Posted on 05/15/2011 8:41:29 PM PDT by blam
I have no interest in keeping anything afloat. The current system is bad, immoral, and it has failed. I’d like it to crash — hard, so that we can begin to rebuild. I see deaths in the hundreds of millions in the next decade or so, and I see any effort to delay the inevitable as simply stupid. It’s coming, so let it come.
It is possible to get an economy back to good fundamentals in slo-no pain. However, it takes longer and costs more to do it.
It’s like paying minimal balances on your credit cards.
But what is the plan of action? In my humble opinion, we need to do the following:
1. Every government agency on the Federal, state and local level should be aggressively audited to look for bureaucratic overlap and agency size bloat and use the audit results to cut the size of government 30% now, with a goal of possibly as high at 70% within 4-5 years. For example, we should merge Social Security, Medicare and other national social programs into a singular Department of Social Services, which means a single-point access for all social services and eliminating a HUGE amount of bureaucracy, saving potentially up to US$500 BILLION per year in governmental costs at the Federal level.
2. Our income tax system needs to head towards the dustbin of history. We need to implement the Steve Forbes flat income tax NOW, and start a transition process that four years from now will repeal the 16th Amendment and phase out the income tax in favor of a national 28% consumption tax on new production goods and services, where 21% goes to the Federal government and 7% goes to the state at the point of purchase--essentially a modified version of the FairTax proposal that replaces income taxation at both Federal and state levels. This means it would encourage American residents to save and invest in the USA completely tax-free.
3. Our financial sector needs to be severely reigned in, given that it was the shenanigans of Wall Street that caused the 1929 and 2008 stock market crashes. The financial sector should operate like this:
a. Require real liquidity backing to trade in hedge funds, derivatives, credit default swaps, etc. or ban them outright as financially too risky.
b. Increase the minimum margin requirements for trading in commodities and stock futures to 20%, with 30% for strategically important items like crude oil, certain petroleum products (unleaded gasoline, diesel fuel and natural gas), certain foodstuffs (corn, oats, rice, soybeans and wheat), certain industrial metals (aluminum, copper, iron, nickel and titanium especially) and precious metals (gold, silver, platinum and palladium). Also, require that the buyer on margin must take delivery on 40% of the product.
c. Re-impose the 1933 Glass-Steagall Act to protect bank assets from the ups and downs of the equities market.
d. Revise the Sarbanes-Oxley Act to make it easier to do corporate initial public offerings (IPO's).
4. We need to start a decade-long process to phase out the Federal Reserve Note fiat currency and replace it with a new asset-backed US dollar, one that has the backing of gold, silver, platinum, palladium, copper and nickel (the most common metals used for coins and bullion blocks used in monetary transactions). An asset-based currency will far less likely lose value, as history has shown.
5. As part of the tax reform I mentioned earlier, this will allow private citizens to create their own financial "nest eggs" for retirement and/or medical bills. This will allow American residents to be weaned off dependence on Social Security and Medicare, which will allow both programs to be downsized in future years, dramatically cutting the cost of government.
6. Create a single national standard for environmental regulation, especially in terms of motor fuel mixes. For example, this will allow oil refineries anywhere in the USA to ship refined motor fuels anywhere in the country, saving many billions in production costs.
7. Repeal Obamacare and replace it with a new, privately-based medical insurance system where insurance companies can sell medical insurance policies over state lines on a regional basis, which will guarantee real price competition for medical plans in essentially every state. Also, impose tort reform for the medical industry, especially requiring the loser of the malpractice case to pay for all court costs; this would immediately cull all the frivolous lawsuits and keep lawsuits that have real merit like proven defective medications.
Implement this seven-point plan and our economy will be essentially booming within one year after the passage of these reforms.
My solution? Make Congress pay for it. Personally.
And if they can't...?
Debtor's prison! (Still Constitutional according to the 13th Amendment)
Cheers!
Those are brilliant ideas and solutions!
If the US dollar was not the world reserve currency, hyperinflation would have occur like Argentina, Zimbawe and Serbia. Problem is 70 percent of the world transactions is done in US dollars and there is no alternative. Euro is unstable, Yen is moribund and Chinese Yuan is not ready for international role. Instead I see the Feds do QE2 off, then wait and see how the US economy fare. Despite high unemployment, US corporations have made profits and will it be sufficient to take up the slack as the QE2 funds get used up and its policy affects wear off by fall 2011. Feds may embark on a QE on and off policy as the economy goes from gliding to faltering and rising cycle. It essentially is a slower tempo to inflate the US out of its huge debts.
In the meantime will the US gov make the necessary spending cuts to reduce the national deficit? I don’t think so.
In the meantime other countries may be making local arrangements to use alternative currency in lieu of the dollar because they know that the US is trying to inflate their way out of debt. The world will shed the dollar slowly or take up to five years studying and planning for an alternative. Either way the American middle class will see their buying power shrink as the dollar become less and less valuable.
Lurking in the background that can cause hyperinflation and collapse of the US dollar is a Black Swan event.
IMHO average Americans should maintain at least six months (more the better) worth of food and definitely 10 percent of their asset in precious metals in case hyperinflation hits. Historically it takes up to six months before the gov is forced to reset the currency. People with precious metals can exchange it for more new paper currency and their food supply will feed their families during the six months of shortages and price rises.
In addition, have a backup plan that is based on the 3 G’s, guns, gold and a getaway plan.
What we need to do is this:
1. Cut the deficit. It needs to be under $500B next year, and running surpluses within 4 years.
2. Complete regulatory reform. Especially in environmental law, but generally across the board. Business interests might be on equal footing with regulatory goals, and the courts and regulatory agencies limited as well as greatly reducing the RICO type activities our special interest groups in shaping regulation.
3. The tax code must be simplified and flattened, and also weighted in favor of new business startups, expansion, and small business. I think some type of national sales tax should be enacted.
4. The fed needs to quit printing money and giving it to banks and brokerages. Severely tighten Fannie and Freddie rules so we don’t restart the junk mortgage conduit.
5. Radical reform of all welfare programs to get rid of fraud and waste.
6. Ensure secure and reliable energy supplies with domestic drilling and exploration with favor given to extraction, refining and selling our oil in the U.S.
There is no magic here. All it takes is political will.
In fact I have no doubt we'll decline to pay the interest on that debt one day and outright default.
There is no will for it. Anywhere.
Great minds. :-D There was only one post when I started, it took me awhile to think thru so I didn’t cheat. You picked up some details I missed though.
sfl
Americans are spending massive amounts of borrowed money.
The money is supporting a significant percentage of Americans; perhaps 25%.
ANYTHING which reverses the borrowings will SIGNIFICANTLY impact the standards of living of all Americans, especially the 24% which are most directly being supported.
The economy overall would be severely impacted by the sudden decline in the prospects of 25% of our population if the borrowing ended. The stock market would plummet.
Based on the above reasoning, our borrowings CANNOT be significantly curtailed. The alternative is exactly what we see happening; the government is printing money to loan to itself and inflation, which is at 10%, is climbing rapidly. Hyperinflation is virtually a certainty with the purchasing power of savings, investments, and wages due for dramatic declines.
There will be those who maintain their wealth by purchasing assets with lasting value. It will be deemed "unfair" for them to have profited and their assets will be taxed to insure that they bear a share of the burden.
The rapid decline of the standard of living in the U.S. is not a pretty picture but it is exactly what happens to individuals who live beyond their means.
I think you are going to get your wish because this train is too far down the tracks to stop now. I hate to say it but I’m also thinking we just need to face the collapse and get it over with. I hope everyone is getting a year’s worth of food stored up and the means to protect it. Its going to be a very rough ride.
Yeah....and the "Trivia Quizz Game" for Economics has 400 questions....
and 1,000 answers.
Didn't I read that 41% of the money the government is spending today is borried?
"Based on the above reasoning, our borrowings CANNOT be significantly curtailed. The alternative is exactly what we see happening; the government is printing money to loan to itself and inflation, which is at 10%, is climbing rapidly. Hyperinflation is virtually a certainty with the purchasing power of savings, investments, and wages due for dramatic declines."
Someone else called this a 'liquidity trap.'
"There will be those who maintain their wealth by purchasing assets with lasting value. It will be deemed "unfair" for them to have profited and their assets will be taxed to insure that they bear a share of the burden."
My son and others that I know have invested heavily in real estate and I worry that these 'visible' assets will be confisticated and re-distributed....I also worry that at that point many Americans will be suffering so much that they will agree with punishing the 'greedy' and support the confistications.
That's how I used to think, but eventually came to realize that it is more appropriate for the American people to feel this pain. After all, it's the American people who elected these buffoons. :(
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