Only six states remain

map 03

The American Legislative Exchange Council (ALEC) is a secretive group of right-wing politicians and their rich owners (e.g. the Koch Bros.) who are dedicated to widening the gap between the rich and the rest.

Currently, as part of their mission of greed, they are working to get a balanced budget amendment to the U.S. Constitution, in order to force the privatization of programs like Medicare and Social Security.

If the U.S. Constitution is changed so that it requires a balanced federal budget, then the U.S. government will no longer create sufficient money to pay for social programs. The programs will be privatized to “save them.” Workers will continue to pay FICA taxes, but the tax revenue ($1.1 trillion per year) will flow straight to the criminals of Wall Street. When retirees apply for benefits, they will be told that there was a “market downturn,” and all the money was lost. And everyone will accept it.

map 08

Republican presidential hopefuls Sen. Ted Cruz (Texas) Sen. Marco Rubio (Fla.) Ohio Governor Gov. John Kasich all want a Constitutional amendment that mandates a balanced federal budget.

For the U.S. constitution to get an amendment, Article V of the U.S. Constitution says there must be a Constitutional Convention, as seen below…

MAP 05 There are two ways to get a Constitutional Convention. Congress can propose having a convention, or else two-thirds of the states can propose it. (Thirty-four states.) Whatever is decided at a Constitutional Convention, the Constitution can only be amended if three-fourths of the states (thirty-eight states) ratify the proposed changes.

As of today, twenty-eight states have passed resolutions calling for a Constitutional Convention to propose a balanced budget amendment. This is six states short of the two-thirds threshold required by Article V to have a Constitutional Convention. The ALEC-affiliated Balanced Budget Amendment Task Force is hoping to get the remaining six states by 4 July 2016. In the map below, they are targeting twelve states, hoping to get at least six. In six of those twelve targeted states, Republicans control the house, the senate, and the governorship.

map 01

Once the elitists get the remaining six states they need, the Constitutional Convention will declare that the U.S. Constitution must include a balanced budget amendment, so that the masses have permanent austerity.  Then thirty-eight states must ratify the change to the U.S. Constitution. This will be easy, since it is what the American people want. The masses know that the U.S. government can print infinite money, yet they pretend that the government is “bankrupt.” Rather that seriously examine the fake “national debt crisis,” the peasants believe whatever they are told by their masters. They believe the myth about the “national debt crisis” even more than they believe the myth about the saintly “six million.”

MAP 04

A balanced budget amendment has been a holy grail for Republicans and right-wing elitists since the 1930s. Today it is part of the Tea Party platform. So far the only thing that has saved us has been concern that a Constitutional Convention could get out of control. In addition to a balanced federal budget amendment, various interests would try to pass other amendments covering various topics. Perhaps an amendment to outlaw abortion; or to make the death penalty mandatory for anyone who questions the endless wars, or who questions Israeli atrocities. Not all states would agree to outlaw abortion, but they would certainly agree to a balanced budget amendment. Such is the idiocy of the American peasantry.

map 07

Trump became a frontrunner among Republicans because the peasants are unhappy with Washington insiders. The Koch Brothers and their allies will exploit this unhappiness by claiming that a balanced budget amendment is just what the peasants need to get back at everything from NSA spying to immigrant invasions. The peasants will love it, and they will   take pride in knowing that the USA will be the only nation in the world with a constitution that mandates a balanced federal budget. The elitists will remind the peasants that during the last 200 years the U.S. Constitution has been amended 27 times, so what’s one time more? The elitists will say, “You don’t like the Congress? This is your chance to go around them!” And the peasants will eagerly submit to financial execution.

map 02

When the peasants willingly doom themselves, they will blame Blacks or Muslims or immigrants, or whatever — anything but themselves.

Of course, a balanced budget amendment to the U.S. Constitution does not mean that the federal budget will actually be balanced. The federal government will continue to create endless money for wars, for weapons makers, for Israel, for corporate subsidies, for Wall Street bailouts, and so on. However, anything that helps average people will be privatized or eliminated, since there will be “no money.” And taxes on the peasants will be increased dramatically. Food inspectors will be laid off, as will national park rangers, and all sorts of other positions.

Even now, much of the federal budget is classified (i.e. “off-budget”) for reasons of “national security.” When military contractors want money for a new weapons system, and Congress asks how much it will cost, the weapons makers say the amount is classified for reasons of “national security.” This ensures that the weapons makers enjoy an endless river of money.

In the 1980s, President Reagan said he was in favor of a balanced budget convention, even as he radically increased the federal deficit to pay for his military spending. The point is that a “balanced budget” means austerity for the little people, and ever-increasing federal dollars for the rich and the well-connected.

The meaningless map below is from a blog called “Demand Balance Now.” It purports to show which states have “passed a balanced budget amendment,” even though there was never any Constitutional Convention. This is an example of the level of intelligence involved.

map 06

Anyway we’ll have to keep our eye on this. Will President Hillary give the rich elitists the balanced budget amendment they have not been able to get so far?

Austerity in Thailand

The Big Lie and austerity mania are indeed global. Today we’ll see it in a Thai media pundit who calls himself a “senior economics reporter”…

Despite public debt accounting for 44% of GDP, it appears the Thai government remains safe from the immediate risk of fiscal crises, and is still able to acquire low-interest loans from domestic sources.

Right away the nonsense begins. The Thai government creates its domestic spending money out of thin air, and therefore does not need loans from domestic sources.

As for “public debt accounting for 44% of GDP,” this is irrelevant. Japan’s public debt is over 200% of GDP, meaning the amount of money deposited at Japan’s central bank is twice the amount of a given year’s GDP. What does that have to do with the state of Japan’s economy? Nothing.

A nation’s debt-to-GDP ratio is only meaningful when we are speaking of (a) foreign debt in foreign currency, or (b) entities that cannot create their domestic spending money out of thin air, such as euro-zone countries.

But that is no reason for the government to be complacent. In fact, permanent secretary for finance Somchai Sajjapongse said the need for fiscal reform is imminent, without which the country may experience a fiscal crisis in the next 10 to 15 years.

There it is. “If we don’t have more austerity, we will be doomed!”  For governments that create their domestic currency out of thin air, the sole purpose of austerity is to widen the gap between the rich and the rest. The only exception to this rule would be if a nation was experiencing severe inflation, and the government wanted to use austerity to remove the amount of money in circulation. But the author says nothing about inflation. The author says Thailand may have a fiscal crisis in its domestic currency, which is nonsense.

Incidentally the term “permanent secretary of finance” warrants explanation. Thailand’s form of government is modeled after the British (i.e. Westminster) system that is used by thirty different nations. In the Westminster system, the Prime Minister chooses his Finance Minister (which at present in Thailand is Mr. Apisak Tantivorawong). The minister has a deputy minister, assistant minister, a vice minister, and several other assistants.

Meanwhile the “Permanent Secretary” of Finance (or Permanent secretary of Foreign Affairs, or of Defense, or of Agriculture, or Justice, or Labor, etc etc ) is a high-level bureaucrat. “Permanent” usually means about ten years, such that “permanent secretaries” do not come and go with each Prime Minister.

At present, Thailand’s parliamentary system is ruled by a military junta that took power in a May 2014 coup d’état. Thailand’s ruler is General Prayut Chan-o-cha. Since he does not always agree with the Western Empire’s demand for neoliberal “reforms,” the Empire calls him a “dictator.”

Anyway the same garbage we see in the Empire also occurs among media pundits in Thailand…

The need for fiscal reform is imminent, because Thailand will have to deal with increasing pressure from a fast-approaching ageing society.

What is the “pressure”? If you need to create more benefits for retirees (which in Thailand is called “Social Security”) then just create the money out of thin air, like always.

According to a study by the Fiscal Policy Office, the number of people reaching retirement age will reach 25.2% in 2030. This means in the next 16 years, this group of people will comprise one quarter of the entire population. As a result, the government has had to allocate an immense budget for the retirement safety net, which accounted for 270 billion baht in 2014 or 2.1% of GDP. Half of the sum went to pensions for retired state officials. The rest went on living allowances for the elderly, and contributions to the Government Pension Fund, the Social Security Fund (SSF) and the SSF) and the newly-established National Savings Fund.

So what? Money for beneficiaries (which is only 2.1% of GDP) goes into the Thai economy, and therefore helps everyone, not just beneficiaries.

In 2024, the amount is estimated at 680 billion baht, or 3% of GDP. Of the total, some 470 billion will be used for the retirement safety net.

The government will simply create it out of thin air. Notice how these pundits cite large numbers to make you think there is a crisis. Or as this writer calls it, “an enormous burden.” It’s like saying, “The USA has a 19-trillion dollar national debt? Where will we ever get that money?” Answer: we don’t need to get it. The money already exists. Nineteen trillion dollars is simply what’s been deposited at the Fed.

Despite the enormous burden, the government has yet to suffer a financial crunch, and has managed under a deficit budget for two decades. But the pressure will intensify each year.

As you can see, the garbage is the same in almost every nation. “The deficit will cause us to explode! We need a balanced budget! We need AUSTERITY NOW!”

With the need to relieve the financial burden, the government and the Office of the Civil Service Commission have considered raising the retirement age of civil servants to 65 years old from 60 which will which will ease the burden on pension payments for the retired and curb recruitment in the bureaucracy.

Where is the “burden”? Just create the money!

As the burden grows bigger, there has been little, if any progress in tax reform measures including a proposed hike in value-added tax while the introduction of housing and land taxes, due to public opposition have been put on hold indefinitely. Though the new taxes can ensure social justice, no government dares introduce them for fear of the political impact. 

The author wants the government to impose austerity in the form of spending cuts and / or tax increases. However the military junta refuses. Therefore the Western Empire hates the junta.

But a new fiscal reform approach means more than tax increases. On the contrary, reform measures can include tax cuts — both in personal or corporate income tax — which are aimed primarily at boosting competitiveness and public acceptance. The measures for small- and medium-sized enterprises are a case in point. The Finance Ministry has offered an amnesty for SME operators to persuade them to duly pay tax in accordance with the single financial account project. Those eligible to join the project are operators with maximum registered capital of 5 million baht, and a sales performance not exceeding 30 million baht a year. Cooperative operators will be exempt from corporate tax this year.

Translation: When media pundits talk of “fiscal crises” and the need for “reforms,” they are calling for tax cuts for the rich and for the corporations — and tax increases for the masses. It’s all about widening the gap between the rich and the rest. This boosting of inequality is called “boosting competitiveness.”

Moreover, the Finance Ministry recognizes the need to improve the efficacy of the tax system which is vital, given that tax money accounts for 80% of the government’s total income. It is hoped that when the economy improves and people have more income, they will be more willing to pay tax, while the use of e-payments should significantly help heighten efficiency and improve revenue collection.

Yes, even in Thailand we see the lie that the government relies on tax revenue.

Reform of the tax system is not enough. In fact, the government needs to look at spending reform to prevent flawed projects such as the rice-pledging scheme that became an enormous budget burden.

The author falsely uses the term “burden” eight times in his article, and “reform” eight times. When anyone uses the term fiscal “reform” it means, “widen the gap between the rich and the rest.”

Damages from the rice scheme, plus past mistakes made before the 1997 crisis, became a massive burden amounting to 2 trillion baht or 35% of public debt for the current administration. An improvement in spending that prevents unnecessary losses or graft would ensure a stronger economy while taxpayers will be more willing to make contributions as they could be certain their money will be wisely used, with national development the ultimate goal.

The author is referring to a rice subsidy plan that was overseen by Thailand’s former Prime Minister Yingluck Shinawatra, who stole so much of the money that the military junta dismissed her on 7 May 2014 and took over. In fact, her corruption was one reason why the military took over.

In 2011 Thailand was the world’s largest exporter of rice, and had enough clout to influence world rice prices. The Thai government sought to buy rice from local farmers at a price 50% higher than the global market price. The government would then stockpile the rice in warehouses, causing a shortage that would drive up world prices. Thailand would then sell the rice abroad for increased foreign revenue.

Thai farmers signed up for the plan, and they boosted their production, expecting to get increased money for their rice. Thailand stored between 10 and 15 million metric tons of rice—equivalent to almost two years of the country’s rice exports. However, government bureaucrats stole more than $4 billion of the money (2 trillion baht ), and some 800,000 Thai farmers did not get paid.

Naturally Ms. Yingluck Shinawatra’s corruption made her a darling of the Western Empire. Her brother, Thaksin Shinawatra, was also corrupt, and was also ousted as prime minister (in 2006). He fled Thailand with his stolen billions before he could be imprisoned.

Since Ms. Yingluck Shinawatra is popular with the Western Empire, the Empire claims that the rice subsidy plan was killed by India’s return to the rice export market after a long absence, causing global process to drop for rice. The Empire claims that the Thai government “ran out of money” to support the rice subsidy, even though the Thai government can create infinite money.

Meanwhile all the extra rice that was produced was piled up in warehouses. Since there is now a surfeit of rice, the Thai farmers are getting 30% less than they were before the subsidy was introduced. However Gen. Prayuth (the military leader) ordered state-owned farmers’ banks to disburse some $2.7 billion owed to approximately 800,000 farmers who were unpaid for months for their rice.

Anyway the author of this article is lamenting that the rice scandal makes ordinary Thais less willing to pay taxes, and therefore less willing to submit to austerity.

Source:

As ageing society approaches, fiscal reform needed

A modest proposal

Heroin 01

In 2014, heroin overdoses killed 10,574 people in the USA.

On 29 March 2016 Obama unveiled new steps and funding to broaden medical treatment and assistance for millions of people addicted to heroin.

The heroin problem is no longer confined to minority populations in big cities. Now, experts say that addiction to heroin and other opiates has become a major public health problem in suburban and rural areas within substantial white populations.  Hillary Clinton calls it the “quiet epidemic.”  Senate Majority Leader Mitch McConnell (R-KY) says that heroin addiction is “spreading like cancer” across his home state. Obama says the statistics are “staggering” with regard to lives lost, diminished productivity and cost to families.

What to do?
It seems like an unsolvable problem.
An eternal conundrum.
A timeless mystery.

How about we stop mass-producing heroin in the first place? That’s my modest proposal.

Heroin 04

If you think that U.S. troops are in Afghanistan to fight “terrorism” or the “Taliban,” then you are either in denial, or else you are not paying attention. The troops are there to ensure the orderly production and shipment of opiates such as heroin, which in turn legitimizes the “war on drugs” in the USA. The Internet has countless articles about this, plus countless photos of troops guarding the poppy fields.

Just as we pretend that the U.S. government is “bankrupt” (even though we know the government can “print” infinite dollars) so do we pretend that the troops are in Afghanistan to “fight terrorists” (even though we know the troops are there to guard the production of heroin).

The U.S. government’s excuse is that if we don’t help the Afghans produce heroin for global distribution, they will turn to terrorism.  Therefore the government is “protecting” Americans by killing 10,000 of them each year with heroin overdoses.

Heroin 05

It’s not just the USA. All human societies are built on lies and delusions. The lies continue because of human selfishness.

The Cambridge English Dictionary defines human culture as, “The way of life, especially the general customs, beliefs, lies and delusions of a particular group of people at a particular time.” (I added the lies and delusions part.)

Edward Burnett Tylor (1832 –1917), the “founder of cultural anthropology,” defined human culture as, “That complex whole which includes knowledge, belief, art, morals, custom, habits, law, lies, and delusions acquired by man as a member of society.” (Again I added the lies and delusions part, and I stick by it.)

Our lies and delusions include the lie and delusion that we do not live by lies and delusions.

The U.S. government is “bankrupt” because we agree that it is. We share the lie and the delusion. And the delusion keeps us in poverty.

None of us are totally free of lies and delusions. Liberals and conservatives both indulge in the lie that the U.S. government runs on loans and on tax revenue. I know a person who does not share this delusion, but who remains hopelessly lost in delusions about U.S. imperialism, World War II, and the magical “six million.” This individual condemns racism and bigotry in the USA, but champions racism, bigotry, and extermination (indeed revels in it) when it occurs in a certain country in the Eastern Mediterranean region.

Some children share delusions about Santa Claus and the tooth fairy. Later they trade Santa for Jesus, or Mohammed, or Buddha, or whatever. The more people are deluded, the more they claim to have the “Truth.”

The delusions we most cling to are those that justify our hate, our selfishness, our self-righteousness, and our personal privileges. For example, we cling to our delusions about Afghanistan in order to feel superior to those “terrorist rag-heads.” We cling to our delusions about U.S. government finances in order to feel superior to those “welfare queens,” or to condemn the rich for not paying taxes.

So my suggestion about Afghanistan will have to remain a modest proposal. We don’t want to question anyone’s delusions, even when they cause death, destruction, and despair.

Heroin 06

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David Cameron became the U.K. Prime Minister on 11 May 2010. His Finance Minister, George Osborne, took office the same day. Together they launched a war on average Britons, using austerity as their weapon.

Their excuse was that the U.K.’s “national debt” was out of control.

And yet, according to the U.K. Independent, six years of austerity have increased the “national debt” by £555 billion (USD $798 billion).

Source

“The only reason why radical austerity hasn’t worked is that it has not been radical enough!”

Those pesky “trust funds”

oldies 01In this article, an oldie but a goodie, the author explains why there is no such thing as a Social Security “trust fund.” Instead there are only accounts that the U.S. government can debit or credit at will. The author explains that the myth about the “trust fund” has been around since Social Security began eighty years ago.

I would like to quote sections and comment on them. (There is no such thing as a “highway trust fund” either.)

Much of the public is convinced that Congress is stealing from a “trust fund” where our Social Security taxes are supposedly “held in trust” to pay future benefits. People think this is why Social Security is supposedly headed for trouble, and that all Congress has to do to fix Social Security is put the stolen money back.

This belief is mistaken. There is no trust fund, and Congress is doing nothing wrong. What’s more, the source of this misunderstanding is the government’s own public-relations efforts to create support for Social Security.

The U.S. government itself created the “trust fund” myth as a public relations move.

The Social Security Act of 1935 created an “Old-Aged Reserve Account” in the Treasury, and required that every year an amount determined sufficient to pay that year’s benefits was to be appropriated to it.

Note the word “account,” which can be debited or credited at will, simply by changing the numbers in the account.

Any of this money not needed for benefits was to be invested in federal debt (including unmarketable debt issued for this purpose) earning 3 percent interest, or other government-guaranteed debt.

Translation: The U.S. government created money out of thin air for this “Old-Aged Reserve Account.” If any excess money was created, it was to be deposited at the Fed. Even today, much of the “national debt” consists of money that the Social Security Administration has deposited at the Fed.

Presently, criticism arose. Winthrop Aldrich of Chase National Bank argued that the reserve would be fictitious. He said the government would just be issuing promissory notes to itself. As for interest on the bonds, which would supposedly help pay future benefits, he said the government would get the interest money from “the only source it could obtain it—the general taxpayer.

That was eighty years ago. Republicans and the money masters started circulating the lie that taxes pay for Social Security. They falsely claimed that the government would tax you for Social Security, and then spend that tax money on whatever, and then have to tax you again to give you any benefits.

In his Milwaukee speech on Social Security during the 1936 presidential campaign, Republican candidate Alfred Landon said it was as if a father took deductions from his children’s wages to invest for their old age, “invested” them in “his own IOU,” and spent the money, leaving his kids nothing but those IOUs. Landon called Social Security “a cruel hoax.” President Franklin Roosevelt countered that Social Security tax dollars “are held in a Government trust fund solely for the social security of the workers.”

Roosevelt was lying in order to offset the lies of Landon and other Republicans. There was (and is) no “trust fund.”

Yet attacks kept coming. Critics such as General Hugh S. Johnson, former head of the National Recovery Administration, and journalist John T. Flynn said that unlike insurance companies, which invest their premiums to build a reserve to pay on their policies, the U.S. government was only issuing claims on itself. Hence the Social Security reserve was merely worthless IOUs. To pay future benefits, Americans would have to be taxed all over again.

Even today we continue to hear this nonsense about “worthless IOUs.” As with all lies about money, it is based on the fundamental lie that money is physical and limited, and that the U.S. government must therefore run on loans and tax revenue.

In 1939 the Roosevelt administration proposed various amendments to Social Security. There were congressional hearings about the reserve fund controversy. Critics accused the administration of “embezzlement.” They said the reserve was merely IOUs. They said Americans would be taxed twice.

In response, defenders of Social Security countered that there was no embezzlement, there would be no double taxation, and the much-maligned IOUs were the safest investment around—U.S. government bonds. By now three years old, the reserve-fund controversy had become a serious blow to Social Security’s prestige.

At that point the Roosevelt Administration renamed the “Old-Aged Reserve Account” the “Old Age and Survivors’ Insurance Trust Fund.” Nothing changed but the name.

On the recommendation of Treasury Secretary Henry Morgenthau, the Social Security Amendments of 1939 created an Old Age and Survivors’ Insurance Trust Fund at the Treasury. This renaming was done to end the controversy. Arthur Altmeyer (Chairman of the Social Security Board) testified before the Senate Finance Committee that the purpose of the “trust fund” was “to allay the unwarranted fears of some people who thought Uncle Sam was stealing the money.” It was a public relations ploy.

The Trust Fund operated just like the old Reserve Account. Indeed, it was the Reserve Account. It was as if a shoebox full of bonds labeled “Reserve Account” was relabeled “Trust Fund.” Social Security’s Trust Fund is really a Treasury account, nothing more. 

Just as we have been saying all along. By the way, what is a “trust fund”? In explaining the answer, the author gets technical, and he uses many legal terms. Essentially he says that Social Security meets none of the legal or financial criteria or definitions to be an actual “trust fund.” Social Security is an account, not a trust fund.

Despite the term “trust,” the Social Security system contains nothing that remotely resembles the common law trust. There is no segregation of assets, no equitable property rights, and no private right of enforcement (which are all characteristics of the common law trust). It is merely a system of taxation and appropriation sprinkled with “trust” terms to hide its true nature. 

And now things get a bit tricky…

Social Security’s so-called Trust Fund does not operate as a trust fund does. Social Security revenues go into the Treasury’s general fund and are automatically credited to the Trust Fund in the form of Treasury bonds. The Treasury pays Social Security benefits and administrative outlays out of general revenue and debits the Trust Fund an equivalent value of bonds. Any leftover Social Security revenue finances general government operations, with an equivalent value of bonds remaining in the Trust Fund as Social Security’s “surplus;” to cover any revenue shortfalls. This is how a Treasury account, not a trust fund, works. And calling a Treasury account a “trust fund” to influence public opinion does not make it a “trust fund.”

This needs explanation. I say that the U.S. government has no need or use for tax revenues, and effectively destroys revenues on receipt. This author says no, FICA tax revenues, for example, go to the Treasury’s general account at the Fed, and are used to buy Treasury securities. Who is correct? Technically he is, but I say it’s just a numbers game, so what’s the difference? Money is not physical. Money is created and destroyed by changing the numbers in accounts. FICA tax revenues are not physical. They are merely numbers. If they are credited to a Treasury account at the Fed, that’s just a formality. It’s a bunch of accounting tricks to keep the numbers game balanced, in order to avoid inflation and disruption.

The U.S. government creates money out of thin air by crediting accounts. In order to avoid inflation, when the U.S. government credits one account, it generally tries, whenever possible, to debit some other account. (Federal taxes debit the entire economy.) Therefore, when the Treasury pays out Social Security benefits, the Treasury tries to debit its own account at the Fed. If the numbers don’t match up, the Treasury fudges them. No big deal.

Despite all this, it remains true that money is infinite, the U.S. government is not “bankrupt,” and Social Security is not “unsustainable.”

In all respects, then, Social Security’s Trust Fund is bogus. The adoption of the label “trust fund” for what was in fact a Treasury account was intended to cash in on the public’s understanding of this term—that assets are absolutely safe, invested on one’s behalf, and are held for one’s future use—and to reassure the public that Social Security was sound and trustworthy.

The semantic trick worked.  The reserve controversy disappeared. Over the following decades, Social Security continued to make public-relations capital out of the “trust fund” myth by repeatedly telling the public that benefits are paid out of a trust fund built up from their tax payments.

The author then explains that the “trust fund” myth is useful, but unfortunately people can still claim (falsely) that the U.S. government is “robbing it.”

Talk of Congress’s “raiding” or “dipping into” the Trust Fund to cover federal budget deficits continues to this day. People say the government is spending the Social Security surplus. They say there is no real reserve, nothing but worthless IOUs. It’s the old reserve-fund controversy all over again, but now with the added anger that the “trust fund” is being “robbed.”

The New Dealers of the 1930s did not foresee that this “trust fund” phrase might someday work to weaken rather than strengthen faith in the government and in Social Security. Lifting assets from a trust fund is a serious crime and a breach of faith and trust. The more firmly people believe that the Social Security “Trust Fund” really is a trust fund, the angrier they will be at stories of Congress’s looting it.

And the more they will be inclined to believe the lie that Social Security is “unsustainable.”

But as we have seen, there is no trust fund to be looted, only a Treasury account. And Congress is only doing what the Social Security law requires. 

Source: The Myth of the Social Security Trust Fund

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I thought the image below was cute. At a drive-in movie, three young boys don’t care about the film. They’re excitedly watching the real show, which is the boy and girl necking in the car behind them.

drive-in 09

The drive-in theater was created in 1933 by chemical company magnate Richard M. Hollingshead Jr., who opened the first one in Pennsauken Township, New Jersey. Drive-ins took off after World War II. By their peak in the late 1950s and early 1960s, there were more than 4,000 drive-ins across America. They continued to show mainstream Hollywood fare for families, but they also became popular with teenagers, who would see the latest B-Movies with science fiction monsters, juvenile delinquents, and early rock & roll. For teens, the privacy factor made drive-ins notorious as “passion pits.” Drive-ins gradually declined because real estate became too valuable to “waste” on a business that could operate for only a few hours a day, a few months a year, and which was subject to bad weather. Meanwhile, audiences began turning to cable TV and home video for their movie fix, plus multiplex theaters. Some drive-ins responded by changing their emphasis from family fare to increasingly violent and sexually explicit exploitation and horror films. Some even showed porn. Many added multiple screens. Some rented their land during the day to other businesses such as flea markets—or they managed such businesses themselves. Especially in urban areas, the vast expanses of land necessary for a drive-in became too expensive to maintain, and the land was sold for redevelopment. Most drive-ins were forced to close between 1970 and 2000. In many cases, the land was even turned over to build multiplex theaters.

Drive-in use 01Drive-in use 02

 

Fist bump

bump 01

This is classic. At left is Juha Sipilä, a millionaire who became Finland’s Prime Minister in May 2015. At right is his Finance Minister Alexander Stubb, a jet-setter and right-wing ideologue who likes to wear expensive suits and maintain a posh lifestyle while he tells ordinary Finns that they must make do with less and less. The two are doing a triumphant “fist bump” to celebrate their crushing of Finland’s labor unions so that workers submit to lower wages and fewer benefits.

bump 02

Up until mid-2011, Finland vacillated back and forth between having a trade deficit and trade surplus. This happened because Finland’s economy was heavily dependent on exporting cell phones and timber products, including paper, which go through cyclical phases of demand. When the economy was strong, Finland self-righteously condemned countries like Greece, for which no amount of austerity can ever be enough. Average Finns enjoyed very high job security and an average national wage of 25 euros per hour (USD $28.00).

All of that changed with the partial demise of Finland’s cell phone business, plus a shrinking demand for Finland’s forestry products. (Apple made Nokia go from being synonymous with cell phones to being synonymous with obsolete phones. ) The recession became even worse when Finland’s politicians agreed to abide by the USA’s sanctions against Russia, which had been one of Finland’s biggest trading partners, especially in dairy and agricultural products.  Even without sanctions, Russia would be buying fewer imports from Finland because of the fall in oil prices.  Finland fell into the red zone, and its recession has been worsening for the last four years…

trade balance

When economic times were good, and euros flowed into Finland, the country had an AAA rating on its sovereign bonds. No more.

Finland’s largest export industries had been electronics (21.6 percent), machinery, vehicles and other engineered metal products (21.1 percent), forest industry (13.1 percent), and chemicals (10.9 percent). Now everything is down.

Finland is the only Nordic country to have submitted to the euro-scam, and is therefore the only Nordic country that is badly suffering. Denmark and Sweden wisely did not adopt the euro, whereas Iceland and Norway never joined the European Union, let alone the euro-zone.

The two men in the topmost image are doing a fist bump because when economic times were good, Finland’s labor unions were too powerful to crush.  Now the unions must submit to the rich owners if workers are to have any jobs at all. Unions have agreed to slashed wages and benefits, and to the elimination of many labor laws. Unions also submitted to longer working hours, lower holiday bonuses, larger pension contributions for workers, and lower pension contributions for employers.

bump 02

Average Finns are now experiencing the pain that they had smugly wished on Greece. On 11 March 2016, farmers from all over Finland drove their tractors to Helsinki to block city roads and bring the capital city to a standstill. They were protesting the sanctions against Russia, which have badly hurt Finnish farmers. Many had driven their tractors for hundreds of miles.

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Thousands of pensioners and students have also taken to the streets. Helsinki University has off 980 people so far.

Prime Minister Juha Sipilä (the millionaire) and his Finance Minister Alexander Stubb want to start with 4 billion euros in sending cuts. Stubb has warned labor unions that if they do not continue to submit to austerity, Stubb will ram even more radical austerity down their throats. This attack on workers is called “internal devaluation.”

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From Reuters:

Few economists see any magic wand to boost growth, given how few new industries are making up for weakness of Finland’s electronic and forestry exports. We are all clueless on how to get long term economic growth,” said Markus Jantti, a professor of public finances at Helsinki University.

Here is the “magic wand”…

[1] Dump the euro and go back to using the Finnish markka. If neighboring Sweden doesn’t need the euro, then Finland doesn’t either.

[2] Stop participating in the sanctions against Russia.

[3] Launch massive public works programs like the National Socialists did in 1933, which caused Germany to rise in only five years from Europe’s most depressed economy to Europe’s strongest. Germany went from severe unemployment to having a labor shortage. Or launch things like the “New Deal” programs in the USA, with its Works Progress Administration, its Civilian Conservation Corps, and so on.

Of course, this is not possible, since it would cause the gap between the rich and the rest to not grow so wide.

Some Finns understand that the euro currency must go, but Erkki Liikane, head of the Bank of Finland, says Finland must keep the euro at all costs.

In return for this, the European Central Bank in Frankfurt lets Liikane sit on the ECB committee that makes monetary policy decisions.  Central bankers are alien entities that must be kept under very strict control at all times.

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These people hate me more than they hate Blacks and Jews.

Less means more

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An ABC news article is an example of how European bankers and their puppet politicians and media pundits call for austerity to be cut in half today, so that austerity will inevitably be tripled tomorrow.

The Portuguese Socialist government is advocating an end to Europe’s years of budget austerity by increasing spending and cutting taxes. Even the president of the European Central Bank says governments should do more to support growth.

Increasing spending and cutting taxes is great for countries whose governments create their spending money out of thin air (like the U.S. government), but it is lethal for some of the euro-zone countries.

The U.S. government does not borrow its spending money, but euro-zone governments do, if their nations do not have large trade surpluses. Borrowing means debt, which means more austerity, which means mass privatizations.

Privatization is what the euro-scam is all about: using debt to force governments to give public assets to the rich.

So, euro-zone politicians please the masses by calling for an end to austerity today. In doing so, those same politicians set up the masses for radically increased austerity tomorrow.

The situation is similar in many of the economically weaker parts of the 19-country euro-zone. Italy is challenging Germany’s focus on debt reduction head on, arguing that spending more would help the economy.

 Italy exemplifies the scam. Starting in February of 2013, Italy enjoyed consistent trade surpluses because of a reduction in imports and an increase in exports. In the year 2015, about four billion more euros flowed into Italy each month (on average) than left Italy.

Toward the end of 2015, however, Italy’s trade surplus evaporated….

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Despite having stored up a mountain of euros from 2013 to 2015, the Italian government has the second highest debt in the euro-zone, after Greece. Italy’s debt is 135% of Italy’s GDP, which means that if every euro that changed hands in Italy in one year went straight to the banker criminals, it still wouldn’t pay off the Italian government’s debt to the bankers. If the Italian government embarks on a spending increase and tax cuts right now, the result will be a whopping increase in debt, plus a recession and a lot more austerity.

That’s the plan. It’s intentional. With an increase in government spending right now, Italian politicians can please the masses. “The end of austerity!” Then in a couple of months the politicians will announce that the resulting debt load will require more austerity, plus more privatization, in which public assets are given to the rich.

Italian Prime Minister Matteo Renzi pointed to the example of the United States, whose economy is profiting from a focus on growth and innovation and where Obama said last year he wanted to “replace mindless austerity with smart investments.”

And there it is: the concealment of the euro scam by falsely comparing the Italian government (which cannot create its spending money out of thin air) with the U.S. government (which can). I was beginning to worry that Matteo Renzi would forget to repeat this lie. Renzi is young (age 39) and he is eager to please the money masters by doing away with laws that protect Italian workers.

The euro-zone economy needs growth any way it can get it.

Except for dumping the euro, which is the chief obstacle to growth, since the euro maintains a permanent debt load for all euro-zone nations that do not have large trade surpluses.

The Paris-based Organization for Economic Cooperation and Development, a respected policy group that represents the world’s most developed economies, has thrown its weight behind a move away from austerity as soon as the opportunity arises. 

Yes, they want governments like those of France and Italy to embark on a binge of tax cuts and spending increases, in order to increase their government debt, which will in turn necessitate more austerity in the form of privatizations.

Remember that the debt-to-GDP ratio is meaningless for countries whose governments create their spending money out of thin air (like the USA), but it is crucial for countries (like France) that must borrow all their money because they have huge trade deficits.

France in particular has been deep in the red zone for the past decade, but you don’t hear the screams (yet) because France had the euro-zone’s second largest economy (after Germany) going into the nightmare. With so many billions of euros flowing out of France year after year, the mass layoffs and privatizations get worse all the time.

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“What has changed is that over the past year, euro-zone governments have started to openly question” the wisdom of Brussels and Berlin’s policy strictures, said Simon Tilford of the Centre for European Reform, a think tank in London.

Nonsense. No one is questioning the euro scam. This is like saying “U.S. economists are questioning austerity as the best means to bring about necessary deficit reduction.” In other words, economists all agree with the lie that the U.S. government is “bankrupt,” and needs to impose austerity. It’s just that economists question whether austerity is the best way to impose austerity.

Portuguese officials hope tax cuts coming into force this month will put more cash in people’s pockets, generating a spurt of domestic demand and firing up the wider economy.

That could lead to debt problems. Portugal has spent a lot of time in the red zone.

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In Portugal, Finance Minister Mario Centeno, who has a PhD in Economics from Harvard University, is introducing income tax and sales tax cuts, tax rebates, new subsidies for household energy bills and restoring government workers’ pay that was cut. Those steps, he says, will stimulate consumption.

In the short term, yes, but if the debt gets out of control, there will be more austerity.

Portugal borrowed 78 billion-euros in 2011, and its debt is already 130% of its GDP.

Banks lend to the Portuguese government. When the government can’t pay, the ECB in Frankfurt bails out the banks, and forces Portugal to pay the debt (plus interest) in the form of austerity and privatization. This attack on Portugal is called a “bailout.”

Portuguese banks are already sitting on close to 18 billion euros of bad debt. They are waiting for the next bailout from the ECB, which will be another debt bomb for Portugal.

“Portugal alone can’t really do that much” to hasten a recovery. It really needs Italy, France and Spain to put up a united front and demand fundamental change in the way the eurozone is run.”

Yeah. It’s called dumping the euro.

A doomsday scenario!

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Here’s an absurd article from a few years ago…

Chinese Leaders Threaten To Sell US Debt as Punishment For Taiwanese Arms Sale

The doomsday scenario we’ve feared since World War II has arrived.

A doomsday scenario!

In response to the United States’ latest arms sale to Taiwan, the Chinese military has suggested that China sell off some of the U.S. debt it owns to give the U.S. an economic punch of sorts.

Oh no! That would be a terrible blow to the USA. (Not.)

Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan. The calls for broad retaliation over the planned U.S. weapons sales to the disputed island came from officers at China’s National Defence University and Academy of Military Sciences, interviewed by Outlook Weekly, a Chinese-language magazine published by the official Xinhua news agency.

So let’s see. China sells goods to the USA in exchange for dollars. China deposits those dollars at the Federal Reserve in order to gain interest, and to move dollars out of China so that dollars cannot displace the local Chinese currency. China likes U.S. Treasury securities, because they are the safest in the world, since the U.S. government can create infinite dollars that are accepted worldwide. China deposits its dollars at the Fed by purchasing T-securities. China threatens to sell those T-securities to someone else. China would then collect money for those Treasuries, but would sacrifice the interest that China would have been paid. (The new owners would collect the interest.) The money that China initially deposited at the Fed would stay in the Fed.

And this would harm the USA…how again?

I mention this because most people pretend that the U.S. government is “bankrupt.” Hence they pretend that the U.S. government runs on tax revenue, and on loans (in dollars!) from China. Therefore they believe that China could harm the USA by “dumping China’s bonds,” or by “calling in China’s loans.”

Nonsense. The truth is that China could sell all its T-securities tomorrow, and it would hurt no one except China, which would lose the interest that China would have been paid. The money that China deposited at the Fed would stay at the Fed. It would simply have new owners.

As far as China “calling in its loans,” this would just be a matter of giving China’s dollars back to China without interest. It would have no effect on the U.S. government’s ability to keep creating money.

So ignore whatever you hear about China using the (fake) “national debt crisis” to “threaten” the USA. It’s nonsense.

I just saw a different article that is full of nonsense. Examples…

China’s position as America’s largest banker gives it some political leverage. Every now and then, China threatens to sell part of its debt holdings. It knows that, if it did so, U.S. interest rates would rise, which would slow U.S economic growth.

“America’s largest banker” is the Fed, not China. And if China sold its T-securities, it would have no effect on U.S. interest rate. The Fed decides the “overnight” rate and the Fed funds rate based on many factors, of which China is only one.

What would happen if China called in its debt holdings? China would not call in its debt all at once. If it did so, the demand for the dollar would plummet like a rock. This dollar collapse would disrupt international markets worse than the 2008 financial crisis. China’s economy would suffer along with everyone else’s.

China cannot “call in its debt holdings.” China has money on deposit at the Fed. China cannot get that money out of the Fed until China’s T-securities mature. But China can sell its T-securities to others, and sacrifice the interest that China would have been paid. This would harm China, but not the USA. The U.S. government does not borrow its spending money. So how could China “call in its holdings”?

And now here’s some nonsense from “Investopedia”…

China offers loans to the US so that the US can keep buying the goods China produces.

Huh? China cannot create dollars, but China lends dollars to the USA so the USA can spend those dollars on Chinese goods? Ridiculous!

And again…

Hence, as long as China continues to have an export-driven economy with a huge trade surplus with the US, it will keep piling up US dollars and US debt. Chinese loans to the US, through the purchase of US debt, enable the US to buy Chinese products.

Nonsense. Dollars don’t originate in China. Dollars originate in the U.S. government, and in U.S. banks that make loans. That is what buys Chinese goods. “Loans” from China are simply dollars that China deposited at the Fed, after getting those dollars from outside China.

Some people fear that China might “dump” its T-securities. What does that mean? Simply that China would sell its T-securities to someone else, and forgo the interest.

It’s trivial, but people like that word dumping. “China is dumping U.S. debt!”

Like the “debt-to-GDP ratio,” its sounds dramatic, but it is meaningless.

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