Here is what economic ignorance causes

As the above graph demonstrates, high interest rates correlate with high GDP growth and low rates correlate with low GDP growth.

As interest rates trended up, through 1980, the GDP growth trended up. Then, as interest rates trended down, the GDP growth rate trended down.

The above graph is similar to the previous graph except it shows total interest paid rather than interest rates. The result essentially is the same.

On average, the more interest the federal government pays, the more GDP grows.

“Even if the economy starts to re-open in mid-May, more than 20 million Americans will have lost their job with the economy likely having contracted around 13% peak-to-trough, more than three times deeper than the global financial crisis,” James Knightley, chief international economist at ING Financial Markets, wrote with his forecast submission.

“It will be a gradual re-opening of the economy, so a return to ‘business as usual’ is many months away.

Throw in crippling financial losses and a legacy of defaults and it means we estimate U.S. economic output won’t return” to the late-2019 peak until mid-2022 at the earliest, Knightley said.

People “lose their jobs” because companies cannot afford to maintain payroll. As the companies run short of money, their people run short of money. When consumers run short of money, they buy less, so more companies run short of money, in a self-strengthening helix descending to depression.

To cut the helix, the government must give (not lend) money to businesses and to consumers.

“Crippling financial losses and a legacy of defaults” are symptoms of a lack of money.

See the commonality? The overarching problem facing the economy is a shortage of money — which the federal government could solve with sufficient deficit spending.

The U.S. federal government has a massive built-in advantage, that if used properly, would eliminate recessions and depressions. Unlike state and local governments and unlike euro-nation governments, the U.S. government is Monetarily Sovereign.

It has the unlimited ability to create U.S. dollars and to give those dollars any value it chooses.

There is no excuse for a company to fire people because it has run short of payroll dollars if the government simply will provide per-employee financial support.

There is no excuse for “crippling financial losses” if the government will pump dollars into the economy.

We are at war with our financial enemies: Recession and depression. The U.S. government has an ultimate weapon to use against these enemies: Monetary Sovereignty.

Instead, it chooses to fight with sticks and stones — little sticks and tiny stones. And it leaves the battle to the monetarily non-sovereign states, counties, and cities. The army has departed the battlefield, leaving the women and children to fight empty-handed.

The government is in a war against the enemies, recession

As a result, we will lose the war, and the American people will suffer.

Needlessly.

Rodger Malcolm Mitchell
Monetary Sovereignty
Twitter: @rodgermitchell
Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell

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THE SOLE PURPOSE OF GOVERNMENT IS TO IMPROVE AND PROTECT THE LIVES OF THE PEOPLE.

The most important problems in economics involve:

1. Monetary Sovereignty describes money creation and destruction.
2. Gap Psychology describes the common desire to distance oneself from those “below” in any socio-economic ranking, and to come nearer those “above.” The socio-economic distance is referred to as “The Gap.”

Wide Gaps negatively affect poverty, health and longevity, education, housing, law and crime, war, leadership, ownership, bigotry, supply and demand, taxation, GDP, international relations, scientific advancement, the environment, human motivation and well-being, and virtually every other issue in economics.

Implementation of Monetary Sovereignty and The Ten Steps To Prosperity can grow the economy and narrow the Gaps:

Ten Steps To Prosperity:

1. Eliminate FICA

2. Federally funded Medicare — parts A, B & D, plus long-term care — for everyone

3. Provide a monthly economic bonus to every man, woman and child in America (similar to social security for all)

4. Free education (including post-grad) for everyone

5. Salary for attending school

6. Eliminate federal taxes on business

7. Increase the standard income tax deduction, annually. 

8. Tax the very rich (the “.1%”) more, with higher progressive tax rates on all forms of income.

9. Federal ownership of all banks

10. Increase federal spending on the myriad initiatives that benefit America’s 99.9% 

The Ten Steps will grow the economy and narrow the income/wealth/power Gap between the rich and the rest.

MONETARY SOVEREIGNTY