This economic advice deals with reversing the economic downward spiral that started this recession in October 2006 (not late 2007 as is commonly believed). Every recession starts with a sharp drop in consumer spending.
In short: it is a proposal for borrowing an additional $1.8 TRILLION from the Federal Reserve to lubricate the economy 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 spiral of more consumer spending and more employment. No, I do not like to increase the debt to the Federal Reserve by $1.8 trillion, but it is far cheaper than allowing the recession to continnue at least another 5 years the way Congress and The White House are doing nothing. That will create at least another $8 trillion increase of debt to finance the government budget deficits during those 5 years (or more years). Read below about the solution to end government debt entirely forever. The $1.8 TRILLION will get us out of this recession in UNDER ONE YEAR and that makes it a bargain as compared to the Federal Government plan (they do not have a plan) of doing nothing at all 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 TRILLION per year in budget deficits and that would cost us at least 5 times $1.5 trillion or $7.5 TRILLION. My plan is a bargain at $1.8 TRILLION. The problem is that the Federal Reserve will not likely cooperate and maybe will fool us again by ordering Congress to pass a plan that looks very similar to this one but is deliberately designed to fail miserably. That way the Fed will be safe from similar proposals as this one for at least 20 years.
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 aknowledged, 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. If this plan had been implemented right away when Obama took office, it would have cost only $600 billion and 6 months. Now in early 2012 after 5 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 will cooperate and the two warring political parties will stop taking potshots at each other and make it a combined effort, the recession might be over already in as little as 9 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 resulting less employment. 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 and wavering is more descriptive of "government as usual".
The financial interests that rule most economies are not interested
The cost of only $1.8 trillion to end the recession in under one year is a bargain as compared to how the government is going about it. It will take at least 4 or 5 years and over $8 trillion of budget deficits to let the economy slowly heal itself. In fact the recession might even slip into total DEPRESSION if governments at all levels of jurisdiction are creating the disaster of austerity measures to balance their budgets. Congress and The White House are going about it under the direction of the large bankers that own the Federal Reserve. First these international bankers still want to plunder the economies of Europe, and they need about 5 years for that before they will allow all economies to recover again and start laying the golden eggs again which they will plunder in a next carefully orchestrated recession. Speaking about the Federal Reserve in this way has been ridiculed as conspiracy mongering so I will not touch that hot potato and instead say that the bankers that own or control the Federal Reserve and Central Banks in Europe and North America, are wonderful people that only have the best intentions at heart for those Countries and their economies and that they are not bent on plundering those economies at all. They can then be excused for their incorrect economic measures and thought of as economic tinkerers that know little about economics.
The recession would be over before the middle of 2013
If this $1.8 trillion plan is implemented before the middle of 2012, the recession will be over before summer 2013. Within 9 to 12 months the recession will be over and will no longer continnue to ruin millions of lives. It will 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 shotfalls. 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 the people that propose to take the right to create money out of thin air away from the Federal Reserve and return the right to create money out of thin air 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 support this EndingRecession.com solution.
Recessions are totally avoidable
Going into recession is completely avoidable with the logical economic insights explained above and below. With the same insights economies will be optimized to new record high prosperity.
First some step by step logic that has created this recession ending idea.
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 sales 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 income and will go out of business resulting in unemployment for their employees. Many of the remaining businesses will have to reduce employment in an effort to lower their overhead.
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 for.
Millions/billions of economic infrastructure is destroyed when all the business equipment is auctioned off at 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. Closing factories lose all their manufacturing machinery and production infrastructure that gets also auctioned at maybe 25 cents on the dollar.
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 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. That will lower the tax base for governments even more.
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 also will punish elected officials that propose more government spending. I am philosophically opposed to larger government spending, but recuctions in government should be undertaken when governments run budget surplusses 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 go along with). 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 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.
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 can be 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.
The surprising and unconventional solution for the most effective stimulus is that The Federal Government must give people the money to spend with a mandate to spend it.
How will 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 www.GiveGREEDaChance.com.
Procrastination is expensive
If the recession would have been ended by Bush with this same stimulus solution in the middle of 2007, when the recession had just started half a year earlier, 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 only 2 months in a row with only $250 each. If the Bush administration would have ended the recession 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 $152 billion in mid 2008 but it was too little too late and it was SPENT IN TOTALLY THE WRONG WAY. It 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 for 5 months. 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 banker 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.
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. 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 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 motoroil 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 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 will 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 likely 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 stimulus money.
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.
Whenever we (our governments) need more money we will never ever borrow it from banks. We will 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 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 almost 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.QuickGym.com
As a manufacturer I deal with economics hands on every day. The economic solutions do not come from academia's ivory towers.
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