Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong
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Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong
Its about time that we take care of our own! On Nov 6 2012 Americans rejected the Conservative "Fend For Yourself" religion. In a Monetarily Sovereign Nation there is no need for a balanced budget. Actually Government does not need revenue to spend, it can collect it later as a way to give value to the currency it creates. Spending > Revenue expands the economy, Spending < Revenue contracts the economy, Spending = Revenue is irrelevant and unnecessary. Fiscal Monetary reform is an important agenda for ethical, economic, and political reasons and to undo the privatized franchise by which our economy has been based upon a debt based currency. The deficit terrorism by Fiscal Conservatives threatening austerity and even deeper privatization is based upon the Gold Standard model when dollar was backed by gold and limited, thanks to Nixon, this is no longer the case since 1971, and is thereby false, fraudulent and clearly a fear tactic based upon disinformation. When we align the nature of our economics and the capacities of modern money with the policies of governance as a socializing agenda significant changes will be possible. Based on understanding how sovereign fiat money actually is used can impact Fiscal Policy allowing the Federal government to extend funding for the construction of roads, mass transit, bridges and other "hard" infrastructure to put people back to work which would increase demand for products. This same process can be applied to social infrastructure such as national health care, education, and pensions. Further, an employer of last resort (ELR) process could be established, whereby individuals who wanted to work could be provided a living wage for advancing any number of needed projects toward building communities. Modern Monetary Theory > MMT AND A GOVERNMENT FOR THE PEOPLE | <a href="http://sco.lt/8zdEO1" rel="nofollow">http://sco.lt/8zdEO1</a>; government is not a wealth taker. It is a wealth maker. What’s more, the wealth it makes is not just its own. Generally speaking, people create much more wealth with the aid of government than they do without it. We don’t first become rich and then decide to form a government. First we form governments.  Then and only then can we become rich. Without a strong government that works for all, it is not possible to have a strong economy that works for all. They go together. This important insight is actually inscribed in the preamble of the US Constitution, where “to promote the general welfare” is listed as one of the principal purposes of our federal government, along with establishing justice, insuring domestic tranquility, defending the nation and securing the blessings of liberty."
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Governor Rick Scott’s disregard for the health of Floridians — MSNBC

Governor Rick Scott’s disregard for the health of Floridians — MSNBC | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
With approval rating hovering in the 30s, the governor has been taking a lot of heat—from both the Democrats and Republicans—for the way he’s been doing his job.
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12 Biggest Right-Wing Lies About America

12 Biggest Right-Wing Lies About America | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
These political fallacies are giving America a false vision of our economy and world.
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Daily Kos: You want to compare the U.S. budget to a family budget? Let's be real about it.

Daily Kos: You want to compare the U.S. budget to a family budget? Let's be real about it. | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
In my Facebook feed the other morning, I saw someone sharing one of these notions that seems like basic common sense, until you start thinking about it and realize that common sense is often ...
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The GOP Clown Car Crashes, Again

The GOP Clown Car Crashes, Again | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Under the stress of their incoherence, the Republican caucus is unable to escape one humiliating mess after another.
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Krugman Supports 'Silly' Solution To Debt Ceiling

Krugman Supports 'Silly' Solution To Debt Ceiling | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Paul Krugman is arguing for a rather outlandish solution to solving the debt-ceiling crisis: Minting a $1 trillion coin.
Mahilena Dianz's insight:

Paul Krugman is arguing for a rather outlandish solution to solving the debt-ceiling crisis: Minting a $1 trillion coin.

The idea, which gained (ahem) currency in recent weeks, could prevent Congressional Republicans from holding the country’s financial health hostage in exchange for spending cuts, Krugman argued in a recent blog post.

“Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely,” Krugman wrote. “He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous.”

After a tough fiscal cliff battle, Republicans have said that they plan to demand major spending cuts in exchange for raising the country’s borrowing limit, according to the Financial Times. If Congress does nothing to deal with the debt limit, the country could lose its ability to meet its financial obligations by as early as Feb. 15, according to a report from the Bipartisan Policy center cited by CNBC.

But there is a loophole: The Treasury has the ability to mint a coin in any denomination, deposit it into its Federal Reserve account and use it to pay off its debts -- essentially getting rid of the debt ceiling threat for now. A petition to the White House to use the coin had more than 4,000 signatures as of Monday afternoon.

Still, opting for the trillion-dollar coin solution would be difficult. Rep. Greg Walden (R-Ore.) is introducing a bill to stop Obama and the Treasury Department from minting the coin, which ironically raised the profile of the out-of-the box idea.

(if a conservative is pushing a bill against it which will not succeed, this is prove that it is a real threat to conservatives)

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The Federal Government Is Not a Small Business

Republican Representative Greg Walden says something really stupid: “My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air."

Well, yeah, obviously the Waldens' company couldn't issue currency to pay its bills, because issuing currency is a function of the federal government, not of some random small business in Oregon.

Mahilena Dianz's insight:

The Federal Government Is Not a Small Business
By Josh Barrio
In the news release announcing his bill to derail the platinum coin effort, Republican Representative Greg Walden says something really stupid: “My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air."

Well, yeah, obviously the Waldens' company couldn't issue currency to pay its bills, because issuing currency is a function of the federal government, not of some random small business in Oregon.

There are all sorts of nonsensical statements you could offer with the same structure. For example, why should we have a U.S. Marshals Service? After all, when I ran a small business, we didn't just go around arresting fugitives who were wanted for federal crimes.
Or why should the federal government impose environmental regulations or negotiate treaties with foreign countries? A small-business owner who tried to do those things would end up looking really silly.

The mistaken idea that federal economic policy should be driven by the same internal logic as corporate or household budgeting has led to some of the worst ideas of the last few years, such as that governments should respond to budget deficits created by the economic cycle with tax increases and spending cuts.

The federal government isn't a small business, and it has different purposes and different constraints than small businesses do. Whether minting a platinum coin is a good idea has nothing to do with how the Waldens balance the books at their company.
http://www.bloomberg.com/news/2013-01-07/the-federal-government-is-not-a-small-business.html

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Republicans Just Lost a Class War—and They'll Lose Again if the Tea Party Gets Its Way

Republicans Just Lost a Class War—and They'll Lose Again if the Tea Party Gets Its Way | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
The GOP is historically out of touch with the American electorate on economic issues.
Mahilena Dianz's insight:

"Here's something both liberals and conservatives can agree on: Obama just paved his way to a second term by focusing on taxing the rich and portraying his rival as a heartless businessman more interested in preserving tax cuts than helping ordinary working families. This was the same strategy many of Romney's primary rivals utilized, but Obama's arguments resonated with the general public more than the GOP base."

"The old adage is as true as ever: It's the economy, stupid. And Republicans have not been so out of touch with the American electorate on economic issues since the disastrous Goldwater campaign. Paul Ryan's economic agenda may have made him the darling of Fox News pundits and the Tea Party, but a solid majority of Americans saw it as class warfare directed squarely at the poor, elderly, and the middle class."

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Why US policy makers still make policy as if we were in a gold standard

Why US policy makers still make policy as if we were in a gold standard | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Mahilena Dianz's insight:

why US policy makers still make policy as if we were in a gold standard world, why we will not become like Greece, what really creates hyper inflation, why the US can easily reach full employment without inflation, the problem is demand, why the inflation of the 70s was not driven by government seeking full employment, why the "solutions" to the fiscal cliff will produce a fiscal crisis, what is the best policy to follow now and how the economic debate is changing.

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Summit MMT - Kelton: lesson on modern money [2/18 ENG]

Economia per i Cittadini: sito internet: http://epici.it/ pagina facebook: https://www.facebook.com/economiapericittadini twitter: @epic_info youtube: http:/...
Mahilena Dianz's insight:

There is an Italian introduction to this video for about 5 min or so..then Ms Kelton starts speaking in English...very interesting MMT explanations

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Modern Money & Public Purpose 2: Governments Are Not Households

The Columbia Pre-Law Society Proudly Presents: GOVERNMENTS ARE NOT HOUSEHOLDS: Implications Of Monetary Sovereignty & Stock-Flow Consistent Accounting Modera...
Mahilena Dianz's insight:

Published on Oct 17, 2012

The Columbia Pre-Law Society Proudly Presents:

GOVERNMENTS ARE NOT HOUSEHOLDS: Implications Of Monetary Sovereignty & Stock-Flow Consistent Accounting

Moderator: Thomas Edsall, Joseph Pulitzer II and Edith Pulitzer Moore Professor of Journalism, Columbia University

Speaker 1: Warren Mosler, President, Valance Co., Inc.

Speaker 2: Stephanie Kelton, Associate Professor of Economics, University of Missouri-Kansas City

Part of the 2012-2013 Seminar Series on Contemporary Issues in Law and Political Economics organized by the Workers' Rights Student Coalition

http://www.modernmoneyandpublicpurpose.com/

Tuesday, September 25, 2012

This seminar will examine the legal and institutional structure of the current global monetary system, with a particular emphasis on the economic freedoms afforded to nations such as the U.S., U.K., Japan, Canada and Australia that use a non-convertible fiat currency with a floating exchange rate. Questions to be addressed include:

How does a fiat currency with a floating exchange rate differ from other types of currencies?

How does government spending and taxation work?

Why is accounting important for understanding the economy?

How can monetarily sovereign nations address their current economic problems? 

SPEAKER BIOS

Stephanie Kelton, Ph.D. is Associate Professor of Economics and Chair of the Economics Department at the University of Missouri-Kansas City, Research Scholar at The Levy Economics Institute and Director of Graduate Student Research at the Center for Full Employment and Price Stability. Her research interests include monetary theory, fiscal policy, Federal Reserve operations, international finance and employment policy. Dr. Kelton can be followed on Twitter @deifictowl as well as at the blog New Economic Perspectives, which she created and currently edits.

Warren Mosler is the President of Valance Co, Inc., and Senior Financial Advisor to Senator Ronald E. Russell, President of the 29th Legislature of the U.S. Virgin Islands. He is the founder and current manager of the III Funds, which peaked at over $5 billion AUM in 2007 and currently manages about $1.5 billion, as well as the Founder and President of Mosler Automotive, which manufactures the MT900 sports car in Riviera Beach, Florida. Mr. Mosler has written a number of academic papers on issues relating to macroeconomics and monetary policy, and is the author of Seven Deadly Innocent Frauds of Economic Policy (2010). He maintains a personal blog, moslereconomics.com, and can be followed on Twitter @wbmosler.

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Seven Deadly Frauds of Fiscal Responsibility (this is a pdf, advance the pages and zoom, but my summary is below-scrolldown browser)

Mahilena Dianz's insight:

Deadly Innocent Fraud #1:
The federal government must raise funds through
taxation or borrowing in order to spend. In other
words, government spending is limited by its ability
to tax or borrow.
Fact:
Federal government spending is in no case
operationally constrained by revenues, meaning
that there is no “solvency risk.” In other words,
the federal government can always make any and all
payments in its own currency, no matter how large
the deficit is, or how few taxes it collects.

 

Deadly Innocent Fraud #2:
With government deficits, we are leaving our debt
burden to our children.
Fact:
Collectively, in real terms, there is no such
burden possible. Debt or no debt, our children get to
consume whatever they can produce.

 

Deadly Innocent Fraud #3:
Federal Government budget deficits take away
savings.
Fact:
Federal Government budget deficits ADD to
savings.

 

Deadly Innocent Fraud #4:
Social Security is broken.
Fact:
Federal Government Checks Don’t Bounce.

 

Deadly Innocent Fraud #5:
The trade deficit is an unsustainable imbalance
that takes away jobs and output.
Facts:
Imports are real benefits and exports are real
costs. Trade deficits directly improve our standard of
living. Jobs are lost because taxes are too high for a
given level of government spending, not because of
imports.

 

Deadly Innocent Fraud #6:
We need savings to provide the funds for
investment.
Fact:
Investment adds to savings.

 

Deadly Innocent Fraud #7:
It’s a bad thing that higher deficits today mean
higher taxes tomorrow.
Fact:
I agree - the innocent fraud is that it’s a bad thing,
when in fact it’s a good thing!!! 

---------------- open the pdf for the full economic report on these frauds from Mosler Modern Monetary Theory ---

 

Now, check this out as well 

 

 

The false belief that federal finances are like yours and mine"Debt hawks", "Fiscal Conservatives" and others...(maybe some Libertarians I know...)
ignorant of Monetary Sovereignty, suffer from Anthropomorphic economics disease

http://rodgermmitchell.wordpress.com/2010/06/08/anthropomorphic-economics/ — the false belief that federal finances are like yours and mine. Some debt hawks say that a Debt/GDP ratio exceeding 100% puts a nation on the brink of bankruptcy. Yet today, Japan has a Debt/GDP ratio above 200%, and this Monetarily Sovereign nation has absolutely no difficulty servicing its debt. The debt hawks, as usual, having learned nothing from this, continue to wail about the meaningless debt/GDP ratio, which because it is a classic apples/oranges comparison, is devoid of significance (the numerator is a 200-year measure of cumulative T-securities outstanding; the denominator is a one-year measure of productivity. The two are unrelated).

Because a Monetarily Sovereign nation has the unlimited ability to create its sovereign currency, that nation needs neither to tax nor to borrow. Why would it? Further, that nation does not use tax money or borrowed money to pay for spending. Federal income has no relationship to federal spending and so, taxes and borrowing are unnecessary.

When the states, counties, cities, you and I spend, we transfer dollars from our checking accounts to some other checking accounts. When the federal government spends, it creates dollars, because to pay its bills, the government instructs banks to increase the dollar amount in suppliers’ checking accounts. If U.S. federal taxes and borrowing fell to $0, or rose to $100 trillion, neither event would reduce by even one penny, the federal government’s ability to create the money to pay any size bills.

Although Monetarily Sovereign nations need neither to tax nor to borrow, they may choose to do so for many reasons unrelated to financial need. The spending by Monetarily Sovereign nations is constrained only by inflation. However, since 1971, the end of the gold standard and the beginning of Monetary Sovereignty, there has been no relationship between federal deficit spending and inflation. More about this at Inflationhttp://rodgermmitchell.wordpress.com/2009/09/09/46/
and at SUMMARY.
http://rodgermmitchell.wordpress.com/2009/09/07/introduction/


At some level, deficit spending could cause inflation. For instance, if the government were to give every American $1 trillion, I am confident we would have inflation. But we are nowhere near that point. (Debt hawks love to propose extreme circumstances, like the $1 trillion gift to each American, as “proof” deficit spending is unsustainable. But that is no more proof than the other extreme circumstance (tax every American $1 trillion) demonstrates taxes are unsustainable.)

Because taxes do not pay for federal spending, FICA does not pay for Social Security benefits. FICA could (and should) be reduced to zero, and benefits could be tripled, and this would not affect by even one penny the federal government’s ability to pay Social Security benefits.

There had been some question about whether the federal government would or should make a profit on its purchases of corporate stock (GM et al). Any such profits come out of the economy, and therefore are anti-stimulative. By reducing the money supply, federal profits = losses for the economy. Federal surpluses = economic deficits.

There also has been talk about the federal government “saving” money by firing, or reducing the pay of, federal employees. Those so-called “savings” would be money not sent into the economy, and therefore, anti-stimulative.

Politicians and the press do not yet seem to understand Monetary Sovereignty. However, no one intelligently can discuss national deficits and debt without understanding the implications of Monetarily Sovereignty. The concept is the basis for all modern economics. Monetary Sovereignty is to economics as arithmetic is to mathematics.

http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/

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Daily Kos: Sen. Chuck Schumer: Democrats won't be negotiating on debt ceiling

Daily Kos: Sen. Chuck Schumer: Democrats won't be negotiating on debt ceiling | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Add Sen. Chuck Schumer to the list of Democrats that say there won't be a negotiation over the next debt ceiling :

“I think that risking government shutdown, risking not raising the debt ceiling,
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Serfdom in a Free Society

Serfdom in a Free Society | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it

The Road to Serfdom. By Friedrich A. Hayek, University of Chicago Press, 1944 
Full Employment in a Free Society. By William H. Beveridge. W. W. Norton & Co., New York, 1945

Mahilena Dianz's insight:

Both these books are dedicated to the “socialists of all parties.” Hayek wants to discourage them, Beveridge tries to offer encouragement. Both writers speak in the name of science and deal with the reality of, and the need for, capitalistic planning. But what appears to Hayek as the road to serfdom seems to Beveridge the highway to a free society.

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Daily Kos: Another Republican 'non-profit,' another bunch of deficit lies

Daily Kos: Another Republican 'non-profit,' another bunch of deficit lies | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Who could imagine a group allied with him would push lies?


Sen. Jefferson Beauregard Sessions ...
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Daily Kos: Austerity doesn't work: New IMF report details the damage

Daily Kos: Austerity doesn't work: New IMF report details the damage | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Austerity doesn't work: New IMF report details the damage
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Coin Seigniorage and the Irrelevance of the Debt Limit

Coin Seigniorage and the Irrelevance of the Debt Limit | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
Mahilena Dianz's insight:

Beowulf and Joe Firestone's insight:

 

“But here is the point:  If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good...  If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper.  Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit by receiving non-interest bearing currency… instead of the bankers receiving the benefit of the people’s credit in interest-bearing bonds?”
Thomas Edison, quoted in NY Times, Dec. 6, 1921
http://prosperityuk.com/2000/09/thomas-edison-on-government-created-debt-free-money/

If you think about it, it does seem odd that the US Government is the monopoly supplier of US dollars and yet our politicians go through life thinking the government will run out of money unless it can borrow more.  Of course that’s not true, the coins in your pocket are legal tender and yet were not issued against debt.  They’re minted by the US Government, backed only by the gilt-edged credit of the American people, no one is paid interest on it and they don’t add a penny to the statutory debt.  What’s more, the use of coins as legal tender is scalable, they could replace the use of Tsy debt sales.  No, you wouldn’t have to carry more coins in your pocket.  Nothing would change except Tsy would be credited by the Federal Reserve for the sale of interest-free Treasury coins (presumably of large denominations) instead of interest-bearing Treasury bonds.

The two great powers of a sovereign state are the monopoly of violence and seigniorage, the profits from the creation of money.  If the federal deficit (that is, expenditures in excess of tax receipts) were funded by seigniorage revenue, not only would there be no debt service owed on the money, there’d actually be no deficit.  Seigniorage (whether generated by the Federal Reserve or by the US Mint) is supposed to be booked by Treasury as “miscellaneous receipts”, since the funds can appropriated for other govt uses, it actually reduces the deficit dollar for dollar.  Looking into it, I found that while Federal Reserve profits are counted as a revenue source (larger than estate taxes and customs duties combined), US Mint profits are not.  I sent a couple of emails to the Tsy Inspector General’s office to point this out, but have’t heard anything back.  I’ve copied below what I sent Tsy (changing the formatting a bit to merge the two emails). I go WAY into the weeds legally (“presumably in USSGL account, Acct Title: Seigniorage; Acct No 5795″), so I apologize for that in advance.  Feel free to ask me to translate anything below into the English language.  The bottom line is, the Secretary of Treasury already has the authority to create money without debt so there’s no fiscal reason to raise the debt limit.  What’s more, since the Federal Reserve began paying interest on reserves in 2008, there’s no longer a monetary reason to raise the debt limit either.


Circulating Coinage

Circulating coins are shipped to the Federal Reserve Banks (FRB) as needed to replenish inventory and fulfill commercial demand… Seigniorage is the difference between the face value and the gross costs of coins shipped. Seigniorage adds to the Federal Government’s cash balance, but unlike the payment of taxes or other receipts, seigniorage does not involve a transfer of financial assets from the public. Instead, it arises from the exercise of the Federal Government’s sovereign power to create money and the public’s desire to hold financial assets in the form of coins. The President’s Budget excludes seigniorage from receipts and treats it as a means of financing the national debt… p. 28, US Mint, 2009 Annual Report

My question is whether its accurate, under current law, to state that coin seignorage does not involved the transfer of financial assets from the public and whether the President’s Budget should be excluding  seigniorage from receipts when Congress directed the Secretary to sweep the “receipts… from the sale of circulating coins”  into “miscellaneous receipts” (which is where Federal Reserve seigniorage revenue has long been placed).  I understand that Tsy adopted the “other financing source” definition of coin seigniorage years ago, at least since the time of  President Johnson’s 1967 Commission on Budget Concepts.   Since the time of the Commission (and currently reflected in FASAB SFFAS No. 7) , the US Mint has been on-budget with its seigniorage off-budget while the Federal Reserve System has been off-budget and its seigniorage (reflected in the net earnings refunded to Tsy) on-budget as part of miscellaneous receipts.  Indeed, according to the CBO, in 2009 miscellaneous receipts (which are mostly but not solely Fed profits) were a larger source of federal revenue– that is, reduced the federal deficit by a larger amount– than estate/gift taxes and customs duties combined. (Table T-3).  To put it another way, if the Federal Reserve sends money directly to the Tsy General Fund, it is counted on the budget.  If the Federal Reserve sends money to the Tsy General Fund that stops in the US Mint Public Enterprise Fund first, it is not counted on the budget.  That seems anomalous.
Leaving aside whether the nature of budget concepts changed after President Nixon took us off the gold standard (I’ll outsource that issue to the estimable Warren Mosler), neither he US Mint Annual Report nor the President’s Budget appear to reflect the statutory language in 31 USC 5136 (which in the mid 90s created the United States Mint Public Enterprise Fund).  To backtrack a moment, transactions with the Federal Reserve are not considered intergovernmental transfers by Tsy since the Fed’s deposit of earnings at Tsy are booked as nonexchange revenue received from “the public” and are deposited in miscellaneous receipts.  Analogously, proceeds from the sale of govt property– that is, an exchange of, say, Federal Reserve notes for a govt asset– received by the Mint from the Federal Reserve (or from the public at large, since they too buy coins from the Mint), should be booked in the Mint PEF as exchange revenue received from “the public”.

The point is, in section 5136, Congress  characterizes the exchange of coinage produced ex nihilo by the US Mint for the face value equivalent in Federal Reserve notes (or more typically, by marking up the balance in Tsy’s reserve account) as a “sale”–  “Provided further, That the Fund may retain receipts from the Federal Reserve System from the sale of circulating coins at face value for deposit into the Fund“.  What’s more,  the statute also says, “at such times as the Secretary of the Treasury determines appropriate, but not less than annually, any amount in the Fund that is determined to be in excess of the amount required by the Fund shall be transferred to the Treasury for deposit as miscellaneous receipts“.  Unless Congress  intended “receipts… from the sale” to not mean exchange revenue and for “the public”, “miscellaneous receipts” and ultimately “seigniorage” to have each have two different meanings depending on whether we’re referring to the US Mint or to the Federal Reserve System, my suspicion is that Mint seigniorage and Fed seignoirage were intended to be treated the same for budgetary purposes.

If, in fact, Mint seigniorage is legally indistinguishable from Fed seigniorage as miscellaneous receipts revenue, it does offer an escape hatch (or more like a subway tunnel really) if Congress refuses to increase the statutory debt limit this spring. The Secretary has rather broad authority to mint coins, Congress was apparently feeling generous when it authorized platinum coins in 31 USC 5112(k) (“with such specifications, designs, varieties, quantities, denominations, and inscriptions and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe…”).  If deficit spending was paid for (eliminated actually) with miscellaneous receipts revenue generated by selling the Fed jumbo denomination coins, and since the Federal Fund Rate can now be pegged with Interest on Reserve payments in lieu selling Treasuries to drain excess reserves, Tsy could fund govt operations indefinitely without ever raising the statutory debt limit.  

Coin sale proceeds received by the Mint Public Enterprise Fund seem to fall squarely into the category of  “exchange revenue received from public”.  To quote from FASAB FSSAB No. 7:

“Exchange transactions with the public: revenue 270. Sales of goods and services.–The cost of production for goods and services such as electricity, mail delivery, and maps is defrayed in whole or in part by revenue from selling the goods or services provided. The sales may be made by a public enterprise revolving fund (such as the Bonneville Power Administration)…”

Like the Bonneville Power Administration, the Mint Public Enterprise Fund is a “public enterprise revolving fund”. I’d note that The President’s FY 11 Budget, Sect. 11 Budget Concepts defines “seigniorage” as:

“The profit from coining money. It is the difference between the value of coins as money and their cost of production. Seigniorage reduces the Government’s need to borrow. Unlike the payment of taxes or other receipts, it does not involve a transfer of financial assets from the public. Instead, it arises from the exercise of the Government’s power to create money and the public’s desire to hold financial assets in the form of coins. Therefore, the budget excludes seigniorage from receipts and treats it as a means of financing other than borrowing from the public.”

However Sect. 11 also defines “public enterprise funds” as:

“revolving funds used for programs authorized by law to conduct a cycle of business-type operations, primarily with the public, in which outlays generate collections.”

Presumably these “business-type operations” involve the collection of “financial assets from the public”.  Where this discrepancy arose , I think, was when in 1995, Congress passed (and the President signed) the Mint Public Enterprise Fund statute.  Under that statute, the funds generated by coin sales to the Federal Reserve and public can be in one of two places, 1. The coin sale earnings can stay in the Enterprise Fund where it will be apart from the Treasury General Fund (presumably in USSGL account, Acct Title: Seigniorage; Acct No 5795) ; or later, 2. The  Secretary can sweep the revenue ex costs out of the Mint PEF into miscellaneous receipts (presumably FAS Account Title: Receipt from Monetary Power; Acct No 0600);  where it becomes part off the General Fund.  There is a FAS Acct No 0610 also titled “Seigniorage”.  But it is for “other financing” deposits which, at least since the PEF Statute, would not apply to Mint earnings since sales proceeds that go into a public enterprise revolving fund are, in fact, exchange revenue.

I’d add that it is to the same destination, General Fund as miscellaneous receipts  (Acct No 0600), that the Federal Reserve transfers its earnings (which as noted above, make “miscellaneous receipts” one of Tsy’s largest sources of revenue on the federal budget).  Since the courts have held both the the Fed and the Mint to be nonappropriated fund instrumentalities, transferring the earnings from either of their separate and distinct funds into Treasury general receipts would presumably be nonexchange transactions from the public.

In AINS, Inc. v. United States, 56 Fed. Cl. 522 (2003); affm’d. 365 F.d 1333 Fed Cir. (2004),  the Court, in the course of finding the Mint was a “nonappropriated fund instrumentality”, noted that the revenue was generated (Bonneville Power Administration-like) from sales by a public enterprise revolving fund, and identified the destination of both Federal Reserve earnings and Mint earnings. 
“Congress has clearly expressed this intent through its authorization of the Mint’s Public Enterprise Fund. By directing that all receipts from the Federal Reserve System and the public from the sale of circulating coins at face value must be deposited into a special fund, Congress has made clear that the Mint’s funds are to be kept separate and distinct from the general Treasury fund…

“The Board of Governors of the Federal Reserve Board, established as a NAFI in Denkler, has since 1947 established a policy to transfer excess earnings to the Treasury. See 33 Fed. Res. Bull. supp. app. 1-2 (May 1947). Congress in 2002 expressly required the Federal Reserve Board to transfer any surplus for fiscal year 2000 to the secretary of the Treasury for “deposit in the general fund of the Treasury.” 12 U.S.C. § 289(b)(1) (2000)….Therefore, that excess funds are to be deposited in the Treasury as miscellaneous receipts has no bearing on whether the Mint, or any other agency, is a NAFI.”

What’s more, two years ago the Mint, in the course of issuing a federal regulation authorizing civil fines for infringement of the Mint’s trademark, stated that Mint “seigniorage and profits” are deposited in the General Fund as miscellaneous receipts: “Pursuant to the United States Mint Public Enterprise Fund (PEF) statute, 31 U.S.C. 5136, all receipts from fines assessed under the regulation would be deposited in the PEF and the Secretary of the Treasury would transfer these amounts, along with regular United States Mint seigniorage and profits, to the General Fund as miscellaneous receipts. As miscellaneous receipts in the Treasury—the drawing of funds from which are subject to appropriation by Congress—neither the Secretary of the Treasury, nor the Director of the Mint could be subject to “possible temptation * * * when [their] executive responsibilities * * * may make [them] partisan to maintain the high level of contribution” from the assessment process provided for under the regulation. Cf. Ward v. Village of Monroeville, 409 U.S. 57, 60 (1972). Moreover, the amounts involved would nonetheless render any ostensible temptation inconsequential because the relatively small amounts that the United States Mint could be expected to receive in fines payable under 31 U.S.C. 333 would be de minimis when compared to the recent amounts ($600-800 million) that the United States Mint annually has transferred to the General Fund.“  72 FR 60771 (2007) (emphasis added).

Seeing as the Mint stated in the Federal Register that 31 USC 5136 allows the Secretary to deposit Mint seigniorage  “as miscellaneous receipts in the Treasury, the drawing of funds from which are subject to appropriation by Congress”, I would argued that it should be counted on the federal budget as revenue in like manner as Federal Reserve seigniorage, which as you know, is deposited as miscellaneous receipts in the Treasury, the drawing of funds from which are subject to appropriation by Congress.

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Why We Must Go Off the Platinum Coin Cliff

 I'm glad to see Representative Jerrold Nadler lending his support to the idea that President Barack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.

Mahilena Dianz's insight:

Why We Must Go Off the Platinum Coin Cliff
By Josh Barro
" I'm glad to see Representative Jerrold Nadler lending his support to the idea that President Barack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.

In case you're not familiar with this idea: In general, the Treasury Department is not allowed to just print money if it feels like it. It must defer to the Federal Reserve's control of the money supply. But there is an exception: Platinum coins may be struck with whatever specifications the Treasury secretary sees fit, including denomination.


This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government's bills, in lieu of issuing debt.
What the law should say is that the executive branch may borrow to pay whatever obligations the federal government has, but may not print. Unfortunately, when we hit the debt ceiling, the situation will be backwards: The administration will not be allowed to borrow, but it can print in unlimited quantities.

This points toward an interesting solution.
If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow. But, to avoid causing long-term inflation expectations to skyrocket, he should pledge that he will have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so.

And then he should offer to sign a bill revoking his authority to issue platinum coins -- so long as that bill also abolishes the debt ceiling. The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations.

Joe Weisenthal got this right this morning: Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.
Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis."
http://www.bloomberg.com/news/2013-01-03/why-we-must-go-off-the-platinum-coin-cliff.html?cmpid=hpbv

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Why Platinum Coin Opponents Are All Wrong

Platinum Coin Solution to Debt Ceiling

Mahilena Dianz's insight:

By Josh Barro

 

This morning, Joe Weisenthal and I took our message in favor of minting a trillion-dollar platinum coin to "Bloomberg Surveillance," where we were met with the usual shock and horror from hosts Tom Keene and Sara Eisen. Platinum coin opponents are so distressed that one, Republican Representative Greg Walden, has said he will introduce legislation to ban the coin, citing my post from last week as a dangerous instigation.

Walden, Keene and Eisen are all wrong. Here are my responses to the most common objections we are getting to the platinum coin proposal, in increasing order of persuasiveness:

 

1. "That's silly/zany/juvenile!" This is probably true, but it's not a dispositive objection. Republican intransigence over the debt ceiling is juvenile. There is no particular reason that the president should not use a juvenile strategy in response.

The key question to ask about the platinum coin is not "is it juvenile?" but "will it work?" Minting the coin will allow the federal government to continue to meet its spending obligations despite hitting the debt ceiling. It will allow President Barack Obama to pressure Congress to repeal the debt ceiling. That -- not whether it seems silly -- is the important thing.

 

2. "Where will we get all the platinum?" I'm honestly surprised by this question, but I'm hearing it a lot, including from the Guardian's Heidi Moore and from Keene this morning.

To be clear: We do not need a trillion dollars' worth of platinum to make the trillion-dollar coin -- less than an ounce will do. This is not a move to a "platinum standard," and it shouldn't even have any impact on the markets in platinum. There will be no need for dump trucks full of precious metal to head toward the mint.

 

3. "But that will be inflationary!" This is a more serious objection, and it gets at what the platinum coin strategy really is -- financing the federal government's operations by printing money instead of borrowing it. The trillion- dollar coin will never circulate, but it will be used to back cash payments coming from the Treasury that would have otherwise been financed by bond purchases.

If the government financed itself this way in general, that would absolutely be inflationary. But the president can hold inflation expectations steady by making absolutely clear that the policy will not lead to a net change in the money supply over the long term. Obama should pledge that once Congress authorizes additional borrowing, he will direct the Treasury to issue bonds to cover the government's coin-backed spending and then to melt the coin.

The concern about inflation actually gets at why the platinum coin strategy will work to defuse the debt-ceiling crisis. Minting a platinum coin will demonstrate that Congress accidentally gave the president direct control over monetary policy, allowing him to inflate if he wishes. The need to neutralize that threat will motivate Republicans to raise the debt ceiling.

Like the debt ceiling itself, the platinum coin exercise is an asymmetrical, negative-sum game. Nobody wants to hit the debt ceiling, but it bothers conservatives less because they view increasing government dysfunction as useful for achieving their policy goals. Nobody wants the president to pay the government's bills by printing money, but it bothers conservatives more because they are more afraid of inflation.

If the president is clear about his lack of any long-term intention to interfere with the money supply, I don't expect the platinum coin to cause a spike in prices. But if it does, that will only add more motivation for Congress to end the crisis by passing a law that both removes the president's authority to print money and abolishes the debt ceiling.

 

4. "This will undermine confidence in the U.S. government/dollar/central bank." Well, it's all relative. The best solution, from a confidence perspective, would be for Congress to simply repeal the debt limit, or at least increase it without conditions, thus eliminating this manufactured "crisis" and any need for a trillion-dollar coin.

That's what Matt Cooper calls for, but it's not going to happen. Remember, the Republican conference is a bunch of babies.

 

Instead, we need to compare the platinum coin option against others on the table. For example, we could hit the debt ceiling and the government could start leaving about 40 percent of its bills unpaid.

 

The president could accede to Republican demands for near-term spending cuts (of an as-yet-unspecified nature) in addition to the amounts from the Budget Control Act sequesters, which would cause another recession.

 

Or he could assert authority under the 14th Amendment to continue issuing debt, notwithstanding the debt ceiling, which would lead to court battles and probably impeachment. (The 14th Amendment play sounds less "silly" than the platinum coin, but it's actually on much shakier legal ground.)

 

Minting the platinum coin would be less economically damaging than any of the above options, which is why Obama should announce he will pursue it if the debt ceiling is not raised. Hopefully, inflation hawks will be so alarmed by the president's intention to use his direct monetary authority that they will choose to cut a deal and we'll never actually get to the minting stage.

But if Republicans call Obama's bluff, he should be ready to mint that coin - - and to save the economy by doing so.

 

http://www.bloomberg.com/news/2013-01-07/why-platinum-coin-opponents-are-all-wrong.html

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GOP Threat: Cut Social Security and Medicare or we'll kill the economy. Americans say NO to both.

GOP Threat: Cut Social Security and Medicare or we'll kill the economy. Americans say NO to both. | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
GOP Threat: Cut Social Security and Medicare or we'll kill the economy. Americans say NO to both. - The Huffington Post
Mahilena Dianz's insight:

Author's insight:


"Here we go again. Republicans are very clear about their latest extortion threat to the American people: Unless you cut Social Security and Medicare benefits, within the next two months we will throw the US economy back into recession - by refusing to allow the US raise the debt ceiling and pay our bills - or by pushing the economy over another fiscal cliff of deep spending cuts and tax increases - or by shutting down the government by refusing to pass a continuing budget resolution.

But it is very important for progressives and politicians to remember that most Americans hate what the Republicans are doing here. Who but Right Wing terrorists could support pushing the economy back into recession, throwing millions of Americans out of work? That's what Republicans are threatening. And huge majorities also hate the price Republicans are demanding to prevent their threat of manufactured chaos: the idea of cutting Social Security and Medicare benefits.

Republicans can get their way only if Democrats fail to realize they have the American people on our side. And once Republicans are clear about their proposals, Americans turn against them.

During the election, Paul Ryan's plan to turn Medicare into a voucher was so unpopular that candidate Mitt Romney ran away from his Vice Presidential nominee's proposal. Democrats won the election."

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It's Not the Deficit, Stupid!

It's Not the Deficit, Stupid! | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
They thought all kinds of bad things about the deficit. And then, after the 2011 debt ceiling debacle and the formal downgrading of the credit rating of the United States, they were all proven utterly wrong.
Mahilena Dianz's insight:

everyeconomist forecasts lower GDP and higherunemployment when government raises taxes and cuts spending. Likewise, every forecast is for higherGDP and lower unemployment when government cuts taxes and increases spending.

Isn't lower unemployment and higher GDP the common goal in Congress? So what's the problem?

Why are they going backwards?Why are they acting counter agenda?Why are they pursuing deficit reduction?

Why? Because:

They think we've run out of dollars;They think deficits cause interest rates to spike;andThey think we could be the next Greece;Etc. etc. etc.

They thought all kinds of bad things about the deficit. And then, after the 2011 debt ceiling debacle and the formal downgrading of the credit rating of the United States, they were all proven utterly wrong. Immediately after the U.S. was downgraded, interest rates unexpectedly went down! They did not go up as universally feared. The U.S. government was not cut off from spending; was not down on its knees before the IMF begging for funding; and it was not the next Greece.

And the likes of Alan Greenspan and Warren Buffet immediately explained exactly why -- we "print" our own money. Just like Japan and the UK, for example, who also never face funding issues no matter how large their deficits may be, we always have the ability to make any size payment in our own currency -- U.S. dollars. The U.S. government is not like the Greek government that is not the issuer of the euro, and is not like California that is not the issuer of the U.S. dollar. So we can't be the next Greece or the next California, because the U.S. government is never dependent on borrowing or taxing to be able to spend. As the issuer of the dollar, that notion is entirely inapplicable. Yes, too much net spending might cause inflation, but there is never a solvency risk for the issuer of a currency.

As a point of logic, has this has not obviously shifted the burden of proof for anyone promoting deficit reduction? Have not all of their reasons for deficit reduction vanished?

It is now true that, with all of those "solvency" reasons gone, anyone who wants to cut the deficit by cutting Social Security and Medicare must now do so on different grounds. And all that's left is the possibility of an inflation risk. However, with the mainstream economists, the markets and the Fed forecasting low inflation even with the current forecasts of much higher deficits, the deficit hawks have nothing to indicate inflation is currently a substantial enough risk to justify budget cuts or tax increases that weaken the economy. What the deficit hawks do have going for them, however are tragically ignorant deficit doves that have yet to realize this landmark shift of the burden of proof shift, as even the doves continue to propose cuts in Social Security and Medicare for the purpose of deficit reduction.

So to repeat: Ask any forecaster. A tax cut and/or spending increase will cause him to revise his GDP forecast up and unemployment forecast down.

How hard is this????

If you would like to see a more detailed understanding of deficts, I just republished Soft Currency Economics as a Kindle book. The book provides an explanation of how banks and central banks operate with a look at 20 years of Italian deficits. It will be available for free for Huffington Post readers on November 17. Click on the link above or the picture below on Saturday and download it for free to your Kindle, and if you don't have a Kindle just download it to the Kindle Cloud Reader and read it on your computer. You will find it an interesting read and I am sure it will instigate you to ask questions. I am here to answer them.

   
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Modern Money & Public Purpose 3: The Eurozone

The Columbia Pre-Law Society Proudly Presents: DESIGN DEFECTS AND POLICY FAILURES: An Institutional Analysis Of The Eurozone Crisis Moderator: Georges Ugeux,...
Mahilena Dianz's insight:

DESIGN DEFECTS AND POLICY FAILURES: An Institutional Analysis Of The Eurozone Crisis

Moderator: Georges Ugeux, Lecturer-in-Law, Columbia Law School and Founder, Galileo Global Advisors, LLC

Speaker 1: Yanis Varoufakis, Professor of Economic Theory, University of Athens

Speaker 2: Marshall Auerback, Global Portfolio Strategist, Madison Street Partners, LLC

Part of the 2012-2013 Seminar Series on Contemporary Issues in Law and Political Economics organized by the Workers' Rights Student Coalition

Friday, October 5, 2012

http://www.modernmoneyandpublicpurpose.com

This seminar offers a diagnosis of the current European debt crisis that traces its origins to inherent flaws in the legal and institutional design of the Eurozone. Questions to be addressed include:

- Is the European Monetary Union responsible for the current Eurozone crisis?

- What role have core nations such as Germany and France played in the crisis, compared to peripheral nations such as Spain and Greece?

- What are the political and economic implications of austerity?

- What policies should Europe adopt to resolve this crisis?

Background reading:http://www.modernmoneyandpublicpurpose.com/seminar-3.html

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Modern Money & Public Purpose 1: The Historical Evolution of Money and Debt

Moderator: William V. Harris, William R. Shepherd Professor of History and Director, Center for the Ancient Mediterranean, Columbia University Speaker 1: L. ...
Mahilena Dianz's insight:

Published on Sep 22, 2012

Moderator: William V. Harris, William R. Shepherd Professor of History and Director, Center for the Ancient Mediterranean, Columbia University

Speaker 1: L. Randall Wray, Research Director of the Center for Full Employment and Price Stability and Professor of Economics, University of Missouri-Kansas City

Speaker 2: Michael Hudson, President, Institute for the Study of Long-Term Economic Trends and Distinguished Research Professor, University of Missouri-Kansas City

Tuesday, September 11, 2012

About the Seminar Series:

Modern Money and Public Purpose is an eight-part, interdisciplinary seminar series held at Columbia Law School over the 2012-2013 academic year. The series aims to present new perspectives and progressive policy proposals on a range of contemporary issues facing the U.S. and global macroeconomy. Seminars will feature a mix of academics and practitioners on topics ranging from the history of debt and money and the structure of the financial system to economic human rights for the 21st century.

http://www.modernmoneyandpublicpurpose.com

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What ‘Grand Bargainers’ Simpson and Bowles Really Stand For

What ‘Grand Bargainers’ Simpson and Bowles Really Stand For | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
There has been a lot of discussion about Congress enacting a “grand bargain” during the lame duck session of Congress.  Many members of Congress have talked about using the plan put forward by Al
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Prosperity in a Stable World--Volume 3 of Social Capitalism in Theory and Practice

Prosperity in a Stable World--Volume 3 of Social Capitalism in Theory and Practice | Conservative Liberty and Freedom is nothing but an empty box wrapped in the flag that helps no one. The land of the free for only those fit to survive, the rest can and should perish for the benefit of the strong | Scoop.it
The reform of the financial-industrial infrastructure cannot be undertaken without considering fully the political culture in which it exists.
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