All this ruckus over the financial rescue package is prompting many people to cook up their own plans for saving our economy. One innovative idea goes like this: Screw bailing out banks, give money directly to the American people. Internet message boards are chatting up the idea. Callers on talk radio are asking about it. One of my closest relatives rang me up this weekend to discuss it and I, in turn, brought up the concept during a dinner with friends.
Yes, there's something inviting about investing in "The Bank of You and Me". The plan is so simple, especially when compared to the government's complex, daunting and time-consuming rescue attempt. Or as Sarah Palin might say: "Heck, what's not to like?" Yet, before getting carried away, let's concede there will be no mass giveaway. After all, we're not bankrupt banks or insurance firms. But just for yuks, let's follow the plan's populist logic.
Basic premise: Instead of pumping $700 billion into the banks and into buying toxic mortgage securities, the U.S. Treasury gives every red-blooded U.S. household one million bucks. There's about 112 million U.S. households, according to the Census Bureau, so providing each a cool million could end up being a comparative bargain. Backers contend it will deliver the same results, or better, than the current bailout.
Since money doesn't flow like water, some restrictions will apply. For example, any household behind in its mortgage must use the proceeds to make that bank note current or to pay it off. Result? End of the mortgage crisis.
Other debts must also be paid. That means home equity loans, credit cards, student loans, child support, medical bills or other long term obligations have to be drastically whittled down. Presto! Credit crunch resolved.
Everyone would be required to plow a percentage of their million-dollar windfall into a safe retirement account. The payoff? Recapitalized banks and, as a bonus, the end of Social Security's troubles. And because everyone needs a little fun in life, any remaining cash can be used for discretionary spending. That takes care of lagging consumer confidence and the recession.
You know if John McCain or Barack Obama wanted to wrap up the presidential election, all they have to do is come out in favor of this Million Dollar Baby. Hell, maybe President Bush should consider this option. It's gotta help his approval ratings.
Sophisticated financing types and macro-economists will dismiss this bailout brainstorm as costly (it will run $12 trillion, which is high even by Bush Administration standards), inefficient, inflationary and unpatriotic. They may even say its just plain stupid. Apparently, it's smarter to print up nearly one trillion dollars in new currency in order to shore up the sagging lenders that made awful loans, didn't properly assess risk, and concocted exotic and unsafe credit instruments that nobody will ever understand.
Yes, let's hope the government's current economic "rescue" attempt works. But if it doesn't, we can always put "The Bank of You and Me" plan into action.
i have a better idea. Restitution. Prosecute these tyrants with existing anti-trust and fraud laws and make them pay those Americans directly.
Abolish the Fed, the real culprit in all of this mess...destroying our currency!
"Allow me to issue and control a nation's money and I care not who writes its laws!" Amshell Rothschild
Where does the money come from?
If the USGOV issues IOUs to somebody, then the taxpayers will have to pay back THREE DOLLARS for every dollar they receive. Not much progress there.
That's how we got into this mess.
Just like ALL the rest of the money that is created in this country.
If, on the other hand, the Chicago Plan of the FDR era were utilized, the USGOV would directly issue "credits" to the US taxpayers, and whatever was done with the money does not create new debts to repay.
Now, realistically speaking, in order for such action to NOT be inflationary, the amount of the USGOV credits issued to American taxpayers would be limited to what the real growth in the economy measured.
So, if we can get three percent growth, then we can only "credit" three percent of our GDP.
Or whatever indices are used.
This is NOT a hair-brained scheme.
The best economists of the time at the University of Chicago (prior to its total free market approach) proposed EXACTLY such a plan to FDR and it was debated in Congress and shelved by the opposition of the banker class.
And, look where we are today.
We truly DO need monetary reform now, more than at any time in our history.
The Revolutionary War WAS fought over monetary policy.
Cooperative Banks.
Credit Unions.
Public Credit.
Let the banks lend real money.
1. fiat currency
2. printing currency out of thin air
3. regulating failure
4. ignoring trust - anti-trust and fraud law
we've had managed markets, and FDR's policies worked for a while because of the following criteria:
a. we were a savings and production based society
b. our FRN was backed by gold. "the dollar was good as gold"
c. we were a creditor nation because of a. and b.
the death throws of keynesian, managed markets came to full fruition in 1971 with the Bretton Woods complete breakdown, and our traditional managed markets created fertile ground for easy money because of the following criteria:
1. total fiat currency. residual trust in the dollar w/o it being backed encouraged more printing of the paper. the Fed's power increased.
2. 1. led to mal-investment. Corporate lobbied regulations (Fannie/Freddie ie) encouraged more of the same.
3. Regulations and Laws passed that helped send our jobs overseas. NAFTA, Sarbanes-Oxley ie
4. Confidence in the dollar waned.
You want regulation as the solution? Regulate (cough, end) the Federal Reserve. Regulate the Presidential Working Group and the currency reserve.
Re legalize the Constitution! SOUND MONEY AND ONLY HAVE CONGRESS ISSUE IT! Those two are the MOST imporant "regulations" we could have. All else are meaningless from that point forward.