THE MEANS OF EXCHANGE
Stimulate the Economy Without Huge Deficits!
Our economy has been turned upside down. Instead of the enterprise-capitalistic economic system providing the needs of the citizens, the government is attempting to provide employment, social programs and economic stimuli for the economy with a huge deficit. Because of the government’s excessive spending, the government will have to either raise taxes or create inflation to pay off the debt.
A problem arises when Congress cannot keep their hands off the increased tax revenues when the economy comes out of recession and taxes are raised to decrease the debt. Instead of paying down the debt, they re-inject the money into the economy, thru programs and expenditures, increasing the money supply, creating an inflation economic crisis, that the increased taxation was designed to prevent.
There are many ways to decrease the money supply created with credit. Reduce the Federal government’s debt is one. The banks use federal government bonds, treasury notes and Federal Reserve paper money as reserves. The more reserves a bank has the more credit-money it can create. If too much credit-money is created the economy becomes unbalance and an inflation economic crisis is created. If a too small amount of credit-money is created, the economy becomes unbalanced and a recession economic crisis is created. I feel the best way to reduce the excessive amount of credit money being created during the inflation cycle is to have the income tax change as the economy changes automaticly with the Zero Inflation Taxation Policy. Read economic policy paper and comments Zero Inflation Taxation Policy.
Our economy has three economic entities that make up our enterprise-capitalistic economic system. The banks, financial intuitions and the Federal Reserve are the Capitalistic entity. It has control over the means of exchange (money), in the enterprise system. All businesses that provide goods and services are the enterprise entity. The other entity is the Federal Government. It is empower by the people to create money and provide services. The States and local governments, can only provide services.
Currently the federal government is injecting money into the capitalistic entity. The capitalists are using it to balance their books. The books continue to become unbalanced because the enterprise entity is having a deflation economic crisis, mainly in the housing market. It is the enterprise entity that needs the means of exchange increased to facilitate the exchanging of goods and services.
With the correct amount of the means of exchange, the enterprise entity will start working again. By balancing the means of exchange with the supply in the economy, the recession will end. The enterprise-capitalistic economic system works if it is correctly guided and it has the correct amount of the means of exchange available.
President Obama has advisers all around him. His primary economic advisors are from the capitalistic entity. He is being incorrectly advised. The capitalist are more concerned about balancing their books than providing the enterprise entity with the means of exchange it needs, which will allow the enterprise entity to work, there-by balancing the books of the capitalistic entity.
On our Federal Reserve note is printed IN GOD WE TRUST. It should read IN THE FED WE TRUST. The federal government gave its power over the money supply to the Fed and the capitalistic entity. The capitalistic entity creates nothing of value, only the means of exchange. It is similar to a gigantic bookkeeping establishment. The means of exchange only becomes valuable when a person creates more than what the individual needs and the resulting increase in production needs to be exchanged.
Both entities rely on each other to create an economy. The capitalistic entity has great power over the enterprise entity. Without a means of exchange, the enterprise entity cannot facilitate the exchanging goods and services, without using bartering which is not very efficient. Without the increased production that needs to be exchanged, by the individual or group, money is worthless.
Empowered with the control of the money supply, the capitalistic entity has the power of life and death over the enterprise entity. The capitalistic entity must operate in a manner that is honorable and wise for its own benefit and the well being of the economy. Since our money is a world currentcy, we must be extra vigilant to maintain our economy in balance or we will repeat history again and help disrupt the world economy, as we did in 1929, 1980 and 2007
The enterprise system is self-balancing. When too much production is created, it becomes unprofitable and production stops. The capitalistic entity does not know when to stop creating money. The more credit money it can create, the more profit it will receive, until the economy is damaged. The resulting damage hurts the economy (people) and the capitalist.
The Fed with its interest rate policies and the government’s misguiding tax policies are the people’s agencies that created the currant economic crisis, with the help of people that did not understand the dangers of credit. Add in greed and you have a perfect storm, heading for a major economic crisis.
I am the author of INFLATION THE ECONOMY KILLER (Amazon.com) I reversed my policies for inflation control to create policies to correct the currant recession economic crisis. High inflation, recession and deflation are all economic crisis, which are created when the economy becomes unbalanced. The policies to correct them are opposite of each other.
Our concern now is the deflation that is occurring in the real estate market, mainly the housing sector of the economy. To cure the currant economic recession crisis, homeowners must be able to increase their disposable income by refinancing their homes at a lower rate of interest than what the banks, Freddie Mac and Fannie Mae are currently offering.
It has always been the 90% of the population who spend their money and pay their bills that brings the economy out of recession. Helping the other 10% is a noble effort, but it is not enough economic stimuli to bring us out of this deep recession. When the disposable income of the 90% increases, with their good credit rating, they are able obtain credit, which expands the money supply, without the government creating a huge deficit. They can spend money on household goods and services, big-ticket items, autos and trucks ECT. With increased demand, businesses will increase production and employ the unemployed, increasing more people’s incomes. When the economy comes out of recession this will help the other 10% more than any government program.
The economy needs the real estate market. The housing sector is so important because it is the consumer and household formation that creates 70 to 75% of the economic activity in our economy. Our homes have become the value behind our money supply, just like gold was many years ago. The reality of our modern economy is that we no longer barter to exchange our goods and services. We use paper money or credit. If it is credit that you use as a means of exchange, the collateral must maintain its value over a long period of time, similar to gold. Our homes have served this purpose for many years until people changed policies to create more available credit.
I do not want to re-inflate the economy. Inflating the economy would only cause another economic crisis. By providing the enterprise entity with a low cost means of exchange, it will make housing affordable. It will bring more buyers into the market and eliminate the foreclosure inventory and reduce future foreclosures. With safe guards included, which are outlined in the Alternative Economic Stimulus Plan, the chance of another housing bubble occurring is practically nil.
Lowering interest rates does not cost anything. Low interest rates increases more people’s disposable income, by a greater amount and much quicker than deficit spending by the government. This policy puts people back to work faster and the recession does not get out of control. The government’s liabilities are decreased. We do not have to increase taxes to pay down the national debt or to decrease the deficit. With the correct policies enacted the economy will put people back to work and create more jobs as the population increases.
When the economy is correctly guided and is balanced, it will produce more tax revenues for federal, state, and local governments without raising taxes, as the California Congress has done. As more and more people are able to take care of them selves, and the enterprise entity provides the necessary services that are needed to make our economy more efficient, the government can be reduced in size and taxes can be lowered.
Credit cards are a convenient way to facilitate an exchange of a product or service. They should not be used to create extended credit. A person can only create so much economic activity based on their income. When extended credit is used, it puts a lien on future income, decreasing future economic activity, unless inflation is created that reduces the burden of the debt by making the payment a smaller percentage of the person’s income.
Credit cards should only create short-term credit, not more than 90 days. When the 90 days have elapsed the credit line should be closed until the amount owed is paid in full. The credit card companies will have less risk of losing money and will be able to lower interest rates. Of course, this policy can only come about if the consumer realizes the danger of credit, or the credit card companies become motivated by what is good for themselves and the economy, not by greed.
Other economic policy paper by the author are: 1.ZERO INFLATION TAXATION POLICY 2.ALTERNATIVE ECONOMIC STIMULUS PLAN 3.REPEATING THE MISTAKES OF THE GREAT DEPRESSION 4.HOW TO REDUCE OIL IMPORTS AND ECOURAGE THE CHANGE OF OUR VEHICLE’S PROPELLANT 5.STIMULATE THE ECONOMY WITHOUT A HUGE DEFICIT 6.LETTER TO US TREASURY TIMATHY GEITHNER 7.STABILIZE THE VALUE OF YOUR HOME
These articles are posted on http://www.economysflaw.wordpress.com/ Be sure you read the other articles and comments at http://www.americansolutions.com/ put my stage name in the search box, happyashell
The book INFLATION THE ECONOMY KILLER by Leonard Tekaat available at Amazon.com or call author at 661-619-4858 $14.95
Copyright by Leonard C. Tekaat all rights reserved