Sunday, December 7, 2008


By : Mr. Henry A. Pleiterman, Deputy Undersecretary of Interest Rate Management, United States Treasury, Washington, D.C.

America is descending into financial chaos. The so-called “credit crunch” is more than a mere catchphrase; it refers to a destructive cancer that has already corrupted America’s financial health. For decades, consumers could buy whatever they wanted, as long as they could show an income and make minimum monthly payments. It did not matter whether they had any real wealth. Banks lent money without a second thought. Americans thought they owned their homes, cars and stereo systems. Our Federal Reserve System played its part, slashing interest rates to record lows. Never before was so much money available. But in 2008, America awakened to the rude truth: It was all an illusion.

Markets began collapsing immediately. The New York Stock Exchange exploded like an atomic bomb, obliterating trillions in retirement savings in just a few short weeks. Small banks scurried to call in their loans, only to find that overextended borrowers could not repay them. With liabilities exceeding assets, banks folded. Business owners could not get loans to support their enterprises. Major companies, having lost billions in the stock market implosion, sounded the cost alarm by cutting thousands of jobs. Unemployment skyrocketed. In November alone, more than 533,000 people lost their jobs, just in time for the Holidays. Retailers are preparing for the driest season in history as consumers struggle to pay for their mortgages, let alone for expensive trinkets.

This is not a casual meltdown. This is a disastrous full-scale panic with no end in sight. Unless we start thinking fast, we will degenerate from a Nation of debtors to a Nation of hobos and beggars. Unless we start thinking fast, this disaster is going to drag us all into the gutter.

We need to save the economy. Earlier this year, President Bush tried his best to stem the tide by sending every American taxpayer a generous stipend totaling $640. Childrearing taxpayers received even more. Despite this, the collapse continued. More and more people lost their jobs. People stopped buying cars. People stopped buying gasoline. People stopped going on vacations. People stopped buying homes. In a word, we can no longer afford short-term solutions. We have tried every subtle economic trick in the book to clean up this mess. They all have failed. At this point, we here at the Treasury have only one thing left to say: “Fuck it. We are going to print more money.”

Let us be honest. The financial crisis would go away if everyone had enough money to pay their bills. Even General Motors says they can keep employing people if they just had $43 billion. Thus, we have only one alternative to solve this mess: We need to make more money available to everyone. Our goal is long-term economic rebirth, not small-scale crisis-dodging. To achieve that goal, we need to get to the heart of the problem: There is not enough money to go around. Before the crisis, people had plenty of money. Now they don’t. In my book, when there is a problem, you look to the times when there was not a problem to figure out a solution for today. Five years ago, America was strong because people had money. We can recapture that prosperity as long as we give people money again. If people have money, they will be able to spend money at retailers. They will be able to buy homes, cars and jewelry. This, in turn, will kickstart the economy. It will encourage private enterprise to start hiring again.

We need to stop insisting that people earn their money. Letting people earn their money from private business is what got us into this hole in the first place. Private business cannot employ people when people are not earning enough money. By the same token, people cannot support private business when they do not earn money from employment. To end this vicious cycle, we must print trillions of dollars and simply hand it out to everyone. We must not think that this is “irresponsible.” If we cling to outmoded principles such as “responsibility,” we will sink further into economic turmoil. We have tried everything else; it does not work. There is only one path left open. We must print money and give it away for free.

Our Nation depends upon private enterprise for its economic strength. But private enterprise depends upon vigorous consumer activity to support healthy profits for entrepreneurs. The risk inherent in this system is self-evident: When people stop consuming, the entire structure buckles. Without a constant stream of cash, private enterprise cannot afford to pay employees. And when people lose jobs, they can no longer afford to keep cash moving through the system. In happier times, private enterprise had plenty of money to pay employees, lend money, extend credit and help Americans lead fulfilling lives. Now, the gears have jammed. We must lubricate them with some cash grease. We must adjust our thinking. We must forget about “stipends” and start putting real money in people’s pockets. After all, what can an average person really do with $640? Rent in New York City is $3000 per month for a studio apartment. For a one-bedroom apartment, rent costs $4400 per month. Health insurance for a private individual costs up to $1000 per month. How can we blame an overstretched consumer for responding: “I wipe my ass with $640.” If government truly wants to make a difference in people’s economic lives, it must give them amounts that can actually pay for something.

We can overcome these challenging times if we work together for solutions that will make a difference. To do that, we must not be afraid to give away money. Money caused this problem and money will fix it. People constantly complain about money. They don’t have enough. They need more money to pay their bills. Countless Americans say: “I just want enough money to pay my bills.” That begs an easy solution, provided we are bold enough to undertake it: PRINT MONEY AND GIVE IT AWAY. Let us establish a Federal Bureau through which every American can request all the money they need each month for their expenses. The Treasury has plenty of printing presses to churn out $100 bills all day and night. Americans can do anything they decide to do. If we work together, we can print all the money we need to pay our expenses.

When every American can pay his bills, imagine how much happiness we will bring. Americans will be free from worry; they will be able to feed their children. They will sleep soundly at night. They will be able to heat their homes and buy groceries. They will even be able to pay rent. At the same time, private enterprise will benefit because there is nothing more economically lucrative than an American with money to spend. Americans will pour their money into all kinds of businesses, swelling profits and spurring capital growth. Once profits reach suitable levels, private enterprise will begin hiring again. We stand at a precipice. We can reverse this crisis now. We must merely overcome our own sense of convention and print trillions of dollars.

Naysayers will doubtlessly claim that no one gets a free lunch. They will balk at the idea that everyone—including lazy sluggards, oafs and layabouts—will be able to get all the money they need to pay their way in life. They will say that Americans need to know the value of a dollar. They will say it is dangerous to undermine traditional notions of responsibility in economic life. But these criticisms miss the point: When Americans have money, they will spend it. And when Americans spend money, private enterprise ultimately wins. The same critics who praise individual financial responsibility are also the people who run private enterprise. If they merely took a step back and considered the benefits they will gain from giving free money to consumers, they would see that they are the real winners. All that money will wind up in their hands. Who cares whether “irresponsible” people spent it? We venture this to our critics: The important thing is that you get the money, not where the money came from.

Financial crises strike when there is not enough money to go around. By printing copious amounts of money, we will solve the problem. In 2008, the well ran dry. Now we feel the pinch. We will continue to feel the pinch until we put water back in the well. The bailout plan partially addresses the problem, but it will not bring us lasting economic strength. The bailout plan is flawed because it demands that consumers and private enterprise “act responsibly” with the money it supplies. Worse, it only supplies a finite amount: $700 billion. What good is it to splash a bucket of water into a well? People will always need water; and they will quickly use up a mere bucketful. We must provide a constant water supply, not just a bucket here and there. There is only one way to do this: PRINT MONEY AND GIVE IT AWAY. The bailout plan will fail as soon as the $700 billion runs out. American consumption must continue unabated. To do that, we must feed it money—all the time.

In sum, let us join together and stop this disaster before it claims more jobs and more prosperity. It is time to make genuine changes to our financial habits in order to accommodate the unique nature of our free enterprise system. Money must be available to everyone, all the time. Without constant spending and lending, our system will grind to an ignoble halt. Here at the Treasury Department, we are determined to avoid that fate. Join us in our efforts to end the financial crisis. Consumers, stop by soon to pick up all the money you need to keep consuming. Employers, stop by soon to pick up all the money you need to keep hiring. Manufacturers, stop by soon to pick up all the money you need to keep building cars. Banks, stop by soon to pick up all the money you need to keep underwriting mortgage loans and car notes. Our presses are running. We’ll be waiting for you.

It’s almost Christmas. Let’s start spending like it.

1 comment:

SteveW said...

Print money FTW. I hear this is working well in Zimbabwe. Think ahead and make sure to reserve plenty of room for new zeros on those bills, though. Don't want to be short-sighted.