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  • How To Protect Your Wealth From Inflation  [View article]
    Inflation? Are you kidding? How about, "How to Protect Your Wealth From Depression"?

    We are much, much closer to depression than to inflation (at least an inflation much above the Fed's target). The mentions of Zimbabwe and Argentina were silly. We are nothing at all like Argentina and Zimbabwe.

    If you're going to write about economics, better to learn Monetary Sovereignty.
    Feb 15, 2013. 02:58 PM | 2 Likes Like |Link to Comment
  • The XLP, XRT, and XLY all give up gains and turn lower following Wal-Mart sounding the warning over the effects of the payroll tax hike. It's fascinating that it took markets until just now to react to what was crystal clear 6 weeks ago.  [View news story]
    FICA is the worst tax in America's taxing history. See: 10 Reasons to Eliminate FICA:
    Feb 15, 2013. 02:54 PM | Likes Like |Link to Comment
  • When Politics Trump Economics  [View article]
    The " gray cloud in the sky" is the push to reduce the deficit, which will return us to recession. Clearly, our leaders pay no attention to this fundamental equation in economics:
    GDP = Federal Spending + Non-federal Spending - Net Imports.

    Cutting the deficit reduces both Federal Spending and Non-federal Spending, making a drop in GDP mathematically inevitable.

    And vonMisesfan, to bad Ludwig was totally ignorant of Monetary Sovereignty. When the U.S. became Monetarily Sovereign on 8/15/71, everything changed. Ludwig, of course, couldn't.
    Feb 13, 2013. 09:39 PM | Likes Like |Link to Comment
  • The Keynesian Depression  [View article]
    This is my favorite sentence: "The most glaring feature of today's global landscape is that governments around the world have exhausted their capacity to borrow money and have turned to their central banks to provide unlimited credit. "

    You don't differentiate between the monetarily non-sovereign euro nations and the Monetarily Sovereign U.S., Canada, Japan et al. Monetarily Sovereign nations cannot "exhaust" their capacity to borrow; they have no need for borrowing. The euro nations cannot turn to their central banks for credit.

    Your entire post is based on an abject ignorance of Monetary Sovereignty.

    But the graphs are cute.
    Dec 5, 2012. 11:10 AM | 2 Likes Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    Hi Scott,

    You said, "The 'collateral' govts have is their taxing authority. Take that away and the value of their currency goes to 0."

    I reminded Randy Wray that there are plenty of state and local taxes to give value to U.S. currency, so federal taxes aren't needed. He agreed.

    The collateral for the U.S. dollar is full faith and credit, which includes far more than taxes:

    <i>– The government will accept U.S. currency in payment of debts to the government
    – It unfailingly will pay all it’s dollar debts with U.S. dollars
    – It will force all your domestic creditors to accept U.S. currency, if you offer it, to satisfy your debt.
    – It will not require domestic creditors to accept any other money
    – It will maintain a market for U.S. currency
    – It will continue to use U.S. currency and will not change to another currency.
    – All forms of U.S. currency will be reciprocal, that is five $1 bills always will equal one $5 bill and vice versa.</i>

    But, of course, none of this is operational reality of MMT -- the part that cannot be debated -- the money creation reality. Preventing inflation and jobs guarantee are part of policy recommendation.

    Rodger Malcolm Mitchell
    Oct 16, 2012. 09:08 AM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    Actually, where most people get this wrong is the false belief that the federal government needs a source of dollars to "fund deficits." Here is how the federal government pays its bills:

    The federal governemtn sends instructions to creditors' banks to mark up the numbers in the creditors' checking accounts. Period.

    The federal government needs no source of dollars. It creates dollars in checking accounts, merely by telling banks to change numbers. The government doesn't need to sell anything (t-securities) and it doesn't need to collect dollars from anyone (taxes and "borrowing). It simply sends instructions.

    If the sum of all T-securities and all taxes fell to $0 or rose to $999 trillion, neither event would affect the federal government's ability to pay its bills.

    Understanding Monetary Sovereignty is a prerequisite to understanding economics.

    Rodger Malcolm Mitchell
    Oct 16, 2012. 08:53 AM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    Those who don't like federal deficits should explain these two key equations in economics:

    Federal Deficits – Net Imports = Net Private Savings

    Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

    Rodger Malcolm Mitchell
    Dec 28, 2011. 09:09 AM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    What was the date of that "hyperinflation"? No, what was the hour of that "hyperinflation?

    Really reaching, aren't you, to call anything that happened on August 15, 1971 "hyperinflation"? Give me the name of an economist who would use that definition.

    Disingenuous definitions lead to ridiculous conclusions.

    Rodger Malcolm Mitchell
    Dec 27, 2011. 01:31 PM | Likes Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    The hyperinflation was with the rebels, not with the U.S. government. "Would have been" except no gold ?? Hmmm . . . . what does that tell you about today?

    Debt-hawks see hyper-inflation (which we never have) around every corner. Mysteriously, they don't see depressions (we've had at least 6, depending on how you're counting) and recessions (we've had 7 in just the past 40 years -- spaced an average of 6 years apart).

    Further, in that same span, there has been zero relationship between federal deficit spending and inflation. See:

    So which is the bigger problem for America: The extremely rare (nonexistent) hyperinflation, or the far more common depressions and recessions, the most recent one of which may still be with us?

    Further, the notorious Weimar Republic hyperinflation lasted only about two years. How long did the Great Depression last?

    Debt hawks love to wring their hands about hyper-inflations, but they are clueless about economics. It's all intuition with them, not facts.

    Rodger Malcolm Mithchell
    Dec 27, 2011. 08:59 AM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    Hyper-inflation (which the U.S. never has had in its 235 year history) is a totally different animal from inflation. Completely different causes; completely different cures.

    For some reason, debt hawks like to worry about inflation, when the real problem is recession and deflation, and then transition that worry into hyper inflation. It's like worrying about sunburn during a snowstorm, then transitioning that worry into being hit by a giant meteor. That's classic debt-hawk thinking.

    Today's problems are unemployment, recession and deflation, which are problems because worries about hyper-inflation have prevented the government spending needed to cure today's problems.

    Rodger Malcolm Mitchell
    Dec 26, 2011. 09:11 AM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    The constant thread for those who don't understand MMT, is that so-called "printing money" causes inflation -- even hyper-inflation. So where is the inflation, much less the hyper-inflation?

    The federal government has been "printing money" -- way too much money according to MMT critics -- for decades. The so called "debt (I really hate these incorrect, misleading words) has grown to what the newspapers, politicians and old-line economists feel is an intolerable level. So where is the inflation?

    The problem MMT critics have is they take the facts of MMT, use these fact to come to their own wrong conclusions, then criticize MMT for the wrong conclusions. Meanwhile, inflation phobia permeates everything the critics say, but where is the inflation?

    When reality differs from hypothesis, better find a new hypothesis.

    Rodger Malcolm Mitchell
    Dec 22, 2011. 08:42 AM | Likes Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    There has been no relationship between federal deficits and inflation, since we went off the gold standard. (See: rodgermmitchell.wordpr.../ )

    So you are left with two alternatives:
    1. Reduce the deficit to avoid an inflation which maybe, possibly could result some day in the future , while causing further recessions and depressions. (See:
    2. Increase the deficit to stimulate the economy. (See: rodgermmitchell.wordpr.../

    Rodger Malcolm Mitchell
    Aug 19, 2011. 09:01 AM | Likes Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    You are correct about money going overseas, which depletes the local money supply -- which is one of the several reasons federal deficit spending is necessary, without which the money supply would be reduced, causing recessions and depressions.

    Rodger Malcolm Mitchell
    Aug 16, 2011. 01:21 PM | 1 Like Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    Most of the above arguments make the fundamental error of not understanding how the U.S. borrows and how it pays back.

    When China, for instance, "lends" (wrong word) the U.S. dollars, it first puts dollars into its checking account at the Federal Reserve bank. Then, it directs the bank to debit its checking account and credit its T-security account (essentially a savings account). So all that has happened is China's checking account is debited and its savings account is credited. In total, money neither is created nor destroyed.

    Then, when the "loans" (again, wrong word) are repaid, all that happens is China's checking account is credited and its savings account is debited. Again, money neither is created nor destroyed.

    In short, <b>the U.S. does not print money to pay its "loans," and there is no inflationary aspect either to the "borrowing" nor the "paying."

    Rodger Malcolm Mitchell
    Aug 16, 2011. 01:19 PM | Likes Like |Link to Comment
  • The Trouble With Modern Monetary Theory  [View article]
    People with no understanding of economics or history love to trot out the old Weimar Republic / Zimbabwe comparison.

    Weimar Republic: Doomed by the onerous conditions placed on it by the Allies following WWI, which demanded massive reparations, bleeding the nation of money, which caused the inflation, which the nation attempted to cure by printing money.

    Zimbabwe: Doomed by Robert Mugabe's stealing of farm land from whites, who knew how to farm, and giving it to blacks who did not. The resultant shortage of food caused severe inflation, which Mugabe dealt with by printing money.

    In each case, printing money was caused by inflation, not the other way around. Weimar cured its inflation in just two years by changing money, which it then printed to create the greatest war machine the world had ever known. (Who do you think paid for all those tanks and planes?)

    There is no comparison between the U.S. vs. Zimbabwe and Weimar. Note to debt hawks: Stop using that silly comparison.

    Rodger Malcolm Mitchell
    Aug 8, 2011. 10:07 AM | 2 Likes Like |Link to Comment