What Is Wrong With Cutting Taxes?

By Simon Johnson

The president and congressional Republicans have reached a deal that would cut taxes “for all Americans.” Their argument is that this package will stimulate the economy, create jobs and help lead to economic recovery and sustained growth.

This proposal, which seems likely to pass Congress, is not a good idea. Why? (To see me explain these points in a five-minute video, click here.) Vice President Dick Cheney said, loud and clear, in 2002: “Reagan proved deficits don’t matter.”

He was right that Ronald Reagan showed the Republican Party that you can get away with running significant deficits as a result of tax cuts – exactly the strategy of President George W. Bush.

But Mr. Cheney was completely wrong with regard to the implication that there are no economic consequences of sustained fiscal deficits.

I suggest you talk to the Greeks (now in the International Monetary Fund’s emergency ward) or the Portuguese (who are headed in that direction.) For that matter, listen to any policymaker in the European Union – they are all focused on bringing down deficits in a credible manner. And watch the European financial markets – people there are doubting and testing the fiscal credibility of all governments throughout the euro zone.

In fact, try persuading any responsible policy analyst anywhere in the world outside the United States that cutting taxes in the United States from current levels will boost growth so much that the cut will pay for itself” and end up reducing or at least controlling the fiscal deficit (the proposition of the Laffer Curve). You will be met great skepticism.

If the I.M.F. could speak truth to authority in the United States, it would tell you this most forcefully.

This does not mean that we should immediately move to cut our fiscal deficit – efforts to panic us in this regard are completely misplaced. Ironically, some of the fear-mongering emanates from the same part of the political spectrum as the vociferous demands for lower taxes; there are no true fiscal conservatives in America. Again, here, too, is a sharp contrast between the United States and anywhere else in the world.

But our “fiscal space” is limited – we cannot afford to blithely increase our national debt. It can be done – and should be done given the parlous state of our economy and our disastrously high unemployment levels. But it must be done carefully, so we get as much stimulative effect on jobs as possible for our debt-increase dollars.

Cutting taxes for the very rich is an ineffective way to stimulate the economy in the short term (for a detailed discussion, see this post by my colleague James Kwak). On this there is widespread agreement, including from the pages of The Wall Street Journal, where Robert Frank, a careful student of the rich and famous (and editor of The Journal’s Wealth Report and author of “Richistan”), said: “When I ask wealthy business owners and entrepreneurs why they’re not hiring, they rarely mention taxes. They say consumer demand. And jobs.”

Three much more effective ways to support consumer demand and jobs would be:

Really extend unemployment benefits. There is nothing in the proposal on the table that will help people who have already been unemployed for 99 weeks – see this explanation from Nevada.

Don’t lay off teachers anywhere in the country. The broader goal, of course, is to increase teacher quality, which is not easy and takes time (see the film“Waiting for Superman”). But firing teachers at any level of K-12 education makes no sense in the short or medium run.

Immediately hire more people to teach in community colleges. The unemployed – and those at risk of being fired – need new skills, particularly around information technology and the ability to run businesses. Give the long-term unemployed the opportunity and incentive to attend these classes. Help them get jobs – or start their own businesses. Even if those companies fail, the entrepreneurial experience will keep them in the labor force and enable them to enhance their skills – and become more productive employees when larger companies decide to start hiring in earnest again.

This post appeared on the NYT Economix blog this morning; it is used here with permission.  If you would like to reproduce the entire post, please contact the New York Times.

111 responses to “What Is Wrong With Cutting Taxes?

  1. Herbert Wetherby

    Vice President Dick Cheney said, loud and clear, in 2002: “Reagan proved deficits don’t matter.”

    And you seriously took his advice as being meaningful? This from a guy who has regular heart attacks for some reason.

  2. Simon, I agree that cutting taxes for the rich won’t stimulate job growth, but it can well keep the rich in place.

    Of the 3 ways you suggest for job growth, the 3rd one is most likely to have any results, yet those won’t show up for at least a few years.

    Which is to say that we are structurally stuck.

    Now, from the leadership’s perspective, could it be that we ought to make US labor cheaper and/or more productive? Which brings us back to schooling, but that’s a game we lost and we are not likely to fill the gaps for decades…

    I think we will have a structural readjustment, more polarization, and the wealthy will remain one of our few growth sectors.

  3. DakotabornKansan

    Smelling the flowers…

    The president and congressional Republicans deal that cuts taxes “for all Americans” will stimulate the economy, create jobs and help lead to economic recovery and sustained growth.

    Looking for the coffin…

    With these massive tax cuts, our Democratic President and 2011 Congress will be hell bent for austerity to reduce the deficits they just now increased.

    At state and local levels austerity will lead to more teacher lay offs and more budget cuts at institutions of higher learning.

    Corporations will continue their outsourcing of jobs to China, India, etc.

    “A cynic is a man who, when he smells flowers, looks around for a coffin.” – H. L. Mencken

  4. It is also shameful to maintain the freeze on the Social Security COLA. More Americans are moving into the retirement age bracket, and most spend all there income.

    Would like SJ’s and JW’s take on the apparently reliable, consistent poll indications that a determinative majority of Americans oppose continued tax breaks for the rich.

    Politically, what are the implications for the Republicans’ adamantly unified front on force feeding the gouty gorged, while further cutting the diet of the starved. Are they setting the stage for a Progressive Era redux?

  5. Only a self-interested politician would disagree with you.. Thanks for the praise for the EU, by the way, I was wondering what the benchmark case would be. Not the US then.

  6. Do you support having the dollar be the global reserve currency?

    How do we create dollars in our system?

    In much the same way that we have a building full of gold, foreign countries will have an entry at the federal reserve saying they own U.S. dollars. This was free money as a result of our position as the global currency provider. So saying the deficit doesn’t matter isn’t that incorrect. Deficits matter for countries that aren’t the global currency provider.

    You could argue that this may change. People will sell their dollars. It would actually be beneficial to our employment situation if someone sold dollars and bought something tangible from us.

    What am I missing here?

  7. Deficits are like mushrooms.

    From the book “AN AUTISTIC WORLD (1)”

    You stop in your inspiring track, and getting close to one, your mind begins to wonder if the mushroom is edible or toxic. For some ancestral reason, that is the first thing that goes through a person’s mind when a mushroom is spotted. It seems that mushrooms have been part of our diets for millennia, engraving the significance of their variable shapes and colorful aspects in our brains. Many people find them irresistible; maybe is because their fragile appearance, or because of the short distance that separates a savory and nutritious dinner from death. Whatever it is, fungi have been a part of our culture, and if science will allow it, they will remain an important cornerstone of our civilization for many centuries.

  8. Two years from now, the Republican argument will then be…the deficit, the deficit, the deficit; therefore, we can corner the Democrats and the POTUS once again. Pres Obama says the R’s wont have an argument but also hasn’t said whether he would pull the rug from underneath the Democrats again.

    President Obama was also noted to say that he would rather be a good one-term president rather than a mediocre two-termer. He may not have that choice. Mayor Bloomberg already has made his first non-presidential, presidential aspiration speech earlier this week.

    In case anyone has loved ones and are worried about their resting place after life, the inheritance estate tax will go downward from the current 55 to 35 percent, making for those golden coffins, more affordable.

  9. I surely doubt that Cheney thought about it any but political terms.

  10. Simon,

    Your description of the tax deal is ignorant at best, and an act of deceptive propaganda at worst.

    The deal you speak of between the GOP and the President is most certainly NOT a tax cut. It is a continuation of existing marginal tax rates for all, except of course, the estate tax on the wealthy.

    So even the tax deal is not a tax cut on the wealthy, but a tax increase, driven primarily by the estate tax increase from this year’s rate.

    As a buddy of mine in college often said, “You don’t have to lie to be popular.” So please stop lying! It makes everything else you say suspect and harder to take seriously.

  11. Elizabeth,

    The current estate tax rate is 0%.

  12. If you have scurvey, the answer is to take vitamin C. If you have a different disease, the solution is probably also going to be different. Tax cuts can be stimulative when rates are really high, especially capital gains cuts. But we have a different disease, and the prescription is apparently doing the same things we’ve been doing – since this bill only extends the current system. Yes there is the payroll tax holiday which is somewhat stimulative, but imagine if we ended the tax cuts for the rich and used that money to eliminate both sides of the payroll tax for two years?

  13. The worst problem is not the increasing deficit. The worst problem is that the USA is paying its tax cuts by destroying its infrastructure, including in education. That will be harder to fix than through simple austerity.
    http://patriceayme.wordpress.com/

  14. Our willingness to let the Bush Tax cuts expire would have a salutory effect internationally. It would strengthen our position by showing that we can act with fiscal responsibility. It would strength the dollar slightly and make our bonds more attractive. Yes, there are still fiscal conservatives out there, but Obama is not one of them.

  15. Sir: The compromise is NOT a ”deal that would cut taxes “for all Americans.” “

    The compromise deal involves an EXTENSION of an existing legislation that provided tax cuts 10 years ago with the courtesy of the Bush Administration.

    All this compromise deal will do is increase the national debt !!! I estimate that the multiplier effect on the EXTENSION of earlier legislated tax rates will be ZERO !!! On the other components of the compromise deal there may be some multiplier effect.

    Moreover, this distorted compromise which accorded an extension of low tax rates for the wealthy will result in widening disparities in burden sharing with the share of the burden of government expenses by the wealthy decreasing and the share of their national income owing to low tax rates increasing.

    As an economist looking at the ongoing fiscal debate in Washington from Canada, I am horrified by the tolerance by most Americans of the bankruptcy in the Republican party of fresh new proposals or strategies that will resolve the grave fiscal, social and other economic problems over the immediate and short term – not just the long term. Since the beginning of the recession, the share of Americans who are really hurting is growing – unemployment, home foreclosures, etc. The Republican party represents the wealthy and privileged, not the hurting, working and educated Americans.

    This compromise amounts to successful POLITICAL BLACKMAIL by the Republican party !!!

    Gerry O’Brien
    Ottawa, Canada

  16. Nothing at the moment. The government should take advantage
    of its current ability to borrow cheaply to reduce the burden
    on its taxpayers. It can raise taxes as the economic recovery
    takes hold and interest rates rise.

  17. Simon:

    I agree that the IMF would LIKE to have the US in the same position as the Greeks or Portuguese, that is without monetary sovereignty, but surely you cannot be advocating the US to join some supranational institution and to abdicate its right to manage its own currency?

    As to the our “fiscal space” being limited, this is a meaningless statement without some idea as to how “limited” we are actually talking about? Do you have a number in mind? And can that number be run against an economic model or be shown in a proper historical context to be indicative of limiting anything?

    Deficits matter, but not in the way the public is currently led to believe. Cheney shortcut the explanation for political means, big surprise.

  18. For a year. It wasn’t like that before this year. It won’t be like that (and wasn’t supposed to be like that) next year. If it bothers anyone so much to pay that much on an estate, they better work on dying or convince the hospital to pull their parents’ plug by Jan 1.

    Anyone that was managing a vast amount of wealth had already planned for the cuts to expire if they were smart. In effect, they *will* be getting a tax cut since they already had plans in place to handle the expected tax rate.

  19. “But our “fiscal space” is limited – we cannot afford to blithely increase our national debt. It can be done – and should be done given the parlous state of our economy and our disastrously high unemployment levels. But it must be done carefully, so we get as much stimulative effect on jobs as possible for our debt-increase dollars.”

    Assuming additional debt will get us out of this recession/depression/whatever, when do we begin to address the debt problem? Taxes alone are not the solution. At some point, we must face the fact the current size of our government is larger than we can afford. If we do not decide what to cut now, someone else will do it for us down the road and we probably won’t like their choices.

  20. 8 years of these cuts failed to save the economy and contributed to massive debt overhang we’re now facing. The cause is the cure. Welcome to Orwell’s doublespeak in practical application.

  21. Herbert Wetherby

    Eventually there could be a limit as to ones ability to pay just the interest on the national debt. As I see it, a GDP of 14.6 T, and just the national debt close to it. Would mean every working person would have to work for free for one year and be able to support themselves during that peroid, to pay off just the national debt, never mind personal debt. I don’t need hysterical, I mean historical, evidence to put that in context or to realize there is timer on the problem.

  22. Herbert Wetherby

    Well then, I guess its put on your madison blues shoes.

  23. You’re missing the beautiful aspect of trade: rising standards of living.

    We’re been getting people’s stuff and giving them paper – actually, electronic paper. Imagine if your next door neighbor did that with you – what a deal!

    But when they decide they don’t like our paper, we’ll have to start not only giving them stuff, but really nice stuff – spending more time (labor) on it than we want to. The value of our labor has decreased, and our standard of living along with it.

    And with history as our guide, we can be sure that a decrease in the standard of living will be extremely unevenly felt. Some will lose homes, jobs, and even lives as we adjust.

    That’s the reason in my mind that we must demonstrate to the world that we are a responsible handler of their reserves – the alternative really is an ugly scenario.

  24. The President and the Congress did not agree to cut taxes, the agreed not to raise taxes, the only tax cut was a cut in the employee’s side of social security. This lack of a tax raise did not increase the deficit, the deficit was already there, the government is simply spending too much compared to the amount of taxes and fees it is taking in. This deceptive language that is used by the media and the government is really shameful, tell the people the truth the lack of a tax increase did not make the government lose any money, they never had the money, it is the peoples money, just because the government is not taking more does not increase the deficit, spending increases the deficit.

  25. I just listened to Dr. Johnson decry the tax cut decision on a YouTube playback of his 12/7 Rachel Maddow interview. He stated that instead of agreeing to a 900 billion tax cut (over time) it would be preferable to invest in community colleges. The first option is a decision to not remove money from the system and the second is a decision to add money to the system in a single shot. They aren’t in anyway comparable.

    Either he is choosing to slant the response or he doesn’t see the difference. He even compared the U.S. economic system to Greece’s system as a cautionary tale. Really? … //so it goes

    The tax cut blather is unproductive noise. The U.S. citizenry shouldn’t choose to let the bond market traders bias their fiscal strategy. We do not fund public sector spending by borrowing. I thought that Dr. Campbell was smarter than Sarah Palin and John Campbell.

  26. Jerry, as in Lewis? Your comment is hilarious. Under current law, passed by a Republican Congress and signed by a Republican President, taxes rise on Jan. 1, 2011. That’s in about three weeks. The “tax deal” is a proposal to create a different tax structure on that date. So it is a tax CUT, a reduction of taxes from the rates that are presently required BY LAW. You, sir, are the one who is ignorant at best and deceptive at worst.

  27. Spending increases the deficit. Lack of revenue for expenses already committed to increases the deficit. Why draw a distinction where none exists? You can close the deficit by decreasing spending or increasing tax revenue. You can do some of each. I hear this comment all the time but it is meaningless.

  28. Here’s the perspective of a very dynamic/entrepreneurial segment of the economy:

    http://siepr.stanford.edu/

  29. Bayard Waterbury

    Simon, from every perspective, you are right, and those on the Hill know it. So, why don’t they act like it? Simple. You don’t hurt those who are your meal ticket. That’s not the general business owners of this country. It’s the top 1% of the wealthiest (arguably not Gates or Buffet), who essentially have bought our country for the cost of electioneering. The proof is the fact that, in the last 20 years, there has been scant meaningful legislation which changes the economic lives of the average citizen for the better (or maybe since Reagen with a couple of small hiccups under Clinton).

    It’s kind of heartening to watch Barnie, et al, make the “stand,” when, in reality they may get a couple of minor tweaks in the bill, the preservation of massive benefits in the bill for the wealthy won’t be eroded at all. This is Capitol Hill Kabuki at its best. Same crap different day for the rest of us.

  30. Cheney is right to a degree, what does matter is paying interest on the debt. Why do we not talk about interest and the reason why we have to pay it at all, and why do we not issue our own currency? Why is that eerily not mentioned on this enlightened web site?

  31. Why not a project like CCC to rebuild cities. We red lined them which in itself was an attack on the urban poor,devaluing their neighborhoods. Why not a project to replace all those boarded up retail stores with a new green urban America.

  32. The writer of this blog does not know the meaning of Monetary Sovereignty. He gives Greece and Portugal, nations that are not monetarily sovereign, as examples of what will happen to the U.S., a nation that is monetarily sovereign.
    .
    Anyone who does not understand monetary sovereignty, should not write about economics.

    Rodger Malcolm Mitchell

  33. But that must be what USA voters want. Do you suggest that these politicians are not self-interested and prepared to do whatever their voters want?

  34. Nothing “pays for” tax cuts. If taxes were zero, this would not affect by even one penny the federal government’s ability to spend. See: Monetary Sovereignty.

    There is zero relationship between federal taxes and federal spending.

    Rodger Malcolm Mitchell

  35. You are an economist? Yet you do not understand Monetary Sovereignty?

    You say you want “fresh new proposals or strategies that will resolve the grave fiscal, social and other economic problems over the immediate and short term – not just the long term.” Read the above link.

    Rodger Malcolm Mitchell

  36. Stephen A. Boyko

    One-size-fits-all economic stimulus is just as inefficient

    http://www.aikenstandard.com/Letters/shandle-letter

    and proving to be every bit as ineffective as one-size-fits-all regulation.

    You want jobs, Colonel Jessup, you can’t handle the policy of job creation!

    The answers are found in the market place, not the lecture hall tutorial. Cut of regulatory taxes that are targeted and hinder the job creators, entrepreneurs.

    See: “Small is Beautiful”, The National Interest, No. 77 – Fall 2004.
    http://www.findarticles.com/p/articles/mi_m2751/is_77/ai_n6353167/print (presented at the SEC 2004 Small Business Conference) and pages 112-118 in “We’re All Screwed” http://www.traderspress.com/detail.php?PKey=671

    To have jobs you need viable companies that create wealth.

    To have viable companies that create wealth, you need a capital formation platform such as the Entrepreneur Exchange that is comprehensive in addressing the concerns of issuer, intermediary, and investor.

  37. There is no relationship between federal taxing, federal borrowing and federal spending. If both taxing and borrowing were zero, this would not affect by even one penny, the federal government’s ability to spend.

    To understand why, read: A Quick Summary of the Facts

    Rodger Malcolm Mitchell

  38. “National debt” merely is the total of outstanding T-securities, which the federal government creates ex nihilo (out of thin air), and can create in unlimited amounts. The government also creates money ex nihilo, and so does not use “borrowed” money.

    In fact, contrary to popular belief, federal spending does not add to federal debt. The government spends by adding money to vendors’ bank accounts. It can do this endlessly, and without limit. This spending requires the creation of money, but does not require the creation of T-securities.

    The government can spend endlessly, and never create a single T-security. Why? The U.S. federal government is Monetarily Sovereign.

  39. Dude, stop trolling for traffic to your pathetic blog.

  40. author said: “The unemployed – and those at risk of being fired – need new skills, particularly around information technology and the ability to run businesses.”

    Ahh yes, more education will solve all of our problems. WRONG. USA Today just ran a story showing that the unemployment rate was increasing fastest for college educated workers … particularly those workers in Information Technology and Finance!


    Unemployment rate for college grads is highest since 1970

    There are already tens of thousands of skilled IT professionals that are out of work because there jobs have been offshore outsourced. The reason is that the offshore workers are much cheaper. There is just a HUGE DISPARITY in wages and cost of living between U.S. and BRICs. A U.S. IT pro would be better off on welfare and foodstamps than the wages paid to like positions in India.

  41. Stephen, I am pleasantly surprised to see we both use “Colonel Jessup-” and “Small is Beautiful-”type of arguments. We may disagree on the overall recommendation, though.

    To place the conversation where it really belongs, people got addicted to the late ’90s returns, without understanding that they were harvesting the fruits whose seeds were planted for ~45 years (read, investments in fundamental science and such). Those investments had been big and would qualify as “One-size-fits-all,” in your book, I’m afraid.

    ________________________
    P.S. Since we write from the same place in the US, maybe we’ll meet some day. It’s possible you base your recommendations on experience that I might not have been exposed to.

  42. I agree fully Rodger – the problem is that when economics ditched its accounting side, it lost the way.

    Wynne Godly and the balancing accounts – it is the only proper way to think about the world of money, and therefore economics.

  43. aster, could it be that a lot of these degrees are hardly worth the paper they are printed on?

  44. I don’t think they will give us back the electronic paper. They will keep it like we kept the gold. Hopefully, at some point they will get their fill and we can give them less paper and more products. That’s the economic rebalancing that is needed. At some point we can’t responsible handle their reserves if THEY continue to pursue their mercantilist policies.

  45. Stephen A. Boyko

    @ via fCh

    I find Baseline’s political insights to be far more interesting to me than the economic analysis. I believe that Dr. Johnson would be better served applying his keen mind to a poli-sci subject concentration.

    Since you agreed with Dr. Johnson earlier in his economic tax analysis, it is likely that we see things differently.

    Nonetheless, you may find the excerpt from a forthcoming article to be of interest.

    Change: #1 management challenge

    Change is defined as the reflexive process between risk and uncertainty. The dictionary defines risk as the chance of loss. Risk deals with and is synonymous with probability. Risk presents foreseeable consequences, unlike uncertainty which is indeterminate and characterized by unforeseeable consequences. This distinction between risk and uncertainty was made famous by economist Frank H. Knight in his seminal book, “Risk, Uncertainty, and Profit” (1921). Knight argued that uncertainty is not a linear extension of a “riskier form of risk,” but a separate and distinct concept. Planned change is when uncertainty becomes risk. The consequence of learning or innovation provides greater control over the underlying economic environment. On the other hand, unplanned change is when risk becomes uncertainty. Then there is either confusion from too much information, or ambiguity from too little information. Should the uncertainty become unstable as in New Orleans when the levees broke or in the subprime real estate market, chaos happens (Boyko, 2009).

  46. Bruce E. Woych

    WE MAY WELL BE WITNESSING THE ADVENT OF ANOTHER ROUND OF GLOBAL REVOLUTION; FASTER AND MORE CONTINUOUS THAN THE SPREE OF CLASS STRUCTURE REVOLT IN (CIRCA) 1860S. Count the street protests growing in the world. The Mortgage “trigger” in America is growing just as readily.

    (1)
    The abject concessions being served to Republican rhetoric and the capitulation to an unconditional no vote of opposition party resistance is not diplomacy or negotiated consensus; it is wholesale surrender one compromise at a time. The question now is not whether the devil is in the details, but who is the devil at large. You can’t play politics with snakes, and if the straw dog Democrats down get on board to a solid platform of solidarity and core values than cut them off from the agenda and membership. This false economy is only trumped by this false democracy. We need a new consensus that is not watered down by op-positionally defined issues and marginal exceptional-ism. Make up your minds, and start minded the store! Don’t tell us about conscience if you allow the Republican tricksters to run the counter, the store and the ultimately the whole show. Negligence by omission is still negligence.

    (2)

    “The RIGHT thing to do:” do the RIGHT thing? Is this a ploy? It is RIGHT ALL RIGHT. IN FACT ITS MIGHTY RIGHT!
    This is hucksterism in action. President Obama is the biggest blue dog democrat of them all, if he is really a democrat in practicing policy at all. The democratic party is being handled like a psych-ops campaign against counter-insurgency. The Republicans idea of “compromise” is to take half of what they ask, and their strategy is to ask for twice as much as they think they can get (if not more in pure hubris). Frankly we would be better off if we just stopped the Republicans in a dead heat. A Mexican stand off! The network of backstabbing in Congress is matched only by the network of double deals, and the core power Republican strategists are laughing all the way to the bank! The CIA couldn’t have planned a better context of cover, misinformation and deceit; masterminded as coalitions and consensus under discretionary decision making (the new BUSH “message” out to his crony gangland chiefdoms) and all dignified as political science and high stakes capital power dominion.
    Democracy needs to define its issues and core values and not dilute them with oppositional distractions, explanations, excuses, complaints or diatribes of rhetoric. Define the core values and set a strict agenda and don’t take no for a political position. If Obama is going to compromise us to death, then he is not what he proposes to be…plain and simple. Congress must forge a democratic consensus of its own, write up an American Contract to the people concerning the economy; consolidate a concentric fortress of power relations with a common cause; establish its own coalition strategies and begin to play the command center establishment with unrelenting zeal. Finally, it must set up a core value statement concerning HUMAN RIGHTS right here in America. That is the only “Rights” that we should be willing to share a center with, and the concessions must be theirs to the people without the million dollar pocket linings!

    (3)

    Please be assured that there are many who understand the dynamics of power politics and the fight that is growing against against the vitiators of justice and the public security of traditional American liberty.
    There is a nexus of oppositional obsession with controlling and even owning power, meanwhile. and this contest has been between the proliferation of freedom and democratic rule, vs. Network Centric competitive exclusion under the name of market politics. The great American experiment in human rights and public freedom can not be reduced to an entrepreneurial estate and private playground. We must retain the sensibility of balance, and look to history for answers. We have been here before, and the systemic attempt to turn freedom into private domains of capital capture cannot be equated to the perverted distortions of rhetorical justification. There is no such thing as isolated wealth in itself; it is a cooperative distribution from a demographic substrate that makes it possible. When technical advantages allow some well positioned people to extract a disproportionate share from the Nation’s preserve, it requires a fair return. The vicious cycle of royal absolute power, however, was never intended to be sustained “by other means” as a part of the economic libertarian sector in classical history. The “Rights of Man” transcended the distinctions between the commercial middle class and the lower peasantry of the times. The Merchant creedo of accumulative consolidation was quick to seize political opportunity over time; but civil wars were politically leveling and socially (…if painfully) corrective. But today We are tending in the opposite direction, and this “ship” won’t sail! Capitalism does permit the distribution and redistribution of resources and the liberty to pursuit a secure life. However, it also seks the advantage of gaining monopoly over the factors of competitive exclusion. When the American people must fear the controlling arm of a mew power politic, consisting of a few people who make or change the very rules for hoarding the national good for themselves;and work with their capital advantages to now reject the fair access to resources for the demographic realities, then we are no longer a working democracy but a plutocracy of means. When the “Republic to which we stand” no longer stands for the rights of every citizen, then we are no better off than the centuries of suppression under Royal regimes of Old Europe. And when we support a secrecy of order that maintains torture and assassination as its private weapons of retaining power, then We are no better off than the third world countries that just a few decades ago, we had purported to save if they would follow our lead.

    The plain truth is that if we were to (theoretically) drop every single one of these self serving “elites” we would not be facing doomsday. The country would survive until the next set of greedy culprits came along and took their place…and you know they would!
    So how could it possibly be that a fair tax upon their excesses would “doom” America unless they were tyrannical enough to sabotage our systems out of spite? The sad truth is that they already have done that and shown a proclivity to do it more. Why? Because they have excesses enough to weather the very storm they create to punish the country for not getting things their own way. They have too much out of proportion, and too many of the wrong people have managed to power position themselves into this leveraged position of money power. The ability to allow money to dictate to people is all too real and all too addictive. This power is entrusted to our democratic government. but all too many of the “representatives” have been brought into play by that very same money. Do we allow this to perpetuate itself to self-destruction?

    Supply side economics has proven itself to be a failure. More of the same rhetoric about wealth creating jobs and economic stability is a radical farce…and the numbers over the past decades prove this to be true. We need to structure down; to downsize the superstructure like any business that has outsourced its scale advantage. We need to reset the allocation potentials to truly open up economic liquidity to the nation and the future generation next in line. Please stay strong and true to the democratic ideals that created the greatest Democracy on the history of time. History is silently watching every step! Will we look back on this history as a “tenant” society in a “rental” economy with a corporatized managerial police state run by an administrative political market that serves a the privatized priorities of a United “ESTATES” of America? The fact that I can put that sentence all together should be a very worrisome consideration. The fact that I do know that you fully understand every link, is an even more troublesome reality.

    1. “Liberals find Obama’s tax cut deal positively revolting,” The Sacramento Bee, December 6, 2010
    http://www.moveon.org/r?r=205411&id=25405-18041997-fKi_eUx&t=5

    “Republicans achieve top goal in Obama tax-cut plan,” The Associated Press, December 7, 2010
    http://www.moveon.org/r?r=205417&id=25405-18041997-fKi_eUx&t=6

    2. “Obama-GOP Tax Deal ‘an Absolute Disaster,’ Says Bernie Sanders, as Filibuster Talk Stirs,” The Nation, December 7, 2010
    http://www.moveon.org/r?r=205413&id=25405-18041997-fKi_eUx&t=7

    3. “Liberals find Obama’s tax cut deal positively revolting,” The Sacramento Bee, December 6, 2010
    http://www.moveon.org/r?r=205411&id=25405-18041997-fKi_eUx&t=8

    “Obama-GOP tax deal agitates Democrats,” The Seattle Times, December 7, 2010
    http://www.moveon.org/r?r=205412&id=25405-18041997-fKi_eUx&t=9

    “Sen. Sanders Threatens To Filibuster Obama Tax Deal,” YouTube, December 6, 2010

    4. “Deal Struck on Tax Package,” The Wall Street Journal, December 7, 2010
    http://www.moveon.org/r?r=205416&id=25405-18041997-fKi_eUx&t=10

    5. “Poll: Obama supporters strongly opposed to deal extending Bush tax cuts,” The Washington Post, December 7, 2010
    http://www.moveon.org/r?r=205414&id=25405-18041997-fKi_eUx&t=11

    6. “Richest Americans could buy a $83,000 Mercedes every year if Bush tax cuts extended, or light 800 pricey cigars with $100 bills,” The Raw Story, November 19, 2010
    http://www.moveon.org/r?r=205415&id=25405-18041997-fKi_eUx&t=12
    7. “Tax cuts for the rich? No.” The New York Times, September 17, 2010
    http://www.moveon.org/r?r=205214&id=25405-18041997-fKi_eUx&t=13

  47. Thank you for sharing your insights on risk vs. uncertainty.

    I would just say, uncertainty turns into risk only when you can attached a probability distribution to the phenomenon at hand. Thus, learning, as informed by risk considerations, comes only after enough instances have happened. Innovation, by one of its definitions, looks to make profit precisely out of uncertainty. Launching the 15th pizza parlor at the mall does not qualify…

    Risk turns into uncertainty when you go down to a more detailed/granular level of analysis.

    Why did New Orleans go down? Because people ignored common sense for too long (this being a sure way to internalize uncertainty), and then because nobody cared in Washington.

  48. Stephen A. Boyko

    @ Peter
    @ Rodger Malcolm Mitchell

    Forget the correctness of the content, how does Mr. Mitchell comply with the standard of transparency if he does not disclose his blog. It is the reader’s choice as to the degree of due diligence.

    I am the author of “We’re All Screwed: How Toxic Regulation Will Crush the Free Market System.”

    http://www.traderspress.com/detail.php?PKey=671

    I have taken positions whether right or wrong that require disclosure not unlike a broker/dealer noting that he makes a market in a stock or provides research.

    Granted it is a thorny issue, but either you are a mind reader as to Mr. Mitchell’s motives or you are selective in your application of transparency. It is a Hoson’s choice but you can’t have it both ways.

  49. Yes, that could be a part of the problem – the level of technical training of our competitors is both higher and more importantly more widespread. But this also reflects the focus of their economies – they are focused on building things, which requires such training. The US economy is overdependent upon financial manipulation. However, aster’s comment is basically correct; there are too many graduates for the high-paying technical jobs, and as the knowledge industry is not dependent on geography, it goes where the costs are lowest.
    Two generations ago the 75% of the populace that didn’t have advanced degrees could depend on a middle-class standard of living because industry still required people to produce things. Automation knocked a hole in that, and the globalization of capital and information finished the job. Several commentators have noted that the 21st century world’s needs can be met with only 25% of the world’s workers.
    Guess what this means for the middle class worldwide.

  50. “However, aster’s comment is basically correct; there are too many graduates for the high-paying technical jobs, and as the knowledge industry is not dependent on geography, it goes where the costs are lowest.”

    Yes and no. Show me an EE-graduate who can do a Fourier Transform, yet Intel has not made an offer! Or one who can go all the way down to assembly language level and back up to databases and Apple/Google has not made an offer. I know there may be exceptions that just confirm the rule.

    However, the rest of your message is right on target! I’ve been arguing for some time that education becomes a reflection of the bigger forces/trends in an economy.

    Is this the only way it could have happened? No, if you ask the Germans. They’ve been going for quality…

  51. You have it right Rodger. There are no so blind as those that will not see.

  52. I would be very happy to see the tax increase (by allowing the Bush temporary tax cuts to expire) IF at the same time spending cuts were implemented to eliminate the deficit.
    Tax increases are ultimately self-defeating. As you increase tax rates you encourage productive people to be less productive. Low tax rates encourage people to produce because they get to keep more of what they produce. Simple economics.
    Government spending is ultimately not just NOT productive, it is destructive. It allows unproductive people (we now have so many) to do nothing and let the government support them. It encourages productive people to spend their time trying to “game the system” to get government money instead of working to produce something people want. It allows unproductive companies to stay in business because they bribe Congressmen instead of because they produce valuable products (see GM, Chrysler, major banks).
    Tax increases are ultimately not the big issue. Allowing our government to intrude into our economy, turn our citizens into parasites and our companies into wards of the state is the issue.
    However, the day of reckoning fast approaches. Our current system will not continue because it cannot. What comes next is up to us. Freedom or Serfdom. Either we kill the “beast” or it enslaves us. We can only go forward by going back to a Republic with limited government. Mr Franklin’s words: “A republic, if you can keep it” were prophetic. Can we keep it?

  53. Interesting and informative links

    thanks

  54. ‘The president and congressional Republicans have reached a deal that would cut taxes “for all Americans.”’

    I was under the impression that the deal in fact would raise taxes on the lowest bracket–the people who can least afford the added expense and have been hurt the most by the reckless rapacity of the rich. It is nauseating to see them forced to pay for still more wealth for the people who need least.

  55. If we are to get our country firing on all cylinders again we must fix our structural problems. We need to be certain our actions taken directly address the problem impeding restructuring.

    First the tax problem. Cutting taxes never cost money! Government spending costs money.

    If you want to encourage employment cut the payroll tax that directly deters putting folk on a payroll.

    If you want to start fixing structural problems first kick the addiction of the dollar being the global reserve currency. This was only ever a banker’s benefit deal and printing free money to be inflation financed by the rest of the world is surely not a way to win friends and ultimately succeed in the global community.

    With the ‘reserve currency’ anchor away we can truly get our house in order otherwise we will continue forever be the rubes for finance crooks and their pimps.

  56. If you eliminate the deficit, you will have a depression. It’s happened six times in the past. See: http://rodgermmitchell.wordpress.com/2009/09/07/introduction/

    By the way, government spending is what puts dollars into the economy. Where do you think dollars come from?

    Rodger Malcolm Mitchell

  57. Government spending costs nobody anything. You do not pay for federal spending. Taxes do not pay for federal spending. If taxes were zero, this would not affect federal spending by even one penny.

    Federal spending creates money and stimulates the economy. When federal spending declines, we have recessions. See: http://rodgermmitchell.wordpress.com/2009/09/07/introduction/

    Rodger Malcolm Mitchell

  58. I thought that Dr. Johnson …

  59. OK if what you say is correct, let us cancel all taxes!

    We can spend any amount of federal magic money, clear all State debt, immediately embark on a capital works program to fix everything. Maybe we could also pay off all sub-prime mortgages and clear all credit cards. Should we announce this before Christmas?

    One question. If this was all so easy, how come nobody in Washington has cottoned on this great idea?

  60. Herbert Wetherby

    I will pay $1,000 to the first person (including you, Representative Boehner) who can demonstrate why the U.S. federal government will be unable to service its debts.

    This is too easy and I don’t think you’re gonna pay up. Since the countrys founding, with the execption of one decade (1930′s), the historical average rate of growth was 8%. With that growth rate, each decades growth would surpass all the decades before it. That is how the country serviced its debt up to the year 2000. Real estate was keeping pace but when the bubble burst in 2008 the rate of growth dropped and unless we have 8% growth for an entire decade, we can’t service our debt, and 8% is not scheulded to arrive anytime soon.
    Now I know you have to refute this some how to keep from payin, but thems is the FACTS. Jacks.

  61. Works good on paper, but when we can no longer make paper and must buy it from other countries the whole theory falls apart. When all manufacturing ceases to exist and everyone works for either Walmart, Mcdonalds, Wall Street or the goverment, what will we give them instead of paper.

  62. Herbert, this is way too easy.

    The federal government does not service its debt with “growth rate.” It does not use GDP or any other measure. It services its debt with money.

    Where does that money come from? The federal government creates money by spending. If the government owed you money, it would send you a check, which it creates out of thin air. You deposit that check in your bank account. Your bank credits your account, then notifies the Federal Reserve Bank, which credits your bank’s account.

    At no time are taxes, borrowing or “growth” involved. The government can create those checks, endlessly. As a monetarily sovereign nation, it has no limit on it money-creating ability. (Look up “Monetarily Sovereign” at http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/ )

    Now think very carefully. Where did the first dollar come from? Who created it and how?

    Rodger Malcolm Mitchell

  63. Ah yes. The old debt-hawk, extreme argument. O.K., here’s an extreme argument for you: How about tripling everyone’s taxes? Put everyone in the 95% bracket, and pay off the federal debt, as you say, “before Christmas.”

    Now, let’s get to reality. Ever since 1971, when we went off the gold standard, the federal government has had the unlimited ability to create money. It no longer uses tax money or borrowed money, to pay its bills.

    If you had taken the trouble to read http://rodgermmitchell.wordpress.com/2009/09/07/introduction/ you would have found that:

    1. Federal surpluses have led to depressions
    2. Reductions in federal deficits have led to recessions
    3. Increases in federal deficits have cured depressions and recessions
    4. There is no relationship between taxes and federal spending.

    So yes, federal taxes are not necessary for federal spending, but eliminating them “before Christmas” would cause inflation. Federal taxes should be eliminated gradually. The reduction in FICA proposed by the President is a good first step, a step I recommended in my book FREE MONEY, and again at http://rodgermmitchell.wordpress.com/2009/09/08/ten-reasons-to-eliminate-fica/

    Contrary to popular myth, FICA does not pay for Social Security. If FICA were zero, this would not affect by even one penny, the government’s ability to pay benefits.

    If you truly want to learn about federal financing and our economy, begin with the two links I’ve given you.

    Rodger Malcolm Mitchell

  64. Simon Johnson said, “I suggest you talk to the Greeks (now in the International Monetary Fund’s emergency ward) or the Portuguese (who are headed in that direction.) For that matter, listen to any policymaker in the European Union – they are all focused on bringing down deficits in a credible manner. And watch the European financial markets – people there are doubting and testing the fiscal credibility of all governments throughout the euro zone.”

    Sadly, Mr. Johnson does not understand Monetary Sovereignty. The EU nations he mentions are not monetarily sovereign. The U.S. is. There is zero comparison between the two. Classic “apples/oranges.”

    Mr. Johnson, before you write further, you should read http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/ Monetary Sovereignty.

    Cutting taxes cannot “pay for itself,” because in a monetarily sovereign nation, taxes do not pay for anything.

    I do agree however, with supporting education, and have provided an idea for this at: http://rodgermmitchell.wordpress.com/2010/07/17/salary-for-attending-school/ Salary for Attending School.

    Rodger Malcolm Mitchell

  65. Herbert Wetherby

    Hey Bruno, Rocco, Get over to Rodgers and help him find his checkbook.

  66. Re: @ pebird___”but surely you cannot be advocating the US to join some supranational institution and to abdicate its right to manage its own currency” – Sorry, but we’re almost there already with our current “Federal Reserve Banking System”? I’m going to reference “dated” print (note: these guys look out decades in planning strategy?) from the “August Review” (Global elite research center): C. Fred Bergsten is a prominent and core Trilateral Commision member and head of the Institution for International Economics. On *January 3, 1999*, Bergsten wrote in the Washington Post (Graham’s WP are members of the Bilderberg Group – mouthpiece for the american oligarchy?)___Quote: “The adoption of a common currency is by far the boldest chapter of European integration. Money traditionally has been an integral element of national sovereighty…and the decision by Germany and France to give up their mark and franc…represents the most dramatic voluntary surrender of sovereighty in recorded history. The European Central Bank (ECB) that will manage the euro is a truly supranational institution”___from the authors POV – Bergsten will have to rephrase this when the U.S. gives up the dollar for the “Amero”– that will become the most dramatic voluntary surrender of sovereighty in recorded history! “The “Amero” will be the new currency for Mexico, Canada, and the United States (NAFTA). This is my’ “JMHO” on the scenario that has been unfolding like clockwork since this publication in “1999″. Currently we are in a “Drug War” with Mexico, and have been looking the other way for years (even going as far as imprisoning our own border gaurds for doing their job?) and sooner rather than later there are going to be some back-door deals to realign both countries politcal strategies? Our porous borders do nothing to stop the inflow of illegal aliens, and we love the smell of “Mexican Oil” which incidentally has been in the news, coincidence? Obama’s, “Health Care Overhaul” will facilitate all this when the time comes as a bargaining chip for the Mexican Gov’t to join an alliance with a new currency (Obama will probably be gone – but whomever gets in office will push for the aforementioned agenda) this “so called “Amero”! Canada will most likely come along seeing that their natural resourses will be displaced by “Green Energy Technology” down the road, leaving a gapping whole in their fragile GDP as will be seen in the not to distant future, not to be outdone by our military might. Ref: “Global Banking: The Bank for International Settlements” (Pg.9-10/11)

    http://www.augustreview.com/issues/banking/global_banking:_the_bank_for_international_settlements_200510147/#

    Thankyou Simon and James, and “Never Stop your Good Digging for America’s Sake” :-)

  67. Mr. Mitchell has linked from these comments to his own blog post at least five times. That’s well beyond “transparency” in my view, and probably also in Peter’s.

  68. He links to his blog because he has written more complete explanations that don’t fit in blog comments. There are other sources of accurate descriptions of how the U.S. monetary system works as well. Bill Mitchell writes an excellent blog you may want to read.

    The conventional wisdom wrongly projects household and state financial constraints upon the U.S. and similar systems. Rodger rightly confronts the common errors when he sees them here.

  69. Rodger, I have taken your advice and read the two links. These links do not offer proven information but merely you unproven ideas claimed as facts!

    Your misinterpretation of things economic is breath-taking but also arrant nonsense. Your conclusion that debt reduction is the cause of depression is a case of your ideas requiring data to be bent out of shape. Now why on earth would you propose a 95% tax to remove debt? Any situation where extreme action is undertaken will result in extreme and possibly bad results So the comment that gradual change is preferable is acceptable but hardly news..

    May I suggest you consider the ‘remote’ possibility that you are not batting 1000?

    Now you have not repudiated my hypothetical case whereby governments fund services zero tax and 100% deficits. This nonsense does not work in our home budget and likewise in public spending. You may want to tout your book etc but it may be better if you were to examine the subject again. You may then be able to advise accountants, banks, treasury but you will have to use an enquiring mind.

  70. Perhaps this thread has gone stale, but this recent article in the NYT shows that the problem of underemployed graduates is not unique to the USA:

    http://www.msnbc.msn.com/id/40626200/ns/world_news-the_new_york_times/

    China is having the same problem! This just points out that you don’t need many highly skilled workers to run an automated industry, and that China is not transforming its economy from labor to knowledge-intensive fast enough to absorb its new graduates.

  71. Appendum: The United Kingdom (UK) should in all practcality give up its pound/sterling “Sovereighty” and join the European Central Bank (ECB)? This is long overdue. The Brit’s are on the wrong side of the trade. There only chance/salvation too compete in a global economy is to consolidate into a “United [States?]/Country Europe”. The writings on the wall – explicitly written – the emerging markets will rule the roost for decades to come. Its time to evolve, and adapt or find yourself as a 3rd world (Britain) country on a limb waiting to be pruned “Off”! JMHO

    Ref: C. Fred Bergsten “Biography: C. Fred Bergsten”
    http://www.iie.com/staff/author_bio.cfm?author_id=33

  72. How can an estate tax increase be a “tax increase on the wealthy.” Those individuals are dead when the estate tax kicks in. And they, being no longer numbered amongst the quick, are unable to “stimulate” the economy with their spending.

  73. Although the gov’t can create money, that money is not “wealth”. Wealth is created by production (in the general sense of value added).
    20 million idle workers could be producing something.

  74. The funny thing is…Rodger is largely correct and the rest of you are laughing at him as if he’s trolling. Do you not find it odd that our monetary system completely changed in 1971 when we went off the gold standard yet economic theory changed not one iota? Do you find it odd that we currently have no inflation despite massive “stimulus”? Do you find it odd that US bond rates are incredibly low for a country with such a deficit “problem”. Do you find it odd that Japan, with the largest debt/GDP ratio on the planet has bond rates at or near zero? How can this be explained?

    If you truly want to understand check out Warren Mosler’s website “The Center of the Universe”, Bill Mitchell’s “Billy Blog”, University of Missouri KC’s website “New Economic Perspectives”, or Cullen Roche’s “Pragmatic Capitalist”.

    You are like flat-earthers laughing at the man who is telling you that the world is really round.

  75. Lil’D,

    Aside from the semantic sophistry about money not being wealth (Having money doesn’t make you wealthy??), the subject was Herbert’s false belief that growth rate is what makes servicing the federal debt possible.

  76. Uh, oh. Prepare yourself for the sneers, jeers and insults of those who will offer not one shred of evidence to substantiate their beliefs, but nonetheless are absolutely, positively sure.

    I’ve fought this battle for 15 years, and I’ve heard it all.

    Rodger Malcolm Mitchell

  77. It is more accurate to say that to have jobs viable companies need willing and able customers. The U.S. Government has the capacity to create the demand that will result in companies hiring and if they don’t, to hire directly. The U.S. Government can create demand and pay wages at will. Companies must be able to afford the wages, which they do by meeting new demand above their current customer base. The new employees reinforce the virtuous circle by spending money.

    Here is a key point, spending = income. The U.S. Government spends and the private sector has income. The private sector spends and employees have income. The employees also have labor that is their real resource to offer to the marketplace.

    It appears that your logic is impeded by your supply side bias. Tax reduction etc will not free up money from sales from nonexistent customers. (Demand)

  78. @ RMC___”The United States Supreme Court once ruled “Federal Income Tax” unconstitutional. Income Tax was first imposed during the Civil War as a temporary revenue-raising measure. In the late 1800′s the government attempted to revive the levy again, but the Supreme Court ruled it in violation of the constitutional provision that direct taxes must be apportioned among the “States” according to their population. In 1913 {(William H. Taft the only man to have been both Chief Justice and Presidnt)(It was President Woodrow Wilson that finished the dirty work left from the Taft adm.), however, Congress passed the Sixteenth Amendment, making a Federal “impost” legal once again.”
    “The percentage of income tax paid by the average American family has more than ~ tripled since 1953 when the average family paid 11 percentage of its income out in taxes”
    “The first coin minted in the United States was a “Silver Dollar”. It was issued on Oct. 15, 1794.”
    “The ‘Federal Reserve Banking System’ created in 1910 (Taft), codified by congress 1913 [(President Wilson/ Wilson's 2nd wife, grazed sheep on the front lawn of the White House (pastoral infirmary to soothe Woodrow' madness?) while she ran the office of White House 'Presidential Affairs' by her lone self)], along with the personal ‘Income Tax’ – this system facilitated the U.S. Government’s ability to inflame the nation’s citizens for the purpose of supporting the European War {(WWI / (1914-18) & (once again the UK drags the United States into another War?)}”
    “As far as America being a “Monetary Sovereign Nation” your terribly misguided my friend – our “Fiscal” sovereignty is a misnomer at best? :-)”

  79. @Earle,Florida – You are comparing different monetary systems. The one we have today is not the one you romanticize. While not collecting income taxes, the country collected royalties, fees, import duties, etc.

    The size of the current fiscal deficit directly reflects the size of our private sector and external trade economy. The fiscal sovereignty Mr. Mitchell describes speaks to the U.S. Government being the monopoly supplier of the currency and that it freely floats in the international market. It is not a legal point it is a mechanical point.

  80. Rodger Mitchell is quite correct. Nixon taking us off the gold standard in 1971 changed everything. Since international trade is settled in dollars (and of course, all US debts are in dollars), the US Government’s monopoly on creating dollars is akin to a gold standard system with a single country owning the world’s only gold mine.

    Short of invasion (and that would be a fruitless enterprise, America is nothing if not well-armed) there is nothing creditor nations or the IMF can do to compel the United States to change its fiscal or monetary policies. I’d point out during World War II, Tsy and the Fed agreed to cap short term interest rates at .375% and long term rates at 2.5%, with the Fed buying up any Treasuries that didn’t sell. Uncle Sam never ran out of dollars then, Uncle Sam can never run out of dollars now.

    Our problem isn’t the budget deficit, its the output deficit, there’s at least a $1 trillion output gap that should be filled by adjusting our fiscal stance (higher spending, lower taxes, take your pick). Its aggravating that while Republicans understand deficits don’t matter, the Democrats think they’re the only thing that does matter. No wonder the Dems get taken every time they negotiate with the GOP, its a game of Russian Roulette where only side recognizes its a water pistol.

  81. Not odd at all my friend. Stimulus funds are leaking out to global markets which will use them. The funds went to bankers (immoral thieves uncaring of anyone but themselves). TBTF bankers send our money where they make most profit not to help the economy.

    Also it is clear from the Bernanke only act play that poor Rodger’s (wipe the eye) misunderstood message will not be proven any time soon by Bernanke buying State debt! This could immediately put thousands of people back in work. Attempts to have him explain his currency belief and thereby justify termination of all taxe while simultaneously commencing all necessary public projects have been met by the poor fellow seemingly forgetting to reply.

    You have personally experienced no inflation? Maybe you haven’t been to the supermarket or bought gas? 2011 futures seem to indicate price increases in commodities (food and energy) Maybe the inflation measure is broke? Let me offer another of multiple aspects to consider: when you give stimulus finds to bankers and they don’t deploy but may also put in their war chest or their Basel III capital bag, inflation re that money is put on hold. Plenty more Mr. Banker but that’s enough for now. Just give the demonstrably provable answers and please no ‘alleged facts’ masquerading as facts.

    You may also care to explain why your ‘flat-earth’ folk all over the world for many years and at all levels of endeavor have sought to balance budgets.

    I note you have probably been confused by the fact that the dollar is a world reserve currency which we think we can just churn out like sausages but with zero raw materials. If the reserve currency status is lost reality will be stark. You are probably aware that earlier ideas of IMF reserve notes ans the global reserve currency were rejected by our government unless the IMF assumed our national debt. Nice try? But no cigar!

    You may also care to detail your banking experience?

  82. Re: @ RayW___”You are comparing different monetary systems” / “It is not a legal point it is a mechanical point”

    “Sovereighty vs. Souvenir”? – “Two Master have I”!

    Dated material: (1999-2001)

    “The last major industrialized nation to merge financial services was the U.S. in 1999. Under such changes the Federal Reserve Bank (FRB) became the U.S. Umbrella Supervisor of Financial Services Conglomerates, in addition to retaining its powers as bank holding co., and state-chartered bank supervisor. While the U.S. Gov’t. body known as the Comptroller of the Currency still retains some powers as supervisor of nat’l banks today the FRB is the “king of regulators”. It seems that the FRB will have the ultimate responsibility for the supervision of all big financial operations based in the U.S.. It is the FRB in the U.S. who will ultimately oversee the standards set by the Basel Capital Accord [(BCA)/( Basel, Switzerland)(BIS) > IMF > WB) via (Bilderberg Group/ Netherlands)], because BCA applies to the Int’l. players that will be supervised by the FRB.
    The reality is potentially fraught with peril for a number of reasons. First, although the FRB has some oversite its operations are disproportionately controlled by the private banking sector itself, the very same group supervised by the FRB. This domination by the banking sector comes partly from the role of the Federal Advisory Council (FAC), who are the primary Federal Reserve Board (FRB) advisors and our 100% bankers. It also comes from the fact that most (67%/ dated?) of the directors of the 12 FRB’s are appointed by the banks, and that the FRB is generally dominated by Wall Street choices (as is the case 2010-).
    Second is the fact that the FRB is first and foremost responsible for monetary policy of the world’s linchpin [?] currency, the U.S. Dollar (hegemony on a broken stool?). The role of supervisor-concerned with safety and soundness in the banking system can and does often directly conflict with the goals of monetary policy. This creates the potential the potential for very harmful conflicts of interest with worldwide consecquences (1999 and the conception of the ECB/Eurozone?). A classic example of this arose before the Latin Debt Crises when the FRB, from a monetary policy point of view, wanted to raise interest rates to squash inflation. At the same time based on earlier years’ desire for credit expansion (a monetary goal), the FRB (as bank holding co. supervisor) had allowed banks to expand loans well beyond well beyond what their capital levels could support (sound familar 2008-). So by the end of the 70′s past credit expansion had led banks into a situation where defaults on Latin loans could not be swollowed by their low capital levels (by design?), and the Fed’s desired increase in interest rates would surely trigger such defaults. The end result that solved this conflict – hike up U.S. interest rates, trigger the Latin Debt Crisis and have the Int’l. Monetary Fund (IMF) and World Bank (WB) come in as lenders of last resort to bail out the U.S. Banks (this certainly must be sending your alarm bell off – repeat after me ?)! And who paid for this crises for which the conflict-of-interest in supervisory structure/monetary (did someone say mechanical?) policy was largely responsible? The people of Latin America, of course (and you wonder why their careful with the exchange rate today?)!
    The recognized dangers of having the umbrella financial regulators be the same entity as that responsible for monetary policy are illustrated by the fact that no other major industrialized nation has put these two, often conflicting, functions under the same body (you wonder why the Eu wanted out?). The fact that this has been done only in the country that is responsible for credit creation in the linchpin could have serious global ramifications as the Latin debt crises indicates.
    The situation in the U.S. before Gramm-Leach-Biley (Financial Modernization Act -nullified Glass-Steagall Act) was that the FRB as bank holding co.,supervisors would basically assign staff either from Washington and/or the local regional Fed bank to work permanently on the supervision of the larger banks (the NY Fed Bank is without a doubt 90% in controll, the others eleven are window dressing). These staff work mostly on site at the bank, sort of like permanent fixtures there, or actually like staff of the banking group itself. These close relations are likely to get even closer under the “self-regulation” approach proposed by BCA for larger banks, and don’t bode well for independent supervision of the larger banking entities.
    The incredible complexities of monitoring the capital adequacy of financial conglomerates in a world of increasingly complex instruments (mortgage dirivatives/shadow banking, HFT’s, Hedge Fund’s hidden within Hedge Fund’s,etc.?) and loan structure (Monetary risk?) under the “self regulating” methods of the Internal Ratings Base [IRB /Basel Committee on Banking Supervision (BCBS)] approach (specified by the BCA) will likely make adequate bank supervision a Herculean task! Given that a potentially talented bank supervisor would make pots more money working for the banks themselves (sound familar, kinda like an echo chanmber?), the job is close to impossible and therfore wide open for abuse by those banks most likely to adopt IRB. That is, the big banks, and the ones for which bailouts are most necessary.
    These new rules have the potential (once again dated material from 1999- so we all know the outcome of a well thought out design of deception at the american publics’ expense) to increase both the frequency and severity of IMF bailouts (Ireland where my heart is) by allowing more risks to be taken and by allowing those most in need of bailout mechanisms (not the same – transmission failure to appreciate being groped) the most leeway for “bending the rules” during their “self-regulation”.

    Finally: This illustrates to all that our Federal Gov’t purpose of taxation is facilitating the needs and obligations of those less fortunate, and all that a vibrant society starts with one family in a village that grows into a town…into a city…an state that forms the “Greatest Democracy in the World”! The United States of America”. We all must pay for freedom like it or not. PS. The FRB should be abolished. It has been negligent on its core principles of keeping employment and interst rates stable for the last 30 years.

    Ref: “Unraveling the Basel Capital Accord”
    http://www.bilderberg.org/bis.htm

  83. @ notabanker – Not odd at all my friend. Stimulus funds are leaking out to global markets which will use them. The funds went to bankers (immoral thieves uncaring of anyone but themselves). TBTF bankers send our money where they make most profit not to help the economy.
    Banker – Actually those stimulus funds are actually sitting as bank reserves. Regardless, I’m sure you realize that dollars have no existence outside of the US banking system thus if funds are leaking out to global markets and being used then we should begin to see inflation as those funds are placed back into circulation, no?
    @ notabanker – You have personally experienced no inflation? Maybe you haven’t been to the supermarket or bought gas? 2011 futures seem to indicate price increases in commodities (food and energy) Maybe the inflation measure is broke?
    Banker – Strangely enough my house is down in value about $150,000. Very odd that. Sure gas is up but food is only up marginally. Let us be clear though; Are you stating that inflation is currently a problem?
    @ notabanker – Let me offer another of multiple aspects to consider: when you give stimulus finds to bankers and they don’t deploy but may also put in their war chest or their Basel III capital bag, inflation re that money is put on hold. Plenty more Mr. Banker but that’s enough for now. Just give the demonstrably provable answers and please no ‘alleged facts’ masquerading as facts.
    Banker – You have this one correct! The “stimulus” funds are sitting as bank reserves and not getting out into the economy. So the only way to realize this “inflation on hold” is to increase lending demand, true? Now let me also ask you this; Is inflation a manageable phenomenon? Last I checked, managing inflation was one of the few things that the fed was fairly proficient at achieving. Increased rates, increased taxes and reduced spending can all be used to counteract inflationary pressures. You speak like inflation is the end of the world. While we’re on the subject, do you agree that the US cannot technically default as a sovereign issuer of US dollars? Do you agree that inflation is the only real constraint?
    @notabanker – You may also care to explain why your ‘flat-earth’ folk all over the world for many years and at all levels of endeavor have sought to balance budgets.
    Banker – Those who are currency users and not currency issuers, like the EU governments and US states need to maintain low debt levels and, ideally, balanced budgets. Those countries that possess non-convertible, floating rate currencies, like the US, Japan, the UK and Australia do not need to balance budgets. It is a misunderstanding of the mechanics of money resulting from imposing gold-standard thinking onto fiat currency realities.
    @ notabanker – I note you have probably been confused by the fact that the dollar is a world reserve currency which we think we can just churn out like sausages but with zero raw materials. If the reserve currency status is lost reality will be stark.
    Banker – Yes, just ask Japan who is not the reserve currency! They’re having a bear of a time continuing to exist with the highest debt to gdp ratio in the world. They are wallowing in misery, low living standards and having a difficult time financing their deficit….What? Bond rates in Japan are near zero and they have no problem funding their deficit? Can’t be!
    @ notabanker – You may also care to detail your banking experience?
    Banker – Sure, I’m an Exec. Officer and Risk Manager for a relatively small ($.5B in assets) retail and commercial institution in Massachusetts.
    If you want to understand the true differences between a gold standard and fiat currency give the following economic parable a read and then we can talk more. http://heteconomist.com/?p=658

  84. If Rodger Malcolm Mitchell or associates is still reading this thread one may care to comment on the current bond yield increases.

    Looks like Mr.Bernanke’s magic money purchases intended to depress bond yields is not causing bond traders to follow his $600 billion sidetrack?

    Looks like the only result of all this spending is an increase in US public indebtedness? Market equilibrium is not to be altered by such tactics although a variation may be caused. However it is like a car with a leaking tire and Mr.Bernanke with a air hose. Keep pumping and the tire pressure reading indicates things may improve some time. Unfortunately you must keep pumping air into the tire. An imperfect analogy, however even more purchases must finally come to an end and the market return to equilibrium may well be extreme.

    FYI see 30 year and 5 year series price yield increase and not the % yield rate increase over the last month. Mr.Bernanke with his $600 billion stash is seeking to push multiple trillions of the market.

    He shows determination and even reckless determination as he continues to repeat actions that have previously failed. Maybe it is time Ben returned to academia and wrote a book? Please Please

  85. If Rodger Malcolm Mitchell or associates is still reading this thread one may care to comment on the current bond yield increases.

    Looks like Mr.Bernanke’s magic money purchases intended to depress bond yields is not causing bond traders to follow his $600 billion sidetrack?

    Looks like the only result of all this spending is an increase in US public indebtedness? Market equilibrium is not to be altered by such tactics although a variation may be caused. However it is like a car with a leaking tire and Mr.Bernanke with a air hose. Keep pumping and the tire pressure reading indicates things may improve some time. Unfortunately you must keep pumping air into the tire. An imperfect analogy, however even more purchases must finally come to an end and the market return to equilibrium may well be extreme.

    FYI see 30 year and 5 year series price yield increases and note the % yield rate increase over the last month. Mr.Bernanke with his $600 billion stash is seeking to push multiple trillions of the market.

    He shows determination and even reckless determination as he continues to repeat actions that have previously failed and if this fails, why, he will repeat the same spend process. Ha ha it is like watching a hamster in a wheel. Run Ben run. Maybe it is time Ben returned to academia and wrote a book? Please Please

  86. I do drop in once in a while, though I find the lack of desire to learn Monetary Sovereignty, the very foundation of economics, to be rather depressing. I’m saddened at how few are interested in moving beyond personal intuition, and rather are more interested in displaying ignorance by sneering at facts.
    .
    At any rate, you said, “Looks like the only result of all this spending is an increase in US public indebtedness . . .” If you understood Monetary Sovereignty, you would understand that what you call “public indebtedness” is a synonym for “money,” and if there were no public indebtedness, there would be no money. Growth in “public indebtedness” is necessary for economic growth.
    .
    Further, you would understand that the federal government not only has no difficulty whatsoever servicing its debt, but does not even need to tax or to borrow to do so. (Both taxing and borrowing are relics of the gold standard, which ended in 1971, when the U.S. became monetarily sovereign.)
    .
    As for Mr. Bernanke, I never have favored QE, simply because I feel it is useless, and have said so on many occasions. Unfortunately, Congress, which also does not understand Monetary Sovereignty, has abdicated its obligation to end the recession, and has handed the hot potato to poor Mr. Bernanke, who has scant assets to deal with it.
    .
    We all are ignorant. Even the greatest genius is ignorant about many things. But I would appreciate it if those who either are to vain, too lazy or too slow to learn Monetary Sovereignty, will please stop making comments that reveal this particular bit of ignorance.
    .
    Learn Monetary Sovereignty. Then we can talk.
    .
    Rodger Malcolm Mitchell

  87. The Greeks are on the euro, the United States is sovereign in its own fiat currency, so right away you begin this article with a phoney comparison. I’ll save a few minutes of my life by not reading the rest.

  88. Right you are. Monetary Sovereignty (http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/) is the foundation of modern economics, so when someone doesn’t understand it, everything he says is suspect.

    Rodger Malcolm Mitchell

  89. Has Dick Cheney been right about anything?

  90. Silly blog posting, but it is typical of misguided mainstream economists.

    The US is nothing like Greece or Portugal because we have monetary sovereignty and they do not. We can easily create money to pay for government purchases, and this isn’t a problem unless we run into constraints in the real economy. And we’re a long way from hitting real capacity constraints.

  91. “aster, could it be that a lot of these degrees are hardly worth the paper they are printed on?”

    There has been a collapse of aggregate demand. It’s as simple as that. And the policies advocated by deficit hawks will be disastrous.

  92. It’s a tough task trying to light so many dim bulbs. But keep trying, Rodger. A few people here get it.

  93. Taxes are necessary to manage price levels in the economy. They remove purchasing power from the economy, so they are useful for managing inflationary pressures.

  94. Absolutely! I agree with The Banker, and it’s now clear to me that my B-School profs at U Chicago are completely and totally clueless.

  95. notabanker,
    .
    Do debt-hawks never tire of extreme examples? Here’s another extreme example. How about quadrupling all taxes? We could get rid of the deficit right away. Why hasn’t Washington “cottoned” to that idea?
    .
    Seeing as how you have provided no facts or data, and rely solely on your intuition and sarcasm, why do you feel anyone should respect your opinion?
    .
    You might do better to provide facts and data to support your ideas.
    .
    Rodger Malcolm Mitchell

  96. “Has Dick Cheney been right about anything?”

    Let’s see:

    1. Don’t worry, my gun isn’t loaded.
    2. Deficits don’t matter.

    Yep, he was right about deficits!

  97. And another Cheney miss:

    3. Don’t worry, we’ll be welcomed ad liberators!

  98. Dismayed,
    .
    I disagree with the MMTers on this point. They say that decreasing the supply of dollars (via taxes), increases the value of dollars, and so is anti-inflationary. They are right in principle, but there are problems with that approach.
    .
    Taxes are too slow, too political and too uncertain to be effective in moderating inflation. If you suspected that inflation was going to rise 2%, specifically which taxes would you propose that Congress increase, by exactly how much, and how long would it take to pass? Then how would you undo them, later?
    .
    Also, decreasing the supply of money historically has caused recessions and depressions.
    .
    I suggest the approach that has worked for many years: Rather than decrease the supply of dollars, increase the demand for dollars, by increasing interest rates. This can be done instantly, and in small, controllable increments.
    .
    I explain this in more detail at: http://rodgermmitchell.wordpress.com/2010/12/05/how-to-fight-inflation-and-how-not-to/
    .
    Rodger Malcolm Mitchell

  99. Lol…Don’t tell them that Dismayed. Play along, get the grades, get the credential and then forget everything they taught you.

  100. Yes Rodger been away. I must say I am attracted by the idea of unlimited dollars created at no cost to anyone. I guess the old idea of money as a store of value is dead?

    What puzzles me is the apparent creation of dollars via bank leveraging. It seems you have one answer to every need – create money! You apparently don’t accept creation of capital as a basis for money but only government debt? Now how do people outside the US dollar sovereign money area see accepting all these dollars? we could pay any price for their assets? I note your identification of doubters as ignorant vain etc etc however this condescending characterisation does not provide actual proof positive that US sovereignty is sufficient to create additional store of value rather it adds to the exchange medium. This seems to be one way of creating dollars but not the one and only.

    I guess I will have to retire to the ranks of lesser mortals where it appears many other folk congregate in utter ignorance?

    Meanwhile it would be instructive if you would demonstrate use of your model in the progressive elimination of all taxes. Don’t forget to explain the global trade effect of this process. Maybe you could use Iceland’s current economic situation as the model data source? Would Microsoft Excel be a suitable tool? Thank you for your information.

  101. notabanker,
    .
    Here are some of your comments: “money as a store of value.” Specifically, what does that mean? Also, was the original dollar a “store of value,” and if so, exactly what value did it store?
    .
    “you have one answer to every need – create money!” Your words, your invention, not mine.
    .
    “Now how do people outside the US dollar sovereign money area see accepting all these dollars?” They seem to like it just fine. In fact, they yearn for those dollars. What is your evidence to the contrary?
    .
    “demonstrate use of your model in the progressive elimination of all taxes.” I would eliminate FICA immediately. Then, I would begin to increase the standard deduction, year by year, until over time, federal taxes disappeared.
    .
    “use Iceland’s current economic situation as the model” Iceland is applying for membership in the EU, a horrible mistake, and therefore is trying to reduce its debt, another horrible mistake. As a Monetarily Sovereign nation, Iceland currently has the power to pay all its bills, but is on track to losing that power.
    .
    Meanwhile, the U.S., despite massive deficits, never has had, nor ever will have, any difficulty paying its bills. No federal check ever has bounced nor ever will.
    .
    Rather than inventing a straw man (“unlimited dollars created at no cost to anyone”) which is no more true than if I accused you of wanting 100% taxes, why not see what I really advocate. Read http://rodgermmitchell.wordpress.com/2009/09/07/introduction/
    .
    Rodger Malcolm Mitchell

  102. I have read all your referenced sites.

    There is a mile of difference between my requesting you to be more specific with some hard numbers for tax elimination and the related handling of public debt compared to 100% taxes which you must surely know would leave neither incentive or any funds for living expenses.

    Iceland’s current plan to join the EU is well known. I proposed Iceland to suggest a small economy to use as your demonstration model. You might prefer to use Argentina or another real example?

    International trade balancing via the global reserve currency renders a peculiar attribute to the US dollar, other than a uniquely national currency which you seem to exclusively consider. Yes, dollars are currently acceptable but this is hardly the expected response if we add say another $7 trillion each year to the store of dollars? Should we expect the Saudis to accept fresh off the press dollars for their oil? Will the world’s banks and financial institutions be require to accept any volume of dollars and if so at what exchange rate? What if other nations are also in the money printing business, will we accept the other currency as payment for Boeing 747′s. I suggest there are still a few loose ends.

    Money as a store of value means that an entity may forgo spending at this time and lay something aside for the future. This of course depends on the store not being devalued.

    When was it ever a store of value? When the dollar exchange promise was for an asset such as silver or gold.

    Your Federal Government to ‘create unlimited dollars’? is not yours? Do you imply there is/are essential related actions required? Will this not result in increasing the circulating store of dollars? If all sovereign states follow suit how will exchange rates be determined? How will you manage rates with the Zimbabwean currency or any other country pumping out their money? None of your stated references give such answers.

    Now please be specific and don’t conclude that this lesser mortal can’t see reality. As you say,no one is entirely right so I trust you treat these questions as non-criticisms but as genuine questions.

    Thank you.

  103. When I give answers, you seem disappointed. I gave you my suggestions for tax cuts. What more did you want?

    You posed the extreme example of $7 trillion. I suspect that would cause inflation, though that depends on interest rates. Now, how about a similarly extreme example? What if all taxes were doubled?

    You asked, “Should we expect the Saudis to accept fresh off the press dollars for their oil?” My answer: Yes, they always have, despite an astounding. 3,600% debt increase in just the last 40 years. So, how about if we repeat that 3,600% debt increase for the next 40 years?

    Today’s Federal Debt Held by Private Investors (perhaps the best measure of debt) is more than $8.2 trillion. A 3600% increase would put it at $296 trillion by 2051. Do you view that (doing exactly as we have done for the past 40 years) as a problem?

    You said, “Money as a store of value means that an entity may forgo spending at this time and lay something aside for the future.” Only a Monetarily Non-Sovereign entity needs to “lay aside” money. Not only does the U.S. federal government not need to do so, but it actually is incapable of storing money. There is no storage area for dollars, as there was for gold. Money is not physical.

    Money today is just a number on a computer, and the federal government uniquely has the power to change that number at will. Your comment indicates you are confusing federal financing with personal financing.

    I said the federal government has the power to create unlimited dollars, not that the government should do so. And yes, creating dollars increases “the circulating store of dollars,” just as it always has. And if you reviewed the references I provided, you saw there has been no relationship between federal deficits and inflation.

    Exchange rates will be determined the way they always have been: Supply and demand.

    If you truly wish to learn, I’m pleased to assist. Frankly, I don’t think your questions reflect a genuine desire to learn, but perhaps others who do wish to learn will read this.

    Rodger Malcolm Mitchell

  104. Rodger, I wonder if you are proposing a funding process for the US Feds only or for all sovereign states?
    There seems to be an ‘x’ factor which should make all this work everywhere, but the missing ingredient should surely be described? To manage exchange by ‘supply and demand’ or ‘the same as always done’ is a little nebulous in response to the picture of say 20 sovereign stated all adding to each nation’s money supply and ‘expecting’ some managed exchange with settlements in accord with BIS procedures?

    Clearly my explanation re meaning of money as a store of value related to us lemmings within the sovereign monetary region delaying exercising purchasing power to a later date and expecting the purchasing power of the savings to be not too reduced in value. I wasn’t actually expecting Washington to save money in some super piggy bank.

    You ask if I consider a $296 trillion national debt as a problem? Well yes I do, of course inflation will have debased the number somewhat. Whilst you may aver that a Federal deficit has no effect on inflation, when the funds enter the private domain the holders will seek acceptable ‘value for money’ or else ensure they are not left holding money whether electronic or other of course in a situation where current demand is depressed by bringing future demand forward and meeting this with excess credit, we will sense a bank-up of excess liquidity whereas our private consumers are still running down excess debt and using up the accelerated purchases. I trust this explains my clear understanding of the difference between federal and private financing however noting they are inter-related.

    Given that the BIS and IMF folk have a role to play between sovereign states ordering interchange and appear to be not yet of your persuasion, will their current operating rules require modification and if so how would you propose they change?

    May I advise that my questions are not explicitly answered in your given references and there are many generalisations. I also note your opinion that I don’t wish to learn. I am slightly amused and disappointed that you continue to make such condescending value judgments, is this an answer to too hard questions? You really haven’t answered much at all!

  105. Zimbabwe fought a war that destroyed their productive capacity. The had nothing to offer the market. Iceland is doing a bad thing in my opinion. If they follow through, the austerity constraints will create a sad result in a horrible experiment.

    The key point here is whether we want to add money to the system to purchase real goods or let the productive capacity lay fallow and unemployment to rise. Money spent (public or private) will be income to someone. TARP was income to bankers. The stimulus became income to a few consumers and the negotiated tax cuts left some money in the hands of those able to pay taxes. Obviously we needed more stimulus to affect our level of unemployment. That was a political decision to let the unemployed stay that way. Spending creates income.

    You will retain your ability to make political decisions about how to invest public money even after the public understands how the modern U.S. economy works. If you want to keep unemployment high, at least understand why it is happening.

  106. There isn’t any evidence that producers or consumers consult foreign exchange rate prior to making spending decisions. Rodger did state that deficit spending can raise inflation. We have a political choice of when to stop spending and drain the supply from the system. It appears that the only way your positions hold is if a monopoly supplier of the currency is constrained the same way a household, state, or business is constrained by having to earn or tax to gain revenue.

    The “excess liquidity” comes at a point where public sector purchases compete with private. Even how that is handled is a political decision. Here, we back off public spending when the private sector is already spending enough to optimize resource use and remove unemployment. We could make the decision to push the private purchaser out of the picture, but that can’t happen here … //smile (FZ)

  107. Rodger or friends:
    I must confess to not having known of Rodger Malcolm Mitchell before this exchange of thoughts. I asked Wikipedia for information re this gentleman hoping to learn details of his formal training and learned the following (extract provided)
    —————————————-
    Rodger Malcolm Mitchell is a business man and an economist — a turn-around expert, who enters companies in trouble and rebuilds them. He began his career in 1956, where he became the advertising manager and purchasing director for Booth Fisheries, Chicago, then the largest frozen seafood company in America. [further info included at Wikipedia]
    ————————————————-

    Is it correct that Mr.Mitchell is currently (2010)about 73 years of age? This seems to indicate his birth date was circa 1937? Therefore the 1956 date at which he became Booth Fisheries advertising manager and purchasing director found him then about 19 years old? Was he already a graduate economist? Where did he attend to earn his degree? I ask this because I would interested to know the source of his ideas. Also did he have previous business experience before he took the Booth Fisheries positions? His Wikipedia work experience is impressive.

    Of course I may have the wrong person identified.

    Thank you for assistance.

  108. Notabanker

    Yep, that is I. Actually, 1935.

    “You ask if I consider a $296 trillion national debt as a problem? Well yes I do.” Why? It is exactly the same growth rate as in the past. What is the problem and what is your supporting data?

    “I trust this explains my clear understanding of the difference between federal and private financing . . .” I suspect you were talking about inflation, but I lost you at about word 50 in this monster, convoluted, multi-clause sentence.

    ” . . . have a role to play between sovereign states ordering interchange and appear to be not yet of your persuasion . . . “ I have no idea what you’re talking about.

    Anyway, you ask many questions, some comprehensible, then ignore the answers and the data I supply, and provide zero data yourself. I’ve given it my all, and seeing as I don’t have that many years left to waste, I’ll stop responding now.

    If ever you have a philosophy, supported by data, put it on my site at http://www.nofica.com, and I’ll be glad to post it.

    Rodger Malcolm Mitchell

  109. Top scores for consistent evasion and non-answers Rodger. I presume you are a graduate economist from a recognized degree conferring institution?
    Thank you.

  110. Rodger,
    You are a graduate economist from where/when?