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Bank issued money
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Government issued money (US
Money)
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Federal Reserve Notes
(This is the paper money in your pocket right now)
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US Notes
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Federal Reserve Bank Credits
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US Bank Deposits
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Deficit Reduction and cancellation of
sequestration budget cuts
1. Starting on the first day of the quarter beginning
after passage of this act, (i.e. either Janm1, Apr 1, July 1, or Oct 1), and
continuing for a period of 10 years,
the quarterly budget deficits will be
partially financed by US Money, to be issued
INSTEAD OF US
Treasury Bonds (that is, by bo, at the rate of $100 billion per quarter (roughly
$1.54 billion per workday). Hence annual
deficits will be reduced by $400 billion per year or $4 trillion in ten years’
time.
2. New US Money issues (backed by past or future economic output) will be itemized in the federal budget as
income to be totaled with tax receipts, and included in budget legislation
to be submitted and approved by Congress.
3. Estimated deficit (i.e. borrowing) reduction during the
ten years will be $400 billion per year.
Hence the deficit reduction requirements of the Budget Control Act of
2011 will be met in about four years instead of ten years. Hence the sequestration budget cuts scheduled
to begin on Jan 1, 2013 are hereby canceled.
GREEN MONEY CAN AVERT
THE FISCAL CLIFF (by reducing the deficit)
In the example
developed below, issuance of government
money is done in a gradual way by “ramping up” the rate of green money
injection on a quarterly basis over a period of a year or two so as to enable a
smooth transition to be made. Since
government money issued specifically to partially fund the deficit would count
as deficit reduction dollar for dollar, the deficit reduction achieved would be
equal to the amount of government money issued.
Under the plan
given in the proposed Greenback Renewal Act, the deficit reduction during the
first year (given current conditions) would be about $652.5 Billion and deficit
reduction during the second year would be about $1.3 Trillion for a total of
$1.9525 Trillion in the first two years alone.
By the end of the first quarter of the third year, the $2.3 Trillion in
budget reductions required by the Budget Control Act of 2011 ($2.3 Trillion)
would have been accomplished, thus preventing the sequestration budget cuts
that will be so harmful otherwise. Since
the time frame for the $2.3 Trillion deficit reduction is 10 years (not three)
the rate of ramping up of the green money injection could be cut in half or
even to a third of those shown in the example and still satisfy the
requirements for avoiding the sequestration budget cuts.
When population and hence the work force
continues to increase, and technology advances lead to productivity increases
as well, it follows that real output capacity of the economy is going to keep
increasing for the foreseeable future.
This being the case, as we
have seen through analysis of Irving Fisher’s money exchange equation (see full document at: http://monetaryreform-taskforce.net for
specific math) , the money
supply is going to have to continue to increase at about the same rate in order
to maintain stable prices.
When unemployment is high, it is essential
that some of the newly created money
enter the economy through funding of the federal deficit, so that the money is
directed at those individuals who need it the most, and at those activities
that will provide the greatest stimulus towards future growth of the economy,
e.g. infrastructure projects and breakthrough technologies.
The federal
government has the power to create money for the economy, and the need to do so
to support growth and pay down the debt is greater now than at any time since
the Great Depression in the ‘30s. Our
next President should be one who understands that difference, and who, unlike
FDR, will stand behind ” green money” funding
of a significant part of the deficit as the most effective way to bring the US
economy back to health.
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