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Have you ever noticed that the economic academics and pundits on television and in print are very confusing, opaque and paradoxical?  They use terms like growth, growth rate and GDP to describe the status of an economy that are nebulous and have defused meanings.  I call this “Econo Speak”.   They also never use the word people or their condition in describing an economy.

Let’s discuss this GDP which is always sighted when discussing the condition of an economy. The following is the basic definition:

“The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports.”

The high growth rate nations like India and China have very high growth rates over the last decade or so.  But, they still have over 1.5 billion people that are extremely poor.  There environmental conditions are bordering on deadly and their other services like medical care leave something to be desired.  (But, they are improving!)  Then, there is Europe and Japan with almost nonexistent growth rates that have few dirt poor people, education and medical care for all, with a reasonable environment to live in.

Where would you like to live??

GDP is just a measurement of overall activity of the economy.  It is just that, if you look at GDP per head, it might look alright, but it is just an average.  The billionaires bring up the average so it does not look like there is any poor nor does it describe the living conditions of most of the people.  The academic world has attempted to create different measurements-formulas describing the well being of the economy and its people.  None of these formulas has ever caught on so we are still using this archaic term that almost means nothing.

Our main concern is what is economically happening to ALL of the population.  As a businessman, this is in my own self interest.  I want to have everyone be a quality customer or client.  I am not even talking about having a quality community for my children and grandchildren to live in.

How do accomplish this?  We have to start with two basic assumptions.  First, Money is neither scarce nor expensive to create and distribute.  Second, we currently live in a world with enough resources and productivity to supply the basic needs of food, shelter, education, retirement assistance and health care for all.  This latter assumption is proven by all the excess capacity and production that becomes waste.  We just cannot distribute it properly because there is not enough money in enough peoples’ hands.

If money is not scarce, we should be pouring and spreading it throughout the main economy while keeping inflation in the range of 2-4%.  (Current money creation is just sitting in the commercial and central banks as reserves along with insurance company reserves).  We can issue money as direct currency issue, equity and debt.  We should use all three as a way of spreading new money around the economy. This diversity helps keeping inflation in check.  Also by using debt and equity, the Federal government gets a return which keeps excess inflation at bay that allows for even more programs to be paid for.  Therefore the Government has to keep a sharp eye on the inflation statistics and keep throwing the money out their each year for the benefit of the economy by paying for the basic needs of the population.  If inflation reaches a 4% annual figure then the government has to cut back its monetary creation or increase taxation.  (Federal taxation reduces the money in circulation)  If inflation is in the 0-2% range, then the government needs to at least keep the same amount of money or a slight increase to “main street” circulation.

These basic needs programs are NOT just the current safety net-disaster payments but actual basic support.  Can you imagine the quality of customers when they are relieved of a significant burden of food, shelter, education and health care cost?  Can you imagine the reduced strain on all businesses from wage increase pressures?  The economy would just take off!   So who cares what the growth rate is and how to measure it, only the inflation rate really counts.

The following are examples of distributing money through direct currency issue and paying for basic needs.   Other examples using debt and equity, plus a more complete explanation is found on our site in the “Monetary Reform Section – The Big One” on the right side of the home page.

  1. Food Stamps are basically a currency through a Food Stamp Credit Card.  It should be increased and issued to all except maybe the top income earners.
  2. A direct issue of money to help pay rent and/or transportation costs.
  3. Almost free public schools from Preschool through the 14th grade.
  4. Helping in the payment of Social Security checks.
  5. Almost free medical insurance/care.


The U.S. has a very successful history of issuing currency directly into the economy during the Colonial, Revolutionary* and Civil Wars.  The myth that a government cannot issue currency without causing excess inflation is a complete myth!  In fact, a recent study by Rogoff and Reinhardt (conservative economists) depicted a higher inflation in the 20th Century under the Central Banks than the 19th Century without them.

The following are a summary of my 13 points to keep inflation under 4%:

  1.  Diversity of monetary delivery systems.  This especially helps avoid asset bubbles and allows for more monetary expansion.
  2.  Continue to increase Production and Productivity.  The private sector is extremely productive and produces most of the goods and services we need or even desire.  The expansion and diversity of the monetary functions will aid in this production by providing, more capital for production than for collateralized loans.
  3. Reduction of high interest rate charges which is a cost of doing business and places an upward pressure on prices.
  4. Encouraging savings and investing for retirement rather than the over consumption of goods.
  5. Encouraging spending on personal services rather than over spending on goods.
  6. Having the Commerce Dept. creating and publishing an array of inflationary statistics.
  7. Having checks and balances in the creation and distribution of new money in the Federal Gov’t by the President, Treasury, Judiciary, Commerce, Senate and House.
  8. Voters will be able to cast their votes based on the inflationary management of the country.  The debate will be how much and where to increase or decrease monetary creation rather than the current philosophical debate.
  9. Currency and Commodity markets should be monitored in the long run to help control any excess inflation. (This includes Gold!)
  10.  Increasing taxation removes money from the system.  But, current taxation can be reduced when some programs are paid for by monetary creation!
  11. Increasing Competition keeps upward spirals of prices in check.  Increasing anti-trust enforcement and/or regulating monopolies and oligopolies help.
  12. Substantial encouragement of renewable and recycling to reduce the demand pressures on raw materials-commodities.
  13. Elimination of ‘fractional reserve banking”.  The current system creates money by making loans, but it doesn’t create the interest to pay for those loans which can’t get paid unless there is a supply of new money entering the economy. This forces more new loans causing inflationary conditions and asset bubbles.

Inflation should be at least 2% as any lower is too close to human error bringing deflation causing recession/depression and severe human hardships.  Another significant inflationary factor is Oil which is basically run by a Cartel who controls the prices.  It was the main cause of inflation in the 70’s.  We will always need to continue our efforts to reduce consumption of fossil fuels.

We have the ability to take care of all the people.  We have the technology to solve most of our problems including the environment.  We just need the money and the proper macroeconomics to implement the solutions.  We feel we have most of those answers at the Center for Progressive Economics.

*In the Revolutionary War, the Continental Congress’s currency was working well until two British ships in New York harbor starting counterfeiting the scrip.  It was a tactic of the British in their conflicts.





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