The following explains how recessions start and how they can be ended in record time and alsp how they can be totally prevented from starting in the first place. I found this very simple solution that works for any economy in any country. It is far superior to all these stupid complicated schemes that politicians and mainstream economists dream up. So, do not be fooled by its simplicity. Shift your brain in high gear and do some very anlytical thinking about it.
What happens right at the beginning of any recession?
No matter what the initial cause of any recession is, it causes a decline in consumption of goods and services. If consumption of goods and services drops for example by 20%, then the average money receipts by all businesses will decline by 20%. Many businesses whose gross receipts decline by 20% cannot meet their overhead expenses and will not be able to stay in business. The many businesses that must close their doors will create a lot of unemployment and the remaining businesses that have to reduce their overhead and costs will also let a lot of employees go. The newly unemployed people have less money to spend than when they were employed and that will mean an additional decline in consumption of consumer goods and services. More businesses will have to close and downsize, resulting again in additional unemployment. This creates a spiraling down economy of successive rounds of more unemployment and less consumer spending. The result is ever increasing poverty and an increase in crime. When incomes of businesses decline by say 20%, then tax revenues of governments at all levels of jurisdiction decline by more than 20% because of the insane progressive systems of taxation most governments have instituted. That causes immediate and sharp budget shortfalls at all levels of government. And in yet another economic mistake governments are persuaded to implement austerity measures to reduce the size of the budget shortfalls. This is a huge economic blunder because it results in additional unemployment which also contributes to the downward spiraling economy. The way governments try to persuade the media and the public that they have slowed down the recession and have ended the recession is by blatantly lying about unemployment figures and economic statistical indicators. They may be totally ignorant of the sure fire way in which a recession can be ended in record time and turned into a new economic boom in a minimum of time.
The way to end a recession
The downward recession spiral of less spending and less employment can be very quickly reversed into an upward spiral of increased consumer spending and increased employment. But how exactly can you get consumers to spend more money. The administration cannot go on television and tell people: "Open your wallets people and spend more because it is good for the economy." Nothing will happen that way because most people have no money to spend and those that have money want to hold on to it because things might get worse in the future and the want to keep what they have for a nest egg. So what is the solution? The solution is very quick and simple. The Federal Government will create 314 million Federal Debit cards, one for each person in the USA, babies and small children included (their parents get the debit cards until they have reached the age of 12). These Federal debit cards get funded by the government with $475 per month for 12 months running (the amount is different according to how deep a recession has been raging while the government was bumbling or sticking their heads in the sand). The funding of the $475 comes with the mandate that the money must be spent within 30 days (before next month's funding of another $475). That would increase consumer spending by a whopping $110 billion into the consumer circulation each month and of course the total circulation will grow from month to month because part of the $110 billion from the previous month will also keep circulating again in the next month. This will immediately create jobs in retailing, distribution and manufacturing and in the service sector. The increase in jobs will of course stimulate consumer spending some more which in turn will again create more jobs. An ever upward spiraling consumption and job creation spiral has been set in motion that will end the recession in record time and propel it to new records of prosperity. This heating up of sales and consumption will set off inflation, so we will monitor inflation from month to month so that we can measure carefully whether we should decrease the funding of the debit cards accordingly when inflation gets outside acceptable limits. Part of the inflation will be offset with the deflation that is created by the greater production of goods and services.
Wait a minute, there must be something wrong here.
This is where most people stumble with this brilliantly simple idea. In fact there are many things wrong with this idea. First of all most people reason that if it was really so simple, that the government would have allready done it a long time ago, so it could not possibly be so simple. You are giving government too much credit. Most people in government know little or nothing about economics. They would not be able to run a hot-dog stand with a profit. The only thing they know is how to get elected and take as much money as possible from all the lobbyists. Also, where does the money come from with which to fund the Federal Debit Cards? And why should every person get the same $475, including all the rich people? I will explain: If it is really as simple as it is the government would have done nothing because governments never do anything simple, they always complicate things as much as possible and get nothing ever done very quickly. The money comes from "We the People" because we are going to take that previledge of creating money out of thin air away from that crooked banker cabal that is the Federal Reserve that is neither Federal, nor has it any reserves. We will print our own money and that way we will not have to borrow it from bankers and we will not have to pay interest on it and we never have to pay it back because we printed it ourselves, it is ours. Yes, bringing extra money into circulation will create inflation, but it will create less inflation than bringing borrowed money into circulation that we would borrow from those slimy puppeteer bankers, because it costs no interest.
I like to repeat simple ideas because that improves understanding. So here is the first repetition in a slightly different wording.
So, once more: How do recessions start?
All recessions start with a signifficant drop in consumer spending for products and services. If consumer spending drops for example by 20%, then all businesses that sell consumer products and services will on average experience a drop in monthly receipts of 20%. Many of these businesses cannot survive a reduction in income of 20% because they cannot meet their overhead expenses any longer and have to close their doors. Many other businesses have to cut their overhead expenses down by reducing the number of their employees and other such overhead cutting measures. The closing of businesses and the downsizing will of course create a lot of unemployment.
Now an additional drop in consumer spending results from the increase in unemployment because when people become unemployed, they will have less or no money to spend to purchase goods and services. This additional drop in consumer spending sets up an additional round of business closings and business downsizing and as a result even more unemployment. A downward spiral of successive rounds of less consumer spending and more unemployment is creating an ever worsening recession and even depression.
The ONLY WAY out of a recession/depression is to reverse the downward spiral of alternating reductions in consumer spending and increases in unemployment, by reversing that downward spiral into an upward spiral of ever increasing consumer spending and increasing employment. This upward spiral must be started by priming the pump with an increase in consumer spending and an increase in employment. Ideally both at the same time.
Governments around the World and all their "expert" economists have not figured out how to reverse the downward spiral into an upward spiraling economy. They do as if they try their best to reverse the recessions into upward spiraling economies, but either their lack of understanding economics or their special interest masters keep them from accomplishing it. In the United States they gave $700 billion to the bankers and told the bankers to get that money into the economy by making loans to small and big businesses. Of course the bankers just took the money and never made any loans, beause businesses in a recession do not need loans, they need customers. They would not want any loans to increase the size of their restaurant or buy new machinery to expand their factory. Their restaurant has already more room than they need and their factory already can manufacture more products than they can sell.
How to end a recession and prevent all future recessions:
The following idea explains in detail the method with which any recession will be turned into an economic boom in record time. Read it slowly and carefully all the way to the end before coming up with clever observations with which you would like to invalidate this excellent idea. Do not fall into the trap of evaluating new ideas with "common sense" or "gut feeling" or "intuition" because you will kill the most brilliant ideas in the process. You cannot come to proper conclusions without engaging your brain in analytical reasoning and to draw carefully reasoned conclusions.
Most people will compare new ideas to their own belief and body of knowledge they have created from currently accepted old ideas and belief and they will very quickly dismiss them after they have read only a few lines or listened only to a few sentences. Their gut feeling and common sense will kick in and they will shift their brain into high gear to explain their current belief. Some of them will actually lower themselves to the use of ridicule in their arrogant display of their ignorance.
If the new ideas conflict with their current belief, they will reject them as nonsense. They are totally oblivious to the reality that new ideas MUST DIFFER from what they currently believe in, else they would not be NEW ideas. The more that new ideas differ with what people currently believe in, the more they will be rejected and that is why the most brilliant ideas are the hardest to explain and to be accepted by the general public. Mankind loses the most brilliant ideas this way and progress is stifled and even reversed.
So here is my request to you: Do not evaluate this brilliant idea by using "common sense", "gut feelings" and "intuition" and certainly do not rely on "experts" to do the thinking for you. Read this idea to the end before drawing any conclusions and use your own brain and not your gut to do the thinking.
Of course a recession will drastically decrease tax revenues at all levels of government and that will cause enormous budget deficits for governments at all levels of jurisdiction (Federal, State, County, City etc). The elected officials and their "expert" advisers now will immediately feel forced into austerity measures of cutting government employment by cutting services and also reducing all manner of government spending. That of course increases overall unemployment some more and as a result less consumer spending and more businesses failing. And unfortunately the general public just loves reductions in government wasteful spending because they do not understand how economics work either.
The only things that governments think will end a recession is cutting government spending and at the same time they dream up half baked stimulus ideas to increase employment. So how ludicrous is that, because cutting government spending will of course increase unemployment and as such will decrease consumer spending. So they really do not know what to do and are sticking their heads in the sand and do nothing. That will drag the recession out at least another 5 years with massive budget deficits of maybe $1.5 trillion per year that will add to the National Debt to the great joy of the bankers that are the owners of the Federal Reserve. So all of this is OK as far as the Federal Reserve is concerned and the Bankers that own the Federal Reserve. That alone is of course a situation that must be changed by totally ignoring the Federal Reserve which is neither Federal nor has it any reserves. It is a big corrupt hoax which the general public is slowly starting to realize 100 years after this Federal Reserve hoax was created on December 22nd of 1913 by a small number of corrupt members of Congress that had not yet gone home for the Christmas recess.
Increasing employment would indeed make things better. There are two very effective ways in which employment can be increased and they should both be done simultaneously to get the economy out of recession in the fastest way possible and both will unfortunately be met with immediate and strong opposition by corrupt or ignorant politicians on both sides of the isle (conservatives and socialists or liberals) because they know as little about economics as the public that they supposedly represent. The only way we can get out of this recession mess is to carefully and slowly educate the public about the simple workings of economics and to undo the lies and falsehoods that are spread by the moneyed people and the politicians that are royally rewarded for the corrupt laws and regulations they create for the benefit of the special banking interests and at the expense of the general public that they supposedly represent.
So this is what must happen to end the recession and create a prosperous economy:
1. Dramatically increasing consumer purchases of consumer products and consumer services by giving all 314 million people in the United States on a monthly basis money to spend on products and services.
2. Reversing all government spending cutbacks that have been implemented since beginning of 2007 by all governments at all levels of jurisdiction. And additionally hiring the same number government employees that were let go since the beginning of 2007.
3. After the economy has come out of recession and has recovered into a prosperous economy, that is the time to slowly reduce the wasteful spending of governments at all levels and increase the productive spending by governments.
Well, you can see now that most people in their right mind would stop reading right about here after having read these three points above because "common sense" and their "gut feeling" will tell them immediately that this supposedly "BRILLIANT" idea of "Ending Recession" must be complete nonsense and that reading any further would be a waste of their time. But they are completely wrong because the explanation that follows is totally outside the box BRILLIANT economic thought that will end the current recession in record time, and can prevent any and all recessions in the future and will guide the economy to new levels of ever increasing prosperity. "Common sense" is what most people and their governments have always used and it has gotten us nowhere fast because it is ordinary low grade below par dull common sense. What we need for unprescedented human progress in prosperity is extra-ordinary brilliant uncommon sense. But sadly such brilliant uncommon sense makes no sense to the below par common sensers which are in the vast majority in Congress and all governments at lower levels and sadly also among the general public. We are after all big champions of "DEMOCRACY" where each person has an equal vote and that makes perfect "Common Sense" but in reality Democracy is one of the biggest disasters for any country that adopts it as its form of government. Democracy is guaranteed to lead to control by the very few enormously rich checkbook puppeteers that steal any democracy blind. Democracy leads to an electorate that is very easy to manipulate to give their vote to the politicians that promise them the things they want from their government for nothing. Basically to take from everybody who pays taxes "the Rich" and give it to those that pay no taxes "the Poor". Democracy makes for a majority vote of less intelligent people whose vote can be bough with cheap promises. by the rotten apples that rule the whole World with their checkbook puppeteering.
So calm down and suppress your gut feeling common sense and emotional intuition and read the following to learn the brilliantly simple solution to ending this recession and the ever increasing prosperity created through implementation of these brilliantly simple economics. At the same time it would take a lot of power away from the checkbook puppeteers and it would try to shift people slowly into the direction of an Intelliocracy.
Any recession can be reversed in 2 months or less
Recessions can be halted and reversed within 2 months or less if acted upon immediately after a mild recession has been identified and enough money is quickly infused into a sagging economy. The longer a recession is ignored the more economic infrastructure is destroyed and the longer it will take to rebuild the destroyed economic infrastructure and reverse the economy back to prosperity and the more money it takes to reverse it.
Economic infrastructure is destroyed in recessions
Businesses and factories are dismantled and their fixed assets are sold at auction at 20% of their replacement cost. It takes alot of capital and time to rebuild economic infrastructure.
Here comes a repeat and restating of the above writing for purposes of learning these SIMPLE ECONOMICS
What causes a recession?
Every recession starts with a drop in consumption of goods and services. There are two kinds of consumption. There is private individual consumption of products and services and there is government consumption of goods and services. If the combined consumption of the private sector and government sector of the economy declines by, for example 20%, then the average money receipts of all businesses will decline by 20%. Many businesses whose gross receipts decline by 20% cannot meet their overhead expenses and will not be able to stay in business. The many businesses that must close their doors will create a lot of unemployment and the remaining businesses that have to reduce their overhead and costs will also let a lot of employees go. Unemployed people will have less money to spend on consumer goods and services and that will mean an additional drop in income for all businesses and more businesses will close and downsize. This in turn will mean more unemployment. This whole process creates a spiraling down economy of successive rounds of increasing unemployment and less consumer spending. The result is ever increasing poverty and an increase in crime.
Government tax collections drop sharply and causes deficits
Tax revenues at all levels of government drop sharply when economies go into recession. That creates a shortfall in tax revenue that creates budget deficits and requires government borrowing and an increase in goverment debt at all levels of government. This drastic decline in tax revenue and the resulting budget deficits could be totally eliminated by a new tax system I have created: www.AutomaticTax.com But first finish this website before digression to my new tax system that requires no accounting, no filing of taxes and no audits and has a tax code of less than 10 pages (instead of the 75 thousand pages of the current IRS tax code. Just another brilliant idea that sounds too good to be true and will be vehemently opposed by those who most profit from the the current idiotic 75,000 pages of IRS tax code that is the greatest source of corruption in America.
Identifying the beginning of a recession
Identifying the beginning of a recession is a very simple task. The only indicators needed are the decrease of bank deposits from sellers of consumer goods and from providers of consumer services. Every recession starts with a sharp drop in consumer purchases of consumer goods and consumer services. When consumer spending on goods and services drop sharply then monthly receipts for businesses drop sharply. Alternatively sales tax receipts can be monitored to detect the beginnings of a recession. Many businesses can not meet their overhead expenses and have to dowsize or go out of business. That results in unemployment for millions of employees.usinesses. Unemployed people have less or no income to spend and that results in another drop in consumer spending. That in turn will result in more businesses closing or downsizing. It is a continnuous downward spiral of successive rounds of less consumer spending and less employment that ends in abject poverty and misery for most of the population and untold riches for the few that profit from the universal misery of the many.
Preventing and curing recessions
The only way to get out of recessions is to turn the downward spiral of less consumer spending and less employment into an upward spiral of more consumer spending and more employment. The following new discoveries of economic measures will reverse downward spiraling consumer spending into upward spiraling consumer spending and end any recession in record time and prevent any future recessions. This recession that has been allowed to spiral down since 2007 because of inaction by Congress and The White House will take a little longer to fully recover. This current recession that was allowed to last from 2007 until now in early 2013 can be returned to prosperity within 12 months and turned into an extremely prosperous economy in an additional 12 month. These measures will also prevent any future man made recession that results from bumbling politicians having no understanding of economics and special interests that buy the politicians. The new insights in economics explained below deal specifically with reversing the economic downward spiral that has started the current recession in October 2006 (not late 2007 as is commonly believed). The newly created economics must be executed exactly as proposed below and not modified by clever economists that already have proven in the past that they know little or nothing about economics and have created failing laws and measures in the past that created all recessions in the past. With these new measures any future recession can be totally prevented. In addition very prosperous economies that are not ever subject to recessions can be created.
In short
This is the solution to ending this current recession in less than a year. The downward spiral with recurring rounds of less consumer spending and less employment that was started by an initial sharp drop in consumer spending, will be reversed into an upward spiral of recurring rounds of increases in consumer spending and increases in employment. The projected cost of this proposal to end the recession and prevent any future recessions in the United States is $1.8 TRILLION. Question is: Where will these $1.8 TRILLION come from? It will come from "We the People" who will create that money out if thin air just like the Federal Reserve has been creating money out of thin air for over 100 years now, since 1913 when the corrupt Federal Reserve was created on December 22, 1913 by a few corrupt members of Congress that had deliberately and secretly stayed in Washington when the rest of the members of Congress had already left for the Christmas Holidays. This is how the bankers paid those corrupt members of Congress for creating the Federal Reserve Act and gave the Federal Reserve the exclusive right to create money out of thin air and lend that money to all the governments at all levels of jurisdiction and create the Federal Debt and all other government debt at all levels of government. All that debt creates interest payments to the banks that own the Federal Reserve and all that interest is to be paid from taxes that the taxpayers pay to their respective governments at all levels of jurisdiction. A very neat trick to enslave the total population into servitude of the bankers and deprive them of the fruits of their labors.
How will that $1.8 trillion be used to increase consumer spending and increase employment?
The president cannot go on television and tell consumers to open their wallets and start spending. They do not have any money to spend and the people that have money do not want to spend much of it because things might get worse and they want to hold on to their money for the possible worse times to come. So how can you get consumers to spend more money to get the upward spiral of increases in consumer spending and increases in employment going? Simple, you give consumers the money and make it mandatory that they spend that money within a short period of time. That way you force the recession spiral to reverse in an upward spiral of more consumer spending and more employment in successive rounds spiraling up toward a booming economy. To increase employment more rapidly during this forced recovery, the Federal Government will provide weekly block grants on government debit cards to all the local governments at all levels of jurisdiction including all departments of the Federal Government. These block grants come with the demand that these grants will be used immediately to restore employment to early 2007 levels and to use the block grants to pay for that restoraton to such level of employment and that the people that had lost their jobs will be first in line to get their jobs back. Also government contractors will be re-instated as fast as possible and they are free to hire people the way they feel is best for their business.
Money has no other value than being the grease that lubricates the economy engine
This money lubricant must be poured into the economy engine in a particularly clever way so that the downward recession/depression spiral of less consumer spending and less employment is instantly reversed and turned into an upward recovery spiral of more consumer spending and more employment. Where should that money come from? Preferably not from the corrupt Federal Reserve that has plundered our economy for about 100 years now. No, I do not like to increase the National Debt by printing Government Bonds and selling the bonds for money that we need to run all the governments at all levels of jurisdiction (Federal, State, County, City etc.). The corrupt Federal Reserve that was created on December 22nd, 1913 by a handful of corrupt members of Congress. The Federal Reserve was given the exclusive right to create new money out of thin air and the fractional reserve lending laws have permitted banks to multiply money endlessly and calling the multiplications of the money "profit" that can be doled out to shareholders and top executives and top employees of the banks. These corrupt Federal Reserve and banking privileges must be stopped instantly and the rights to create new money must be returned to "We the People" as was provided for in the Constitution. This plan to end the recession will cost less than $1.8 trillion and that amount will be "created" by "We the People". That infusion of $1.8 trillion into the consumer economy will create a certain percentage of inflation but it will create no additional increase in the National debt. The money is created by "We the People" so it belongs to us, so we need not borrow it from banks or other lenders by selling bonds and as such we will not have to pay it back because it is ours already and we do not have to pay interest on it because it is our money already. This is far cheaper than us printing bonds and borrowing money on the bonds. All of this would be a financial disater for the Federal Reserve and the international bankers that own the Federal Reserve and are the shareholders of the Federal Reserve. It should be no surprise that the Federal Reserve and its corrupt shareholder bankers will do anything in its power to stop this instant recovery plan.
The Federal Reserve Bank
The Fed and it’s owners would like the recession to continue what looks like at least another 5 years the way they have Congress and The White House doing nothing other than proposing tax increases and austerity measures. These tax increases will reduce the money available for consumer spending and will deepen the recession some more. Government austerity measures will increase unemployment and that also decreases consumer spending and also sends the economy into deeper recession, and that will create at least another $8 trillion in budget deficits and tax revenue shortfall and the budget deficits during those 5 or more years require additional borrowing of money, which is just fine for the Fed and all the large bankers that own the Fed. The greater the National Debt the more interest the lenders get and the more new money they can create out of thin air. Read below about the solution to end government debt forever. It only requires a law that forbids any government to borrow money and will take the privilege to create money away from the bankers (Fed) and return that exclusive privilege to the government to "WE THE PEOPLE" as it was meant to be as written in the Constitution in the first place (Article 1, section 8).
"We the People" will create our own money and never borrow any money from bankers ever again
Those $1.8 TRILLION we will create ourselves (We the People), will get us out of this recession in UNDER ONE YEAR and that makes it a bargain as compared to the Federal Government’s doing nothing (they don’t have a plan) and waiting at least 5 years for the economy to slowly come out of recession by itself. That will cost us at least $1.5 to $2 TRILLION per year in budget deficits and that would cost us $8 to $10 TRILLION. This plan is a bargain at $1.8 TRILLION. The problem is that the Federal Reserve will not likely cooperate and maybe will fool us all again by ordering Congress to pass a largely plagiarized plan that looks very similar to this one but is deliberately designed to fail miserably. That way the Fed makes my plan look silly and the Fed will be safe from similar proposals as this one for at least the next 20 years. So, what is this plan? Patience, it is all explained in detail below.
So now for the detailed proposal of ENDING RECESSION:
A simple method for Congress to end the recession in record time
Had this method been implemented in early 2007 by Bush when the recession had not yet been identified or acknowledged, then the developing recession would have been stopped in its tracks by April 2007 and reversed in only 2 months at a cost of only $150 billion. The longer governments think about how to reverse a recession and then do nothing at all, the more expensive it gets and the more damage is done to the economic infrastructure. If this plan had been implemented right away when Obama took office, it would have cost $600 billion and 6 months. Now in early 2013 after 6 years of incompetent trial and error tinkering by two administrations, the reversal of the recession into a prosperous economy will take a lot longer and a lot more money, 12 months at a cost of $1.8 TRILLION. If the media would cooperate and the two warring political parties would stop taking potshots at each other and make it a combined effort, the recession might be over already in as little as 10 months. Recessions start very quickly after a drop in consumer spending and then go gradually deeper with successive spiraling down rounds of less spending and the resulting higher unemployment. Recessions can be reversed almost as quickly as they develop with swift, courageous and decisive government action. The problem is that swift, courageous and decisive are not part of the vocabulary that would describe standard government behavior. Slow, cowardly, corrupt and wavering is more descriptive of "government as we know it".
The recession could be over before Spring of 2014
If this $1.8 trillion plan is implemented before the middle of 2013, the recession will be over within 10 to 12 months. The recession will be over and will no longer continue to ruin millions of lives. It would cost at least $8 TRILLION or more to keep all governments at all levels (State, County, City) from going bankrupt during the Fed planned 5 year longer recovery period. The $1.8 TRILLION plan, as explained here, will bring tax revenues at all levels of government back to where there will be a budget surplus instead of budget shortfall.
The problem with ideas that "sound to good to be true"
The problem with many brilliant ideas is that they sound too good to be true and they do not catch media attention that is needed to create enough public pressure on Congress and The White House to quickly implement such good ideas. Of course, new ideas are always opposed by strong special interests that benefit from the perpetuation of the status quo. And the whole population that would benefit from the new idea is deliberately told that the stories about the bankers that own the Federal Reserve are just conspiracy theories. And people that propose to take the right to create money away from the Federal Reserve and return the right to create money back to "We the People" (as was intended by the Constitution) are painted by the media as lunatics that don't know what they are talking about. This then gives all people the excuse to not get involved and stand on the sidelines doing absolutely nothing to support really good ideas like this method to end the recession in less than a year.
Hoping for courageous enterprising journalists and editors that will publish and popularize this recession cure. All the media that are controlled by the bankers will undoubtedly ridicule this idea as too simplistic or worse.
How does a Recession start?
With just limited research it can be quickly established that a recession always starts with a drop in consumer spending or government spending or a combination thereof. A drop in spending will always result in an increase in unemployment. Why? Because a drop in spending, of say 20%, will results in an average drop of 20% in monthly gross receipts for businesses that sell to consumers and/or to governments. It will reduce manufacturing orders by 20%. Many businesses and manufacturers that suddenly get 20% less income will start losing money. Some businesses will not survive a 20% drop in monthly receipts and must go out of business resulting in unemployment for their employees. Many of the remaining businesses that will not close their doors, will have to reduce employment and other overhead in an effort to stay in business.
Unemployed people get less or no income and that results in even less consumer spending. Alternating rounds of less consumer spending and rounds of higher unemployment will establish a downward spiraling economy that gradually goes deeper into recession. In that downward spiraling of the economy there are a lot of personal and family lives that are destroyed by losing all their assets in personal bankruptcies and home foreclosures. Funeral directors report an increase in their business through a percentage increase in suicides, for which the do-nothing bumbling Congress and White House should be held accountable.
Millions/billions of dollars of economic infrastructure is destroyed when all the equipment and machinery of bankrupt businesses and factories is auctioned off at 10% to 25% of replacement cost. For example a restaurant that closes will lose all its kitchen equipment that gets auctioned off at maybe 25% of its original cost and all the cost of installation is lost also. Closing factories lose not only all their manufacturing machinery and production infrastructure that gets auctioned off, they also lose a trained work force that is scattered to all directions and will be difficult to reassemble when maybe the factories are rebuilt some time in the future.
Through the recession, the over 30,000 (thirty thousand) taxing agencies in the United States (Federal, State, County, City etc.) all receive less revenue and that creates budget deficits at all levels of government and in turn persuades and often forces these governments to implement austerity measures that sharply reduce government spending and create more unemployment for government workers and for employees of government contractors whose government contracts get cancelled. Unfortunately, the majority of taxpayers, and their government representatives in the various legislatures, applauds and supports the austerity measures that governments get forced into by the declining tax revenues. We all hate large government and love it when government gets reduced in size and scope. But the problem is that reducing government spending during a recession will push the economy even deeper into recession because it will increase unemployment of government employees and of employees that work for government contractors and it results in additionally lower consumer spending. Lower employment and lower consumer spending will lower the tax base for governments even more resulting in even more government austerity. People have no idea that governments must start spending money like drunken saylors when an economy goes into recession and must only implement austerity measures when an economy is booming. Those insights are of course totally counterintuitive to governments and the voting public, so they keep voting for politicians that promise more government austerity measure that will create deeper recessions.
What will guaranteed end a recession?
It is guaranteed that a recession will always end with an increase in consumer spending. Governments could help by increasing their spending as well. But they are gutless by not wanting to do deficit spending and increasing government debt in the process. The voters will punish elected officials that propose more government spending. I am philosophically opposed to larger government spending, but reductions in government should be undertaken when governments run budget surpluses and greater government spending should be done when governments run deficits (sounds crazy, because it is exactly opposite of what governments do and what voters will want their governments to do). An increase in consumer and/or government spending will always result in higher employment. Why? Because the increase in consumer purchases will increase income for all businesses that sell consumer products and render consumer services. Those businesses will need more workers and will hire back employees resulting in more employment. Profits of those businesses will rise again very quickly and that will encourage other people to go back into business and hire employees. That increase in employment will give more people wages that can be spent on more consumer purchases which in turn will result in more employment. This sets in motion an upward spiral of alternating rounds of more employment and increases in consumer spending and that will end the recession very quickly.
Tax revenue will soar
Governments at all levels of jurisdiction will get more tax revenue when more people are employed and consumer spending is rising and businesses make profits. That means that governments come quickly out of their budget crises and they can now fund more infrastructure projects and give more work to government contractors. That in turn will again lower unemployment and it will increase consumer spending some more. Getting out of a recession will be almost equally as fast as getting into a recession if the right stimulus methods are implemented.
Conclusion: Increasing consumer spending will end the recession. But how exactly can consumer spending be best increased?
To increase consumer spending Congress and the President cannot just say to the people: "People, open your wallets and start spending money and make purchases because that will help the economy". First of all, most people do not have the money to spend and the ones that have money, want to be extra careful during a recession and they save most of their money in case things might get even worse in the future. By saving their money and not spending it, things will indeed get worse in the future because it increases unemployment and decreases consumer spending.
As little as economists and politicians and the media know about economics, they all know that pouring money into the economy is needed to get an economy running again. But they do not know how.
The surprising and unconventional solution for the most effective stimulus is when The Federal Government will give people the money to spend with a mandate that the money the government gives the people must be spent immediately within 30 days.
How can the Federal Government give money to the people with which they will increase consumer spending and end the recession?
The Federal government must create a National Debit Card for each person with a valid Social Security number. That will be about 314 million National Debit Cards. Rich and poor, legal aliens, young and old alike, all people that have a valid Social Security Number will receive a National Debit Card that will be funded by the Federal Government.
All 314 million National Debit Cards can be funded each month all at the same time with a simple computer keystroke command. The amount of funding can be increased or decreased every month as needed. The parents or legal guardians will get custody of National Debit Cards that are issued to small children, babies and persons under guardianship for any reason. When children attain the age of 12, they will get control of their own debit cards or earlier if the guardians deem it appropriate.
The amount of funding will be exactly the same amount for all 314 million cards. Everybody rich or poor, young or old will get exactly the same monthly amount of money. The amount of funding will be determined by the condition the economy is in. If the economy is in a deep recession, consumer spending must be increased with more money than if it is only in the beginning stages of a recession. And if the economy is not in recession, but it can be boosted to a higher level of prosperity then the amount of National Debit Card funding can be adjusted to an amount that will take optimum advantage of the production capacity of the economy to optimize for maximum prosperity (there is a potential problem with maximum prosperity for all. Read www.GiveGREEDaChance.com.
Procrastination is expensive
If the recession would have been ended by Bush with this same stimulus solution in the beginning of 2007, when the recession had just started, the cost of ending the recession would have been only $150 billion because the National Debit Cards, had they existed at that time, would have had to be funded for only 2 months in a row with only $250 each. If the Bush administration would have ended the recession with such National Debit Card in early 2008 it would have cost $350 billion with 3 months in a row funding the 314 million National Debit cards with $375 each per month. Bush tried with a $152 billion tax refund program in mid 2008 but it was too little too late and it was SPENT IN TOTALLY THE WRONG WAY. It was a tax refund program. Totally uineffective because it gave money to only people that had paid taxes (they got a refund). These refunds were deposited in the bank accountIt only gave the economy a temporary boost of about 4% increase in GDP. It is extremely important to know exactly how to feed the money into the economy to maximize an increase in consumer spending. If Obama would have implemented this plan right away when he took office, the recovery would have cost only $600 billion with $385 each month National Debit Card funding for 6 months in a row. If you fund too much too fast, the economy cannot react fast enough and it will create too much inflation. But inflation is a necessary "evil" if you want to get an economy out of recession fast. Bankers do not like inflation and will do anything to fool the public into believing that inflation is a disaster. It is only a disaster for bankers that have a lot of money outstanding on loans and those loans will then be paid off with less valuable inflated money. But all the people that owe money to bankers with home loans and credit cards, consumer loans, student loans etc. will benefit from inflation because they pay off their loans with money that is worth less. Inflation takes from the rich and gives to the poor. Inflation is bad for the bankers that create these recessions to plunder the poor and middle class. Inflation is very beneficial for people that owe money to bankers and other lenders. But bankers and money lenders have found other methods to to steal money from the averagepublic by foreclosing on their homes.
Money is the lubricant for the economy engine
Money is the lubricating oil for the economy engine. Without the lubricating oil the engine grinds to a halt and into recession. So we have to give lubricating oil to the engine to make it run again. You must know however exactly where to pour the oil, because just pouring oil randomly all over the engine will not do any good. You must feed it directly to the oil pump that brings the oil to all the moving parts of the economy engine (to all the working people in an economy). That proper filling hole has not been found yet by all the economists that advise governments on how to run their economies and where to pour the lubricant for the economy engine. They like to pour oil into the banks in hopes that the banks will lubricate all the businesses with it (which they do not). That is just as stupid as pouring oil on the back seat of the car instead of the filling spout for the motor-oil where it will get to the oil pump.
The cost of ending the recession
The cost of ending this recession in under one year at this late stage in the game, having already destroyed millions of businesses and millions of lives, will be $1.8 TRILLION for funding the National Debit Cards with $475 each for 12 successive months. That is actually $1.3 trillion for the 12 months debit card stimulus plus $200 billion in reserve to step up the monthly amount of debit card funding if the economy can absorb the increase of consumer spending without experiencing an excessive percentage rate of inflation. Another $300 billion is set aside for a big stimulus for advertising as explained in the following paragraph.
Advertising Debit Card funding
$300 billion funding is set aside for Advertising Debit Cards for businesses. The debit cards can be used to pay 75% of their print (magazine and newspaper) advertising, and 25% of TV and internet advertising expenses. Advertising is the most important business expenditure to boost consumer spending. Unfortunately most businesses will slash their advertising budgets in an effort of cutting business expenses when an economy goes into recession. That is a major marketing mistake that hastens the demise of many businesses and it increases unemployment and drops consumer spending additionally. It also is the reason for the decline in print advertising and the going out of business for many magazines and newspapers. This $300 billion advertising stimulus is a much needed boost to allow print advertising to survive this recession. Hopefully all media will give this brilliant stimulus project its full editorial support.
Where does all this money come from?
In order to please the banks, that own the Federal Reserve Bank and that have all the power to block this stimulus measure, the money could be borrowed, as usual, from the banks, and that will of course increase the National Debt again by $1.8 trillion. The Federal Reserve (Fed) is already making faint noises that there is most likely another banking bailout on the horizon. Well, this $1.8 trillion stimulus package that will get the economy out of recession in under one year, will also at the same time serve as a banking bailout package because all the $1.8 billion will eventually wind up in the banks in the form of deposits from all the businesses that receive all the National Debit Card stimulus money from the consumer spending on purchases.
No more National Debt and local government debt in the future
This paragraph will get the banks to spend whatever money it takes to stop this legislation in Congress. Of course it is total nonsense for governments to ever borrow money from banks and pay interest on that money. As it is, we have given the Federal Reserve the exclusive rights to create new money out of thin air. "We the People" then borrow that newly created money and that creates the National Debt that "We the People" owe to various bankers and other money lenders that also collect interest on that National Debt. Similar debts are created by all governments at lower levels of jurisdiction. The logical solution would be that "We the People" should take the right to create new money back from the Federal Reserve Bank and reserve that right to create money to ourselves, to us "We the People" as was intended by the framers of the Constitution (that the Federal Government would have the exclusive right to create money, not a cabal of bankers like the Federal Reserve and in other countries Central Banks that are controlled by private bankers). This is what the Constitution decrees: Article One, Section 8 of the Constitution: The Congress shall have the power . . . . . . . To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
To provide for the punishment of counterfeiting the securities and current coin of the United States;
So the burning questions are: Why is the Congress not creating money itself and why has Congress given that exclusive right to create money out of thin air to the corrupt cabal of bankers that own the Federal Reserve? Look at the dollar denominated bills in your pocket and read that printed on them, it clearly states that it is not United States Government money. It clearly reads FEDERAL RESERVE NOTE. So that is clearly a violation of the Constitution in that those Federal Reserve Notes are clearly COUNTERFEIT money that was not created by the Federal Government of the United States. Why is the Congress not going after the Federal Reserve and provides for the punishment of counterfeiting? I tell you why: Many members of Congress get royally rewarded by the bankers for their complicity in the corruption of counterfeiting money and the plundering of the American people and the economy as a whole.
SO WHAT ABOUT CONGRESS ABIDING BY THE CONSTITUTION?
Whenever we (our governments) need more money we should never ever borrow it. In fact we should make it illegal for governments at any level of jurisdiction to borrow money. We should never ever anymore create government debt. We, “We the People” will simply create new money ourselves. That way we do not create a National Debt. We will also create new money for local governments and they will be obligated to raise local tax rates and they will not create debt either. We do not have to pay interest on that money either. The creation of new money out of thin air has an inflationary influence on the economy but the additional production of goods and services that will result from the influx of extra money into the economy will have a deflationary influence on the economy.
Fact is that borrowing money from banks will have more inflationary influence on the economy than money "We the People" create ourselves. Bankers currently collect overt one trillion dollars per year in interest on Federal and local government debt. Creating our own money and not paying interest on that money will not make bankers happy at all and they will fight such proposal with all their might, which might is considerable. Those who control the money RULE.
How to implement this as fast as possible
Members of Congress should be able to read and understand this simple measure in less than 2 days, vote on it in another 3 days and the President can sign it into law on the sixth day. "We the people" will create this new economic Universe in six days.
Congress should implement this unique stimulus package immediately without wasting much time on discussions or doing endless studies or getting dumb advice from economists that are currently advising governments and seem to promote economic policies that only help the special interests (mostly corrupt financial and banking interests). Out with the bad, in with the good.
Try to spread this website to as many people as you can, because I cannot do it alone. “We the People” need all the help we can get. Do what you can.
By Alf Temme, Suggestions and comments to Alf@400a.com
Manufacturer of www.Sauna.com and www.FastExercise.com
As a manufacturer I deal with economics hands on every day. The economic solutions do not come from academia's ivory towers. Most members of Congress and all their economists that give them advice would not be able to run a hot-dog stand with a profit.
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