Following are the two very powerful stimulus measures that are mandated by the “Recession Recovery Act”. They will force a sharp increase in consumer purchases of goods and services in the local economies of Cities, Counties, States and the national economy as a whole. That will end the recession in record time but it will create some inflation that must be expected and accepted as a necessary byproduct of getting out of a recession by stimulating employment and the increase in purchases of consumer products and consumer services. Gradually that inflation will become lower again through the increase of production of consumer products and consumer services.
History repeats and nobody seems to learn
The fear is that politicians are not the type of doctors that administer the strong type of medicine that will cure an epidemic like for example a bubonic plague. Historically politicians are the wishy-washy doctors that talk a good game but do too little too late and allow the plague to run its course and end by itself after millions more casualties. They are generally the dabblers that want to just put a Bandaid on a festering wound instead of stopping the festering with stronger medicine or surgery. Doing too little will create more unemployment and will add several years to the recession. The two Administrations, one Republican one Democrat, that had to deal with the Great Depression. Hoover and Roosevelt, made the same mistake of doing too little too late. Hoover started in 1932 with creating the Reconstruction Finance Corporation (RFC). That agency gave $2 billion in aid to State and local governments (about $40 billion in 2010 money). Far too little of course to reverse the “Great Depression Plague” and also 3 years too late since the Depression started in late 1929. Back then the $2 billion appeared as an enormous sum of money in comparison to the total $49 million cost of building the Hoover Dam.
Politicians, just like the general population, were awed by the large numbers, by the enormous sums of money it takes to pull an economy out of recession. The result of the small $2 billion infusion was a continuing increase of unemployment and a deepening of the depression. The depression could have been turned around instantly with giving $25 billion in aid to State and local governments (about $500 billion in 2010 money) instead of the token $2 billion. The longer a recession/depression is allowed to continue, the more money it takes to pull an economy out of recession/depression because more economic infrastructure is destroyed for every day a recession is allowed to continue without a counteracting stimulus. With the correct knowledge of how an economy works, recessions can be totally prevented by reacting very fast with the correct stimulus measures that will cost relatively far less money than is needed after allowing this recession to deepen and persist for over 4 years now since January 2007 (actually it started in October 2006 when credit card companies became very concerned about the rise in credit card debt defaults and drastically reduced the lines of credit to the borrowing public and withdrew billions of credit card money from the economy).
Then came Roosevelt with the April 8, 1935 Emergency Relief Appropriations Act with $5 billion for the WPA job creation program ($100 billion in 2010 money) and the full “New Deal” with an additional $25 billion ($400 billion in 2010 money) that lowered unemployment from about 22% down to 14% and then around 1936-37 under political pressure from Fiscal Conservative Republican and also Democrat Fiscal Conservatives, such expensive government programs were reduced in size and scope and unemployment rose again to 17% and then finally came WW2 with a massive increase in manufacturing jobs after 1940 for weapons manufacturing and America was instantly out of the Great Depression with a rapid drop in unemployment down to 2% in 1943. Of course spending massive amounts of government money on wars is also wasteful spending, but it could not be opposed by Fiscal Conservatives because that would be seen as unpatriotic. Of course you have already learned above that even totally useless and unproductive employment increases are great for the economy. The same dramatic wasteful spending increase on weapons manufacturing in Germany and Japan in preparation of the wars they started, did create very powerful economies with full employment. England and the United States ended their Great Depressions by being forced into spending money they did not have on weapons they needed to defend themselves against the attacks from Germany and Japan. That wasteful spending on weapons also did create full employment and booming economies. So lets learn that governments must spend money they do not have to get out of recessions/depressions to create fantastic economies. Please learn from history and do not repeat the mistakes that were made in the past. But of course populations learn nothing from history because a lot of young people are constantly added to the population and they do not learn much in school from history, so they happily will make the same mistakes over and over again. The older people that have learned firsthand from their expensive experience with poor leadership that created the economic disasters will try to reason with the younger people, but parents and other older people are usually quickly dismissed as old fools who do not understand that conditions have changed. Well, the reality is that principles of economics act in an identical manner throughout all of human history. But it is always the younger population taking initiative for change and unfortunately the change younger people have in mind is almost always change toward socialism that turns out to be an economic disaster. Read my www.UniversalDemandLaw.com that explains the unfortunate influence of socialism on the economy.
The first stimulus measure:
The first stimulus measure (already touched on above) will INSTANTLY end the financial crisis of all local governments, Cities, Counties and States. The Federal Government must pay large grants without delay to fund all the local governments on a weekly basis with as much money as the local governments need to restore their finances to a level that will allow them to increase their services and their level of employment again to where it was in January of 2007. That is 3 months after the recession started in October 2006.
Question: Where does all that money come from? Answer follows below.
The second stimulus measure:
This second economic stimulus measure is a very certain and direct way to increase consumer purchases. It will give money directly to 320 million consumers to boost consumer purchases of goods and services. While boosting consumption of goods and services it will increase employment in retailing, distribution, service industries and manufacturing. Increased employment in turn will create more wages with which consumer spending will increase in an upward spiral of economic improvement.
National Debit Cards. This second stimulus measure cannot be implemented as fast as starting the weekly grants to Cities, Counties and States. For this stimulus measure the Federal Government needs to create National Debit Cards for each and every of the 320 million people that have a valid Social Security Number. In fact the National Debit Cards can double as, and replace, the Social Security Cards. It can take as much as one month before the cards have been produced and distributed. Even babies and small children will receive a National Debit Card and the parents or legal guardians will have custody of the cards until the children reach an age deemed appropriate by their parents to use their debit cards themselves (I suggest age 12 is a good age for children to start taking control of their own debit cards). These cards will be funded immediately the first week after their issuance with $xxx and with varying amounts every month thereafter. Each following month the funding level of the National Debit cards will be determined according to the rate of inflation that has been created by the two economic stimulus measures. Inflation will be guaranteed by the large influx of money into the economy and an inflation rate of 4% after the first month of funding should be acceptable for keeping the funding at the same amount as the first month. If the inflation was less than 4% after the first month, then the next month funding could be slightly increased and if the inflation was more than 4%, the next month funding can be slightly reduced.
The requirement for the National Debit Card holders is that the total funding on the cards must be spent within 25 days of the date of funding. Whatever amount has not been spent will revert back to the Federal Government. The funds are not allowed to be cashed out or saved in any fashion, they must be spent on goods and services. Of course 20% of the card holders may cheat by not spending their own money and using the funds on the cards instead. Some people may spend the money inappropriately in ways not deemed desirable by government officials. Despite that, no restrictions will be placed on the way the money can be spent. Themoney can be spent exactly like other money people own, without any restrictions.
There will be no determinations made as to who is deserving of the $200 and who is not. To get the most even distribution of consumer spending over all businesses in the country, everybody will get the identical $200 funding. It will be the same $200 for very poor people and millionaires, for homeless people and people that live in mansions. The millionaire will maybe go out for dinner an extra time or benevolently give the $200 to someone else who is deserving as determined by the millionaire. The pauper on the street will maybe buy some extra food or maybe spends all of it on alcohol if he is so inclined and another person may spend it on part of a vacation. There will be absolutely no restrictions on how the money can be spent. The only important thing is THAT IT GETS SPENT to boost total consumer spending. To make subjective determinations of who is deserving or in more need, would take Congress 6 months of hearings and deliberations and meanwhile the economy would not improve. We cannot afford such delays in ending the recession.
Again same question: Where does all that money come from? Answer is immediately below.
Here is where it becomes very interesting
Bankers have taught us that we cannot print money, no-way no-how, because we have learned from the bankers that printing of money will result in a very bad economy and runaway inflation and maybe even hyperinflation from which the economy can go into total collapse. To back up the anti-printing-money warnings, the bankers have given us plenty of historical examples of such collapsed economies that resulted after the printing of money. For example we all know the story of Germany in 1923 with hyperinflation that made the money so worthless that it took a wheelbarrow full of money to buy a loaf of bread. There are plenty more such examples where the printing of money was followed by hyper inflation and a collapsing economy. There is Argentina from 1975 to 1991, Brazil from 1986 to 1994, Ukraine from 1993 to 1995, dozens more, and the latest and most current example is Zimbabwe where the daily inflation rate reached 98% in late 2008. The US dollar is currently the currency in use for all daily commerce in Zimbabwe.
Many of us have heard those inflation horror stories and they seem true and are quite convincing. But they are only half truths. And we all know that a half truth is a whole lie. The fact is that the printing of money has never ever been the cause of a deteriorating economy.
Bankers have cleverly and corruptly reversed cause and effect in their stories and myths they have created to confuse the public, the media and elected officials. All manner of bad legislation has been based on the bankers’ misleading and corrupt lies about the printing of money.
Setting things straight about the printing of money
Fact is that cause and effect have been deliberately reversed by the bankers with their lies and myths. Printing of money does not create inflation and a bad economy. It is exactly the other way around in that it is a bad economy that leads to the printing of money. When an economy slides into recession, tax revenue drops drastically for all local governments and for the national government as well. The government then runs into financial crisis and must replace the loss in tax revenue with additional sources of money. That is when governments start printing money to be able to pay for their expenses. If the economy is running normally then tax revenue will be normal and there is no need to print money. So governments only need to print money when the economy has already gone into recession. So the printing of the money did not create the bad economy, it was exactly the other way around in that the bad and deteriorating economy forced governments into printing money. So that is the reason why the printing of money and a simultaneous bad economy can be so conveniently associated with each other by the corrupt half true myths that bankers create.
The people that run governments know generally very little about economics and that is why they will start cutting their expenses when their tax revenues are dwindling. Totally wrong because they must do the exact opposite and start spending more money to inject more money into the economy to stimulate job creation and consumer spending. You can see now that this big mistake of reducing government expenses has been done in the past and is surprisingly repeated in the present. History repeats itself and incompetent central governments do not learn. How could they learn from economists that generally are in the employ of bankers?
Bankers hate the printing of money
Bankers of course want to prevent the printing of money because they want governments to borrow money from them instead. Banks are in business to lend out money so that they can earn interest. So bankers want to create as much government debt as possible, the more debt the more interest. Bankers have been less successful in the United States to run up the National Debt than in 40 odd other countries, but with their lies and half truth they have been doing very well with the latest two Administrations. The Obama Administration will set new records in increasing the National Debt. But maybe this “Recession Recovery Act” will put an end to the strangle grip that bankers have on all governments and government officials whose election campaigns they fund on both sides of the isle so that they have their bets covered.
Bankers have taught us myths and outright lies
The interesting fact is that on the one hand bankers tell us that if we need money to stimulate the economy that we cannot possibly print it because of the “hyperinflation” stories they have created. But curiously enough, almost in the same breath, the bankers are telling us, that if we need money to stimulate the economy or to run the government with, that we can borrow that money from them instead of printing it. We pay the bankers then interest on the debt and increase the National Debt and increase all public debt at all levels of local jurisdictions (State, County, City etc.). The more public debt bankers can create, the better for them and obviously much worse for “We the People”. We are currently paying interest to bankers and other money lenders on $13 trillion of National Debt and $6 trillion of local government debt. The interest we pay on that debt is over $700 billion per year and that amounts to over $5500 per family unit or $2500 per person per year. That must stop and with the “Recession Recovery Act” it will stop. Governments will not be allowed to go into debt and they will not be allowed to borrow money EVER. Governments borrowing money from bankers is only a clever invention by bankers that stuff the pockets of government officials to create this massive government debt. Bankers are not bad or evil people, they just do what is best for them at the expense of all the rest of us.
Bankers are great at fooling us
So what are bankers trying to tell us here? They are apparently telling us that printed money will create bad inflation and a bad collapsing economy, but that borrowed money will oddly enough not create such bad inflation and such a collapsing economy. Are these bankers just dumb or are they deliberately and corruptly lying to us? What we have learned above about inflation will tell us that any money we use to stimulate the economy will guaranteed create inflation and that it does not make any difference what kind of money it is, printed money or borrowed money or money found under a tree. The rate of inflation that is created will be exactly identical with borrowed money, printed money or money found under a tree. The rate of inflation depends on many factors that can be influenced but not controlled or precisely predicted. Some of the strongest variables that influence the rate of inflation are the emotional reaction of the general population and by how much businesses will raise prices of products and services in response to the increase in consumer spending and also how gradual the stimulus money is flowing into consumer spending and how many rotations the stimulus money will circulate through the economy during a month. Another very important factor is how much increase in production of goods and services there will be. When the rate of inflation is higher than what is deemed acceptable, then stimulus money that will increase purchases of consumer products and services should be reduced and used instead to boost and subsidize production of goods and services. That will drive inflation down by making more products and services available to the economy. Creating goods and services obviously will stimulate an economy as well and it creates the opposite of inflation in that it causes the price of goods and services to become lower and that is called DEFLATION. An important aspect of ending recessions or depressions is to stimulate production of goods and services so that INFLATION will be tempered with the DEFLATION created by producing more goods and services.
Both stimulus “tools” of the “Recession Recovery Act” will be permanent tools for management of the economy. They will be used in optimizing the economy to realize its potential AND they will be used to prevent any future recession.
Email comments and questions to Alf TemmeAlf@FastWorkout.com (818) 787-6460
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