December 3rd, 2012
in Op Ed
Eurozone Discovers Formula for Economic Growth While Raising Taxes, Reducing Spending and Paying Off Loans
by Rodger Malcolm Mitchell, www.nofica.com
- The more federal budgets are cut and taxes increased, the weaker an economy becomes.
- Austerity is the government’s method for widening the gap between rich and poor, which leads to civil disorder.
- Until the 99% understand the need for federal deficits, the upper 1% will rule.
- To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
- Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
- The penalty for ignorance is slavery.
Here is the European formula for economic growth:
- First, destroy a nation’s ability to create money. One method is to take away the nation’s sovereign currency, and force it to use an alien currency, the euro.
- If the nation runs a trade deficit (mathematically necessary for half the world), its euro supply declines, and it finds itself less and less able to pay its bills. So it is forced to borrow euros.
- The EU sets requirements for borrowing: Increase taxes and reduce spending (aka “austerity”) Both requirements draw euros out of the private sector, which depresses the nation’s economy, further. The nation must borrow more and more.
- As loans are repaid – with interest – euros flow out faster and faster. The nation now is in an economic “death spiral,” from which there is no escape.
But wait. Along comes the EU and the other euro nations, to save the day. Here are some excerpts from Bloomberg News:
German Lawmakers Set to Approve Greek Aid Plan This Week
By Patrick Donahue on November 27,
German lawmakers are set to approve Greece’s new aid package by the end of this week after euro-area finance ministers reached an overnight agreement to ease terms on emergency bailout aid for the country.
Lawmakers expressed relief that a Greek debt write- off wasn’t part of the agreement in Brussels.
Translation: Greece will continue to go deeper into debt.
The euro ministers gave Greece more breathing room to scale back its debt amid economic collapse, declaring after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.
Translation: Greece has “breathing room,” but has no way to obtain euros to pay its debt – plus interest — except to borrow more and more.
“We believe that these measures are appropriate for the solution of the problems that have emerged in Greece,” Gerda Hasselfeldt, the Bundestag caucus leader for the CSU, told reporters. “I also can’t say whether this is the last step. We have to keep an eye on this.”
Translation: They will watch as Greece descends in an ever faster “death spiral.”
The agreement “offers a change so that Greece can return to the markets and sustainable growth and competitiveness after long and difficult developments,” Finance Minister Wolfgang Schaeuble said today.
Part of the welcome for the agreement, stemmed from the rejection of forgiving any of Greece’s publicly held debt, an option the government in Berlin has ruled out.
Translation: Greece has no way to grow its economy, except by obtaining euros. It has no way to obtain euros except by more borrowing. No one will forgive Greece’s debts, so Greece will sink deeper and deeper into debt, the economic “death spiral.”
And that is the EU formula for Greek economic growth.
Here is how the U.S. Congress applies the European successful formula for national growth:
- First, cut the deficit to destroy the government’s ability to create dollars.
- As the U.S. runs a trade deficit, its dollar supply declines, and it finds itself less and less able to pay its bills.
- Congress demands increased taxes and reduced spending (aka “austerity”). Both requirements draw dollars out of the private sector, which depresses the nation’s economy, further.
- America now is in an economic “death spiral,” from which there is no escape.
And that’s it. That is the European model for economic success. We’re fortunate our Congress is copying it.