20 June 2013





Euro-zone governments must borrow all their money from bankers and investors. By contrast, Monetarily Sovereign governments create their money from nothing. If they “borrow” money (that is, if they sell Treasury securities) it is by choice, not by necessity.  They have no need to “save money.” They have no use for tax revenue. Indeed, with Monetarily Sovereign governments, federal tax revenue is destroyed by the very act of paying it, as I have repeatedly shown in this blog.

If you disagree with this, then you have been brainwashed. When you have been brainwashed, you regard truth as absurd.

Much of this brainwashing is an automatic byproduct of society.  That is, when humans form large groups, they tend to think and act like herd animals. Below is a quick example of the American herd instinct — the same herd instinct that keeps the American masses enslaved by bankers and the rich.

The picture below is from a kindergarten school in Pyongyang, the capital of North Korea. It is a children’s pop-up book which shows a U.S. soldier murdering a Korean woman with a hatchet. For North Koreans, anti-imperialist doctrine starts in childhood.


The average American sees this and thinks of North Koreans, “Those evil monsters!

Of course, in the USA, anti-north Korean propaganda also starts in childhood. How many times do you hear every day that North Korea is “evil”?

Below are statues of former North Korean premiers Kim Il Sung and Kim Jong Il.


A right-wing blogger says these statues show that North Koreans are “insane” because they worship their leaders.

But what about various statues of the Bush presidents?


This is the nature of society. Humans tend to think and act as a herd, which is necessary for society to exist.

Unfortunately it also means that most humans are miserable slaves.slaughterhouse




The US government does not shred paper bills when it receives federal taxes, but the visual metaphor above is nonetheless appropriate, since money is 100% digital, and the U.S. government does indeed destroy money the instant it is paid as taxes. (Paper bills merely represent money, just like checks, or stocks or bonds.)

I mention this because Congressional champions of immigration “reform” say that an increase in immigrants will reduce the federal budget deficit because immigrants will pay federal taxes. A reduced deficit is supposed to be good for the economy.

You and I know this is nonsense, because all federal taxes hurt the economy, and a reduced deficit means an increased depression.

From the New York Times:

Congressional budget analysts say that legislation to overhaul the nation’s immigration system would cut almost $1 trillion from the federal deficit over the next two decades, and lead to more than 10 million new legal residents in the country.

Great. Another $1 trillion sucked out of the U.S. economy. Just what the economy needs during a depression.

The CBO report estimates that in the first decade after the immigration bill is carried out, the net effect of adding millions of additional taxpayers would decrease the federal budget deficit by $197 billion. From 2024 to 2033 the deficit reduction would be an estimated $700 billion.

Great. $700 billion in austerity, in addition to all the other austerity.


The report was immediately seized on by backers of the bill as a significant boost to its prospects. Senator Charles E. Schumer, Democrat of New York, one of the bill’s authors, said the report “debunks the idea that immigration reform is anything other than a boon to our economy.”

Immigration reform can’t help the economy as long as we are in austerity mode.

And then there are the right wing liars…

Senator Jeff Sessions, Republican of Alabama, a leading opponent of the bill, said that its authors used “scoring gimmicks” in order to conceal the “true cost from taxpayers,” including providing illegal immigrants with Medicaid, food stamps and cash welfare.”

At the federal level, immigrants present no “cost to taxpayers” at all, since the US government creates money from nothing, simply by crediting bank accounts. The only “cost” to taxpayers is federal taxes themselves.

The Wall Street Journal says the Senate’s immigration reform bill, “Would cost private employers at least $700 million each year, once all its mandates are in place, likely by 2016, according to the CBO.”

How is that supposed to help the economy? Oh that’s right: we are reducing the federal budget deficit.

(And thereby killing the economy).



Greece’s creditors include the Troika (IMF and ECB) plus investors who buy Greek sovereign bonds (mainly the central banks of  other euro-zone nations). The Troika lent money to the Greek government directly, and the other central banks lent money to Greece by purchasing Greek sovereign bonds.

On 17 Dec 2013 the central banks agreed to “roll over” some of Greece’s debt, i.e. replace some of the Greek bonds they hold with new Greek bonds as the debt comes due.

This measure, called the “rollover of ANFA holdings,” was expected to save Greece from having to make a 3.7 billion euro payment this year, and a 1.9 billion euro payment in 2015.

But now, despite the agreement, the bond rollover has hit a snag, because some central bankers worry that it might be seen as direct financing of the Greek government. The law governing the ECB forbids it from such direct financing.

This is the heart of the euro-scam. When the Troika banksters dreamed up the idea of a common currency for all of Europe, they made sure that the ECB in Frankfurt would only lend money to member states; never give money. This would keep the euro-zone nations forever in debt. As long as the nations use the euros issued by the ECB, the nations will have more poverty and austerity.

And so the euro-zone nations surrendered their printing press, and began living purely on credit cards. This wouldn’t be so bad if the nations had a massive trade surplus like Germany has, since a trade surplus brings in money from the outside. But most euro-zone nations have a trade deficit. Their only source of money is their credit cards.

We’ll have to wait and see whether the Greek bonds get rolled over, or whether the Troika demands a 3.7 billion euro payment.




Here’s more evidence that Germany’s economy continues to get stronger, while those of Greece, Italy, Portugal continue to get weaker.

Eurostat (the European Union’s official statistics agency, located in Luxembourg) says the consumption of goods and services in Germany continues to increase, while consumption in Greece, Italy, Portugal continues to decline. We can call this a “consumption gap.”

In 2011, household consumption in Greece was 91% of the EU average of €9,291 ($12,445).  In 2012, household consumption in Greece fell to 84% of the EU average.

In 2011, household consumption in Italy was 101% of the EU average. In 2012, household consumption in Italy fell to 97%.

In 2011, household consumption in Portugal was 82% of the EU average. In 2012, household consumption in Portugal fell to 77%.

All of this spells an economic depression, caused by austerity.

By contrast, in 2o12, German household consumption rose to 121% of the EU average.

Source: Wall Street Journal





The British New Statesman magazine notes that the UK government will have to impose much more austerity on U.K. citizens, if the government wants to keep its austerity timetable (also known as deficit reduction schedule).

With a week to go before the Spending Review, reports suggest that the Treasury has secured just a third of the £11.5bn of cuts planned in 2015-16.

Thus, the U.K. government is only a third of the way toward its austerity goal.

“Without further welfare cuts or tax rises, the next government will have to cut departmental spending 50% faster.” New analysis by the Resolution Foundation shows that departments are already expected to be some 9% smaller on average in 2014-15 than in 2010-11, as a result of cuts in the 2010 Spending Review. With spending on health, schools and overseas aid protected, these have been far starker for some departments. The Foreign Office will be just half of its previous size, while the communities department will have shrunk by more than two-fifths. The defence budget will fall by 17%, while the Home Office will have a 25% cut.

Those figures are hypothetical. In reality, politicians and bureaucrats want to protect their jobs, which means that deficit reduction will continue to come not from reduced government departments, but from reduced social programs and increased taxes.

With every additional pound of savings harder to identify than the last, don’t be surprised if the Chancellor decides to raise extra revenue from further welfare cuts.

Exactly. Of course, the U.K. government does not need to “save money,” since it creates money from nothing, simply by crediting bank accounts.

The purpose of austerity (or deficit reduction) is to widen the gap between the rich and the rest.




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