Opportunity Lost: UK and Greek Versions: What Do They Have in Common?

July 11th, 2015
in Op Ed

by Rodger Malcolm Mitchell, www.nofica.com

In the U.S., and perhaps elsewhere, we speak of "snatching victory from the jaws of defeat," but it is the ironic anagram, "snatching defeat from the jaws of victory" that is most appropriate, here.

Follow up:

Here is the UK version:

Osborne spells out new, post-election spending cuts
LONDON | BY WILLIAM SCHOMBERG AND DAVID MILLIKEN

Chancellor George Osborne, fresh from a decisive election victory, pledged to recast the country's economy by chopping welfare spending, lowering the tax bill for workers and tackling low productivity that could undermine the recovery.

In the first solely Conservative budget for nearly 20 years, Osborne used the turmoil in Greece to argue that the world's fifth-largest economy needed less spending and less borrowing.

"Britain still spends too much, borrows too much," Osborne told parliament.

"You only have to look at the crisis unfolding in Greece as I speak, to realise that if a country's not in control of its borrowing, the borrowing takes control of the country," he said.

Osborne pushed the target of achieving a budget surplus into the 2019/20 financial year from the 2018/19 financial year as projected under his previous budget plan.

Osborne, who has previously said he wants to tackle Britain's hefty bill for tax rebates to low-paid workers, said he would freeze working-age benefits for four years.

"The benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system," he said.

Anyone reading that article would assume the UK is a monetarily NON-sovereign, euro user.

The line, "Britain still spends too much, borrows too much," is exactly what the leader of a euro nation legitimately might say.

Even Osborne pretends Britain is monetarily non-sovereign like Greece.

But, of course, Britain is not Greece. Far from it. Britain did not surrender its Monetary Sovereignty (MS) to the troika, instead wisely retaining its own sovereign currency.

That was a brilliant move.

As a MS nation Britain retained total control over its money supply. Britain never can run short of its own currency. It creates money ad hoc, by spending.

Contrary to what Osborne claims, British taxpayers do not fund British spending. Even if all tax collections fell to zero, the British government could continue spending, forever.

The only reason - and I mean the ONLY reason - to cut spending, is in response to the threat of inflation. Even then, one should try other means first, i.e. increasing interest rates.

And borrowing cannot "control" a MS nation. First, the nation never needs to borrow; it has the unlimited ability to create its currency.

And second, even if it does borrow, it has the unlimited ability to service any debt of any size.

So Osborne lies - and lies - and lies.

He and his conservative party "chop welfare spending," the spending that benefits the UK's poorest citizens.

Why? What kind of morality causes a government to punish its weakest and poorest?

The conservatives cut spending for the poor, because they can. The poor have no power; the rich have the power, and greedily, wish to have even more.

Cruelty to the poor never is punished. It is rewarded.

Finally, the notion of achieving a surplus (taxes greater than spending) is outrageous for a MS nation. Why would a government that can create money at will, want to take more money from its own economy than it gives back?

What does this do to an economy? Shrink it, of course. What else could a reduction in funds possibly do?

Why shrink the economy? Because the rich are less affected than the rest, so the Gap widens. In a shrinking economy, the middle class becomes more desperate for work, thus increasing the power of rich employers.

In summary, the UK might just as well have adopted the euro, become monetarily non-sovereign and lost control over its money supply, because its government acts as though it has done just that.

Given its retention of Monetary Sovereignty, the UK could have been the greatest, most powerful nation in Europe.

Ah, those sad words, "could have been."

Instead, the UK government has snatched defeat from the jaws of victory. Watch as the UK slowly sinks into recession, then depression.

Opportunity lost.

And now comes Greece:

Greece news live: Athens submits three-year rescue request after Alexis Tsipras is torn apart by euro MPs

Greece applies for a new three-year bail-out program after Tsipras is warned banking collapse and humanitarian crisis are four days away

George Saravelos at Deutsche Bank thinks Athens will have to bow down and accept much harsher bail-out conditions than those they have previously had rejected by creditors.

With banks closed, economic activity stalled, and the prospect of IOUs only days away, Mr Saravelos estimates any new three-year bail-out will come with harsher fiscal measures attached.

Greece has come within inches of pulling away from the slavery of euro-imposed austerity, only to see its leaders "bow down" to the troika, and submit a new bail-out plan.

Greece could have been Monetarily Sovereign. It could have had the unlimited ability to control its money supply, pay all its bills and support its own citizenry.

Instead the Greek leaders have caved to the rich bankers, and Greece will return to even worse poverty and misery.

What do the UK and Greece have in common? They are controlled by the very rich, whose primary goal is to widen the Gap between the rich and the rest.

Remember, it is the Gap that hands power and control to the rich. Without the Gap, no one would be rich, and the wider the Gap, the richer they are, and the more power and control they have.

[If everyone had $1 million, no one would be rich and no one would be in control. But if one man has $1 thousand, while everyone else as only $1, that one man is rich, powerful and has control.]

It is power and control that the rich want, and a widening Gap gives it to them.

So the UK and Greece will continue to do the bidding of the rich, widening the Gap, handing ever more power and control to the rich.

The Greek people voted. They wanted freedom from troika-imposed austerity. They wanted more control over their lives.

But their government will hand it back.

As for the British people, they have a history of bowing to royalty, don't they?

Weep for the people.

Opportunity lost.

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.

  1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
  2. All deficit spending grows the supply of dollars
  3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
  4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty
Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka "stimulus") is necessary for long-term economic growth.


Mitchell's laws:









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