Center for progressive economics

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CPE Articles, Essays and Position Papers


— Page 8 of 10


Education is very, very important to individuals in a capitalistic system – especially math and science education in our high tech world. It is also very important to a democratic society in general. But, it is only one of the important components for a successful economy. Brazil, Russia and India – before recent economic booms – had well-educated populations with nominal success economically.

What is important in the United States is that we must begin to educate the general population in matters of personal finance and capitalism. We live in capitalistic society and world. The more educated the public is – the less reliant they will be on government-fiscal programs. Every high school student should be required to take a course in personal financial planning in order to graduate.

Since money can be created at no cost by the government, except for excess inflation, and education is a primary social policy, the government can make long-term college loans – 20 to 30 years – at a cost of about 3%, with repayment starting after graduation. The interest charge just covers administration costs and defaults. The government does not have to make a profit and it does not matter how long it takes to be repaid, as long as it is repaid. This allows almost everyone to afford a student loan and relieves the burden on the fiscal side of government.


Beware of economic Statistics and Formulas. They reduce the human economic conditions to numbers and we over rely on them. They can be unreliable from errors in collection and they can be interpreted in many different ways. Most of the economists do not agree on their own definitions like growth and productivity. The savings statistics are also very misleading. They do not include pension contributions and subtract them when they are paid out. They also do not include investments. The highest savings rate in the world is in Japan, which has been in a deep recession for 15 years. The inflation statistics are the most important. Since the cost of producing money is basically the inflation rate, we have to carefully monitor these statistics to insure a reasonable amount of monetary creation.


Ownership should be encouraged for everyone in a capitalistic system.  It is very difficult to continue to raise wages so that workers can save and build wealth. Therefore, the government, to promote ownership by every citizen, should implement laws and regulations that enhance that outcome. Not necessarily direct ownership in business and real estate but in stock markets and other equity avenues. We should continue to encourage all pension, profit sharing, ESOP, 401k, and IRA plans. In the long run, it will mean less reliance on government fiscal services.


Moderate inflation is good and excess Inflation is bad. Growth and wage increases do not cause inflation in the overall economy. The economic boom in the 1990s proved this. The only thing that creates excess inflation is too much money issued by the banking system and Federal Reserve chasing an inadequate supply of goods, services and assets.


Since most countries have a national debt and annual deficit, the budget does not really count.  A monetary sovereign nation can have revenues from creating money without debt, taxes of all types and usage fees.  The key is not creating to much money with to low of tax and usage fee revenues.  It should be the major job of Congress with the President to protect the purchasing value of the currency (excess inflation) with the appropriate balance.


In the not too distant past, certain principles of money were not subject to alteration by society’s money managers. They might be ignored or forgotten for a time but they could not be repealed. One of these principles was the ancient biblical injunction against usury. The definition of usury may have vacillated over the centuries but the moral meaning was the same. When lenders insisted on terms that were sure to ruin the borrowers, this was wrong. This was usury.

There were practical, as well as moral reasons, why usury was considered a sin. It was more than a social plea for fairness and generosity from the wealthy. No social system could tolerate usury, not as a permanent condition, because it led to an economic life that was self-devouring. The money monger collected his due until he owned all the property and the peasants had nothing. No one could really survive. Who would buy from the money monger if he had all the money? And what kind of life would the peasants have?

We have had usury laws in our country. Currently there are none.

Consequently, moneylenders can charge as high a rate of interest as they want – 20%, 30% or more. Usury laws pegging the highest rate that can be charged to the Federal Reserve Funds rate must be enacted to preserve the buying power of the quality customer and reduce bankruptcies. Those rates must be reasonable for both the lender and the borrower.