#7 What I've been pointing out for a while now is that since WWII, the Democrats have relied on inflationary spending sprees, and the Republicans have relied on economic growth, as the *only* two means to support and balance the post-war "easy credit", leveraged economy.
But this cannot continue, because it created a debt bubble with no mechanism for reduction. This could have possibly lasted for many more years, if it was limited to just the US government.
But the fools allowed it to be used in unregulated and less regulated markets as well. This turned a bad chronic problem into a severe and acute problem, worse by more than a factor over even the US government's problem. Running into the hundreds of trillions of dollars of unsustainable debt.
There is no way of "fixing" things the way they are now, so the only possibility is to segregate the "real" economy from the leveraged economy, and let the leveraged economy completely collapse.
The leveraged economy cannot even be allowed to try and survive, it must be wiped out entirely, because until that happens, there is no possibility of restoring the real economy. If any parts of the leveraged economy survives, it will parasitically draw the liquidity out of the real economy like a malignant tumor, and destroy it as well.
The way to segregate the two economies is with regulated currency control. Virtual money is inextricably tied to the leveraged economy, so the real economy must rely on physical cash.
At the consumer level, there is only the fraction of the cash we need, so there is a severe cash deflation in the near term. However, at the "big money" level, the government will need to issue very high denomination bills that can only be transferred with Treasury Department permission. $100k to $10M bills.
Only real economy corporations will be provided these bills in exchange for their virtual funds, and they will guarantee both that these corporations cannot go bankrupt, and that they retain 100% collateral for any loans they need to operate.
This is a government backed real corporation insurance policy. Any virtual money beyond this limit the corporation earns or uses is up to it. But it cannot spend those bills, and they cannot be taken from them, except by Treasury permission.
The leverage economy corporations will go to any lengths to try and obtain these bills, but even if they take over a real company and loot is virtual liquidity, it cannot take and use these bills for its own purposes. Even if they buy the real company, the government just invalidates the bills, unless that company continues to perform its real economy function.
This real economy insurance will also make the restoration of American heavy industry very stable, as once a new corporation is accepted into the real economy group, its existence is assured far into the future, until eventually the high denomination bills are redeemed for good. |
Former President Bill Clinton said Friday the U.S. government has no choice but to spend its way out of its worst economic crisis in decades.