil exporter.