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It is of interest to the Observer that the review this week brought back memories of the controversy historically about what exactly brought us out of the Great Depression. Was it the war? Was it the programs of FDR? Was it spending?
The causes and the solutions of the Great Depression are still a hotly debated item.
My take on it is that the cause was correctly described by John Kenneth Galbraith in his book "The Great Crash" where he named the disparity of wealth as the major cause, and....... this disparity is matched by that of the last ten years.
My take on the spending is that the programs of FDR alone did not bring the US out of the depression, but the transformation of the US in its technology ---think of the inventions---sonography, aerospace, medical innovation, construction and computers...etc. Out of the code breakers came the computer industry as we know it.
We need the same sort of transformation today. And Congress is wrestling with program proposals---some of which are NOT innovative and transforming but rather the usual lists of political interest groups. It is difficult work---trying to fashion a list of the NEW.
Saturday, February 07, 2009
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I'm concerned with the tunnel vision the President has on this issue. Not the obvious problems, but that by spending 900 billion dollars on projects that will give a boost to specific areas in specific regions. Everyone says how something needs to be done. Does it? I keep hearing about the top economists say we must do this or else. How many these top economists have a proven track record on economic turnarounds when dealing with the beast we have today. The Great Depression wasn't based on sub-prime mortgages, bad 401K investments, a non-manufacturing society, and depending on China to buy up our bonds. Rome wasn't built quicker because more money was borrowed and spent. If the blue ribbon economists think building a new Department of Homeland Security Building is good for my financial being, then maybe they know formulas that others don't.
ReplyDeleteIf Mr. Obama was truly looking to get the economy jump started with 900 billion dollars, my 2 credits of economics classes at MATC might come in handy.
1. Figure out how many people paid income tax in 2007. Create four columns based on how vested they are in Social Security, 100%, 66%+, 33%+, and 32.99%-.
2. With that information you will determine how many people, and how much money they will receive in the form of a "gift card". This card will be used for purchases only, and will expire within one year.
3. You will not receive all the money at once, it will be deposited on the card bi-weekly for a total of 12 weeks. You can spend it when you get it, or let it roll for 12 weeks then spend it.
It needs to be spent within one year from the date of issuance.
4. It would be used in the same fashion as a Visa/Master Card. You would have a unique pin number and need I.D. verification to use it.
5. Whatever funds that were not spent within one year would be dispersed to the local governments of the non-users. It would then have to be spent as part of their education or public safety budgets.
Nothing is foolproof, but this way Fairbanks, Alaska and Bangor, Maine have a guaranteed impact on their economies, not just hybrid vehicle manufacturers, or ice breaker ship designers.
If you sincerely believe that spending money is the way to jump start this country, then, why not?
It will be spread across one year, it will cover anyone who has earned a legal living and reward them based on their previous contributions. It will limit people who would have spent all the money at once and then have nothing. This system will force them to spoon feed whatever money they receive over at least half a year to limit a big spending spike.
If they want to spend our money, I think this is how it should go. Personally, I don't think we should do anything, and let capitalism do the work.
I like your ideas.
ReplyDeleteThe program you suggest would be of no use to the political class. Washington power brokers would not get the benefit of allocating funds to their supporters, and even worse, would expose themselves as redundant or even useless.
So, never happen.
The Wall Street banking crew ran the previous administration in banking and finance matters and runs the present administration in such matters as well. Those guys will never give up.
Bear Market Trader