Use infuse-and-drain monetary system to balance budget

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To the editor:

“A House divided against itself cannot stand.” These immortal words asserted by President Abraham Lincoln with regard to black slavery are applicable, albeit in a less egregious way, to today’s political parties.

America is represented by two major political parties with polar opposite viewpoints. Congressional Democrats believe raising sufficient revenue to encourage a partnership between a well-funded public sector and a market-based private sector is the most efficient way to govern; Congressional Republicans, at least rhetorically, would like to shrink the public sector, except for defense, to the size of a thimble.

Neither party by itself has the power to legislate a budget to its liking. Thus our House remains stalemated to the detriment of citizens. Furthermore, a set of draconian spending cuts to both defense and nondefense agencies is set to kick in if a budget cannot be passed. What to do?

We can use our medium of exchange as a tool and craft a balanced budget that will satisfy both parties. First, direct the Treasury Department to infuse enough new money to pick up the tab for all ongoing government expenses. 

Our federal government has the ability to authorize the creation of money on command.

To avoid inflation, maintain the value of the dollar, calculate how much money is in circulation, electronically monitor all transactions, say on a monthly basis, for purchases, investments and savings; calculate the turnover rate of money and then drain or disintegrate (not redistribute) all excess money in circulation not used for transactions through a variable nationwide consumption tax, the only tax needed in this pay-as-you-go, infusion-then-drain monetary structure.

This should satisfy both Democrats and Republicans. There would be no direct tradeoffs between the public and private sectors. No public debt would accrue since no borrowing would be necessary. Money supply would grow based on market forces – the people’s desire to produce, consume, save and invest.

As the economy grows, the need for more circulating money would increase, less and less money would have to be drained, thus our nationwide consumption tax would diminish in magnitude. Since a consumption tax hits poorer folks the hardest, justifiable generous food stamp allotments, for one, could be distributed to the needy.

The economic problems we face today are substantially due to a lack of circulating money supply caused by the dysfunctional way we pay for public expenditures. Our divided House will remain divided if it continues to ignore this defect in our monetary system.

We can repair and replace infrastructure, employ ample numbers of teachers, cops, firefighters, research scientists and bureaucrats, begin to pay down our national debt and so forth without borrowing a dime from China or elsewhere. Our private sector as well as public sector will flourish. Do we have the political will to create such a system? 

Lawrence Uniglicht

Galloway


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