First a short explanation on how, with very simple measures, the current recession, that we have suffered now since 2007, will be turned into a prosperous economy in under 12 months.
How is that possible when hundreds of economists and politicians have not found such simple solutions? I thought that there must be one or more economic causes that can explain all boom and bust economic cycles. We know that the 3 major components of an economy are Production, Distribution and Consumption and that if any one of these 3 components is in decline that it immediately pushes the other 2 into decline.
Consumption is the driving force of all boom and bust economic cycles. When the consumption of products and services is in decline then the economy is in decline. If consumption over a period of time drops by 20%, all businesses will on average have 20% less income and many of them will have to reduce their payroll and some will have to close their doors. That will reduce employment. Unemployed people have less money to spend and that reduces consumption of goods and services some more, resulting in another round of layoffs and business closings and layoffs- less employment- less consumption- more business closing and layoff- etc.etc- you get the picture- an ever more spiraling down economy.
Reversing that downward spiraling economy into an upward spiraling economy is easily done by simply increasing consumption. The whole population has to start consuming more goods and services and in less than 12 months we will turn this recession, that we have suffered unnecessarily since 2007, into a very healthy economy that will turn into a new boom that will prevent any future decline. This will sound too good to be true to most economists and all the people that have put their trust in politicians and their economic advisors that seem to deliberately feed them false information that makes the rich richer and helps the poor and wipes out the whole upper middle class that creates all the goods and services and creates employment for the lower middle class and the poor.
So how can we get the whole population to increase consumption of goods and services that will restore the middle class and employment? The President cannot go on television and beg all the people to please spend more money and increase their consumption of goods and services. Most of the people have no money to spend and the ones that have money to spend want to hold on to it as a nest egg, because things might get even worse with the economy.
The only way you can get every person to increase consumption, is to GIVE THEM THE MONEY in monthly installments with a mandate that the money must be spent within 30 days of each monthly installment.
But how can you give all the 314 million people in the United States money every month?The Federal Government must create Federal Debit Cards for all 314 million people in the USA, including children and babies. The debit cards have the same number as the social security cards. The Federal Debit Cards are funded every month with an amount of money that will lift the economy out of the current recession and toward a new boom in less than 12 months. There is a mandate that the money on the debit cards must be spent within 30 days. What money has not been spent reverts back to the Government. My proposal calls for $475 funding for the first month of this program. That will make for a total of $110 billion of increase in consumption in the first month. The amounts for each subsequent month will be adjusted according to the rate of inflation that results from the higher consumption that was created in the previus month. If the rate of inflation is within the limits of what has been predetermined as being an acceptable rate of inflation, the next month's funding will be increased. If the acceptable rate of inflation is higher than the acceptable limit, the monthly funding can be decreased. The total funding for this rapid recession ending program is estimated to be about $1.8 trillion maximum.
The resulting increase in consumption will stop the downward spiraling and result in an upward spiraling economy of re-opening of previously closed businesses and new start-up businesses, increasing employment- that results in more consumption of goods and services by the newly employed and re-employed- resulting in more businesses hiring and re-hiring people- and an ever upward spiraling economy and a slowly tapering down of the monthy amounts of Debit Card funding to $100 in the last month of funding.
For a more detailed explanation you have to read further down.
New ideas in every field of knowledge are few because there are only a small number of progressive spirits among us, that have the required creative mind to dream up new ideas. And that is very fortunate, because if everybody were to be creating new ideas, we would get far too many ideas and could not take many of them serious. New ideas follow the "99/1" Alf Temme rule, in that fewer than 1% of all the people create more than 99% of all the new ideas. The quality of new ideas follow the "80/20" Pareto rule, in that 80% of new ideas are useless, bad and sometimes even dangerous ideas and only 20% of new ideas range in quality from good to sometimes brilliant.
“Each progressive spirit is opposed by a thousand
mediocre minds appointed to guard the past.”
-- Maurice Maeterlinck
Most politicians and bureaucrats do not know enough about economics to run a hotdog stand with a profit.
We have to force change in economics
If we want to get our economy out of recession and toward a high degree of prosperity in under 12 month, we cannot just allow these incompetents in government to continue doing the same things they have been doing for the past 6 years. They have hired hundreds of economists brewing up trial and error potions in a witches cauldron heated by burning billions of dollars as fuel. None of the potions has worked. They know nothing about this only potion that works.
Improvement is only possible with new ideas
We must realize that we can not hope for any improvements from using the same old stupid economics we have been using in the past. 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 are guaranteed to provide the answers to our current economic woes. Of course we need not accept any new idea without thorough examination and logical reasoning.
Standard rejection of new ideas and hypotheses
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 their current belief. Their current belief is "truth" for them, their current truth. All new ideas will differ with current beliefs. If new ideas would not differ with current beliefs, with current "truth", they would not be new ideas. Yes, of course, dismissing new ideas as false when they differ with current beliefs and current "truths" is a very unintelligent way to evaluate new ideas, but that is how most experts treat new ideas. Once again, new ideas will always differ with current beliefs and current "truth". 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?
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. This new hypothesis will not only end this and any other recession in record time, but will bring the economy to new record prosperity and prevent any future recession.
This must sound like total nonsense to anyone who believes to have a little knowledge of economics. But here it is, the most simple solution to creating a prosperous economy without recessions ever. Do not make the usual mistake that people make in evaluating new ideas. Open your mind and apply simple logical thinking and draw logical conclusions. The only thing that stands between a very prosperous economy and us are the small percentage of mighty powerful people in banking and other financial special interest businesses that mightily profit from our lack of understanding of economics that enables them to lead us by the nose and plunder the economy at the expense of all of us. They own the media and the Congress and the White House. They take from all of us to give to themselves, the rich. They do it all legally by having Congress create all the laws that allow them do all the plundering they want. Sounds like a dark conspiracy theory, but unfortunately it is not. I wish it were.
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 result 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 no longer make a net profit will start losing money instead of making money and many will have to close their doors and go out of business because they can no longer pay their overhead expenses. Many other businesses will downsize and cut back on employees in an effort to reduce their overhead.
The closing of businesses and downsizing of many other businesses adds up to an increase in unemployment. 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 distribution of goods. There will be a decline in net profits for manufacturing and distribution with the resulting business closings and downsizing and of course additional increases in unemployment.
Money in itself has only value as a lubricant of an economy
Money is the oil that keeps the economy engine lubricated. Lubricant must circulate through the engine. Only circulating lubricant will make the economy engine run. If less oil is circulating through 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 another increase in unemployment and another decrease in consumer purchases. It results in additional downward spiraling of the economy in alternating and simultaneous spiraling 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 are the result, and all that in the once most prosperous and most powerful nation on Earth.
Declining tax revenue
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 when more people become unemployed and when businesses are making less and less profit. The lack of understanding how to deal with the declining tax revenue persuades governments into austerity measures that in turn result in more unemployment and less spending of money. Money is the lubricant that makes the economy engine run properly. It does not matter how much oil is in the economy engine, it only matters how much oil is pumped and is flowing through the engine at any one time.
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. The government is mostly concentrating on increasing employment but that is difficult because who wants to go in business and start hiring people during a recession, unless it is heavily subsidized with money incentives to start a business?
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 (let the corrupt Federal Reserve create more money out of thin air). 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 need customers to get the economy out of 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 have. What businesses need in a recession is CUSTOMERS not money.
The government needs to create customers
To create more employment you have to first increase consumer spending and that will automatiacally increase employment in retailing, manufacturing, distribution and service industries. So the government must increase consumer spending, but how?
How to increase consumer spending?
The President cannot go on television and tell people: "Dear fellow Americans, open your wallets and start spending because that will end this recession in record time". The problem is that the people do not have any money to spend and the few that have some money to spend want to hold on to it in case things might get even worse. The simple solution is for the Federal Government to give all the the money to all people directly with a mandate that they must spend that money immediately after they receive it, 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 American economy?
If that $700 billion would have been given to the people in 2008 instead of to the bankers that never did anything with it, 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. Question: Where will the money come from? Answer: 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.
2. Question: How do these 314 million people receive the money every month? Answer: The Government will create 314 milllion Federal Debit Cards that carry the same number as their Social Security Cards. These debit cards get funded every month for the next 12 months with the needed amount that will lift the economy out of recession in record time without creating hyper-inflation (the amount needed for reversing the recession at this point starting 2014 is $475 per month and adjusted every month to finetune the system. Lower amounts if inflation is too high, larger amounts to speed up recovery if the inflation rate can handle it.
3. Question: Why does everybody get the same $475 or whatever the amount is, because surely the rich people do not need it. Answer: If you leave it to the Government to decide who should get the money and who should be excluded, that would take them about three years to figure out and we need this program to start right now, not in 2017.Besides, in a democracy we are supposed to give all people the same rights and freedoms.
4. Question: Should there be restrictions on how the money can be spent and on what it can be spent? Answer: First of all, same answer as above: If you let the government to determine how the money can be spent it will take them even longer than 3 years to figute that one out. But the main beauty of it is that allowing people the maximum freedom will result in the most even recovery of the economy. When the tide rises, all boats rise equally. No restrictions on which boats are allowed to rise and which boats are not. The economy is a very interwoven structure that should be based on maximum freedom to make whatever decisions people want to make. A government that wants to keep people from failing is also a government that keeps people from succeeding. There is only one restriction that the money that funds the debit cards must be spent in 30 days after funding. What has not been spent will go back to the Federal Treasury.
Why people are apathetic and not interested in new ideas
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.