Tearing ourselves away from the photographs of Barack Obama and Michele-with-one-l Bachmann trying to show each of them has the common touch ("Obama and Bachmann Step Up to the Plate on Dueling Road Trips," The Wall Street Journal, 08/18/11. A1), we are left with the impression that there must be something more to a presidential campaign at a critical time in history than showing how you, too, can chow down at the local eatery.
Okay, the Washington Post for once managed not to run the same story as the Wall Street Journal, and actually had some hard news: Obama's new proposal for economic stimulus. In a nutshell, cut taxes and increase spending.
It's worked so well up to now.
Anyway, there might be one or two things wrong with the president's plan to stimulate the economy by cutting taxes and increasing spending. Like, for one, wouldn't that increase the deficit . . . and wasn't it the deficit that just caused Standard and Poors to downgrade the U.S. credit rating?
And how about them jobs? Jobs that are created by artificially stimulating demand through inflation tend to disappear just as fast as they were created once the stimulus money runs out.
Is there a solution that doesn't rely on trying to get out of a hole by digging it deeper? Well, you know that we have something, or we wouldn't have brought it up. Take, for instance, the wise words of one of the gurus of the Just Third Way, Dr. Harold G. Moulton, president of the Brookings Institution from 1916 to 1952.
Moulton pointed out in 1936 — which is when he predicted the "depression within the depression" — that there are two keys to sustainable economic recovery. These are, one, employment and two, production. Further, it must be real employment. The employment must increase production of marketable goods and services, not just provide income for doing an unnecessary job.
If you want a stimulus package, there is more than enough in savings to do that without the artificial stimulus of inflation. Savings should be used for consumption anyway, not reinvestment. Financing for feasible new capital formation should come from commercial bank rediscounting of qualified loans at the Federal Reserve — you know, what the Federal Reserve was invented to do instead of financing government spending.
And, of course, as you are aware, Kelso and Adler added that all new capital should be broadly owned to stimulate demand naturally, with the acquisition collateralized with capital credit insurance instead of savings.
CESJ came up with a proposal for a "Capital Homestead Act" that would rebuild the economy, restore the tax base, eliminate the deficit, and pay down the debt. And all without inflating the currency or putting it on the backs of the taxpayers.
Now — do you want a "stimulus" that makes things worse, or a genuine stimulus that makes things better? It's up to you.