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How To Solve Our Unemployment, Economic, and Mortgage Problems

By: GE Christenson | Monday, February 18, 2013
Problems

This is NOT a POLITICALLY CORRECT or a serious proposal. Beware!

The Federal Reserve is creating $85,000,000,000 per month of new money to purchase toxic waste (mortgage-backed securities) from banks, support foreign banks, and to purchase US government treasury debt. This assists (bails out) banks, keeps interest rates low, and helps enable the government to continue excessive spending. Supposedly, it will benefit the economy and reduce unemployment. Perhaps another $85,000,000,000 per month, or more, should be used for direct assistance to employ people, assist families, and supplement mortgage payments. If money creation for the banks and government is good, then direct assistance to Americans should be even better.


Facts

We know that the Federal Reserve is creating, out of "thin air," about $85,000,000,000 per month to buy mortgage debt (bail out banks) and to buy US government debt (bail out politicians). Let's call this one Federal Reserve Stimulus Unit (FRSU). Such stimulus is widely believed to be good for bankers and politicians. Perhaps similar assistance would also benefit average people.

We know that Congress has sent stimulus checks to taxpayers in the past. It could be done again. We know that Congress has made some effort to help those struggling with mortgage payments, and Congress has created a huge food stamp (SNAP) and welfare program. Those programs could be expanded.


Let's Solve Problems


Cost for the Plan

Unemployment $80 Billion per month (about one FRSU)
Mortgage Assistance $40 Billion per month (about half a FRSU)
Family Assistance $50 Billion per month (about half a FRSU)
Congressional Approval Less than $500 Million in cash (peanuts)
Total Cost About 2 FRSUs per month


Benefits and Timeline

The bill could be written and passed rapidly if "politics as usual" were circumvented via the cash payoffs. Most Americans would see some direct personal benefit so they would generally be in favor of the plan. Banks and politicians would continue to receive their $85 Billion per month. If that $85 Billion per month is beneficial to the economy, then practically eliminating unemployment would certainly be highly beneficial to the economy and tax collection at all levels. Further, mortgage assistance that actually came to the mortgagees would benefit both people and banks, and direct additional family assistance would benefit most Americans.

All this could be accomplished in short order, without adding more government employees, and for about the cost of two additional FRSUs.

This could be a win-win-win-win solution.

Of course, there is always a downside with government programs. The current FRSU of $85 billion per month will accelerate consumer price inflation, and a 2nd and 3rd FRSU per month will probably make it worse. Regardless, the Federal Reserve has already created $ Trillions (injecting liquidity into the financial system); and a Nobel Prize winning economist has strongly encouraged increased "money printing," so the consumer price inflation issue appears unimportant to economists, central bankers, and politicians. It seems pretty clear that creating one FRSU per month is good for banks and the stock market but not for average Americans. Hence, an extension of the program and more FRSUs per month in direct assistance to average Americans is worthy of consideration.

If this additional stimulus is not sufficiently effective or if Congress believes there is a need for another round of stimulus, the Federal Reserve could organize a helicopter drop of freshly printed $100 bills over large urban areas in time for the next Congressional election in 2014. We airlifted $12,000,000,000 in shrink-wrapped cash to Iraq - we could follow that precedent and airlift $100,000,000 in freshly printed $100 bills to each of 120 American cities and let the police and firemen distribute them - just speculating...

Of course, the additional money printing will reduce the purchasing power of the dollar and that will drive the prices for gold, silver, gasoline, food, electricity, and most other commodities much higher, but ... the Fed is currently printing money anyway and so are most other central banks. If creating a $ Trillion a year is good, then why not double or triple it? And if creating a $ Trillion per year is not good, why are we doing it?

Clearly, QE 4 and more QE are necessary (official story). So let's double up on the FRSUs and solve important problems!

And while we are solving problems, please read Why Buy Gold? Then we should buy real assets to protect ourselves from the accelerating consumer price inflation and loss of purchasing power.

 

Author: GE Christenson

GE Christenson aka Deviant Investor
www.deviantinvestor.com

GE Christenson

I am a retired accountant and business manager who has 30 years of experience studying markets, investing, and trading futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me about timing markets, risk management, government created inflation, and market crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs using both fundamental and technical analysis. I offer opinions and commentary, but not investment advice.

Years ago I did graduate work in physics (all but dissertation) so I strongly believe in analysis, objective facts, and rational decisions based on hard data. I currently live in Texas with my wife. Previously, I spent 20 years in Barrow, Alaska, the northernmost community in the United States, 330 miles north of the Arctic Circle.

Copyright © 2012-2014 GE Christenson