THE SEVEN ELEMENT PLAN
FOR GENERAL ECONOMIC REFORM
I think I better state the seven elements now—before you lose interest in the plan. They are—
(1) Greenbacks, like Lincoln's and Bernanke's recent direct purchases of government securities from the national treasury from which it is independent.
When Bernanke (i.e., the Federal Reserve, he heads) buys government bonds directly, the government has money to spend (or lend) for any urgent purpose—without increasing the national debt or disclosing a budget deficit that induced fear of future taxes.
Theoretically this would allow government to finance our move to electric cars ASAP. This could create a huge number of jobs and go a long way toward full recovery from deflation and high unemployment.
(2) A National Capital Budget, financed in whole or in part by greenbacks, to focus public and academic attention on the nature of long term investment, compared to annual operating expenses.
Although a nations money supply and velocity of exchange can help to explain free market prices, and for this reason, cash budget accounting systems have some purpose, this plan approaches prices from a functional point of view: necessities, priced to be affordable, is a primary goal of the plan. Taxes, lowered to zero where possible, is another goal. Both of these goals are better served by a national capital budget than by the cash budget that we have.
(3) A National Dividend, like the one in Alaska, but several times as large. It would end inadequate consumer demand and spending all at once. The dividend could be curtailed as soon as it was not needed.
(4) Inflation Protected Savings, like inflation protected bonds (TIPS bonds). They would, with proper government salesmanship, tend to permit savings to replace taxes as a primary financial tool to prevent spiraling inflation from raising the price of necessities to unaffordable levels.
(5) Anti-inflation Taxes, to subsidize production of necessities people pay for would replace all other taxes.
(6) A Full Employment Operating Budget, to end involuntary unemployment for as long as a majority vote for such an end. Jobs are more than a source of income. They tend to promote the general welfare and individual happiness.
(7) Price Control and Rationing, as a last resort, if and only if, supply, demand, savings, and taxes, were unable to maintain the affordability of prices for the necessities bought by nations and individuals.