In our February newsletter we promised to present 12 ways to improve our economy using these sustainability-oriented criteria:
(1) Use of targeted investments in the economy;
(2) NO increase to the national debt;
(3) NO damaging austerity today or tomorrow;
(4) NO sacrifice of tax revenues.
Think tanks, we welcome competitors!!!
In our March newsletter we proposed the re-introduction of debt-free United States Notes. For a fuller history, see Prof. Richard Striner’s article. We noted that many economists have responded to our idea, falling into two categories: (a) those who explicitly accept it as an immediately available tool and (b) those who tacitly accept it but worry about the political aspects of change to the status quo…whether “anything good” could happen in our present political climate, or whether Congress would go to excess if it again utilized its constitutional power to print money. We do not find the latter concern to fit the nature of our present Congress, and Congress has not historically abused its power to create money in the same way it has its powers to create debt and to create austerity (as in 1936, when most economists believe the “second depression” was so triggered). None of the “reticent” economists we quoted last month has suggested that issuing debt-free United States Notes could not be done again, or that it would be difficult to determine an appropriate limit to the dollar amount issued so as to avoid any risk of “hyperinflation”… as was avoided in the $787 billion ARRA stimulus. At least an equal issuance of debt-free United States Notes should be an option free of inflation worries. They would circulate side-by-side with Federal Reserve Notes, as they did between 1914 and 1971.
Now the question is, how would they best be used? They could be used as they were in the Lincoln administration, for general government expenses. They could be used to fund infrastructure projects, again as during the Lincoln administration. A mark of the greatness of the Lincoln Administration (and the Republican Congress of the time) was that as an initially bankrupt government they not only fought and won the Civil War but also provided for the reconstruction, the westward expansion and the industrial revolution by funding a vast network of infrastructure – all without creating unmanageable debt. What a great subject for another Lincoln movie!
Despite the present excess capacity in the economy and the well-proven effectiveness of Fed measures to dampen inflation if and when that becomes a concern, we propose balancing increased demand caused by an infusion of new money by using some of it to foster increased supply of key inflation-prone items like medical care, food and sustainable energy. Along with targeting the kinds and locations of economic development most needed, these things could be done by chartering a National Economic Development Bank (NEDB) to be initially capitalized by debt-free United States Notes. It would have many of the characteristics of state economic development banks across the US and of national economic development banks throughout the world. A May, 2010 article in The Economist points out that the credit crisis of 2007-2009 was softened in major countries that have such banks, citing Brazil, India, Russia and China. The China Economic Development Bank has had a powerful domestic economy-building role as well as well as an international trade role. A recent book on it by Henry Sanderson and Michael Forsythe has been reviewed by Erica Downs of the Brookings Institute.
Our NEDB would not have to be constantly funded, due to loan repayments. With a zero cost loan fund, there would be strong prospects for profitability in all cycles, and thus for selling subscriptions. The first Bank of the United States, which was oriented to lending for economic development, drew upon subscriptions. The charter of the NEDB would protect the public interest, but the public interest overriding any limiting mandate would be that it simply operate profitably. It would create money by lending and re-lending money against “fractional reserves”, like present banks in the Federal Reserve System. It would leverage money by joining commercial banks or investors in economy-spurring loans and investments, and/or do so with state economic development banks or agencies. Money and banking is supposed to be something we’re good at. Why let ourselves be out-done by the Chinese?
A National Economic Development Bank could do much to prompt a full recovery. We can print some money and use it to acquire valuable investment shares and loan assets. We can strengthen our economy and get our debt under control without short-changing grandpa on the social security he paid into or making it more difficult for grandma to pay for a visit to the doctor using Medicare.
We’ve heard both plans…Isn’t accelerating growth better?
(1) Use of targeted investments in the economy;
(2) NO increase to the national debt;
(3) NO damaging austerity today or tomorrow;
(4) NO sacrifice of tax revenues.
Think tanks, we welcome competitors!!!
In our March newsletter we proposed the re-introduction of debt-free United States Notes. For a fuller history, see Prof. Richard Striner’s article. We noted that many economists have responded to our idea, falling into two categories: (a) those who explicitly accept it as an immediately available tool and (b) those who tacitly accept it but worry about the political aspects of change to the status quo…whether “anything good” could happen in our present political climate, or whether Congress would go to excess if it again utilized its constitutional power to print money. We do not find the latter concern to fit the nature of our present Congress, and Congress has not historically abused its power to create money in the same way it has its powers to create debt and to create austerity (as in 1936, when most economists believe the “second depression” was so triggered). None of the “reticent” economists we quoted last month has suggested that issuing debt-free United States Notes could not be done again, or that it would be difficult to determine an appropriate limit to the dollar amount issued so as to avoid any risk of “hyperinflation”… as was avoided in the $787 billion ARRA stimulus. At least an equal issuance of debt-free United States Notes should be an option free of inflation worries. They would circulate side-by-side with Federal Reserve Notes, as they did between 1914 and 1971.
Now the question is, how would they best be used? They could be used as they were in the Lincoln administration, for general government expenses. They could be used to fund infrastructure projects, again as during the Lincoln administration. A mark of the greatness of the Lincoln Administration (and the Republican Congress of the time) was that as an initially bankrupt government they not only fought and won the Civil War but also provided for the reconstruction, the westward expansion and the industrial revolution by funding a vast network of infrastructure – all without creating unmanageable debt. What a great subject for another Lincoln movie!
Despite the present excess capacity in the economy and the well-proven effectiveness of Fed measures to dampen inflation if and when that becomes a concern, we propose balancing increased demand caused by an infusion of new money by using some of it to foster increased supply of key inflation-prone items like medical care, food and sustainable energy. Along with targeting the kinds and locations of economic development most needed, these things could be done by chartering a National Economic Development Bank (NEDB) to be initially capitalized by debt-free United States Notes. It would have many of the characteristics of state economic development banks across the US and of national economic development banks throughout the world. A May, 2010 article in The Economist points out that the credit crisis of 2007-2009 was softened in major countries that have such banks, citing Brazil, India, Russia and China. The China Economic Development Bank has had a powerful domestic economy-building role as well as well as an international trade role. A recent book on it by Henry Sanderson and Michael Forsythe has been reviewed by Erica Downs of the Brookings Institute.
Our NEDB would not have to be constantly funded, due to loan repayments. With a zero cost loan fund, there would be strong prospects for profitability in all cycles, and thus for selling subscriptions. The first Bank of the United States, which was oriented to lending for economic development, drew upon subscriptions. The charter of the NEDB would protect the public interest, but the public interest overriding any limiting mandate would be that it simply operate profitably. It would create money by lending and re-lending money against “fractional reserves”, like present banks in the Federal Reserve System. It would leverage money by joining commercial banks or investors in economy-spurring loans and investments, and/or do so with state economic development banks or agencies. Money and banking is supposed to be something we’re good at. Why let ourselves be out-done by the Chinese?
A National Economic Development Bank could do much to prompt a full recovery. We can print some money and use it to acquire valuable investment shares and loan assets. We can strengthen our economy and get our debt under control without short-changing grandpa on the social security he paid into or making it more difficult for grandma to pay for a visit to the doctor using Medicare.
We’ve heard both plans…Isn’t accelerating growth better?
