Three simple reforms that can fix the economy immediately.

[Michael K.]

Three simple reforms that can fix the economy immediately.
 
by Dick Eastman
 
With only three reforms that do not require any new government agency or drastic restructuring can save the US economy as well as salvage and secure what is left of the business sector and household sectors.  These are minor changes that would have big impact on debt and demand.  
The reforms are:
 
1.  Allow and require the Federal Government to issue US treasury money -- as was last done in 1963 -- that is pure debt-free fiat money to add to the Federal Reserve currency in circulation -- not less than and not exceeding an  amount  equal to the interest burden on public and private debt extant in this country. This equality will be measured in flows - the flow of new treasury money spent into the domestic economy will equal the flow of money exiting circulation as interest payment.   Reason:  To correct chronic deflation obtaining when Fed reserve money in circulation entirely due to bank lending is less than that amount is pricipal plus compound interest added that must be paid back to the lending sector when in fact no money has been created by the banks to pay the interest that is above principal.  This will kill the deflation that has been putting Americans out of work and pushing them to default and bankruptcy.

 
 2. Variable debt burden adjusted for deflation.  Index debt to American purchasing power.   Just as there are adjustable rate mortgages that vary with interest rate -- we need a new loan adjustment that shrinks both nominal principal and nominal interest owed according to to an index of purchasing power that is based on both a measure of average and median citizen income and average and median prices in retail, wholesale and commodities prices  -- including food and gasoline.  This will cut the profit and the moral hazard (perverse incentives)  temptation of banks to increase deflation (throwing the country into deeper and deeper depression)  to make the pile of wealth (our IOUs) owed to them worth more.  (Note:  Just as the creditor elites push the propaganda that "inflation" must be fought because it cheats "savers" -- "savers" is theri euphemism for themselves --  so they have in reality been using their command of monetary policy and credit policy to ensure constant deflation that makes them ever richer at the expense of borrowers and all who use our debt-based disappearing money.  (I call it disappearing money because it appears as a loan and disappears as principal and interest.  Fiat money does not do that.  It is just printed and circulated.)

3.  Justice may be blindfolded, but Truth is too often gagged, and the truth is that  Fed Chairman Bernanke has told a whopping lie  about doing everything he can to end this depression in the lower loop (domestic working economy.)   The most powerful and  important tool of all he has left untouched.  The tool that the Fed was originally supposed to use most of all but in practice never uses  is changing the reserve requirement to expand money in circulation.    The Federal Reserve has had the power to lower the reserve requirement thereby allowing banks to inject massive new local lending. This alone would have put money in the systme that would have enabled people, in 2008, to keep up their debt payments -- as I argued at the time.    No,  this is not the same as lowering the interest rate to get  banks to lend, rather it is increasing amounts of money available for lending that it will  cost them nothing to lend and that will lose them interest if they do  not lend.  THE FACT THAT THIS TOOL HAS NOT BEEN USED IS A CONSPIRACY -- PART OF THE ROTHSCHILD-OWNED GOLDMAN-SACHS CONSPIRACY AGAINST THE AMERICAN PEOPLE OF WHOM THE ROTHSCHILDS ARE NOT SO FOND. -- but Congress can pass a law requiring the Fed to lower the reserve  requirement for all lending institutions around the country if some minimum of economic performance is not met.  I would require that all lending must take place within 25 miles of the branch bank that holds the reserves.
 
4.  These reforms will fix the economy.  The rest of the improvment will have to come from taking down the power of the treasury department and the state department and elevating the power of the department of commerce and changing its mission.  From now own the Department of Commerce will seek only to increase domestic demand and domestic supply  -- it will not be inovled in iforeign trade -- and it alone will determine the purchasing power index upon which the Treasury will issue Treasury fiat money as mentioned in point #2.
 
This would do it.  This would save the country right now.
 
Who wants it?  Who is willing to believe that answers that can save our skins are still possible?  I know I am.
 
But what happens if the American people, even to save their skins, cannot influence their government to turn from the economic slaughter of its own citiziens and adopt instead these salutary reforms?  Then it will be up to the states -- threatening civil war if necessary -- to issue their own FIAT money.  (South Carolina legislators are trying to "beat coming hyperinflation" with a silver-backed state currency  -- shear folly, and certainly no cure for malignant far-advanced super-deflation.)  Money needs no backing.  Money is not backed.  It is pulled forward by what it can buy.  Fiat money is instantly made sound when the state governments declare that it can be used to pay state income taxes and property taxes -- possibly at a premium over Fed Reserve currency and checkinging deposit money  -- because the states will be saving incredible amounts of borrowing and it can split some of the interest savings with its citizens by having a state dollar  pay for a dollar and three cents of taxes where a Federal Reserve dollar will only pay one dollar. But this option is not necessary, since the simply fact that  state scrip dollar can pay a dollars worth of taxes will make it equal to the dollar.  This would be a great boon to the country  -- but first the people must overcome the great brainwash that tells them that fiat money is bad, that only gold is real money, that fiat always leads to inflation and that inflation is the cause of depressions (when in fact it is ALWAYS deflation that causes depressions and prospers the creditors.  (The moneyed elites made out like bandits in the 1930s depression as well -- it sould be noted.)
 
So the question is, Who wants America to make it?  (I sure do.)