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An Economic Vision for Real, Sustainable Recovery

Posted December 24, 2014 By David Haggith

My economic vision for a sustainable economic recovery is easy to understand, easy to believe in and almost impossible to enact politically. I’ve laid it out in bullet points throughout the article below:

 

  • Banks that failed would be allowed to fail, so the bad stuff dies and decays back into the fetid earth, and the evil and greedy are not rewarded for the destruction they brought upon everyone else.
  • To keep individual depositors from being hurt when the mighty fall, those whose deposits were insured would have new accounts opened up by the government in their name in small, stable banks, using the same fiat money that wrongfully went into the reserve accounts of big failed banks.

 

The federal government stated over and over (both Bush and Obama) that we had to bail out banks that were too big to fail. It’s been the mantra of 2008 and beyond. It was the rationale presented to the public to bail out the wealthiest bankers; but the government was hypocritical because the solution it, then, employed was to make these banks all larger than ever.

In my sustainable economic recovery plan, small banks would be made larger and failing banks that suffered from gigantism would die as their obsessive weight crushed down on their lungs. The herd would be strengthened by natural selection even as the innocent depositors were protected … so long as they were wise enough to put their money in insured accounts.

If creating trillions of dollars in new money didn’t create runaway inflation when given to big bankers, why would it create runaway inflation if it were given, instead, to their depositors through little bankers? The fact is that the government simply cannot think outside of the big box of helping the rich first and foremost.

One reason creating trillions of dollars out of thin air didn’t create inflation in the case of bank bailouts is because creating this money actually added nothing to the economy. It just replaced what was wiped out in the collapse. By the same logic, then, creating that money in other bank accounts would only replace what was lost in the big bank that died. So, it does not really add money into the economy. It just moves it all into the hands of responsible people.

Under my economic vision, the newly created money all goes to the poor and the middle class and bubbles up, instead of trickles down. When big banks fail, the money they claim to have in all their accounts evaporates, and the big bankers lose their jobs, and the institutions they controlled close their doors forever.

If the government creates an equal amount of new money in new accounts, it is only replacing money that just evaporated from the system. That should not create inflation. Yes, the new money is created out of thin air, but so was all the money that exists in the U.S. today. So was all the money used for banker bailouts.

Why not create new money for the depositors, instead of creating it in reserve bank accounts for the big banksters? It is not impossible. It can be done. What is lacking is the political will to see it done that way.

A sustainable recovery must restructure the economy by letting bad banks crash and burn and by rewarding good banks that didn’t participate in outlandish greed. Because we don’t have the political will to do that, we have no real recovery.

So, my economic vision is based on righteousness to use a good word that is often misunderstood. By rewarding the righteous, I don’t mean the perfect or the religious. I mean those who acted in the “right” manner by not participating in high-greed, high-risk financial adventures.

 

Why do Americans continue to believe in a clearly failed economic vision?

 

The majority right now follow a vision for this country’s growth that has said for thirty years that the way to make all citizens better off is to start by helping the rich. Tax them less on their capital gains than you tax the person who actually works and produces something.

Because this philosophy is held as tightly as religion, the majority of Americans have been willing to lap up the lie that the new money that was created as economic stimulus could only be created at the top! On what basis can it only be created at the top? Why would you even believe such a thing?

All money in America is fiat money. It is, in other words, all created simply by decreeing it into existence. The Federal Reserve, run by the nation’s richest bankers and by government appointees, is the sole body with the power to do this. The government appointees on the Fed’s board should have seen that the new money did not go to the corrupt bankers whose greedy vision for their companies failed miserably; but the appointees love their banker buddies and, for the most part have all participated at or near the top of the present economic pyramid, themselves. It’s crony capitalism.

Congress could and should mandate that banks that fail go through normal bankruptcy dissolution. Congress failed. Republican and Democrat presidents failed. Congress could order that the successful parts of those failing banks be sold to intermediate-size banks that are firmly solvent, so that good banks benefit from their prudent practice and become larger. That would encourage moral banking behavior.

Congress could make it illegal for the largest banks in the nation to bid for parts of the insolvent banks that are still successful on the basis that those banks are already too big so are not eligible. Instead, Congress and George Bush and Barrack Obama all participated in making certain that those behemoth institutions became even larger. They insisted upon merging failed banks into larger banks that had not, yet, failed.

Why on earth would you do that if your vision for the nation’s economy was one that intended to fix the problems for good? The government clearly stated that one of the biggest problems in this economic crisis was that worst banks were too big to be allowed to fail. In that case, making them larger is either a plan of idiots or a plan of corruption. Take your pick.

Congress could have been visionary and restructured the economy for sustainable wealth creation with a solution that helped smaller banks become even stronger, but congress lacks any economic vision.

We have no visionary leaders in the presidency either. This is where Barrack Obama as a man of “change” has most particularly failed. His years of government have all been status quo economically speaking, and the economy was where we had the greatest need for true vision and brave leadership.

We got none, but Republicans have nothing better to offer. It is just more disappointing from Obama because he failed to be all that people hoped he might be. With Republicans, we know they will serve the banksters every time out of their religious belief that anything good for big business is good for all and that wealth is created from the top down.

“You can’t do that!” the indoctrinated will argue. “Money printing is a certain path to economic collapse!” Maybe so, but money printing is all we have been doing throughout the Great Recession, and it caused no hyperinflation, except in the stock market. So, why not do it in a righteous manner? Why on earth would you put all of your newly created stimulus money in the coffers of rapacious banks that created the problem? It defies all sense and can only be explained by sheer stupidity or cronyism in the highest degree.

 

More of my economic vision for a sustainable recovery

 

If we really want to avoid “moral hazard” and create moral success, we’d have to rewrite some of our corporate laws. Corporate reality has to happen to stop corrupt banking:

 

  • Bankers who took foolhardy risks need to go to prison.
  • They also need to pay for all the losses out of their own wealth before any others do.

 

Financial investment advisors who counseled investors to buy junk while, themselves, buying insurance against the junk in belief that it would fail (such as Goldman Sachs did) … should be in prison. It’s time to rewrite corporate law to put more responsibility on the shoulders of the highly overpaid executives and on board members. If they’re going to be entitled to such enormous salaries, they can and should shoulder some enormous risk to go along with it. As it is, they have almost no risk at all.

Corporate leaders who deceived investors at a level that caused their own institutions to fail would, under my economic vision be stripped of ALL of their personal wealth. Corporate law would specifically state that personal wealth cannot be isolated from the losses created by those within a corporation who corruptly cause those losses or who cause such loss through great imprudence.

Corporate law is corrupt and needs to be rewritten so that it does not protect avarice. Leaders who can’t take the heat of that responsibility or what it could mean to their own vast fortune, can get out of the kitchen. We don’t need them in charge anyway. Theirs must be the first money to be used to replace what was lost.

There is nothing in this universe, other than the indoctrination that protects the wealthy, that can prevent Congress from drafting corporate laws in such manner that they never protect the wealth of criminals nor of greedy people. Corporations are artificial entities for the benefit of mankind that are only created via laws in the first place.

Only when you place the risk on the shoulders of those making the big decisions will you find they act in ways that are responsible with other investors’ and depositors’ money. End moral hazard by creating moral responsibility.

 

  • Do not put your stimulus debt on the shoulders of other generations unless you give them something for it.

 

This, too, is moral irresponsibility. Government could have and should have used the astronomical deficits of the past six years to fund improvements of our transportation systems, schools, parks, sewers, water supply, electronic infrastructure, and security because these are things government is behind on anyway. They are a legacy, once we have created them, that we can hand to the same generation we are handing the debt to so that they get something for the money we are charging to them.

Creating these projects would have created far more jobs than inflation of the stock market has fueled. Yet, it would have wound the stock market up, too, because money always bubbles up. Projects like this make companies bigger and wealthier. So, the money will bubble its way up to the wealthy share holders in a manner that only works when new jobs are created, rather than just giving it to bloated banksters to invest in the stock market — a game that only the rich get to play, which rarely creates jobs. It just creates higher stock prices and richer rich people.

Government didn’t want to make the rich work for they money, but these kinds of projects would have done much more than create hundreds of thousands of new jobs and would have done more than giving the next generation some goods along with the bill. They would have paved the way for sustainable economic improvement. New and better roads move goods faster. New electronic infrastructure conducts business faster. It all improves the quality of our economic engine. So, that kind of stimulus improves the economic foundation of the nation; but we did almost none of that because we’re stupid and short-sighted and addicted to feeding the rich.

In terms of moral success versus “moral hazard,” deficit spending on civil projects does not strap the future with the impossible burden of solving our problems. (Highly immoral in my way of thinking.) It doesn’t strap the future for the obvious reason that it gives them tremendous assets in exchange for the debt we are passing along. That’s money they won’t have to spend to repair those things or build those needed things.

Under my plan, the next generation inherits something that balances the huge debt it inherits. Moreover, that generation saves money because all of the necessary work has been done for them with today’s dollars. The cost in today’s dollars will seem like a spectacular bargain twenty years down the road when the debt is still being paid.

This vision is nothing more than common-sense. Obvious opportunities were missed simply because corrupt minds do not see the possibility. They think first of saving the rich, saving themselves.

How do you know this is a true economic vision? Because it’s simple and clear. New money CAN go into the economy at the bottom first. When it does, it creates wealth all the way up as the rich cream inevitably rises to top. It creates durable assets that benefit everyone, not just wildly speculative fortunes on paper.

Moral hazard is simple to avoid if you have the courage to do what is right. Greed CAN be made accountable if you have the moral fiber to create laws that enshrine accountability, rather than give sanctuary to greed. M

aking overpaid executives personally responsible for their decisions will not cause them to flee their top positions because they’ll have no alternatives. Those who don’t have the courage to shoulder responsibility at personal cost should not be the ones making decisions anyway. To have your wealth protected from mistakes of others or from decisions that you don’t have full control over is one thing; to have your wealth protected when you participated in a decision that was clearly risky or clearly criminal is another matter altogether.

 

My economic vision can be summed up in five points:

 

  • Never bail out those who created the problem as that always creates moral hazard. (The fact that banks are still doing all the same things that caused the Great Recession proves this point.)
  • Never make institutions that are too big to fail even bigger by forcing mergers as a solution (which the government did with several massive banks). In fact, do not even allow them to become bigger. In fact break them up. (Since corporations only exist as a creation of law, law can prevent goliath structures that pose a risk to everyone just because of their size if they fail.)
  • Save depositors by creating new deposits in small, solvent banks with the same fiat money that would have been used to bail out big banks.
  • Only take out government debt to create economic stimulus by using it to build infrastructure that creates jobs, builds up companies, and improves the economic capacity of the nation for the future so that those who inherit the debt also inherit the assets. (Because THAT is sustainable.)
  • Create accountability at potentially great personal cost within corporate law because those who are afraid of the risk that corporate leadership puts on their own personal assets aren’t big enough to deserve to be in the game anyway.

 

Those five points would change the world, but congress will never enact them unless the bulk of Americans stop taking whatever comes and put some skin in the game and demand that their leaders fully carry out these changes. The amount of public pressure required to get congress to stop dancing with the big banksters would be enormous because those banksters are really persuasive in their arguments that you must first help the rich if you wish to help the poor and that doing anything else will fail economically. They also have persuasive wallets.

The number of enraged Americans would have to completely overwhelm members of congress before they’d stop listening to the successful bankers. They believe these bankers understand what it takes to make money and do business better than the average person on the street, so they will listen to them, not you.

As I see it now, Americans are asleep and are gladly letting their government come up with all the solutions to the economic crisis. That’s why there have been no sustainable solutions. Congress has no creative ideas. All we have seen is public welfare to the richest of the rich in the hope that they will save all the rest of us from themselves.

How can Republicans still believe a capital gains tax increase will hurt investment and jobs when the world’s most successful, multi-billionaire, investment advisor begs to differ? Republicans may stand on the right side of the aisle, but they certainly do not stand on the right side of the argument when it comes to ending the Bush Tax Cuts for Billionaires.

Warren Buffet has been in the investment business longer than just about anyone alive, and he has certainly made more money by counseling investors than anyone on earth during any time on earth, yet Warren mocks the idea that higher tax rates discourage investment. In fact, Warren writes that the minimum tax rate for those making over $500,000 a year should be 30% of all they make; but, more importantly, Warren advocates raising the one tax where the Bush Tax Cuts have created a huge subsidy for millionaires — the capital gains tax.

 

Without capital gains tax increases, the rich are subsidized by the poor

As I’ve often argued in The Great Recession Blog, millionaires and billionaires do not make their money in wages. You’d think that would be so obvious that no one would need to say it. Yet, over and over, you hear Republican pundits saying that the rich already pay the highest tax rates. NO THEY DON’T! Flush that STUPID thought out of your head! The high 35% income tax rate is smoke and mirrors. The rich make very little of their money off of the kind of income that pays income tax. The highest income-tax rate is nothing but window dressing to make it APPEAR that the rich pay a higher tax rate than the rest of us.

Many millionaires make none of their money from wages. They make their money the way Warren Buffet does — off of investments — and money made off of investments is taxed through capital gains tax, which the Bush Billionaire Tax Cuts reduced all the way down to 15%. According to Warren, the average upper-class person made $97,000 PER HOUR last year, and paid less in taxes than you probably did. And, YES, the top twenty-percent do pay eighty-percent of the taxes, BUT they make eight-five percent of the wealth! So, by any measure, they are underpaying. The poor and the middle class are carrying their sorry fat asses uphill for them. Why do you want to do that? What is wrong with you?

I know this is obvious to many, but it clearly is not obvious to Republican voters. I am not sure whether Republicans are this ignorant or are simply liars. I like to think that it is only the Republican politicians that are the liars, and that the Republican voters are simply ignorant masses. Republicans (and I USED TO vote Republican more often than Democrat, being an independent myself) would stop endlessly repeating that the rich already pay higher taxes if this was as obvious to them as it should be. THE RICH PAY LOWER TAXES! The reason Romney only paid 15% tax on his income in 2011 is because he makes his money buying and selling investments and off of stock dividends, and all of these pay only 15% in taxes! That is one step from the LOWEST tax rate in our income-tax system.

In other words, thanks to George Bush (and earlier Ronald Reagan), the rich are subsidized by the middle class. People in the middle class all pay a proportionately larger amount of their total income in taxes than the rich do. Why are Republican voters so unwilling to believe a major capitalist like Warren Buffet who is arguing against his own personal interest? You’d think that would wake them up! Bill Gates, a hero to many capitalists, is also making the same argument.

As if the low capital gains tax rates were not bad enough, the rich also have numerous exemptions and credits available in the income tax code that help them write down the taxes paid on the portion of their income that is made through wages … well below the stated 35% top bracket. So, even those who make some of their money in wages, do not pay anywhere near 35% on their salaried income. It is ABSURD to think the rich pay a higher percentage in taxes than the middle class. THE RICH DO NOT EVEN PAY AS HIGH A PERCENTAGE IN TAXES AS MANY OF THE POOR!

What fools Republican voters are to continue to gulp down this bilge water whenever their favorite talk-show hosts and Republican politicians regurgitate this swill into their hungry little mouths.

 

Republican voters believe they know more than Warren Buffet when it comes to capital gains tax increases

Mitt Romney, Grover Norquist, Karl Rove and Rush Limbaugh have argued until spit is spewing from their mouths that an increase in the capital gains tax will drive money out of investment and will hurt jobs. Republican politicians have stated in lock-step with each other since the days of Ronald Reagan that the best and only way to spur the economy forward is to keep capital gains taxes low. Republican voters have swallowed this hook, line and sinker, even though history proves them wrong. Warren Buffet also says they’re dead wrong!

 

Let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased, argues Buffet, Only in Grover Norquist’s imagination does such a response exist.

 

Grover Norquist has managed to subjugate the entire Republican party to his will with a simple pledge, and he’s not even elected. Fortunately, his stronghold his finally starting to crack. This week such Republican stalwarts as Lindsey Graham have said they will break their no-tax-increase pledge.

Let’s get another fact straight here once and for all. If you’re an average voter who is screaming in fear, “I don’t want my taxes raised,” NO ONE is talking about raising your taxes. President Obama and Democrats have consistently said that they are not about to raise taxes on the middle class or the poor. YOUR TAXES ARE NOT GOING TO GO UP. The taxes of the rich are going to go up, and if you pity the rich because you think we are about to confiscate their wealth and give it to the middle class as a transfer of wealth via taxes, then put on your reading glasses and go back and read the beginning of this article. It is YOUR wealth that has been confiscated by having to pay higher taxes than any rich person pays in order to help keep the rates of the rich low.

Get a brain! Find a used one. It will work better than the one you have already discarded! First, you have been subsidizing the rich for years, so taxing them at a higher rate now than the rate you pay, is merely recalling the debt they owe you for letting them off so easy for decades. It will take them a LONG time to pay back the debt they already owe the middle class, so have no fear that a capital gains tax increase is confiscatory toward the rich. THEY OWE YOU because you HAVE been subsidizing them for a very long time. That’s a fact!

So, it’s time to call in the loan you’ve given to the very rich because our country is in need, and the middle class simply cannot afford to pay more taxes to work our nation out of this huge debt we’ve created.

Romney preached the Grover gospel that lower capital gains taxes are “the right way to encourage economic growth, to get people to invest, to start businesses, to put people to work.” Even Hurricane Sandy didn’t create as much Wall Street rubbish as came out of Romney’s mouth.

Warren Buffet, who has managed investment funds for the very rich for decades, has said repeatedly that a capital gains tax increase will not stymy investment one iota. Back in the fifties and sixties, capital gains taxes were 27.5%, and income taxes were 70%, while Warren rose to his present wealth guiding the investments of the world’s greatest capitalists during that time. Writing about that time, Warren says,

 

Under those burdensome rates, moreover, both employment and the gross domestic product increased at a rapid clip. The middle class and the rich alike gained ground.

 

Republican mantra against capital gains tax increase already proven wrong by Clinton

An even better argument against the Greedy Grover Gang is the Clinton era. Clinton raised capital gains taxes and income taxes on the wealthy, and the economy surged forward at a far faster rate than was even healthy. While the dot-com boom in the Clinton years went bust, it certainly proved in a dramatic way that higher capital gains taxes will not slow down investment or job growth. Clinton raised the capital gains tax, and we experience a long boom period of wildly speculative investment. People invested insane amounts of money as if money flowed out of their fingertips. They invested in companies that had never even shown a profit. This is the exact opposite of what Romney said will happen if we raise the capital gains tax, and he is without excuse for such a lie because history had already proven otherwise … to anyone who was paying attention.

If you cannot learn by listening to a major capitalist like Warren Buffet, who specializes in counseling other major capitalists on their investments, I would think you could, at least, learn from history. We raised both capital gains taxes and income taxes in the Clinton years, and yet investments new ventures soared beyond the stratosphere.

 

Wake up to a capital gains tax increase and smell the rich aroma!

As Buffet and Gates have both said, “Stop coddling the super rich!” They are not made of straw. They will not blow away in a summer breeze or freeze in the winter if they have to start paying the same tax rate on their investment income that the rest of us pay on our income! They will not stop investing and stop making money just because they have to pay the same taxes you do. As Buffet writes,

 

Suppose that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.”

 

Don’t be stupid! Of course, the rich are still going to invest. Are they going to decide, just because they have to pay higher taxes on their capital gains and investment income that they don’t want to get richer? You haven’t stopped trying to earn money at the rates you pay, if you are poor or middle class, so why would the rich stop trying to make money if they suddenly have to start paying as much as you do on their investment income? Don’t be absurd. According to Buffet, not once in his career has one of the investors whom he helps make rich mentioned tax rates as a reason to not invest. Why do you believe these Republican peddlers of fear? Seriously? What’s wrong with you?

Stop thinking and acting like your livelihood depends on the rich.

Sure, it’s true that tax decreases can stimulate the economy, but the Bush Tax Cuts have done nothing to stimulate the economy. The economy stinks! The Bush Tax Cuts have not created jobs. We’ve had these tax cuts for eleven years, and jobs have rarely been worse. They did not create jobs last year; they did not create jobs the year before that; they did not create jobs before Obama first took office. Jobs before Obama took office were sinking in the belly of a great depression.

The fact is that tax cuts do most to stimulate the economy when they are given to the poor and to the middle class. When those groups get tax cuts, they go out and buy things. And if you think the rich won’t quickly go out and build factories to make those things when people are ready and able to buy, you don’t know the rich. If the rich smell a market, they’ll go after it like sharks on blood. So, stop thinking your livelihood depends on being easy on the rich in order to help them help you out by building factories so that you’ll have a job. The factories built by the Bush Tax Cuts were all built in China, Mexico and India anyway!

Stop living in the fantasy that someday you’re going to be rich, so you want to keep those capital gains tax rates lower than what you are paying in taxes now because you want to be able to benefit from them when your ship comes in. Your ship is far more likely to come in if the rich are paying more taxes than if you are! And NO ONE is talking about raising taxes on the middle class or the poor. So, get that silly little fear out of your head.

And stop buying the rubbish that higher taxes on higher income bracket tax any person more unfairly than another. In a marginal tax system with no write-offs that favor one kind of person over another, the rich pay the same on their first 10,000 that you do, and then they pay the same amount on their next 100,000, and they pay the same amount on their next $1,000,oo0 that you will pay if you ever get there. They are not being singled out. If we ever get back to such a tax, it is a sliding scale for everyone that decreases your tax burden as your ability to pay decreases. It adjusts the load to what you can manage at any particular time in your life. But the rich don’t currently pay those higher tax rates anyway. Not even close.

Why on earth Democrats have not managed to convince blue-collar Republicans that the rich are currently taxed less then the middle class is beyond me. The argument continues to be that we should not tax the rich “more” than the middle class. Heck, I’d be glad if we just taxed them the same by treating capital gains like all other income and by ending all their special write-offs. It’s a simple fact that the rich are all taxed far less than the middle class, so it is ludicrous that middle-class Republicans want so badly to keep them from being taxed as much as the rest of us. We are still bound in political gridlock here in the U.S., and people are still thinking like ideologues about whether a solution is “Republican” or “Democrat,” “Conservative” or “Liberal.” Who cares?

A capital gains tax increase increase would merely level the playing field so that investors are not coddled with kid gloves as if they are so precious and vital and fragile that we have to make sure they pay the LOWEST tax rate in our code so that they don’t break.

Give ME a break!

Economists Just Don’t Get The Great Recession

Posted August 8, 2012 By David Haggith

The Business Editor of The Daily Telegraph must be dining on the food of the gods to be so high about recovery from the Great Recession, but he’s also eating with his feet and making quite a mess in his analysis, which speaks against any evolutionary development in his thirty years.

According to The Telegraph, “Ambrose Evans-Pritchard has covered world politics and economics for 30 years.” In that case, he should know better than to present the following graph and make the claims he does:

 

M1 money chart shows how economists fail to understand this economy

This Chart by Thompson-Reuters Datastream shows the supply of money expanding and contracting during the Great Recession

 

… and then proclaims…

 

The first green shoots have begun to emerge in money supply data from across the world, raising hopes of a tentative global recovery by later this year. (The Telegraph)

 

Recovery? Really? Rather than raising tentative hopes, I think the graph above hangs my hopes out to dry on tenterhooks.

 

A graphic Great Recession

Let’s parse the graph Ambrose is talking about with a little more reality and less ebullient optimism.

First, the deep plunge in the blue line reveals how much global industrial output fell during the first year of the Great Recession.

Shortly after the plunge begins, money supply (red line) is expanded through the bailout programs started by George Bush and continued by Barrack Obama. (The big rise.)

The inrush of new money resulted in an enormous increase in industrial output — though who could see it in reality as jobs continued to decline rapidly during that period. Nevertheless, the graph shows industrial output going up.

Ambrose’s point from the graph is that six months after every great increase in money supply, industrial output goes up. What I see in the graph, however, is that those results proved unsustainable every time. From that point on, the Great Recession kept hammering away. As the influx of  new money dried up, industrial output dried up. Notice the long decline is made up of many upward bumps in both lines, followed by equal dips in both lines. After the first so-called “recovery” in the middle of 2009 (where the blue line crosses back above the zero mark), every low is lower than the low before. In other words, at the end of each subsequent burst of new money, we were worse off than before.

In 2011, I wrote in my “Letters to Stan” that the end of Q.E.II, which was artificially propping up the Great Recession so that it appeared it had ended in 2009, would result in the economy falling off a cliff again in August. You can see in the graph that the economy (best represented by the blue line) dropped again in August after rising from a large influx of new money. Money supply remained in decline until the last couple of months, and Industrial output is still in decline.

The graph looks like nothing but a long bumpy, downhill recession to me where each attempt to boost industrial growth with new cash quickly founders and sinks to a lower bottom.

Where is our recovery from the Great Recession?

Ambrose Evans-Pritchard heralds the little upturn at the end of the money supply line in his graph as a sign that the green shoots of recovery from the recession are finally here!

Again, really?

Look at how many other upturns of the same size happened in money supply along the long downfall of the red line that marks the Great Recession in his graph. Each one was followed by another drop off, and the average trend of both lines has been downward from the beginning of the Great Recession to the present. So, who cares if industrial output rises a few months after the present quantitative easing that is happening in other parts of the world? It isn’t going to last. The graph proves that.

Abrose also bizarrely claims,

 

The combined growth rate for the G7 economies and E7 emerging powers levelled out at 1.6pc in May and rebounded at 2.5pc in June, though China and India are still contracting.

 

You couldn’t prove that from the chart he presents. Global industrial output is still falling on the chart … and in the news.

 

They give some comfort that the latest growth scare will stop short of outright slump.

 

Looks to me like its still slumping, and the upward tick in global money supply has done nothing at all to arrest the slump in global industrial output. It is as if Ambrose is trying to whip up some ambrosia out of swamp mud.

Money supply has ticked upward at the end of his graph, but the only thing that proves is that the economy is in bad shape. Money supply in each case shown on the graph rises because the central banks of industrial nations have been “expanding their balance sheets,” a phrase the generally means “creating money out of thin air.” They only do that when they see the economy is falling into a deep pit. The latest short burst in money supply, however, has done nothing to change industrial output. And that is what the graph tells us we should expect: Each burst in money supply has resulted in a smaller increase in industrial growth than the burst before. That says to me that the ability of quantitative easing and other government measures to help lift us out of The Great Recession may be nearly dead at this point. It is a case of diminishing returns — a case of the drug addict needing a bigger hit each time to get a smaller high.

Of course the rise in industrial output at other points on the graph shows a lag of about six months behind the expansion of money supply. So, it could be that growth in industrial output is about to come, but the expansion of money supply 1) never guarantees that industrial output will respond just because it has in the past, and 2) that monetary expansion is only happening because the economy is going down and is being pumped up along its inevitable decline by central banks. Clearly the graph shows the last upward burst in money supply led to only a small blip on the patient’s heart monitor compared to the first enormous burst. Everyone knows QE3 will have even less effect. As the patient’s tired heart gets worse and worse, a shot of adrenalin accomplishes less and less. Moreover, the recent inflation in the amount of money at the end of the graph is a much smaller dose than either of the previous increases, so it should garner a smaller response still in industrial output. The graph says to expect very little.

The fact that the graph for money supply and industrial output averages out to an obvious downward slope from the start of the Great Recession says everything you need to know about the ability of quantitative easing or any other kind of increase in money supply to create a sustained recovery with the present patient. In fact, it illustrates what I’ve been saying throughout The Great Recession Blog: The Great Recession did not end in the summer of 2009 as economists have been saying all along. It has merely been pumped up by mainlining money in huge doses. The patient is dead.

To put the graph in perspective as to what it says about the economy, imagine posting that exact graph on the end of a patient’s bed. Do you think his family is going to see any good news in those vital signs where it takes endless hits of drugs to keep him less and less alive?

I think Ambrose has been hitting the happy juice.

 

The reality behind talk of “recovery” in the Great Recession

What Ambrose’s graph really shows is that GDP was propped up with an enormous flood of new money at the beginning of the recession, but retreated back toward recession. It has been pumped up again and again, but stubbornly falls right back off afterward. It proves that Q.E. is only temporary in its benefits. That’s because hits of adrenaline do not right any of the fundamental problems that are killing the patient. If I were this man’s family, I would be fighting with the doctor right now who keeps prescribing hits of adrenaline as the sole solution to the patient’s problems.

Nothing has been done to surgically rebuild the economy’s misconstructed foundation. Governments around the world are still trying to entice consumers into more deficit spending in an attempt to restore the moribund debt-based economy. The governments, themselves, are more stuck in deficit spending than ever before. All of the new money  was injected into the worst of banks, not the best of banks, in order to bail them out. That fiat money could have been created in new accounts designated for the depositors in the old broken banks so that the depositors could be saved inside of healthy banks while those broken banks were allowed to fail. Since the new money didn’t create inflation when it was deposited out of nowhere into the Federal Reserve bank accounts of the big banks, why would it have created inflation if, instead, it was deposited in personal bank accounts of insured depositors at good banks while the bad banks were left to fail?

Moreover, the governments of both George Bush and Barrack Obama have chosen to solve the problem of banks that were too big to fail by forcing them to merge with other massive banks that were failing in order to get emergency bailout money. Thus, the government created larger monsters that to this day look like they could topple on all of us and crush us all. Just last week, one of the greatest advocates of bank mergers, Sanford Weill, switched sides to join the small chorus that says these big banks must be broken up. Conglomeration has gone as far as it can. The game is over.

Moreover, governments have taken out enormous additional debt to bail out banks, which gives the future generation that must pay that debt nothing for their money. How can anyone think this mountain of unrepayable debt will end as a sustainable recovery?

 

A different graphic look at the Great Recession, which I prefer for understanding where we’re heading

The following graph compares the spring and summer of 2011 (red line) to the same period in 2012 (blue line). The lines begin in May when the positive economic signs of “recovery” in the spring began to fade away, leading to a summer of growing consumer anxiety and discontent. In 2011, that ended with a plunge in the stock market that was triggered, in large part, to the brinksmanship played out over the U.S. debt ceiling and the resulting firt-time credit rating downgrade for the U.S. government. It was due in greater part, of course, to the bad economic fundamentals that still underly the U.S. economy and to the crumbling situation in Europe at that time. Has any part of that equation changed in 2012?

 

2012-stocks-repeat-2011 during the Great Recession

I wouldn’t want to be standing here. Would you? Yet, that is exactly where we stand … again.

 

That is the graph I’d be paying attention to. The blue line for 2012 stops where we are in time today. What will happen at the end of August as a result of this year’s brinkmanship over the “fiscal cliff” that has been in the news every week and that has seen no positive action taken by either Democrats or Republicans?  What about the fact that we face the same situation with Greece that we faced in August of 2011, but now have Spain and Italy sitting more on the brink of a fall than they did back then? What about the fact that European leaders continue to act at a speed that indicates they believe the markets will buy zolpidem tartrate 5mg accord them whatever time they need? Thus, Europe’s leaders have all left for their summer holidays!

Is the August plunge a cliff we want to go over again? Not only does this graph show an almost exact reflection of the stock market in 2011, but the exact same triggers are in play in the major economic headlines  this summer. Is not “insanity” expecting the same actions to lead to different results?

 

How deficit spending could have brought recovery from the Great Recession

If government had focused on putting all of its new debt to work building and repairing infrastructure, it would 1) be creating the structures necessary for an efficient and vibrant economy in the future, 2) be buying and creating assets today that the future generation will have to build anyway, but would be doing so at today’s prices. That means the government would have been able to pass the debt along in manageable form because those purchases today would decrease the expenditures the next generation has to make.

The next generation would have to pay for those roads and repairs in their own time, but would be doing so in today’s dollars, which would offset the interest they have to pay. Instead, they will inherit roads that are even more crumbled, so they’ll get the mountain of debt from us along with worse roads and bridges than we have now, which they will still have to repair on their own. What a sad situation for them! Oh, and they will get a pile of hideously giant banks, riddled with corruption (as we are finally learning) that we saved for them! Won’t they love us!

Economists like Paul Krugman talk about ending the Great Recession by spending our way out with more government debt, and they are right, but they are ignored. Sometimes, when you come to a deep mud hole, you have to decide whether to drive through slowly and cautiously — lest you get in too deep and sink beyond salvation — or to power through with the pedal to the metal and just hope you can create enough momentum to make it to the other side. We are in a situation where we need to power through and just hope that will be enough to get us to the other side.

HOWEVER, Krugman and others who hold this view need to be more focused if they’re going to get their message across. Talk of greater deficit spending is far too vague, so it meets understandably with a lot of rejection, since we’re sinking in debt already. We are in deep quagmire, but power spending must be sharply focused so that ALL of the new debt we are taking out goes to repairing and creating things for the future. That is the only way this enormous debt will be manageable. We have an honor-bound duty to give those who must pay for this recovery something tangible and necessary for their money and for their own economic well being  … not just a bunch of bloated dinosaur banks run by fat banksters.

We have already missed that opportunity!

What an unforgivable and foolish legacy of self-saving self-interest we are passing along.

The only redeeming factor in our present debt scenario is that this debt is not going to push along very far. To use another analogy, we have plowed the deep snow (the cost of recovery efforts from a frozen economy) straight down the road, instead of off to the side, so it is rapidly becoming a larger pile than our economic snow plows can push. Most of us alive today will be that “future generation” that gets stuck with a mountain of debt it cannot begin to repay along with nothing but monstrous banks to show for it. We will suffer a long winter of discontent that we have merely pushed a few years into our future. Those who thought we could let someone else pay for all our problems will prove to be wrong … unless they are already very old or die prematurely.

We began pushing the mountain of debt ahead a few years ago, so those few years of time we bought with enormous deficit spending are about to end. If you think the long push of 2010, 2011, and 2012 were difficult, wait to you see the disaster of 2013 when we can no longer push the mountain of snow forward. To jump back to the patient analogy, the next round of Q.E. from the Fed will be the hit of adrenaline that barely raises a blip on the patient’s monitor. After that, it will be obvious to all that the patient has died.

 

How cronyism worsened the Great Recession

This Great Recession is what cronyism buys you. It is the end result of following a mantra that has been used to justify that cronyism — the obviously false proclamation that the rich are “the job creators.” (I say “obviously” false because the rich have been given their best tax breaks ever for twelve years now, and jobs have rarely ever been worse. On top of that, the rich have been given huge bailouts in the greatest transfer of wealth from public sector to private sector ever witnessed, and still they have created no jobs.)

On the basis that wealthy investors are the “job creators,” we were sold the idea that we must put all money toward bailing out investment bankers so they can save us with investments that create jobs. Wasn’t it obvious all along that we could create those jobs directly (i.e. with no investment from Rich people made richer) by laying new pavement and replacing worn-out sewer lines so that the fired bankers can find a job behind a shovel somewhere!

As for heavenly-minded Ambrose, who thinks that spring has sprung, just remember that it was these graph-toting, number-crunching economists that completely failed to see the Great Recession yawning wide open in front of them. They didn’t see it coming because they spend so much time doodling over numeric bumps that they pay no creed any more to economic fundamentals.

 

More on the road to to recovery from the Great Recession

There will be no recovery from the Great Recession until economic fundamentals are restored. That means…

  • Money supply becomes rational, rather than reactionary, so that businesses and investors start investing on the wise basis of which businesses look sound again, rather than the silly basis of guessing when central banks will throw more free money into the air for investment banks to speculate with;
  • Computer-generated stock market speculation is ended;
  • Banks that were conglomerated like Frankenstein’s monster from the parts of other dying monsters are broken down and parted out, themselves;
  • Sound regulations to prevent human greed from running amok are firmly back in place, while avoiding excessive red tape;
  • The crooks who created this mess are no longer awarded with bailouts, but find they need to raise bail money on their own because they’re going to jail;
  • Corporations smarten up and start distributing pay checks more proportionately between workers and executives so there is a more balanced distribution of wealth and rewards in society, making for a healthier society (If CEOs were really worth so much, they wouldn’t have bankrupted the entire world, and a dwindling middle class cannot buy the goods the rich would like to produce);
  • The government stops trying to base the economy on a foundation of housing, which was unsustainable in the first place because it assumes our towns and cities must sprawl forever to keep the economy healthy;
  • The government stops trying to encourage people to take out more debt and consume more in order to stimulate the economy by purchasing things they never really own (false wealth) and don’t really need;
  • The government of the U.S. refinances as much of its current debt as it can on long-term bonds while the interest rate on those bonds is at a record low due to Europe’s troubles because much higher interest is coming when Europe starts to recover  (which won’t be anytime soon);
  • The U.S. government stops spending more money on the military than its populous can afford because it is spending itself broke on wars all over the world as surely as the former Soviet Union did (so we need to stop acting like we can still afford to be the world cop, stop acting as if we can right all wrongs at our expense or can reshape the world in our image); and
  • The government makes sure that every bit of new debt it takes out is for job-creating projects that give the next generation something tangible and enduring for their money so they can reduce their own costs because we’ve repaired everything and turned it over to them in good shape. They may be given a giant debt, but they will also be standing on the shoulders of giants.

The key to understanding why no recovery effort is working lies in realizing that the Great Recession was not just a boom that went bust like the dot-com boom. It was NOT an economic correction. It is the result of a deeply flawed economic model (a debt-driven economy) employed for the last thirty years that finally ran wild until it burst. It is a core failure! No efforts to pump up the broken model are going to get it going again. Adrenaline will not fix a broken heart. Encouraging consumers toward more debt again is not going to solve a debt-based problem. That should be a self-evident truth to all, but apparently it is not.

Only with full employment can we power the economy out of this mud hole, but only with a thorough restrategizing of our economy from top to bottom can we create jobs without creating nonrepayable debt. . That certainly means deficit spending because the employment isn’t going to happen otherwise, but it has to be prudently targeted as described above, or it creates unrepayable debt. If it is used for repairs, new roads, etc., we can reduce the deficits in our projected budgets by the amount we have spent on those things now because we’ve done the work now so that we will not have to spend that money then. We have to be far more responsible and wise than we’ve been. That kind of accounting should not be hard to understand.

That’s the kind of clear vision we need from our president and our congressional leaders if we’re going to hit escape velocity and free ourselves from the Great Recession, but you have scarcely heard anything so reasonable from any of our world’s leaders. Instead, they spend their time arguing over the revival of their tried-and-failed ideas, hoping to take them one more round. If we stay in a power struggle between Republicans and Democrats, our society is certainly doomed. We need to start looking at creating a new economy with new ideas (or old ones that we wrongly abandoned years ago), not by patching an old economy just to keep it working for the “job creators” who spend it all by speculating up the price of commodities for the rest of us.

Until cronyism is ripped apart, you’ll never see that happen due to all the heavily vested interests in the dinosaur economy that will fight against it. And that is why this continues to be a great recession … for a few.

 

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Anyone can criticize while having no better ideas.  In fact, I would argue that, if you cannot put forward reasonable alternatives, you might not be qualified to criticize those who are, at least, trying something. In that spirit, I want to scope out a new economic recovery program vastly different from the economic plan the U.S. adopted under Bush and Obama or the German austerity program. While it would have created a much rougher ride at the outset, I believe it would have worked to rebuild a sustainable economy that we would now be experiencing. It may be too late, for we have already squandered what little reserve capacity we had — all of which this plan would require — on efforts that have already proven unsustainable. The haunting question is Do we have enough time and reserve capacity at this point to do it?

 

The German austerity plan is the right economic plan in the wrong season

Austerity can never cause an economy to grow. Even those who despise Keynes, who argued that government spending stimulates economic growth, are unlikely to argue convincingly that austerity creates growth. It has no creative power at all. What austerity can do is prevent the kinds of debt that kill growth. Austerity, in other words, is a brake, not a gas pedal. It can never create acceleration; it can only arrest decline.

The lack of austerity, however, (or, at least, lack of prudent spending) can certainly stack up enormous debt that kills economic growth. The car won’t accelerate when you hit the gas pedal if it has already flown off the road. So, the Germans are only half right. Lack of prudence (called “austerity” when taken to the extreme) certainly killed Europe’s economy; but they will not get the economy back by practicing it now. It’s odd but true that austerity can create poverty as easily as prudence can protect wealth. Germans are a staid bunch who love rigidity and austerity, though, so they keep pushing that lone idea as if it can solve the problems that were created by lack of prudence. Germans, after all, like to eat sour things like rotting cabbage in great quantities 😉

Economist Paul Kruegman is right to argue recently that austerity is what should be practiced during times of plenty. I argued the same thing for years in letters to the editor, but nearly everyone in the U.S. wanted to enjoy the feelings of prosperity on the backs of their children. (Tough medicine to hear, but that is exactly what Americans did for decades, and we are a people who should know better than to think that way … being sons and daughters of pioneers who knew austerity all their lives.) Reaganomics never provided true prosperity for the one simple reason that we were never paying for the good times we enjoyed. We were enjoying the good times by making certain that our children paid for them later on. It is easy to have the world’s most powerful military and to enjoy a juiced-up economy with rocket-like performance when no one is paying for it! We bought our good times by stacking up monumental debts. We did not practice prudence (a better word than austerity, which leans too far to extreme action.)

I argued for years that the United States should be paying down its debt (as it did briefly in the Clinton years) when times were good. Good times are for paying off debts, not compounding them because, if you cannot pay down your debt in the good times (or WILL not), then you certainly cannot and will not during times of shortage. If we’re enjoying times of plenty and are NOT paying down our debt, we can be assured of two things: 1) We’re not paying for our own pleasures, so we don’t deserve to have them. They are truly guilty pleasures, for we’re enjoying them at someone else’s expense down the road. 2) We’re using up our available credit to live high on the hog so that we will not have available credit when we need it. That is where we have now landed. No surprise to me.

If a nation ran a prudent budget when its economy was healthy, it would not buy yachts before paying down debts. In the converse: if a nation can only experience a robust economy by expanding its debt, then its whole economic model is flawed. Common sense would tell you that endless expansion of debt is not likely to be a good longterm plan. Debt is properly managed when it is used to expand the economy in lean times and to decelerate boom economies by paying down debt. Debt is a way of evening out the load. The U.S. miserably failed its obligation to pay back its debts when it had the chance, and that is a lesson we need to carry with firm understanding into our future if we want to avoid repeating the worst of our history.

Now we find ourselves in a situation where we need to juice the economy, but our debts are so high that credit agencies are all saying they will lower our credit ratings if we take out any more debt. Some scoff at that because lowered ratings have not hurt the U.S.; but that is as foolhardy as the profligate living we engaged in over the last forty years. The only reason the downgrade of U.S. credit ratings has not hurt us is that Europe has handed us an unexpected windfall exactly when we needed it most. Money is fleeing from Europe, so the U.S. looks like the lesser of other evils financially. It provides the least-rocky shore for a safe-haven landing during the present storm. In other words, the U.S. got lucky — or blessed. At any rate, it was none of our own doing.

That buys us a little time. If we use this windfall wisely, we will stop adding to our debt now and will finance our entire existing debt on longterm bonds to the fullest extent we can move it in that direction while we have the lowest rates we’ll ever see. That will save us from a world of hurt down the road. If we squander this, too, by thinking we can continue in our profligate spending, we’ll find our interest rates go way up on a mountain of debt that moves far beyond our management the day after Europe recovers from its problems. We have so maxed out our debt over the past decades, and especially recently, that we need to use this windfall with utmost prudence … and we are not doing that.

 

Here is an economic recovery plan for sustainable economics

I believe we would already have a sustainable recovery in process if we had followed a much different path. I use the word “sustainable” because the word “recovery” doesn’t work without it. An unsustainable recovery eventually becomes no recovery at all. It is the kind of “recovery” that is talked about endlessly today. The present so-called “economic recovery” is created only be government props, such as quantitative easing and enormous debt spending. As soon as the government/Fed support ends, we see the recovery begins to falter. It has no legs under it, and it never will because it does not require exercising legs in a way that builds strength. The current government economic plan is creating another stock market bubble that will pop like all the past ones as soon the government runs out ability to kick in increasing amounts of support.

Here is proof that the Bush-Obama recovery plan is not sustainable: the stock market surges every time it hears rumors about more quantitative easing; it goes flat every time it hears that the Fed plans no intervention right now. Though nothing changes, except what the government says it is going to do, the market surges or plunges. That means the market is addicted to Q.E. and other forms of government economic intervention. They are the air without oxygen that fills the present bubble. Q.E. has become like candy to a baby. The market cries for more and more and always will so long as we keep giving it more and more. It throw a tantrum when the goodies stop, causing the parent (government) to want to give in to more monetary relief. The present stock market is unsustainable without endless talk by the U.S., China or Europe of more quantitative easing or similar measures.

There was one and always only one way that we could have run the deficits we are have been running during the Great Recession without dooming ourselves down the road. Having accumulated a foreboding overhang of debt over the past thirty years, it was/is essential that we make certain any additional debt delivers a clear payoff to the next generation to give them any hope of balancing their books. There was a way of doing that. Instead of spending money bailing out banks, which gives the next generation nothing tangible, the U.S. government should have spent that money on building the kind of infrastructure that government does best. Here’s why:

Infrastructure is the one solid asset we can buy now with money that people in the future will have to repay while giving the future a way to manage its debt. Repairing infrastructure now saves people in the future from having to make those repairs by extending the life of existing infrastructure. Likewise, building infrastructure now (so long as we focus on infrastructure that will be necessary to accommodate the growth of our cities) saves people in the future from having to build that infrastructure. Thus, we would have been handing future generations valuable assets that we built at today’s cost in exchange for today’s debt. We would save them enough in their own time that they could manage the debt we hand them. We’d benefit from the new infrastructure and so would they.

This would hugely goose the present economy as government construction creates all sorts of supply jobs and support jobs in the areas that surround major construction projects. Our job problem would now be completely over if we had started down this path four years ago as there would be so many projects in the works by now. Instead, we bailed out the rich people who caused this mess. It would also lay a sustainable foundation for a good economy in the future, as good infrastructure makes for efficient economic performance.

The other thing we should have done was pay attention to what we were saying and live by our own wisdom. We bailed out banks that were “too big to fail,” but what did we do in order to save them? We made them even bigger! Therefore, again, we have accomplished nothing that is sustainable in our reconstruction of banks. The Fed lured and even coerced banks like Bank of America to swallow ailing institutions like Merrill Lynch. We constantly chose to solve the problem of banks being “too big to fail” by staying with our old ways of thinking and turning them into even bigger failures. Its a sickness we have in our thinking that blinded us from finding real answers. We also didn’t want the pain that would be involved in restructuring into smaller banks.

The right solution was structured bankruptcy. We should have parted down the failing banks into their units that were profitable enough to continue while letting the cancerous parts of the organism die. Instead, we added the cancer of dying banks to banks that were comparatively more healthy, turning the relatively healthy ones into the next ailing patients. We have created ever bigger monstrosities to tower over us and threaten us when they fall.

How absurd is that? We’re not very smart. We don’t even listen to our own wisdom.

There would, of course, be an incalculable cost to an economic recovery program that allows the leviathans to die. No one can know how many depositors would be damaged by their fall, which would cascade into many other banks collapsing. That would put many in the banking industry out of work, and it would leave depositors at those banks without their money. But it would rebalance society, and that is the only sustainable path. The FDIC, for example, would not cover the losses of the rich because its limit is far below what they have in deposits. Just as the government has created money out of thin air to give liquidity to banks, it could have done for depositors once banks failed without creating any inflation because it would not really be injecting any new money into the system. Instead, it would be getting monstrous failing banks out of the way and recreating those deposits in accounts at better-run institutions.

We created money out of thin air anyway and are talking about doing it again with more Q.E. Why do it to save the bankers who created the mess? That was nothing but cronyism and the worst expression of Reagonomics, which believes we are all indebted for our jobs to the rich “job creators.” How would it have created any inflation if we had let the bad institutions crumble or pare down to their only profitable parts and then replaced the lost money in the accounts of depositors at better-run, smaller, more manageable institutions? The money supply would remain the same. It would only be the institutions that would fail while the deposits were entrusted to more worthy parties. Was our government too blind to see that or was it simply more interested in protecting rich bankers?

We could have completely reshaped our banking industry into a leaner machine by letting the fittest survive with the new deposits, and we would have created room for new banks to sprout up and attract these deposits, creating more banking diversity. There is one caveat here, we’d have to mandate that no FDIC insurance money would go to any bank that hired an executive from the failing banks. That would not be just for the sake of being punitive. It would prevent the greedy people who created this mess from simply starting a bank in a new name with the same players. Let them die careerwise. Who cares? They can man a shovel on the road-building jobs of the new infrastructure program.

At the end of the day, we would have transformed our economy, instead of run a dying economy on endless life support. With the implementation of a few regulations, we’d have banks that were no longer too big to fail. Instead, we have created an even less diversified banking structure by keeping the oversized dinosaurs alive.Democrats and Republicans have utterly failed to restructure our economy because they were too busy looking out for the interests of the big banksters. We have more oversized reptilian banks that are too big to fail than we ever had. How is this a transformation of our economic fundamentals into something healthier? In four years, we have accomplished nothing that will prepare us for a better future.

Would there have been catastrophic problems to sort our way through under my sustainable economic development plan? Absolutely. But there are continual catastrophic problems to sort our way through on our present path, too, and what do we have to show for it but endless troubles still in sight? Likewise with Europe on its austerity plan. We have no economic reformation to show for the enormous outlay and risk we’ve taken and no better foundation for the future. We are giving CPR to dinosaurs, rather than seizing the day to evolve more adaptable economic structures.

Had we engaged in such a bold plan, we would never have nationalized the failures of capitalists. George Bush would not have had to announce, as he did, that he was putting his capitalist principles aside. We would have worked in the capitalist way to correct our failures, and we would not have caused the moral risk that is created by rewarding people for stupid and greedy practices. (The fact is, most politicians and business leaders don’t care at all about capitalism. What they care about is money … and lots of it. We ditched capitalism in order to save the rich as soon as capitalism’s failure-correction mechanisms kicked in because we didn’t want to face the austerity of correction.)

The only people we would have bailed out under my alternative economic recovery plan would be the more-or-less innocent individual depositors, not the people who created this disaster, given that the FDIC does not adequately insure the rich. Many retirement funds would have lost a lot of money, but many retirement funds lost a lot of money anyway … and may still lose more because there is no recovery yet in sight — no problems actually resolved for good. If we had let the dinosaurs die, we would have smarter bankers today because those still living would have learned something from seeing their colleagues fall into the ditches. The rapacious and foolish bankers would also be out of their way … no longer competing for limited nourishment. Banks would be much more careful in their practices even ahead of new regulations if they knew the federal government was not going to save their scaly necks.

How would we have survived this terrible fall? Infrastructure. We’d put unemployed bankers to work under the huge expansion of business created by massive development of improved infrastructure. We’d pay for that job-creating infrastructure by applying those trillions of dollars of deficit spending we’re presently engage on. It would cost the future generation the same fortune, but they’d have something to show for it at a price tag would likely seem cheap twenty years from now … just as it always seems cheap when we look back twenty years and see what we could have built a rail system for compared to what we have to pay now. They’d have the rail system, moving their economy at high speeds! They’d have improved school buildings so they could concentrate their money on teaching. They’d have new roads and less economic gridlock. They’d have alternative energy production facilities to power their economy. Etc.

The Keynesian are right, but so are those who disagree with them. There is a time for government spending to stimulate the economy, but it has to be done on construction of things the next generation will need in order to build a foundation for the future. Economic stimulus and austerity both require application at the right time to be effective. The time for Keynesian stimulus (vs austerity) is now. However, we already consumed our credit. The time for austerity was during all the seemingly flourishing economic times of the past thirty years so that we’d have ample credit available today. Had we paid down ALL of the national debt during those roaring times, we’d have the capacity we need now to build a new economy without the slightest risk to our credit ratings or interest rates.

 

An economic transformation plan

What I’ve outlined above is far more than the economic stimulus plan we have now. It would completely rejuvenate our capitalist economy. Instead, we have a badly patched old economy. It would provide a president with the opportunity to redirect the course of a nation if the president had vision, and that is clearly what our president has lacked. He has known we needed change but has had no idea what change we needed. In exchange for our huge deficit spending, we’d end up with alabaster cities … or, at least, shining infrastructure to leave behind for our grandchildren. We would have done something for them and not just to them for ourselves.

That’s what FDR did once he finally got it right and moved away from the austerity measures that initially deepened the Great Depression. He put people to work building vital assets that we have benefited from throughout our present lives, and the bill for those massive projects and for the huge military build-up seemed entirely manageable when the time came to pay it. We could have learned that from our history, but our polarized way of Democrat-vs-Republican thinking kept us from seeing what worked in the past and applying it today. Instead of learning from history, people spent their time arguing against it in order to retain their political beliefs. The religion of politics.

The projects that led us out of the Great Depression were built well so they have lasted (with normal maintenance and repairs) nearly a hundred years — high schools, dams, the parks and trails that we enjoy. We in the present got something for the debt that our parents handed to us. We benefited from it the entire time we grew up, AND we would have been able to pay down that debt had we be been less profligate, less greedy, less willing to live high at the expense of our grandchildren.

It may be too late now, for we have squandered what little remained of our reserve economic capacity. Still, I think what I’ve presented remains the one solution that does not push the entire problem ahead to the next generation. It still pushes the cost ahead, but, at least, but it solves problems for them by giving them something for their money, and that could have made the cost bearable for them. Using debt for other things like bailing out banks really gets the future generation nothing it needs. They can always create banks out of their own money … if we leave them with any money to save after they pay our bills.

Using debt on huge infrastructure projects would enable us to build around better energy practices. It would also enable us to strengthen old energy practices for the time being, such as by building safer pipelines. The remaining financial institutions would be the smart ones, rather than the big, dumb, rapacious dinosaurs that nearly brought the end of the world as we know it because of their stupid gambles. The downsized institutions that grew out of their remains would no longer threaten to crush the nation if they fell.

But we did not have either the courage or the vision for that kind of economic recovery program. Is that what we want to be remembered for? The people with no vision who lacked courage to create genuine transformation of their society?

 (If you liked this article about an economic plan and want to see others as they’re posted each week, please click the RSS feed link in the left sidebar and subscribe. Also, please use the email button to pass it along to friends you think might be interested. They will not get added to any email list.)

 

I encourage your feedback and ideas below, and here is some additional reading on sustainable economics and economic transformation:

[amazon_image id=”1849713235″ link=”true” target=”_blank” size=”medium” ]Prosperity without Growth: Economics for a Finite Planet[/amazon_image][amazon_image id=”B0056C1V5U” link=”true” target=”_blank” size=”medium” ]The End of Growth: Adapting to Our New Economic Reality[/amazon_image]

The following linked article presents a radically non-radical idea that would change government by reforming the power balance of congress and reducing the influence of money over individual members of congress. It is non-radical because it is primarily a conservative return to the ratio of representatives-to-citizens envisioned in the constitution. It is radical because it would create a massive shift in the distribution and balance of power in Washington, D.C.

Reform congress

The article proposes to reform congress so that there are between 3,000 and 10,ooo U.S. representatives of the people. The framers of the constitution envisioned a formula that would allow a maximum of 50,000 citizens per representative. Under the framer’s vision, every square mile of New York County today would have its own U.S. representative. Every county of average population in the U.S. would have two U.S. representatives. Redistricting would create much more localized power centers than we have today.

Because of a cap on the number of representatives imposed in 1927, each member of congress today represents over 700,000 people. That means every citizen’s voice to his/her representative is lost in the din of people that is slowly closing in on a million people per member of congress.

In short, citizens of the United States today have far, far, less influence over their U.S. representative than people did in the formative years of the United States. The framers also envisioned a part-time legislature so that member’s of the house were closer to the people because they had to continue working professions like the people. It’s time to restore the balance, and this article presents a reasonable basis and means of making that work:

What’s wrong with Congress? It’s not big enough

 

Books on congress and how to change it

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Books on how to change government

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The Ultimate Unemployment Reading List for Inspiration

Posted February 24, 2012 By David Haggith

You may not be able to save the country from its uninspired politicians or the world from bankers gone bonkers, but you can creatively employ a period of recess like the Great Recession toward enhancing your own life. I know that is what I am doing. I’m creating writing opportunities out of these days of recession by developing the The Great Recession Blog and expanding into other areas of writing I find interesting. You, too, can create opportunity in your life if you are one of the numerous unemployed.

When you cannot change the world, the one thing you can always change is yourself. To help you turn the fallow time of life into fruitful experience, a reader of The Great Recession Blog, who works for Online College, offered the following reading list for me to share with you:

 

Books to help you survive unemployment:

The most obvious thing people do when unemployed is look for jobs, but what about the art of survival until the new job is found. Here are books to help you work with your family’s needs, your emotional struggle, the downscaling of finances, etc. that may need to be your game plan for getting to the other side of this time.

A reading list for those struggling with the life changes that come with unemployment:

Many of us don’t like unexpected change. Seeing that change as an opportunity and easing the stress of change is a skill you can acquire if not born with it. In doing so, your own soul grows through times of change like a recession. Let this time become an education for life and not just a period of retraining for job skills.

  • Who Moved My Cheese? by Spencer Johnson: Change can be either a blessing or a curse, depending on how you look at it. This book will teach you how to see the good side of change and learn how to roll with the punches and come out on top.
  • 100 Ways to Motivate Yourself: Change Your Life Forever by Steve Chandler: Motivational speaker Steve Chandler offers some actions plans in this book that are ideal for making big changes in your life.
  • Work Less, Live More by Bob Clyatt: If you’re an older man or woman out of work, perhaps you could consider semi-retirement as an option? This book offers up some ideas that could have you working less and actually enjoying it.
  • Change Anything: The New Science of Personal Success by Kerry Patterson, Joseph Grenny, David Maxfield and Ron McMillan: Unemployment is a big change in itself, but one that may also necessitate making a lot of other changes in your life. Get advice on changing anything standing in your way of success with this great motivational book.
  • Change or Die: The Three Keys to Change at Work and in Life by Alan Deutschman: While you might not die if you don’t make changes during unemployment, you might suffer some serious difficulties getting back into the workforce. Use this book to help you make changes that can affect yourself in both your work life and your personal life.
  • Our Iceberg Is Melting: Changing and Succeeding Under Any Conditions by John Kotter and Holger Rathgerber: Change can be hard under any circumstances, but especially so when you’re dealing with the trauma of unemployment. This great read will help you to navigate change even in the worst of times.
  • Peaks and Valleys: Making Good And Bad Times Work For You–At Work And In Life by Spencer Johnson: Another great read by Spencer, this book offers up a parable that you can apply to your own life, helping you to better understand both the good and bad times in your life.

Anyone caught in the net of national unemployment can use some uplifting and inspiring reads:

Still having a hard time seeing the silver lining in unemployment when there is no silver in your pocket. These books can help adjust the way you think so that you come out of this transition capable of even greater success than when the Great Recession began.

A reading list to improve your odds of finding a job via networking:

Here is an area that bridges self-improvement with the practical stuff. Improving your ability to network does improve yourself, but it also greatly improves your odds of finding a job. The old “It’s not what you know but who you know” never plays stronger than in a job search. Employers much prefer to hire someone referred to them than someone who approaches them out of the blue. It reduces their risk.

Reading list for the active job hunter:

While the recession can be a time for personal growth, there is still the practical matter you are most interested in — getting another job. Here are books to guide your job hunting in ways that can help set you above the masses in terms of your odds and also increase the likeliness of finding employment you enjoy. The truly rich person is the one who loves his or her job, for 25% of your life will be given to that job.

Books to help you use your unemployment to start your own business:

If going to the jobs does not get the jobs, then bring the job to you by creating your own. Many people have done that during a time of unemployment and found themselves wealthier and happier in the end because they were doing what they wanted and realizing their own accomplishments. Here are books to help you evaluate and take steps toward meaningful and profitable self-employment. The mere thought of creating new opportunity and life change in a time of unemployment can elevate one’s feelings.

  • The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich (Expanded and Updated) by Timothy Ferriss: Sometimes, working harder isn’t the answer when you can simply work smarter. While your new business likely will require more than four hours a week to get off of the ground, use this book to learn some methods that can save you time that you can reinvest in other aspects of your life.
  • Rework by Jason Fried and David Heinemeier Hansson: Give your work life a makeover by following the advice found in this book. It offers some amazing advice on entrepreneurship that can help you create a lean, mean, and ultimately profitable new business.
  • Infinite Possibilities: The Art of Living Your Dreams by Mike Dooley: Unemployment is an end, but it’s also a beginning. Mike Dooley explains how you can control your own fate, use positive thinking, and work towards your goals to finally achieve your lifelong dreams.
  • JOBLESS by Alan De Keyrel: You’ve already got the jobless part down, so get some help with the climbing to the top part from this book. You’ll learn how to think like an entrepreneur, find customers, market your business, and more.
  • Think Better: An Innovator’s Guide to Productive Thinking by Tim Hurson: If you want to stay ahead of the competition you have to be an innovator. In this book, you’ll get some tips, tools, and advice on productive thinking that can make you a standout in your new business venture.
  • The Accidental Entrepreneur: The 50 Things I Wish Someone Had Told Me About Starting a Business by Susan Urquhart-Brown: Starting a business sometimes comes with some unexpected adventures. Help take a little of the mystery out of it, with advice from someone who’s been there and done it before.
  • The Small Business Start-Up Kit: A Step-by-Step Legal Guide by Peri Pakroo: Make sure your new business is following all the legal basics it needs to stay successful with help from this guidebook.

Books to help in dealing with depression and anger:

For some, feelings are not going to elevate by such easy means as finding a way to create a new career and a new lifestyle. Part of surviving may require emotional healing.

Books to help you turn unemployment into opportunity to build new skills:

More self-improvement books in case you just didn’t find enough above:

 

 

 

(The above list was provided by one of a regular reader of The Great Recession Blog and can also be found at the following site: The Ultimate Unemployment Reading List)

 

Occupy U.S. Mail

Posted December 20, 2011 By David Haggith

Here’s a great idea to curb the use of bulk mail you don’t want and help save the post office:

A fast, easy, free, and non-violent way to drive the big banks out of their greedy little minds is sitting in your mailbox right now.

Click the link above and discover how to occupy the U.S. mail from your own home.

I’ve done this in the past without the wood chip. I’ll try to do it more often. It is simple to send the envelope back to junk mailers, stuffed with their own stuff

And its fair to Occupy U.S. Mail

Those businesses sent me a mail piece that I truly don’t want to tell me things I don’t want to know, wasting my time and filling my garbage. So, why should I pay to dispose of it for them? They initiated a conversation, as the video says. By sending it back in their own envelope at their expense, I am merely taking the opportunity to return a meaningful response to let them know I dislike their mail … as is my legal right.

I suspect some actual person has to open the mail these companies get back, so maybe, if I include a bright colored one-sentence message in large print, I’ll also be sharing important communication with a real person. (Of course, I’ll be selective in whose mail I return, as I don’t wish to harm good charities.) One printed message fits all to keep this fast and easy. Since it is Christmas, I could write, “I’ve returned your generous gift of this postage-paid envelope in order to express yuletide cheer and to save you the money of having to print another piece just because this one was wasted on me.”

Occupy US Mail to provide a service to the Postal Service

This creative way to Occupy U.S. Mail is timely now that the post office is disintegrating from the inside out with “solutions” that greatly reduce its quality of service for everyone. The postmaster general has said the post office’s demise is due to decreased mail volume. So, help them pump it up! Let Wall Street save the United States Postal Service.

What better way to help the USPS than by returning unsolicited bulk mail, given that low bulk mail rates are a major reason U.S. mail is unprofitable in the first place. In fact, maybe the message I’ll slip into all my returned bulk mail will be about the demise of the U.S. Mail service as a result of congressionally mandated low bulk-mail rates … with a little signature “–Occupy U.S. Mail.”

Maybe I’ll also help myself out by adding on my note “Please remove me from your bulk mailing list” with my name and address included. Returning unsolicited bulk mail not only takes money from “Wall Street” from the postage cost, it also takes money by requiring time from their employees for processing. And if they read my clever little message, it takes a little time from their productivity, too.

Suggested messages when you occupy US mail

Help me out here, by responding with creative one-liners to include in large type on bright paper as the “stalking stuffer” in your occupied mail piece.

 

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Ideas for Change

Posted December 7, 2011 By David Haggith

Let’s have real ideas for change for a change!

U.S. President Barak Obama campaigned on the basis of making political change, but that didn’t happen. Now he’s retreading that campaign, but he still doesn’t seem to have any ideas of his own that look anything like real and significant change. I thought he could use some actual ideas for a change, so I decided I should gather some for him. Under Barak Obama, we got only a rerun of the Bush era ideas, concocted and administered by the same Wall Street cronies Bush hired. I’d hate to see Obama run his 2012 campaign on a retreaded version of the same old ideas.

The following is the first entry of what I hope will become a body of well-written thoughts (perhaps mostly by others) that will be presented under their own category by this same title, “Ideas for Change.” (See “Categories” in sidebar.) This first writing leads off this category of with a number of ideas for economic, political or social justice change that came anonymously to the person who first shared it, as described further down. 

While I write mostly criticism of the shenanigans of Wall Street and Pennsylvania avenue, I feel it is important to offer constructive ideas for social change and ideas for economic change that are not destructive to the society we already have. Of course, I do often offer suggestions in the midst of my criticisms, as it doesn’t do any good to just tear apart if you have nothing better to offer. I thought it good, though, to create a category where positive ideas for change can be found all in one place for those shopping for better ideas. Posts published under this category will be ideas that might improve upon our society’s already significant building blocks — rather than deconstructing that society altogether in some anarchist fashion in order to build something new and experimental.

I don’t necessarily agree with all of what’s presented here, but you won’t find plans for total disintegration of the U.S. government or schemes for a global government or new world order. Those kinds of things are too drastic and upsetting to a vast majority of people and too experimental to be tried on such a large basis. These are ideas for practical political and social reform within the structures we have in place — maybe a constitutional amendment or two, but probably not a whole new constitution. I am not looking to re-invent economics or create grand social experiments, which have in the past often proven to be well-intentioned but very harmful to massive numbers of people. I’m just looking for ways to make representative government and capitalism work more equitably and justly.

(I may from time to time, add my own comments or subheads in brackets to what others have written where I cannot resist or where I think subheads will help people gauge how much they want to read. And, in case you’re wondering why I mentioned “ideas for change” so many times, I confess that it was to make sure the search engines picked up what this lead article is really about so that people shopping for new ideas for economic reform can find those that start below. I’m not exactly spamming my own article with those phrases here, as they do fit very well to this article, but I want to make sure this first page of the section is the one search engines hit on since it introduces these ideas for real change.)

 

(The following writing was found on “Fattymoon’s Posterous Blog.”)

At approximately 1:30 p.m. Saturday, in the park outside Branigan Public Library in Las Cruces, New Mexico, home of Occupy Las Cruces, a man appeared out of nowhere, walked up to me and Caz, and said he had something for us. He handed me a 4-page single-spaced document which he said were his thoughts on what needed to be done to correct the imbalances in our society. Then, without another word, and before I could ask him his name, he walked off. After reading the document, I believe this man was an angel in human form. Or, maybe a friendly alien.  Or, maybe he was just a really smart guy. Judge for yourself. The following is the complete document, edited for a couple typos only.

 

Here’s a group of thoughts about what is needed to cure our economic and political problems.

General thoughts: [The philosophical basis for the political and social ideas for change that are presented here]

The reason we congregate into groups seems to be threefold: companionship, mutual assistance, and defense against predators. This explains families, tribes, or nations. We can do this in the most Spartan fashion, which is to be the toughest in the jungle. We can do this in a compassionate fashion, which protects, nurtures and enjoys our community. No matter how we may start out, we have one factor to consider: some folks are going to stay at the jungle stage of social development, sort of like an alligator walking upright.

“Virtue is not advanced by written laws, but by the habits of everyday life; for the majority of men tend to assimilate the manners and morals amid which they have been raised. Futhermore, where there is a multitude of specific laws, it is a sign that the state is badly governed; for it is in the attempt to build up dikes against the spread of crime that men in such a state feel constrained to multiply the laws. Thos who are governed rightly, on the other hand, do not need to fill their porticos with written statutes, but only to cherish justice in their souls; for it is not by legislation, but by morals that states are well directed, since men who are badly raised will venture to transgress even laws which are drawn up with detailed exactness, whereas those who are well raised will be willing to respect even a simple code.”——Isocrates

Isocrates echoes Moses’ warning in Leviticus chapter 26. Unless the great majority of people embrace the idea that we are to treat each other with compassion, decency and honesty, no society can thrive or survive. There, of course, will always be those who don’t embrace sound morals. However, unless the great majority do, the society will decay and collapse under the weight of legalized injustice. Everything good must be built upon sound morals. The best summaries I’ve seen are: “Do justly, love mercy, and walk humbly with God” or “Do unto others as you want them to do to you.” The latter has been modified in modern society to “He who has the gold makes the rules.”

This essentially is a matter of the heart and, therefore, not under governmental control, no matter how many laws we pass.

Specific thoughts about our social structure: [social-economic change ideas]

“We must return to a free market system of economics”? You can’t return to where you’ve never been; since I’ve never been to Russia, I can’t return there. The definition of a free market is one that anyone is free to engage in any trade that is done without dishonest or coercive behavior. That has never been the case in the US. From the beginning we embraced slavery. We taxed goods in a discriminatory fashion. We allowed bankers to rob their own banks and leave a bunch of worthless paper behind in bank panics. Our government gave land that was inhabited by natives to robber barons to pursue their dreams of wealth, and refused to punish the barons that acted ruthlessly toward employees, competitors or others they deemed to be “enemies.” We’ve waged wars to control markets. We’ve waged wars to correct the damage done by corporations interfering in politics in foreign countries. The list continues unbroken up to today’s Wall Street’s cesspool of fraud continually stealing people’s savings.

Our leaders (upright alligators) claim to be enhancing world peace through “free” world trade. However, “free” trade is conducted with Asian and Latin American countries that treat their inhabitants like slaves. They work them long hours at minimum survival wages in unsafe workplaces, while totally ignoring the damage their operations are doing to the water and air that these slaves must use. So there is no “free” market, hence there is no “free trade”. What does exist is a small group of people who have slaves produce their goods at starvation prices; these prices are greatly multiplied in captive “third world” trade zones and then sold in what is left of the increasingly unprosperous countries of Europe and North America at “top dollar”. Treaties that permit this behavior should be cancelled.

All of this concentrates economic power into a very small group of people (alligators in human drag). They then use this economic power to bribe, intimidate or otherwise “influence” governing authorities to continue to ignore the poverty their behavior produces in the lives of the vast majority of the world’s population. They have power over the “medium of exchange” (called money) via their control of there banking system, which has the legal power to “create” money on demand. If others try this, it is called counterfeiting and severely punished. It is another way of stealing prosperity by replacing money of value with worthless money. That’s why we have continually higher prices even when our wages are dropping. To move a society beyond the alligator moral stage requires that power be widely distributed throughout the society.

Let’s look at the money business first. The government has given sole power to the Federal Reserve Bank to “create money”. They did so to enable the government to engage in warfare without having to get the country’s citizens to approve it by buying federal debt with their savings. The government simply issues the debt bonds and the Fed “creates” money to buy the bonds with. This does two things: first the government gets “instant war money” to spend on the war; second, the Fed then uses the federal debt instruments as a “cash reserve” which they justify “monetizing” and making additional money available for nationally chartered banks to loan out at interest to their customers. Notice the same debt collects interest twice: once from the Federal government (taxpayers) to the Fed and second to the banks that loan out the money (created at no cost to the banks) to their customers. This is why prices always go up in wartime: more dollars are chasing fewer products in the economy. This activity produces  all sorts of financial strain on the economy and is “cured” by a periodic financial collapse like occurred in 2008. It should be noted that the credit unions don’t operate this way and sustained very little damage in the 2008 collapse.

My thought is to replace all private, government chartered banks with credit unions. Credit unions are owned by their “noncorporate” account depositors, not a few “investors looking for the fastest maximum profit”. Therefore, their management must operate honestly to protect the depositors; they aren’t likely to place their employer’s money in jeopardy!! Credit Unions don’t multiply their money like banks, they simply loan out a portion of their deposits. This keeps inflation from occurring, keeps the value of the money stable, and therefore keeps the economy stable so that everyone prospers (not just the “investors”). This simple cure would spread the power over our monetary system into the hands of millions of people.

The same thing holds true with the legal device called a “corporation”. It’s a device that enables a “pooling” of financial sources to finance projects large enough to exceed one person’s savings. It also has an escape hatch that prevents debtors from collecting debts from the owners’ personal assets. It has been perverted to protecting dishonest people from having to protect themselves; they simply hide behind the corporation’s wealth and lawyers. Those who have achieved position of power within the corporate world have not only accumulated economic power, they’ve also accumulated political power. They own both the Republican and Democrat parties. They are quite comfortable with having slaves manufacture their wares and selling them on credit to people who are having their living wages taken away via inflation and “downsizing”, and they intend to keep it that way.

My thought is to replace the corporate system with one that charters cooperative ventures. They would be able to accumulate investment capital from multiple sources to fund larger enterprises. They should be financed from the credit unions; let the credit unions set up venture capital savings accounts (similar to their CUNA operation for insurance policies). These could be pooled into larger funds in a CUNA type operation and replace Wall Street. The management of the cooperatives would be selected by a board of directors elected by the employees and the investing credit unions (like the credit unions do now with depositors selecting the boards). These cooperatives would be established wherever the economic activity would likely succeed, preferably close to the required natural resources needed for the items to be produced. There should be a means established which requires these cooperatives to obtain their resources and to operate in an environmentally responsible way (since the management answers in part to the employees who are in the community, this should be much easier than our current system). This would spread the power over our economic activity into the hands of millions of people and come much closer to achieving a free market to operate within. This should produce a much more stable employment market, because employees are not likely to give themselves the shaft and the credit unions have every reason to keep the enterprise profitable.

By spreading the power over our morals, money, and economic activity we dilute the power of any one individual to have any real power over any major part of society.

[Political change ideas]

One other thought is about the mechanism we call government. This model of social order reduces the need for and, therefore, power of government. First, it reduces the likelihood of conflict because no one has sufficient power over the economy to benefit from the destruction of others. This reduces the demand for military power beyond the need of self defense. The stability of the economic activity, due to the self protection by the owners of the economic and monetary powers, will reduce the demand for safety net expenditures. This same stability would probably reduce the criminal activity, because the access to employment would be enhanced and there would be more employment available. The reason for this is the availability of resources for economic activity due to the widespread availability of financial help and freedom for new enterprises.

[Social justice ideas for change]

Our courts should be reworked to spread the power over the justice system. Money should not play a factor. Criminal activity should not be a financially rewarding activity for anyone. Whenever a person is accused of a crime, the court should be totally and randomly selected by the accused. The lawyers ought to form the “pool” from which the judge, prosecuting, and defense attorneys are selected (as the jury is selected from a pool of non-lawyers) and the accused selects each randomly as in a raffle. The jurors should be selected in the same fashion. No one, including the judge or attorneys, should have any influence over the jury selection. Then the accused has no grounds for complaining about the way the court operates, since the accused has randomly selected all the players.

Additionally, we should severely limit what we call crime. It should be limited to outlawing actual (not potential) acts that harm another’s person, property or reputation in any other context  [other] than self defense. This would eliminate the drug, alcohol, gun and other “opinion” based laws, that basically generate revenue for crime processors, but punishes no legitimate criminal act. One other thought: pensioning off crooks to prisons is nonsense. The very first part of justice is restitution (making the victim as whole as before the crime was committed) and it ought to be automatically part of any sentence passed. Second, the government should be reimbursed for its expenses in having to chase down and try the guilty party. Third, the second part of justice is retribution; a punishment that is severe enough to discourage others who may contemplate criminal activity ought to be included. However, the sum total of all of this is to have the guilty pay the bill, not society, and to encourage crime free behavior. With the proposed changes to the banking and corporate parts of our society, the opportunities for providing a living for one’s self should be abundant, so the demand for crime should be minimal.

[Ideas for education reform]

Another area where we should disperse the power is in our schooling. Schools should not be a war zone for thought control. Schooling is absolutely essential to a person functioning in society. Therefore, we must make it available to all people. The basics of communication (reading, spelling, grammar, writing), basic math (arithmetic), and fundamental skills such as voting, basic health and nutrition skills, understanding basic contracts, and methods of searching for information (libraries, internet, scientific method of inquiry, etc.) and that sort of thing should be required. Beyond that we drift into the areas that can divide us (areas of belief), such as religion, scientific theory (speculation), philosophies, etc. which certainly should be available, but not required. Our schools should equip the students to form their own personal mold of life, using their own belief systems and aptitudes. Then we should help them train for what their own mold qualifies them for.

Therefore, each school should be governed by a board selected by parents, teachers and the entity providing the money to operate (local taxing district, i.e. participating voters). This, I suspect, would create more of a community atmosphere in the schools than we have currently. Besides helping our students to learn the skills of community living, it would bring the community adults together, which isn’t done very well in our modern polarized society. Schools are just as prone to having greedy, power hungry people as anywhere else. Parents, taxpayers and teachers should have “veto” power over those who are trying to use the school for personal gain instead of a stewardship for nurturing children into responsible, capable adults. By breaking the schools into smaller units, we limit the concentration of power in any one place. This can be done and still assure the schools have the buildings, books and equipment evenly distributed; however, it will not be the problem it is today because the dispersion of economic power will also disperse the wealth more evenly.

That’s my thoughts. Too much power in anyone’s hands is dangerous. Anarchy is dangerous. What I’ve suggested is a limitation of power via dispersal, but in a way that enables good government. This way the country can operate democratically and safely. The necessary power is present, but not the empowerment for tyranny.

 

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