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My earlier posts on the subject: Here and here and here and here and here and here.
Posted at 09:32 PM in Financial Crisis of 2008, Private Banks | Permalink
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This is a copy of the letter I originally emailed to the President, several key Congressmen and women, and news agencies, with no response. I am now sending it out to everyone I can, hoping it won’t be discounted before someone qualified will take a moment, to investigate and evaluate the concepts. Someone will have the vision. Granted, these are radical ideas, but radical measures are needed, and quickly.
To the President, or anyone who can reach him,
I previously wrote to you, about ideas I have, hoping you could evaluate them. The President keeps saying he wants everyone’s ideas, but so far, no response. Since then, in my economics history reading, I think I may have found something, a method that’s been used successfully to stem economic collapse in other countries, and in several banking circles, during our own Great Depression. Basically, it’s the introduction of a temporary, substitute currency, like a scrip, that the government can give out freely to its people, to spend like the US dollar. This idea was originally detailed in 1933, in the US, by Irving Fisher, the prominent economist. Silvio Gesell, a German “quasi-economist”, used one such currency, the wära, to revitalize Schwanenkirchen, a Bavarian coalmining village, in 1931. It worked and prosperity returned to them, after which, they phased the wära out. Here's a link to a website about it:
Apparently, Roosevelt also considered the use of a national scrip, but opted for Federal Reserve notes instead, possibly a mistake that may have prolonged the depression. But some people saw the potential of scrip, and there were locally used versions that worked very effectively, and quickly, within their small circles. A national version would be more far-reaching and effective. Below is a link to a historian's EBAY website. His narrative details Roosevelt’s actions. Contacting him directly to pick his brain would be a good idea. He sells original notes of scrip online.
So how could we do it here?
Introduce a temporary proprietary currency, or substitute new money, which the President would decree to be legal tender, like cash, until the emergency eases. The government would distribute it directly to the people, to spend at the stores, for food, bills, vehicles, construction, mortgage payments, wherever. The ripple effect would immediately stop the meltdown and kickstart the economy. Give each household, every homeless family, a designated amount each month, according to their individual needs. The only requirements would be that they spend it that month, to get the next month’s allotment, and they must be actively, and verifiably, seeking their own new income sources. An agency (new jobs!) will be needed to administer and monitor this process.
The new money wouldn't replace the existing, but work side-by-side with it. People could use either one, but they must spend their Scrip allotment every month. It would only be for the US, not a world currency, and slowly, as things picked up again, we would phase it out, back to the greenback.
Using Scrip would also stop inflation and fluctuations on the USD, and it would stop the need to borrow trillions from scary sources. The scrip flow would eventually terminate at the banks, for eventual exchange to the Fed for USD.
This brings me to the second part of the plan: the banks. Instead of inundating them with cash, and hoping they’ll decide to ignore the present freefall, and use the funds to begin lending again, federally guarantee the loans, at the bank-to-bank level, and to documented, responsible borrowers. With the infusion of the scrip making people flush with cash, and freely spending it, the banks would free up credit.
I don’t think I’m off base with this. Please, please, for all of our sakes, check out the above websites about this method, and share these ideas with others for evaluation. The positive changes would come fast, but we must act fast. It should be becoming evident that, because of the speed and scope of our economic collapse, the bailouts will be needed monthly. They only temporarily alleviate the symptoms, not the cause. We need to address the root of the problem: the flow of money. Bail out at the root, the American people. But don’t use USD. That will cause major inflation. With scrip who cares if there’s inflation, it’s a discard after things get going again.
570 Ellis Ct
Sebastopol, CA 95472
Greg Glider |
March 13, 2009 at 02:13 PM
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