No Is An Option

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Solve some of our biggest economic, social and foreign problems today just doesn't seem possible. Our politicians and even some of our private leaders want us to think it just can't be done.  Too complicated, too many competing factions, too little resources, etc.


Really?  It seems that our recent history would suggest otherwise.  Early 1942, the United States is gearing up against war with not one but two superpowers. Germany in particular is well ahead of the curve militarily and innovative wise.  Yet within a year the US is able to turn factories into producing enough equipment so that by the end of 1943 the war was turning in our favor.  At the time we were far more small town and farm based. Tens of thousands of young people before computers or even social security numbers to track them. Yet we found them, trained them and got them to the battle field.


The 1950s we are still for the most a patchwork of 1930s roads.  We usher in the great highway program. Suddenly travel times are cut by half to two thirds.  Then there is jet travel which does the same. This of course has a tremendous benefit for business.


The 1960s and we are behind in the space race with Russia.  JFK challenges the country to land on the moon before the end of the decade.  Using 1960s technology will do it.  A time in which very few people knew anything about computers and only medium to large companies had computers, solely within the confines of their headquarters.  


So how is it a country that once mobilized all of its fit young men for battle using hand written lists can't solve any problem today?  The elites, that's why.


The elites have taken most of the wealth gain over the past ten plus years.  For them every year brings in greater income, increased investments, an enhanced lifestyle, and a brighter future for them and their families.  Their peers are experiencing the same.  The elites write the six figure checks to politicians and PACs.  The message is clear, don't change a thing.


The politicians do nothing despite their non stop blabbering on cable news.  The kings and queens of the private sector see no need for change.  We're too divided, too poor, too dumb and too dispirited.


Don't let anyone convince you our issues aren't solvable.  We could dramatically change the course of our country inside a year.  But it won't happen.  This option has been taken off the table.


Instead, the middle and upper middle class will continue to implode and squabble among each other. There will be millions more of new poor and the poor will continue to fight each other.  The Harvard MBAs will continue to see their incomes and investments soar.  Their children will get Surface Pros, vacations to Europe, Iphone 7s, their pets of choice complete with training and grooming services, admission into great private schools and valuable internships.  Your kid might get a job at Home Depot or Petsmart making $10 an hour.


There is no going back.  We must now count on a change within an economic reset.  Our county is not built and cannot survive in its current form solely on the largess of the top 10%.  We already see what lower tax revenues are doing to government services and government debt.  The dye is cast.  Like the 2007 Wall Street CEOs the elites will never will comprehend the economic disaster they have created as reality doesn't bode well for their narrative.


This isn't a call to action today.  That is useless, our leaders have no intention listening.  Eventually the economic and government system will break down from too much strain and not enough contribution.  Stock and bond markets will plummet.  Companies will fail.


Those in power will want to reenact 2008 on a wider scale.  Its at that point we pounce.  We stop paying our debts, we refuse to move out of our foreclosed home, we flood Congressmen and Senators with hate emails.  We make them sweat.  We demand a reboot to the system. 



wsucram15 Added Aug 6, 2017 - 4:51pm
Hate mail will not work George, no one answers anymore.  Sometimes I am not sure if the phones are flooded or just off the hook.   I go back to DC in two weeks, so Ill know more.
So looking forward to it. Yeahhh!
We have to get out and protest, en masse..fight back against the votes...and work against the rigged system.
If we have to protest and march on DC then so be it, its not like its never been done before.
But I like your refusal to pay debts idea.
Jeff Michka Added Aug 6, 2017 - 5:20pm
Geo Romey demands: We stop paying our debts, we refuse to move out of our foreclosed home, we flood Congressmen and Senators with hate emails.-I can't tell you how easy it is for an elected's staff member to hit "delete" and send all that hate mail into the electronic waste bin, after sending a copy to law enforcement.  Now you advocate doing things, but things that will do no good or have impact.  What a refreshing change, eh?
The Burghal Hidage Added Aug 6, 2017 - 5:20pm
It will all have to collapse before any of these things will happen. I agree with what both you and Don are saying George. I look at these markets floating up, every day moving further into record territory. I strongly suspect that this may be the last gasp before the bottom drops out of the whole thing. The great equalizer is firearms. This is the purpose of the second amendment. To empower the citizen to their own defense. We were not meant to have armies of police, local, state, federal, all with overlapping authorities. A pack of testosterone laden bull necked adolescents trapped inside a grown mans body. Every day squabbling over each other's fiefdoms and measuring their dicks to see who is the biggest and baddest. Who can pull off the biggest civil forfeiture today. 
Katherine Otto mentioned something in the comment thread of her most recent posting about how the military has been used to preserve the hold of the corrupt elites. She is part right on this. The military in question, though, are not the Army or Navy or the Air Force. It is the police state that we have become. When we return to a country where each man is responsible for his own defense, when there is no longer the fear of sanction from the state, that will be the day that we start to make a turn. Left on their own people will figure it out. No more fast talking bankers and con men, no more scheming bureaucrats hiding behind the legitimacy of their laws to steal and reserve the spoils for their cronies. These people will still be around, but if they are smart they will be running for cover. A lot of us have long memories and have been patiently biding our time for a day when the playing field is leveled. They'll find out how clever they really are when they dont have armies of cops to do their bidding.
Jeff Jackson Added Aug 6, 2017 - 5:48pm
Great article, George. The rich didn't build this country, the working people did. The rich didn't build Ford, or General Motors, or any of the equipment that helped us win the conflicts that we were engaged in. During the Civil War, if you had $300.00, you could buy your way out of military service, and a lot of the elites did just that. Theodore Roosevelt felt great shame that his father bought is way out of military service.
The elites have skipped all of the hard work that built this nation, and there are more than a few people telling that narrative. It needs to be told, and more people need to become aware of just what is really going on. If the working class can't have any of the spoils, the time will come when they refuse to give up their lives, as well as the lives and futures of their children, just so the idle rich class can have a cushy life. Senator Jim Webb wrote a very interesting examination of the working class, who have been ignored for decades in The Wall Street Journal quite some time ago. It is well past the time for the government to recognize who gets things done in this country and stop representing the people who contribute to their campaign funds and take them out for golf at the country club. I would like to think that the political class is digging their grave by ignoring the working class. If they don't realize it soon, the working class will dig it for them.
Leroy Added Aug 6, 2017 - 5:52pm
It all comes down to two sides: one wants more government; the other, less.  We haven't hit bottom yet.  Until we do, we will never polarize.  We have to be polarized predominantly in one direction for change to occur. 
Nothing short of a reset will resolve the issues.  It is not a US issue.  It is worldwide.  We are being crushed by debt, no matter what our personal response may be.  It is beyond our control as individuals.  Illinois is now paying out more to retired teachers than it is to active teachers.  Many states have similar problems.  The more we age, the greater the debt becomes, the more taxes we pay to cover the retirement of others, and the fewer government services we have because it is mostly going to be spent on retirements.  Illinois is no longer funding by investments.  It is selling assets.  When assets run out, they will come looking for the taxpayer.  This debt is an unstoppable snowball.   Hyperinflation may solve some of the debt issues, but it just causes others.  I thought my state was responsible.  They lied.
The national debt will never be paid.  This debt snowball can't be stopped.  There is no solution under the current system.
George N Romey Added Aug 6, 2017 - 6:31pm
All I agree the debt we now have will force the reset.  As it is the Treasury is digitizing money to hand to the Fed to buy Treasuries. New debt pays the interest on old debt.  We haven't paid a penny of debt in decades and even in times of GDP growth in the 4% to 7% range.
Fools think because the US prints its own currency this situation can go on forever. The same "intellectuals" that thought the dot.coms created a new sense of markets (one in which companies never have to make profits just have cool ideas and never ending capital infusions) or the sub prime mortgage situation would have nominal negative impact (because you know real estate only increases in value, it can never go down.)  We have our own "intellectuals" here on WB. 
How about when the losses on auto loans, credit cards and student loans hit critical mass?  Will the Fed via the Treasury digitize trillions upon trillions to buy off worthless CBOs?  
Don't think Russia, China and Iran aren't planning for a day soon when the dollar loses its hegemony and the US is clearly moved into the camp of less developed, banana republic.  
Saint George Added Aug 6, 2017 - 7:33pm
Japan stabilized its economy only when it stopped practicing Modern Monetary Theory.
Thomas Sutrina Added Aug 6, 2017 - 9:04pm
George, I am not going to talk about economics since all of you have done a great job discussing that.  No Is Not An Option starts with the morals that we citizens use to make decisions.  About six state had religious requirement when the colonies required a Bill of Right as a condition for approval, and James Madison had drafts from almost every colony to blend into the about 14 amendments drafts sent for approval.  Obviously the interpretation of religion of today could not possibly be that of the people that agreed to the Constitution.  The only option George is to teach the people morals which is presented in the Declaration of Independence as Nature's Laws or God's Laws. 
All major religions have them.  Even Islam but one must look at the very earliest statements of Mohammad before he moved to media and became a political and government leader.  The Old Testament has examples of Godly men that became political and government leaders that corrupted there judgement.
Take a close look at Argentina, Greece, and Venezuela.  They have a class system with rich and the political and governing class on top.  A middle class to keep the economy moving and provide a police force and the lower class which is quite large but unarmed.  America the rich and governing class is the cartel Ted Cruz defined a few years ago, the swamp.  The middle class are all those state and local government employees that are now making more then ever before in the history of the nation and business middle management.  Not an accident.  Failing public pension plans is also not an accident.  Departments that have no use for guns have stock piles of them is not an accident.
The lowest of the lower classes receive welfare that is based on Uncle Sam being the bread winner of the family.  The war in the streets of our cities is the result of a growing il ligament birth rate.   Man do the best job raising boys but fathers are frond upon in our welfare state.  Ganges have become the foster fathers for more then a decade.  Boys have not learned to deal with angry and how to be responsible and educated.  
The colleges have been invaded by modern liberal ideology decades ago starting in the 1890's and now they form the governing bodies of the whole education system.   Before 1900 six graders had studied the Federalist papers and Washington's Farewell Address both discussed the reasons and fears of the founders about the Constitution.  I was educated in the 1960's and never even knew these documents existed.  We learned the dates and basic procedure rules of the revolution and the prime documents.  
Katharine Otto Added Aug 6, 2017 - 10:41pm
Your title, "No is an Option," has far reaching ramifications, both on individual and social levels.  If there are any natural rights, it is the right to say "no." The people declaring the wars are not the ones fighting the wars.  The people spending the taxes are not paying the taxes.  No to war, no to the ethanol mandate, no to all the micromanaging of personal lives.  No to the war on drugs.  No to corporations having the rights of individuals.  No to deficit spending.  Could there be a constitutional amendment to make deficit spending illegal?  Just a few ideas.
I think a total crash would hurt too many undeserving people and cause more chaos.  However, there are more conservative moves, such as making payroll taxes optional.  The health care system could be overhauled by bypassing insurance entirely.   Outpatients served through direct service via public health departments, and inpatients served by expanding VA to all taxpayers. Insurance billing and paperwork clog the system and strangle services.
People are already walking away from debt, and there are more people refusing to leave their foreclosed homes.  If  people are working less, earning less, spending less, consuming less, and wasting less, they are paying less in taxes.  It has the effect of undermining overblown government.  Relaxation is free.
To assume the Deep State is in control is victim thinking.  Lots can be accomplished without money.  Hate mail to Washington probably wouldn't be as effective as letters to local newspapers embarrassing congresspersons into behaving.
Stone-Eater Added Aug 7, 2017 - 6:11am
Nice but a wish. Weapons and power have replaced real economy and arguments. The regular guy anywhere doesn't count anymore.
There's about 6 billion humans too many on that ball they reckon. So blast them away to regain an economic balance LOL
George N Romey Added Aug 7, 2017 - 6:56am
Katharine its time that we overhaul our government to prevent it from being tools of the plutocrats. No to PACs, publicly financed national campaigns, pay on performance, the right to call a President, Congressman or Senator by citizens, etc.  
Leroy Added Aug 7, 2017 - 8:19am
The game is over, George.  We are just running out the clock.
Thomas Sutrina Added Aug 7, 2017 - 8:35am
George the Trump obtained the voters in states that the Democrats have won ever since Reagan left office.  Trump told them what Reagan told them.  I will create jobs by making the conditions to create jobs better.  The Democrats have said I will create jobs by  twisting the arms of businesses for years but have not delivered.  Hillary did not even say it because no one would believe it.  The Democrats sell abortions, minimum wage (that means your teenager can get a job in fast food), and welfare as the way to fix problems of unemployment.
George N Romey Added Aug 7, 2017 - 9:31am
Leroy I agree there is a 1.30 to go in the 4th quarter, we are losing 28-3 and the opposition just took possession of the ball.  We could fix our problems but clearly no one in either Party is serious and too few in the private sector care and are drowned out by an apathetic attitude towards the US.
Thomas, I voted 3rd party because while Trump certainly exposed some of the issue he had no concrete plans.  Also, the very shady dealings of his past ventures like Trump University.  Whether you agreed with Sanders or not at least he had policies he was going to try to implement. Would he have been successful we'll never know.
Afterwards when I heard Trump's acceptance and then Inaugural Speeches I had some hope (as I expressed on WB).  However, he has been as useless and feckless against the Deep State as Obama, Bush and those before him.  His cabinet picks were nothing more than Deep State operatives (possibly forced upon him).  The Republicans are a joke and so are the Democrats.
To Katharine, yes the reset might toll on the elites as the stock and bond market collapses but for most Americans, particularly those already suffering the consequences will be dire.  And as I've said there's no guarantee that the system won't be propped up again by trillions upon trillions of printed money for bailouts and giveaways. Or that what we ultimately get in a replacement isn't any better.
I suppose if its like the 1930s when Americans were screaming to move away from capitalism someone might figure they better do something to save the system.  
Jeff Michka Added Aug 7, 2017 - 10:49am
SEFa sez: So blast them away to regain an economic balance LOL-Yeah, that will do a lot of good.  The remaining people such a good market as everyone dies from radiation exposure.  My point about this "they" are gonna start WWIII so Hillary can become president and "they' can control 'resources," is in KO'S words: To assume the Deep State is in control is victim thinking. Yup, and there's a lot of deep state "victims" on WB...
Bill Kamps Added Aug 7, 2017 - 10:54am
George, I think none of us knows how long the current environment can be maintained.  There have been a fair number of economic crises over the  decades, many worse than the  current one, and it always made it to the other side.  Every one was different, so it is difficult to generalize on this time being worse than others.
People have been predicting imminent demise since I was born, and Im sure in the 1930s, and the 1890s they were predicting it as well.  Every time they got out the duct tape, and patched it back together. 
It was not tidy, but it got done because the people in charge had to compromise, to keep from losing too much. 
Every day you write much the  same thing.  Even in this note,  you basically say we have to wait for the collapse before anything can be done, or at least until your plan could be done.  In the meantime we all go about living our lives as best we can.
If I were you, I would search  for a way to be happy in the meantime, because you dont know  the collapse will come in your lifetime, and if it doesnt, you dont want to just be sitting and waiting, wasting your life.
George N Romey Added Aug 7, 2017 - 11:12am
Bill I have no idea of when and how the collapse will come and what it will look like. I'd safely bet I'll live to see it, I'm not sure I'll live to see the other side.  The tragedy is that solving big problems in this country is nothing new.  There is nothing here that could not be fixed with big thinking and a commitment to revamp our economic and financial system.  
The difference now is that the bubbles are huge and interconnected throughout the global economy.  Its not just the US staring at a bleak situation, its Europe and Japan.  In the meanwhile China, Russia and Iran are taking the lead with the Silk and Belt roads programs.  Now for sure they all three have massive internal issues and have the wind in their face.  But while China builds bullet trains we have Russia, Russia, Russia.
I can be happy and pissed off at the same time.  I'm happy about certain things but have come to realize millions of us aren't getting the life we once had or could have.  I'm not sure how old you are but if you are my age you grew up around a lot of very successful people that endured the Great Depression.   They were very proud that they and America as a whole recovered from what seemed a helpless situation.  WW2 vets had to believe they would come back to a good life, some did and some didn't.
2008 simply was the signal that the economic system of the world had become inoperable.  People want to think it was solely about people taking on crummy mortgages but that was only a symptom not a cause.  Rather than take on deep change respective governments here, in the EU and in Japan just papered over it and called it a day.  Now its far worse and far widespread than anything economically this country has faced save maybe at the end of the Revolutionary War.  More importantly, the genius of the next crisis could start outside the US.
George N Romey Added Aug 7, 2017 - 12:13pm
Donald I'v heard a lot about the August 21st date.  I would say I'm skeptic but I'll admit that over the past 5 years I've come to understand things that at one time I would have simply rejected as nonsense.  I think there are many Americans like me.
I will concede the problem with the digitization of money it goes unseen.  Most Americans know about TARP, $700 billion but what they don't understand that was the tip of the iceberg.  The Fed spent trillions in made up money to buy worthless assets off the banks' balance sheets for stated not market value.  That is the real sin here, TARP was chump change.  
I hear people bant around the $20 trillion debt number like its candy store feed.  Do they realize how much room you would physically need to store $20 trillion in actual currency?  Do they realize just how difficult it would be to repay a modest amount of that say, $5 trillion?Do they realize the interest compounds and will only continue to grow even if from this day forward the US never borrowed another penny?  Then there are the loons that think because we print our own currency the global market would never forsake us.  China, Russia and Iran are already preparing for the day the US collapses and can no longer lead the global economy.  
It has become like charging on a credit card.  It doesn't seem at the time you are spending money but you get that edge you get from buying something.
George N Romey Added Aug 7, 2017 - 12:26pm
The experience of mankind is that when enough people hit critical mass to say something is going to occur (like they did in 2008) something occurs. It might not be exactly as people projected but a change comes about.  
Katharine Otto Added Aug 7, 2017 - 1:05pm
The plutocrats are adept in wresting victory from every presumed defeat.  I don't think overhaul, unless there's a clearly superior plan, will solve the problems, because few people understand or want to understand how the system works.  You and Donald seem better versed than most, but so many people are so heavily invested in the status quo, they will resist fundamental change, even if it's to their long term advantage.  
John G.,
Technically you are right about the accounting scam that is our financial/taxation system.  However, my simplistic interpretation merely reflects how Americans see it.  
What George and Donald are saying, I believe, is that the plutocrats are pulling the strings and have everyone conned into thinking there's anything honest about how it works.  The string-pullers have intentionally confused finance to the point where no one really understands it, but it comes down to money making money making money to the nth degree, with profiteers bleeding value at every step, so no wonder there's nothing left but devastation--environmental, personal, social--when you get down to the individual voters.  It's a shell game. (A shill game?)
My contention is that the money, no matter how it's created, is being mis-spent on a grand scale, everything from war to government contractors, to social and bureaucratic programs that produce nothing of value, to mandates, subsidies, and other favors to insiders, all at the expense of gullible Americans who believe this works for them.
Stone-Eater Added Aug 7, 2017 - 1:54pm
True, but who cares ? That's why Internet is here. To keep people complaining but not DOING anything LOL
Dino Manalis Added Aug 7, 2017 - 2:23pm
Elites aren't very happy or confident either, we're all gloom and doom, it's time to say yes, we can!  Really we can!  Believe in Trumponomics!
George N Romey Added Aug 7, 2017 - 2:26pm
In a nation of laws change can only come formally or forget the laws and go lynch mob. History has shown the ruling elite can & will avoid the demands of the masses if they are sitting pretty. Hence why only change will come from disaster and admittedly the change might be worst.
wsucram15 Added Aug 7, 2017 - 3:07pm
Dino..yes we can will not work. 
Trump can try all he wants, and as much as I do not like the man, I believe in spite of himself, (sorry I have to pause here for a breath) he does try to accomplish something.
The problem is, like most politicians, he owes favors as well. Big ones.
He does Executive Orders and even Congress has done some sneaky stuff on the side. Now people will argue this and dont make me post the proof, I really have other stuf to research right now.  But he has been helping some very wealthy people out of tax jams, political issues, etc.  Just because he can. 
He is just an old school boy from NYC, and all that entails.
Thomas Sutrina Added Aug 7, 2017 - 3:43pm
George, a vote for third party is a vote for Hillary.  I agree Trump did not put of a plan but no candidate in either party in 2016 or in the last century actually presented a believable plan.  What he and the GOP Congressional candidates do is make specific promises.  That George is much easier to hold the to.  So far Republicants are failing and Trump has not put their feet near the fire of public heat.  We the public can put their feet and Trump's feet near the heat.  The rejection of Obama Care and Swamp care has poled above 60% and yes it does fluctuate to the mid 40%'s  The media will push that back up to the 60%'s for the 2018 elections  Only if your head is in the sand will you not figure that out.  They hope that they will be the lesser of two bad choices. This has been their approach when the Democrats controlled congress or the White House.  Now they are naked in front of the voters and to weak to fight.  Why would anyone elect them?
The collapse of the economy lucky will be softened by the fact that Europe, Russia, and China are in the same shape as America.  We are looking at a world wide collapse.  All the major economies have been using the same play book and each has destroy their own economy by thinking government can control the economy.
George N Romey Added Aug 7, 2017 - 5:25pm
Thomas Trump is not even close to getting a domestic economic agenda through.  Even worst despite what he said during the campaign like Obama before him he is pointing to the bogus employment numbers and stock market as proof we are in a recovery. In fact, he's appointed Obama GS types to his cabinet.  
Also Thomas, China, Russia and Iran are trying to reset themselves to become global economic powers when the US, Europe and Japan finally go off the deep end.  Granted they have a lot of problems to solve and face similar issues.  But they are creating the Belt and Road initiatives.  We have just Russia, Russia, Russia.
Trump needs to take the shadow government on direct.  Right now it looks like the shadow government and the MSM is simply turning him into a political eunuch. 
George N Romey Added Aug 7, 2017 - 6:02pm
Balance sheet accounting is that assets are worth the value they are stated on a balance sheet.  If you had any real experience you'd would realize the number of companies that puff their balance sheets up through goodwill and other intangible assets.  Its how many private equity deals were able to carry out massive leveraged buyouts.  You would also know these same companies that once they hit the least bit of economic turbulence immediately write down the value of their assets.  Unless you are the Fed then GAAP accounting can be totally ignored.
A liability on the balance sheet is something you owe and presumably something someone expects you to pay.  Debt doesn't just magically disappear in the middle of the night.  A derivative is also debt but by deregulation hocus pocus there no entry on the balance sheet.
Since the world has more personal, corporate and government debt that can ever be repaid the only answer is a jubilee, which has been a time honored traditional throughout mankind.  It also brutally reminds the lending system what happens when debt starts to get used in place of investment.  
Thomas Sutrina Added Aug 7, 2017 - 7:51pm
George you have said it correctly trying to.  Trump is trying also.  And Europe is trying.   I agree very little is actually happening.  Many are making military gains but their economies your topic is as I said as bad as America's.   American is also making military gains after Obama let them fall apart.  He woke up a little late.
George N Romey Added Aug 7, 2017 - 8:02pm
Thomas what military gains?  The Middle East is as messy as its ever been.  There's nothing to fix.  That region has been broken for years and the modern neighbors such as Qatar, SA and the UAE have ignored it. Maybe they know something we don't.  Trump has handled the Russia spoof horribly.  
Rather than hurl insults at the MSM via Twitter go around them and post Presidential videos on YouTube.  Do what FDR did in the 1930s with his fireside chats.  That man had as many enemies in DC as Trump.  What has Trump done to reach out to the few politicians on both sides that actually would like to get some things done for the American people?  Effective Presidents found others willing to work with them.  Get rid of his son in law.  
Saint George Added Aug 8, 2017 - 12:05am
(I – S) + (G – T) + (X – M) = 0
Already posted earlier in my thread on the kookiness of Modern Monetary Theory.
1) The above form is known as the "Sectoral Balances" tautology. It's nothing but a simple arithmetic rearrangement of two tautologies defining "national income" (GDP); viz.,
Tautology #1:
GDP = C + I + G + (X — M)
C is Consumption Spending;
I is Investment Spending;
G is Government Spending;
X is Total Exports;
M is Total Imports;
So (X - M) is (Total Exports minus Total Imports) which is Net Exports.
So far, that's nothing but a definition of GDP, so it's nothing more than a tautology.
Tautology #2:
GDP = C + S + T
C is Consumption;
S is Saving;
T is Taxes.
This, also, is nothing more than a definition of national income or GDP. It says, "The total income of the economy must equal the income generated by consumption spending plus the total amount of savings plus the total amount of taxes everyone pays.
Since both tautologies are equal to the same thing (i.e., GDP), they're obviously equal to each other. Thus,
C + I + G + (X — M) = C + S + T
We can now cancel some terms through simple arithmetic:
The two C's cancel, leaving:
I + G + (X-M) = S + T; or
I + G + (X-M) - S - T = 0
We regroup the terms according to the different sectors they signify in the economy; thus,
(G - T) is the Public Sector (Government spending minus taxes paid to government);
(I - S) is the Private Sector (private spending on investments minus private saving);
(X-M) is the International Sector (the contribution to national income by the rest of the world expressed as "net exports").
The Sectoral Balances tautology is usually written this way:
[Private] + [Public] + [International] = 0; or
(I-S) + (G-T) + (X-M) = 0;
By convention, the (X-M) term is omitted when thinking of the entire world as one integrated economy. Under such an assumption, there's obviously no distinction between an "export" and an "import" because all trading is (by definition) internal to the economy; all trading becomes, by definition, "domestic" trading. No problem with that assumption, so we simply expunge the (X-M) term, and we are left with this:
(I-S) + (G-T) = 0; or more to the point:
(G-T) = -(I-S); or, finally,
G - T = S - I
Translating this tautology into English:
Government spending into the private sector, minus taxes paid by the private sector into government, equals private saving minus private investment.
MMT acolytes call the right side of this expression "Net Private Saving."
MMT believers call the left side of this express "The government budget deficit"; so MMT paracletes are chanting the following mantra:
The government budget deficit = net private saving.
Therefore (by their lights), the greater the deficit, the greater private individuals can net-save.
This tautology is the reason MMT cultists disdain fiscal and monetary "austerity" and wish to run as large a deficit as possible: they believe that without a deficit, private individuals wouldn't be able to save. So according to them, if you want people to save, then you'll want government to run big deficits.
Aside from the plain fruit-loopy-flakes-and-nuts-kookiness of claiming that a private person cannot save unless government spends, all you have to do is look at the mathematical expression to see that, as a tautology, it is capable of alternative interpretations that make just as much sense as the MMT one. Viz.,
G-T = S-I.
If government spending, G, increases while taxes, T, remain constant, then the right side of the expression must increase, too. But the right side has two terms: an "S" (saving) and an "I" (Investment). Are they both increasing as the left side increase? Maybe. Maybe not. Perhaps neither term increases, but rather, one of the terms — for example, "I" — is greatly decreasing! The math certainly permits it. If "I" (Investment) greatly decreases, then "S-I" will increase, every bit as much as if "S" increased and "I" remained stationary.
Saint George Added Aug 8, 2017 - 12:06am
Those kinds of changes to the terms are perfectly possible, and, in fact, very plausible from a micro-economic explanatory point of view: as government spending on the left side of the expression increases and the government budget deficit grows — spending more and more on projects earmarked by influential special interests eager to receive taxpayer largess — private citizens decide to save as much as they did before the spending but now choose to invest far less due to the well-known phenomenon of "crowding out": as government spends more, people might very well choose to consume less; banks raise interest rates as an incentive for people to put their money in the bank rather than spend or invest it. Does this, in fact, occur? Yes. It both can occur and it has occurred. And more to the point: it's an interpretation completely consistent with the MMT zealots' own tautology.
MMT paracletes make two fundamental mistakes: 1) they believe tautologies tell us something useful and practical about the real world. They do not. They are definitions, in which the "subject" and "predicate" say the same thing but in different ways. The two sides of the national accounting tautologies presented and manipulated above say the same thing but in different ways; and 2) MMT zealots mistakenly believe that the tautology presented in the form of "sectoral balances" (displaying "private", "public", and "international") is capable of only one interpretation (i.e., theirs). In fact, the tautology is perfectly consistent with interpretations from other schools of economic thought, including neoclassical and Austrian.
wsucram15 Added Aug 8, 2017 - 12:44am
St George..I liked your explanation.  Just one thing, X-M is now and will be for a long time a negative sum. We have negative net exports overall which is part of the deficit.   (2.2T-2.7T) or 502B in deficit in 2016 alone.
This is a reality though, we consume far more than we produce.
There is something to this Econ  I just dont think anyone knows what the hell is happening right now or when the bottom will fall out/how bad it might be. 
The largest issue for the US anyway is the devaluation of the dollar, right now its up a tad, and the Canadian dollar is down a bit.  But overall, we need to hang in there.  Not so sure about that one.
wsucram15 Added Aug 8, 2017 - 2:57am
The comment about econ 101 was about..
Your comments and I never liked Econ 101 until I got on here with George and could use my resources from college.    Its almost like something I learned without being formally taught...then when I was formally taught, it messed me up.
The formulas made sense to me..but in the end its a negative dollar amount.  Its why we have the problems we do..
Saint George Added Aug 8, 2017 - 3:26am
Just one thing, X-M is now and will be for a long time a negative sum
That actually doesn't matter.
When we have a so-called "trade deficit" it means nothing more than the fact that foreigners (including, of course, foreign government) are using the U.S. dollars they're holding (which we gave them when we bought their products in our country) to buy capital goods in the U.S., rather than consumer goods. The so-called "deficit" is nothing more than a bookkeeping fiction of international trade. The account books are divided into two columns: one column is called "Current Accounts", the other is called "Capital Accounts." The former records the buying and selling of consumer goods, the latter, the buying and selling of capital goods (e.g., stocks, bonds, real estate, factories, R&D, etc.). If an American buys a box of Chinese-made diapers at Wal-Mart for, let's say, US$10.00, that money goes from middle-man to middle-man until it eventually ends up in the hands of the manufacturer in China. It's recorded in the accounting books as an "outflow of ten dollars" in the current accounts column because diapers are a consumer good for the end-user (no pun intended, OK?)
Now, can the Chinese manufacturer spend that US$10.00 in Shanghai or Beijing? Can he take that US$10.00 and buy dumpling soup at a local restaurant? No. Restaurateurs in China don't accept American dollars. Where is the only place American dollars can be spent? Back in the U.S. So the Chinese manufacturer of diapers will re-spend that US$10.00 in the U.S. What will he buy? His kids really like American mass-market candy (for some reason) and requested that dad buy $10.00 worth of Tootsie-Rolls. If he does, , then he has purchased an end-user consumption good, and the trade gets recorded in the U.S. as an "inflow of ten dollars" in the current accounts column. From the accountant's perspective, the "inflow of ten dollars in current accounts" cancels out the original "outflow of ten dollars in current accounts" resulting in "zero", a perfectly "balanced trade."
But what if the Chinese manufacturer wisely decides that Tootsie-Rolls are bad for his children's teeth, but nevertheless doesn't mind harming the teeth of American children by encouraging the production of even more Tootsie-Rolls? So suppose, instead of buying a consumption good like a ten dollar bag of Tootsie Rolls, he spends that US$10.00 in the U,S. buying a share of stock in the Tootsie Roll corporation? How does that appear in the account books? The account books will reflect an inflow of US$10.00 but it will be recorded in the "Capital Accounts" column, not the "Current Accounts" column. So as far as the account books are concerned, the Current Accounts (remember: of consumption goods) still show an outflow of ten dollars with no corresponding inflow; so the Current Accounts column will show a "deficit"; i.e., ten dollars flowed out for consumer goods but didn't return for consumer goods.
But the truth is that the ten dollars did return to the U.S. economy, it's just in a "tool box" known as capital goods, rather than having been spent on something on the retailer's shelves. Is it good for U.S. dollars to be spent by foreigners on U.S. capital goods? Yes, of course it is. Capital goods are precisely what help expand the economy, increase efficiency, etc.
Now, if the international accountant would simply add the outflows and the inflows of both columns — the Current Accounts and the Capital Accounts — he would see that they exactly equal each other, and that they therefore cancel out: the trades are balanced necessarily; it's just that the first half of the exchange was made for a foreign-made consumption good while the second half of the exchange was made for a U.S. capital good.
There's nothing inherently better about exporting more consumer goods than capital goods (i.e., having a "positive balance of trade"). Throughout most of the Great Depression in the 1930s, the U.S. had a positive balance of trade and it did absolutely nothing to help pull the economy out its slump. Even a big war — WWII — didn't do anything to help the economy: during those years, everything was rationed by government and there were shortages of many consumer goods. Things improved dramatically only after the war, when the servicemen returned home and much of the kooky pro-labor policies instituted by Hoover and FDR could be repealed.
Saint George Added Aug 8, 2017 - 3:30am
we consume far more than we produce
Since we can only consume that which we have produced — or trade our supply of stuff for someone else's supply of stuff, which then becomes our consumption stuff, I don't see how it's possible to "consumer more than we produce", except by means of outright theft.  are you suggesting we're stealing goods from others? If so, whom, and by what method?
Saint George Added Aug 8, 2017 - 3:44am
MMT makes no such claim.
Yes it does, and MMT cult members are fond of pointing with religious awe to those accounting tautologies to "prove" that claim. When it's pointed out that the math permits other interpretations from the one they propose, they either stare blankly, or they go into a Tourette's syndrome spitting tantrum the way you always do.
For whom do you shill, johng? The Russians? Is your ideological compliance officer named Dmitri or Natasha? Do tell.
Curious minds want to know.
Saint George Added Aug 8, 2017 - 3:57am
Yes it does, and MMT cult members are fond of pointing with religious awe to those accounting tautologies to "prove" that claim. When it's pointed out that the math permits other interpretations from the one they propose, they either stare blankly, or they go into a Tourette's syndrome spitting tantrum the way you always do.
Saint George Added Aug 8, 2017 - 4:02am
MMT cult members are fond of pointing with religious awe to those accounting tautologies to "prove" that claim. When it's pointed out that the math permits other interpretations from the one they propose, they either stare blankly, or they go into a Tourette's syndrome spitting tantrum the way you always do.
Saint George Added Aug 9, 2017 - 3:19am
It's quite clear who the Mother is.

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