Optimizing America

How To Engineer the Government Out of Debt…. The Debt Solution

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We live in an economic system engineered to prop up the financial class. Many pockets of everyday life could be optimized if it were not for structural constraints put in place by the bankers, stock brokers, and Federal monetary policy.

Take your mortgage for example. Imagine if bankers changed the terms of lending so that you could pay off your mortgage early and save on interest payments to the bank. Is that conceivable? No, and for a simple reason: because banks and mortgage broker firms make a killing off debt payment plans. It does not matter whether an alternative solution is available that makes it possible for more people to own property. If such a scenario means a lesser role for banks in the mortgage process, then it probably won’t happen. Why would the banks optimize the overall economy if it meant less profit for them? They would not.

If you are skeptical about the mortgage industry changing, then you probably doubt the Government will ever get out of debt. A series of financial crises in the past two decades have done little to change the architecture of the American economy. The Republicans and Democrats in Congress debate the merits of a corporate or consumer tax cut to spur the economy. In the background, the Federal Reserve goes about its businesses setting terms for lending and propping up a debt-ridden government. Even though it was created to prevent significant economic uncertainties, a solution to the debt issue will not come from the Federal Reserve. Why would it, when the Fed monetizes debt in the form of treasury bonds and keeps lending rates low no matter what.

Is Taxation A Possible Solution?

Taxation is one solution to the debt problem. The logic is pretty simple: increased tax revenue can go directly into paying off the national debt. However, merely increasing taxation is not the solution. Tax hikes hurt the American consumer and the American business alike. They take hard earned money away from people who would otherwise spend it on goods and services. Without much warning, this can lead to deflationary pressure, which shrinks the economy. To get out of the debt cycle, we need a solution that grows the economy fast enough so that borrowing money loses its appeal.

The Debt Solution: Grow the Economy By Redesigning the Federal Reserve

There is a better way to get our national economy out of debt by re-structuring the Federal Reserve in two fundamental ways:

Conclusion

There is no simple solution to the debt issue in America today. All we can do is redesign the most ineffective policies and start building an economy that supports growth that doesn’t come from borrowed money.. The only way to get the economy out of debt is to implement policies — like a direct deposit from the Federal Reserve — that stimulate consumer demand. After all, demand created from borrowing today is demand lost from debt repayments tomorrow, like spinning your wheels. The RPMs of a car spinning its wheels makes it seem like we are going fast just like the GDP of a debt driven economy seems impressive yet it’s going nowhere.