Saturday, May 30, 2009

A Letter To The President


A Letter To The President Of The United States

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.

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/Lower Taxes/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!"