Most politicians and bureaucrats do not know enough about economics to operate a hotdog stand with a profit.
If we want to get our economy out of recession and toward a high degree of prosperity in under 12 month, we cannot allow these incompetents in government to continue doing the same things they have been doing for the past 6 years, which was hiring hundreds of economists brewing trial and error potions in a witches cauldron heated by burning billions of paper dollars as fuel.
We must realize that we can only improve upon our current knowledge and beliefs about economics if we are willing to have an open mind toward new ideas and hypotheses that will provide the answers to our current economic woes. Of course we need not accept any new idea without thorough examination and logical reasoning. Unfortunately, the standard procedure for examining new ideas is that new ideas are rejected by experts and the general public alike, when the new ideas differ with what they believe to be the "truth". Yes, of course, this is a very unintelligent way to evaluate new ideas, because new ideas will always differ with current beliefs. If they did not differ, they would not be new ideas.
Other favorite mindless methods of opposing and rejecting new ideas are the following two gems of stupidity:
1. If the new idea is extremely simple: "If this simple idea would be indeed so excellent, then government would surely have implemented it many years ago, because what makes you think that you are smarter than all these expert economists that are the trusted consultants hired by the government".
2. If this idea were true, it would fly in the face of everything we top economists know to be the truth. Were you educated in economics or do you just pull these ideas out of your hat?
I can understand why people are not very interested in ideas that sound too good to be true. They have been disappointed too many times in the past and they have learned from experience that 80% of new ideas are most likely nonsense. So they are not very eager to find the 20% of good and even brilliant ideas by spending their valuable time on methodical and logical evaluation. They do not realize that new ideas are the only way with which mankind can make progress. Rather than trying to find fault with new ideas, I would like to propose that we try to find the 20% of new ideas that make more sense than the current ideas and beliefs. I have realized that new ideas must be presented in short step by step logical explanations that can be easily understood and analyzed. People must also be shown why the current old ideas are very flawed because they have resulted in economic failure and were not able to identify and prevent recessions entirely. People should be less apathetic and start believing that their active involvement is essential to improvement. They must be more willing to have a serious look at these new ideas. The following first explanation will be short so that it has a better chance of holding your attention. There will be longer and more detailed explanations after this one that will answer many of your questions that you might have and they will cover more complex details that are not part of this initial short explanation.
Reversing the process
It occurred to me that the process that pulls an economy down into recession can be reversed to push the economy up and out of recession and toward prosperity again in record short time. I will first explain how a recession starts and how it progresses. After that I will explain how to get an economy out of recession by reversing the process by which an economy goes into recession.
The initial decline
There is never a single reason why an economy slides into recession and we really are not interested what the reasons for the recession may have been because it generally is a long list of small and large economic negative factors and mistakes that all contribute to the gradual decline of an economy. What is however very interesting is that every small economic mistake or blunder results in a small percentage drop in consumer spending on consumer goods and consumer services. Those small percentage drops in consumer spending results in much larger percentage drops in net profit for businesses that sell consumer products and consumer services. If over a period of a few months or a couple of years, consumer spending drops for example 20% then net profit for some businesses may be totally wiped out if their normal net profit is 20% or less of their total receipts. All those businesses that have less than 20% net profit will start losing money instead of making money and many will have to close their doors and go out of business. Many other businesses will downsize and cut back on employees in an effort to reduce their overhead. All in all there will be an increase in unemployment from the closing of businesses and the downsizing. Of course manufacturing and distribution of goods suffer equally or even more so than retailing because there will be fewer and smaller factory orders and less shipping and warehousing of goods. There will be a decline in net profits there also with the resulting business closings and downsizing and increases in unemployment.
Money in itself has only value as a lubricant of an economy
Money is the oil that keeps the economy lubricated while it is running. Money must flow to lubricate the economy. Only flowing lubricant will make the economy engine run. If the oil pump is broken, the economy engine will grind to a halt. The oil pump in an economy is consumer spending for goods and services. When goods are not purchased, retail businesses will not be lubricated, wholesale, transportation, warehousing, distribution and manufacturing will get less lubrication and will slow down. and the businesses that have lost the most lubrication will grind to a halt and close their doors.
The continued decline
Unemployed people have less or no income and have less money to spend and that results in another round of a drop in consumer spending for goods and services which in turn results in more business closings and business downsizing in retailers, consumer service businesses, manufacturing, shipping and warehousing. That in turn will result in an increase in unemployment and another decrease in consumer purchases. It results in additional downward spiraling of the economy in alternating and simultaneous spirals of less consumer spending, less employment, less consumer spending, less employment and of course ever more businesses closing and more people sliding into debt and below the poverty line. Bankruptcies, increase in crime and an ever lower standard of living and all that in the once most prosperous and most powerful nation on Earth. Of course tax revenue for all governments at all levels of jurisdictions for the more than 30,000 taxing agencies in America are also in constant decline which results in less government spending and an increase in unemployment as well.
Reversing the downward spiral into an upward spiral
The quick revival of America back to prosperity can only be initiated by government, but how? By reversing the downward spiral of the economic cycles of less consumer spending, less employment etc. etc. The reverse of that downward spiral is an ever growing upward spiral of more consumer spending, more employment, more consumer spending, more employment etc.etc. The government economists and the politicians have somewhat of an idea that they must get money into the economy to get the economy going again, but they do not know the fine points of how an economy works and that money itself is only the lubricant of the economy and that an economy is just like a car engine that needs oil but if the oil does not reach all the parts of the engine, that the engine will slowly grind to a halt.
When the economy is low on oil it needs a few quarts of oil and the government can create new oil whenever it is needed. The government must know however where to pour the oil into the car. The government has no clue where to pour the oil. The government has poured $700 billion into the banks in hopes that the banks would lend the oil to businesses to get it into the engine. The reality is that businesses do not want or need any money during a recession. Businesses are not going to increase the size of their store or restaurant or factory to increase their capacity. They have already more capacity than what they need for the number of customers they currently serve. What businesses need in a recession is CUSTOMERS not money. It is the people that need money to be to become the customers that businesses need.
So customers they will get
It is the wallets of the people, all people, that will get the blood transfusions from the Federal Government so that they immediately become the customers that increase the consumer purchases of goods and services that immediately start the upward spiraling of the economy.
How to create more consumption
So how will the Government give the money transfusion directly to every one of the 314 million people in the economy?
If that $700 billion would have been given to the people instead of the bankers, we would have been out of this recession already in early to mid 2009.
Here is the simple novel solution
To get all people to spend exactly as much money as is needed to end the recession in record time without causing excessive inflation, the Federal Government will simply give every person in the United States the money to spend. Instead of giving $700 billion to bankers for no result at all, we will give Federal Debit Cards to 314 million Americans including to children and babies (where the parents control the debit card until children have reached age 12). These 314 million debit cards will be funded every month by the Federal Government with the maximum amount of money the economy can "digest" without creating runaway inflation. A high rate of inflation is still acceptable as long as it will not turn into a rapidly accelerating inflation or hyperinflation. The funding of the debit cards comes with the mandate that money must be spent within 30 days and whatever has not been spent will revert to the Federal Government.
So this is what must happen to end the recession and create a prosperous economy:
We must dramatically increase consumer purchases of consumer products and consumer services by giving all 314 million people in the United States money to spend on products and services. This must sound like complete nonsense to anybody in his right mind. But read the explanation below and you will understand the brilliance of it all. This money will be given to all 314 million Americans every month for a 12 month period. The maximum total cost of this program will be $1.8 trillion during the 12 months.
1. Q: Where will the money come from? A: Same place where the Government gets it from now when it increases the National Debt some more. Or better yet, the Government reverses the crazy Federal Reserve Act that was passed by Congress in Dec. of 1913 and takes the previlege to create new money out of thin air away from the Federal Reserve and returns it to "We the people" where it belongs according to the Constitution. Then we do not have to borrow money any longer because the money we print ourselves is already our money, that we do not need to pay back and we do not pay any interest on.
And how do these 314 million people receive the money every month? Is it taxpayer money? Who pays for all this crazy largesse? Why do the very rich also get these monthly payments? Are there restrictions on what the money may be spent on?