Sunday, January 25, 2009

A Stimulus Project That Works

A Stimulus Project That Works
By Jerome Grossman

President Obama is pressing for a quick jolt to the economy to make up for the dramatic decline in public consumption that has left our business system gasping. The dream of endless consumption of goods and services has no limits as our species chews up the planet in the race between endless population growth and the finite resources of Mother Earth.

In the current economic crisis, we are all Keynesians, followers of John Maynard Keynes, who believed that a program of government spending on public works would increase national purchasing power and promote employment. The latest proposal considered by Congress calls for spending $825 billion, including $550 billion "For spending on infrastructure, science, energy and education programs over two years” and $275 billion "For tax cuts for individuals and businesses."

That bill will not give Obama his quick jolt. In total dollars it is inadequate: The stimulus needs to be $1 trillion for each of the next two years. From past experience in the US and Japan much if not most of the income generated will be put into bank accounts or used to pay debts. The proposed spending on infrastructure et al takes time to organize and is subject to delays, sometimes as long as two years. The tax credits to business are unlikely to stimulate investment and employment, which depend on an increased flow of sales.

Furthermore, the Congress program is too complicated, trying to correct social deficiencies when the problem is how to stimulate a quick jolt to restore purchasing power to give business the incentive to hire workers and invest in equipment. First things first.

Here is a simple plan to accomplish the objectives immediately and effectively without a new bureaucracy. For numerical simplicity, assume that there are one hundred million families in our nation of 300 million people. Mail to each family a numbered coupon giving ten thousand dollars for the purchase of goods and services only, a total of one trillion dollars. The coupon must be used within 60 days, and then sent to the U.S. Treasury by the vendors within 60 days. Repeat: only for goods and services, not for deposit in banks, not for payment of debts. Every family would participate in the plan, would understand it, and would benefit.The coupon would be worthless if not spent within 60 days, encouraging immediate spending.

This program gives the economy an immediate jolt of $1 trillion. The operating cost is minimal. No delay to set up a bureaucracy. The U.S. Treasury and Census Bureau have all the names and addresses. Repeat the $1 trillion project in 2011 to encourage business by promising the continuance of the purchasing power.

We are all Keynesians now, Democrats, Republicans, and Independents. Let’s use a Keynesian formula and objective in its purest form. Will it cost too much? Professor Martin Feldstein, Harvard economist and chief economic advisor to President Reagan said, “Without that rise in government spending the economic downturn would be deeper and longer.” The production lost in a deeper and longer recession would amount to at least $5 trillion. The Keynesian formula will pay for itself.

3 comments:

RDAbrams said...

This is a horrible idea. Consumption of TV's is not the solution to a failing infrastructure and placing people in the work force. You aint going to get any employment kicker from this, except for bus boys at restaurants.

We need to put the money in the hands of state governments that have infrastructure ready to go over the next 24-months.

It would also be helpful if we picked two projects, the power grid and alternative energy systems seem logical and likely. A plan for the decade needs to be put in place that will, hopefully, kick-in after a couple of years and prevent a "Roosevelt Recession".

In any case stagger either the payments; use fractional payments, or stagger the full payments, albeit many will front run their checks.

Anonymous said...

This is a horrible idea. Consumption of TV's is not the solution to a failing infrastructure and placing people in the work force. You aint going to get any employment kicker from this, except for bus boys at restaurants.

We need to put the money in the hands of state governments that have infrastructure ready to go over the next 24-months.

It would also be helpful if we picked two projects, the power grid and alternative energy systems seem logical and likely. A plan for the decade needs to be put in place that will, hopefully, kick-in after a couple of years and prevent a "Roosevelt Recession".

MC-Shalom said...

You Bail Them Out, We Opt Out.


Dear, I should say Expensive Chairman Ben S. Bernanke,


All of Our Economic Problems Find They Root in the Existence of Credit.

Out of the $5,000,000,000,000 bail out money for the banks, that is $1,000 for every inhabitant of this planet, what is it exactly that WE, The People, got?

If my bank doesn't pay back its credits, how come I still must pay mines?

If my bank gets 0% Loans, how come I don't?

At the same time, everyday, some of us are losing our home or even our jobs.

Credit discriminates against people of lower economic classes, as such it is unconstitutional, isn't it? It is an supra national stealth weapon of class struggle.

Credit is a predatory practice. When the predator finishes up the preys he starves to death. What did you expect?

Where are you exactly in that food chain?

Credit gets in the way of All the Principles of Equal Opportunity and Free Market.

Credit is a Stealth Weapon of Mass Destruction.

Credit is Mathematically Inept, Morally Unacceptable.

You Bail Them Out, We Opt Out

We Want Some TARP

Opting Out Is Both Free and Strictly Anonymous.

My Solution: The Credit Free, Free Market Economy.

Is Both Dynamic on the Short Run & Stable on the Long Run, The Only Available Short Run Solution.

I Am, Hence, Leading The Exit Out of Credit:

Let me Outline for You my Proposed Strategy:


My Prescription to Preserve Our Belongings.

Our Property Title: Our Free, Strictly Anonymous Right to Opt Out of Credit.

Our Credit Free Money: The Dinar-Shekel AKA The DaSh, Symbol: - .

Asset Transfer - Our Right Grant Operation - Our Wealth Multiplier.

A Specific Application of Employment, Interest and Money.
[A Tract Intended For my Fellows Economists].


If Risk Free Interest Rates Are at 0.00% Doesn't That Mean That Credit is Worthless Already?

Since credit based currencies are managed by setting short-term interest rates, on which you have lost all control, can we still say that are managing?

We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.

In This Age of Turbulence The People Wants an Exit Out of Credit: An Adventure in a New World Economic Order.

The only other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.

It will be either awfully deadly or dramatically long.

A price none of us can afford to pay.

“The current crisis can be overcome only by developing a sense of common purpose. The alternative to a new international order is chaos.”

- Henry A. Kissinger


What Else?

Until We Succeed the Economy Will Necessarily Keep Sinking Into a Deeper and Deeper Depression


You Bail Them Out, Let's Opt Out!

Check Out How Many of Us Are Already on Their Way to Opt Out of Credit.



Let me provide you with a link to my press release for my open letter to you:

Chairman Ben S. Bernanke, Quantitative [Ooops! I Meant Credit] Easing Can't Work!



I am, Mr Chairman, Yours Sincerely [Do I really have the choice?],

Shalom P. Hamou AKA 'MC-Shalom'
Chief Economist - Master Conductor
1 7 7 6 - Annuit Cœptis
Tel: +972 54 441-7640
Fax: +972 3 741-0824

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