Right now, all money is created as debt. Therefore, NO money is created to pay the interest on the initial principal.
If NO money is created to pay the interest on initial borrowed money, that means we have to borrow to pay interest.
Borrow to pay interest? Madness.
We simply can't borrow our way out of debt.
In addition, when a principal payment is made, that money is extinguished from circulation - it no longer exists for anyone to use. That puts a constant drain on the economy and forces more borrowing. No borrowing, no money. So there is a constant drain on the system that becomes very obvious when lending slows down - a contraction of the money supply as loan principal payments are made by many Americans, every month, and fewer loans are made.
SOLUTION: Monetize the Production of Infrastructure
We need SOME money in the economy that is not initially created as debt - otherwise we can never pay off all of our debt and the debt must continue to grow (now our total debt exceeds the GWP or Gross World Product. The whole world working all year can't pay our debt, how can a country in a deep recession pay it? It can’t) We can get debt free money into the system by "monetizing" the production of infrastructure.
HERE'S HOW: Pass a law to authorize the following. 1. The People need a bridge built (this will work with any infrastructure - roads, sewers, electric grid, desalination plants). 2. The RFP (request for proposal) is issued by the state or federal government and the bid process concludes with the winning bid. 3. Congress authorizes the Treasury to deposit newly created money, in the amount of the winning bid (electronic bookkeeping entries, just like they use now - only NOT as a loan. New Debt Free Money), into the transportation account (state or federal). 4. The government entity receiving the new funds pays the contractors, just like they do now. 5. It's NOT a loan. It's direct funding with newly created debt free money. 6. New money flows into the economy, creating jobs, stabilizing banks and growing the economy. 7. It is not inflationary because it is matched with production - the bridge! That is real wealth (raw resources + innovation + labor) that everyone can use. 8. The government entity can use the same principle to pay for current projects and to buy back the existing bonds from bond holders and thus eliminate the debt on their books that goes for infrastructure, helping to balance their budget.
BENEFITS: Millions of Jobs/Stabilized Banks/Balanced Budgets/Increased Liquidity/Economic Leadership/And A New Infrastructure Rebuild! – Without Debt.
It's quite simple, actually. Now, we have to borrow to have money. We go deeper into debt and that causes a lot of problems for everyone - borrowers AND lenders. So, stop. Create some money that is not debt and does not benefit any special interest group - and everyone uses our infrastructure, so no special interest there! So, pay for it outright, without borrowing (no need to when government can create their own money); stop hiking up the debt. Banks do that right now - they create new money when they make a loan. The bridge is an asset - real wealth! Fund it directly with newly created money.
There is NO logical reason to have a shortage of money when we can create all we need (it's a computer keystroke!).
A change of mindset, really. It will not tear the fabric of the universe to have some debt free money in the system so that we can pay down some of this debt and put people back to work.
"Yes We Can!"
Comments (4)
The problem is that government can always find projects to print up money for that are really dumb: bridge to nowhere, for example -- and I'm sure the Dems have their own.
Better idea: finance it all with bonds. If you can't find a buyer, it's a dumb idea. If no one wants to buy, then it's probably because it won't create enough wealth (through time and gasoline/money saved, as with a bridge) or revenue earned (from people buying the oil, natural gas, or water, as with a pipeline).
Bonds are not a better idea. Here's why:
Bonds = Debt.
They are the same OLD idea.
We cannot solve a debt problem with more debt.
tomgoldie - If the government builds a "bridge to nowhere" and it comes out of your tax money or they have to borrow (bond) increasing debt to do it, then you have every reason to oppose it. But, if the money does not come out of your pocket and the local government (accountable to the people) decides to build a bridge, and it provides jobs, lowers debt, increases our country's wealth and answers an infrastructure need - why oppose that? Hard to imagine supporting more debt, fewer jobs and crumbling infrastructure, but maybe some do.
The issue is NOT wealth - we have an abundance.
The issue is money. And, using debt for money.
Since we use debt for money (debt is generated every time a loan is made) we have no chance of getting out of debt.
We cannot solve the problems we have with the same level of thinking that got us into them.
If we are going to restore our economy, we have to have a source of debt free money. Gold might work, but there is physically not enough of it in the world (158,000 tonnes) to pay off our debt and use it as a general medium of exchange.
Now, we borrow electronic digits, at interest, for everything - all money can be traced to this genesis. So, use the same thing - electronic digits -just don't borrow. No borrow, no debt.
All the benefit. None of the caustic debt. A reasonable, new solution that we can begin right now - at NO COST!
26. Infrastructure Works Programs: United States has a large problem with aging infrastructure, such as bridges, airports, roads, and facilities. Much thought as to where to spend public funds that would be liberated from the excessiveness of the defense department. Public works projects help provide jobs for Americans; this is the most direct form of benefit that the Federal Government can employ to improve the lives of its citizens. These types of programs must utilize a free open bidding process with American agents/companies, whenever possible. Painted rust syndrome is an American problem. Everyone must realize that most every major building and structure in our modern world was never designed to last more than 100 years without continuous and regular maintenance. Should mankind die out, very little will be here to indicate a thriving race after a few hundred years of weather and elements.
I like your concept but hav a slightly different approach that may work - Instead of giving billions of dollars to companies that will squander the
money on lavish parties and unearned bonuses, use the following plan.
You can call it the Patriotic Retirement Plan:
There are about 40 million people over 50 in the work force.
Pay them $1 million a piece severance for early retirement with the
Following stipulations:
1) They MUST retire. Forty million job openings - Unemployment fixed.
2) They MUST buy a new American CAR. Forty million cars ordered - Auto
Industry fixed.
3) They MUST either buy a house or pay off their mortgage - Housing Crisis
fixed.
It can't get any easier than that!
If more money is needed, have all members of Congress and their
constituents pay their taxes...