Friday, October 22, 2010

ReadMe a Hundred times

Our economic policies since the end of World War II have
(1) Restricted the quantity of money in circulation (to fight inflation) and
(2) Encouraged the use of credit (to stimulate growth).

Since the use of credit is no less inflationary than money, monetary restriction had to continue to an excessive degree. And since monetary restriction is harmful to growth, encouragements of the use of credit also continued to an excessive degree.

This analysis of conflicting policy explains not only our inexplicable debt, but also why we don't have the money to keep ourselves out of debt.

The proper solution to the economic problem is to correct the imbalance we have created -- to increase the quantity of money in circulation while restricting the growth of credit-use. Thus the solution includes "printing money," but only up to the point where monetary balance is restored.

1. Our policies encourage spending but remove money from circulation.
2. Because of policy, we use credit for money.
3. When we use credit, we accumulate debt.
4. We could reduce debt by paying it off, but
5. The Fed takes that money, to fight inflation.
6. So we're left with more debt, and less money.

From this analysis of the problem, a solution arises.

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