My survey produced an interesting anomaly— several respondents felt that excessive consumer spending was the primary cause of the economic problems we face today, and that spending is not to be encouraged.

But the root problem they were correctly speaking to is the source of the spending money, not the spending itself. Spending is essential for demand creation, and increasing demand is what produces jobs.

So why we ask, does government remove the dollars from the economy before they accomplish the demand stimulus “thingie” (highly technical economics jargon)? Nearly half the survey responses observed that consumption taxes (The Fair Tax) are far more productive/creative than income taxes.

The other half wants to replace the IRC (Internal Revenue Code) with a Flat Tax on all forms of income. Both suggestions are simple, and quantum leaps better than anything being seriously considered by congress— “seriously” being the operative word.

A combination of the two— priceless, but later!

The single, easiest, fastest, biggest, consumer-spending instant winner bonanza is not even a twinkle in an old politician’s eye— there are far too few new politicians. Replace the Social Security Retirement Program with a plain vanilla pension plan, pre-funded by smaller, mandated employee contributions.

The current methodology is simple: it takes money out of our pockets (and our employers) puts it though governmental blenders, and spits out IOUs for a meager benefit at retirement. Why not let the private sector provide pension benefits to all employees under the direction of a trimmed down Social Security bureaucracy?

How? By purchasing Social Security Retirement Income Annuities (SSRIAs). Google “A Capitalist’s Social Security Reform” for the nitty-gritty details, but here’s what we accomplish:

We stimulate spending immediately by only withdrawing 3% of income from 300 million pockets and pocketbooks, and nothing from employer treasuries. We provide demand-push spending money and reduce demand for consumer credit.

And, looking forward an article or two, we collect a tax on every dollar spent in the economy— except those for food, healthcare, and higher education; even from our friends and neighbors in the Underground and Internet economies.

There are several other ideas on the more-spending-money-in-consumer-pockets agenda, and some thoughts about consumer confidence. It’s tough to be confident, for example, when you click the links between congress and business lobbyists.

It’s tough to be confident when we see Wall Street control its regulators, constantly produce the same speculative garbage, and reward its senior employees and sales persons from the carcasses of mutilated shareholder-owners and “hostaged” taxpayers.

These confidence destroyers can be dealt with, but first the rest of the story, on increasing consumer spending without credit abuse:

One: Reduce the interest rate on all mortgages at least twenty-five basis points, and adjust monthly payments accordingly. The banks owe us, and will make-up the difference from increased business activity.

For the rest of the article, please google the title.

Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.com
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”

Full value? To which individual valuers in which marketplace, and at what times and for what purpose?

Fiat money inflation (temporarily) benefits only those who are first to get the new currency – the politicians and their friends. From there, as the purchasing power of the dollar declines, each successive receiver and holder of dollars gets successively more shortchanged for his past real labor and savings. This is why counterfeiting – whether legalized or not is always morally wrong; it’s theft!

Mr. Peachey’s arbitrary floating abstractions need to be concretized – i.e., tied to perceptual reality. Fiat does not create real sustainable, stable, reliable value; only production of real, not fiat, goods and services can create real wealth.

This is the root problem of the mainstream modern economics profession: virtually no economist studies the root of economics – production and trade by individuals and incorporations. They’re too busy studying consumption for the statist folly of concocting ever more impossible schemes to centrally “plan” and manage” the flow of billions of individual trades.

Read J. B. Say, and learn, as Ayn Rand put it, that “When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others… Destroyers seize gold and leave its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values.” [like the FED] “Gold was an objective value, an equivalent of wealth produced. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked ‘Account overdrawn.’”

We need to return to free banking and privately issued, competing currencies. Then the quality of our money would be restored and its value would again be objective – set by millions of individual traders every day instead of by the whims of 12 Fed governors every 6 weeks.

Of course, the statists demand a monopoly on the issue of currency because if they had to compete with REAL money, they be out of business in a week and their giant looting scheme would be over.

Under a free market, only reckless fools would take Federal Reserve IOU Nothings in payment for their hard work. Abolish the Fed.

http://greensrealworld.blogspot.com/2008/11/americas-real-economic-chaos.html

But why did WWII end the depression? Oh, because government spending increased aggregate demand. That put the unused capacity of the nation to work.

Under serious recession/depression conditions deficit spending is indicated. The problem becomes it is addictive.