I have an idea to stimulate the economy that falls into the "democracy is the worst form of government except for all the rest" category. It's utterly unfair and goes against all of my principles but for its two redeeming virtues: (1) it will work, and (2) it will cost a lot less than the plans currently in development.
Others have probably thought of this, too, though I haven't heard of it. I thought of it when I happened to look at the total consumer debt on the federal reserve site. Here it is:
Posted January 29, 2009 8:15 p.m. pst
Another bad economic stimulus proposal
A very bad idea
How much will the bailout cost? Bottom line estimates range from $4 trillion to $8.5 trillion.
That's far more than the $2.6 trillion in total American consumer debt reported by the Federal Reserve. So why not just pay off all of that consumer debt, instead?
It's a very bad idea, but we need to jump start the economy somehow, and this will work.
The current stimulus package looks a lot like previous bail outs, and look where that got us. It will simply perpetuate the boom-bust cycle.
Another boom and bust?
One problem with the various economic programs and stimulus packages we've seen during the past several administrations, as some pundits on both sides of the aisle have noted, is that there has been nothing to sustain the middle class. Including this one.
As a consequence, another bust will follow. Like the Great Depression.
But where World War II bailed the nation out of depression because the "industrial" part of the military-industrial complex was located in America, where it put American women to work, after which they were pink slipped in a very sexist but also very effective maneuver to put the returning men to work supporting their families.
That raised up the middle class like never before. Betty Friedan's admitted-lies about the mysterious "feminine mystique" buried the fact that war, home grown industry and moderately patriarchal institutions led to a golden age for the American middle class.
Back to the Future?
No, I do not want to ever go back to a time like that again. Sexist double standards are and should continue to diminish. For both women and men.
Nor is war the answer to our economic problems. Now that so much industry has been outsourced or relocated to other nations, prosperity through military conquest is no longer an option.
But for any economic stimulus to endure it has to raise up the middle class. The middle class has taken it in the shorts during the past 30 years. With that in mind, I would like to make an immoderate proposal.
An immoderate proposal
According to the Federal Reserve, current total consumer debt in America stands at about $2.6 trillion. That's less than the amounts that the current stimulus package is expected to cost.
Why should the nation go deep, deep, deep into debt for programs that will take a while to work, when for 1/2 or maybe 1/3 the price the government can simply buy out all the consumer debt?
Now I think this is a very bad idea. No, seriously, it's horrible economic policy. But so is what our government has already done and is preparing to do. The difference is that it will unleash a cash-strapped middle class.
Won't that be bad? Yes and a qualified no. It would be bad to loose unrestrained spending by formerly debt-laden consumers. Credit would have to be severely restricted. No more reckless abandon.
The good that will come from this won't be more credit, but more cash. Freed from mountains of debt but restricted from diving back into debt, American consumers will start to spend cash, again. That will both stimulate the economy and raise up the middle class.
Yes, this is simply a transfer of debt from us as consumers to us as taxpayers, but the plans in place now call for leaving the credit debt in place while adding more taxpayer debt.
As long as a consumer debt relief plan is coupled with sound credit policy, the economy will start growing, the taxpayer debt will be paid off and banks teetering on the brink will un-teeter.
As bad ideas go, it's not that bad.
You need to know
A lot of squawking heads claim that they never saw the meltdown coming, nobody saw it coming. Hogwash. In 2005 my dad and I were talking about the coming bust of the real estate bubble, and on June 15, 2006, I testified before federal officials at the Skyview High School in Vancouver, Wash., that "a severe recession is coming."
You can download the video of that under the title, Cowlitz Indian Tribe Casino Project 6-15-06, at http://www.cityofvancouver.us/cvtv/cvtvarchive/default.asp?subfolder=Community_Events/2006_Events. If you just click on it you'll be waiting for it to stream. It's faster to download it and watch it on your computer. My comments are at 1 hour, 25 minutes and 26 seconds into the video.
How did I know? My background is in business, economics and politics and it was obvious to me. But I also read a lot and strongly recommend NewsMax.com. In their Financial Intelligence Report, their CEO, Christopher Ruddy, has been exactly right about the economy.
Copyright © 2009 by Rod Van Mechelen; may be redistributed with attribution to the site and author.
By the way, when I got tired of hearing Bill O'Reilly claim that he never saw this coming and that nobody did, I emailed to call his blarney and to challenge him to get Christopher Ruddy on his show. Yea, like that'll happen. I like Bill, but sometimes he can be such a nut burger.
I know everybody will poke my proposal full of holes because I've already done it. It's a socialist sieve and I hate even suggesting it, but it's the least bad alternative.
It absolutely would have to include imposition of credit regulations that make sense, like caps on the amount of debt, requirements for down payments, etc.
Yes, I would couple it with huge tax breaks for small businesses, tax credits for home buyers, and tax credits for home investors: current code discourages investors from buying houses and turning them into rentals, and the market really needs that service right now. Of course we need tax breaks on capital gains and in a lot of other areas.
I accept and support all that, and utterly agree that my proposal is hideous. But it will cost less than anything else on the table and will be like hitting the reset button on a frozen Dell Inspiron 1720 running Vista Home Premium.
Not that I would know anything about Dell Inspiron 1720s running Vista Home Premium. ;-)