"enflamed" is not a word.
Dear Madam Macdonald,
I was sitting with two friends this weekend, in Prospect Park, when the conversation about the police/stop & frisk came up. I was contemplating my position between the violation of human and civil rights and the senseless killings that are perpetrated predominantly by young children of color.
I was literally at the cusp of being brainwashed; even though I myself grew up in the Giuliani era, where the policy of stop/frisk&(question), 'hit its stride', leaving indexed crimes(murder, rape, assault, robbery, burglary, grand-larceny, and auto-theft )the central public indicators of the city's crime rate to plummet comparatively to the late 80's and early 90's; a time that is known nationally as the cocaine era. Where crack cocaine was the bane of every major city, as is the case with everything else NYC set the trend.
Everyone should be more considerate, if your rights were being overlooked there would be no justification!
N.Y. Times is no longer a news organization. It is the propaganda arm of the radical left who can't abide a free people running their lives without interference of over-educated indolent snobs who think they have the right to run the world. The only think honest about the NYTimes is the cross-word puzzle.
The NY Times is all about "Journalism". It is not about "News" or "Reporting".
As anyone who has taken a Junior High School English class can tell you, "Journals" are for writing opinions and "how you feel" in. They have nothing at all to do with reality.
The New York Times:
"All the news that's fit to lie about."
Too bad the NYT has lost its way under the bright red Sulzberger guidon. Regrettably, no longer a great paper, but rather little more than a propaganda medium for those who hate America and what she stands for.
Marx and Lenin must be very pleased.
Mr. Serrano needs to understand that he is a tool being used by the cultural Marxists who are constantly trying to create racial animosity as a means of furthering their cause: Viz. A complete breakdown of the societal fabric of a community as a means of destroying civil order and creating civil crises that will in turn lead to social disintegration and anarchy. Such a breakdown would satisfy the third stage of the communist model for takeover: "Crisis."
1) Disillusionment - sowing the seeds of discontent by creating frustration, distrust and animosity (covert and overt) within the society. (Can take decades...)
2) Destabilization - creating chaos in markets; political strife within political institutions; promoting class warfare and conflicts between various social groups (black/white; gay/straight; old/young; left/right; etc.). Upsetting or aggravating market forces and creating disturbances within the institutions of finance, banking, commodity markets, government, etc. (Can take several years...)
3) Crisis - creating a cathartic ‘moment’ when destabilization efforts ultimately trigger a critical mass that results in some sort of catastrophic collapse; e.g., collapse of the currency; a major political event; mass demonstrations that erupt into open civil violence; perhaps an assassination (and perhaps false flag attack); etc. (Can occur rather quickly - within days to weeks, or can take months, depending on societal reactions and resistance and other factors...)
4) Normalization - imposition of martial law; suspension of Writ of Habeas Corpus; reorganization (coup) of the government; sequestration, arrest and imprisonment of dissidents or 'patriot resistance forces' deemed "enemies of the people"; disposition (or outright disposal) of political opponents and "useful idiots" (viz., those who helped create disillusionment and destabilization but who are no longer needed, and who can no longer be trusted. Expendable, in all senses of the word. (Goes on indefinitely... “pacification” is achieved by various means; some ‘benign’ and some brutal and final...)
We are now between stage 2 and stage 3.
Mr. Serrano won't like the society that the Cultural Marxists have in mind. He will quickly become a "useful idiot" and could face punitive isolation or much worse.
He needs to study cultural Marxism and in particular, he needs to understand the meaning behind Vladimir Lenin's expression: "Useful idiots."
Sam: a fair chance? Have you actually been to these places? Spend some time in an inner city school, go to the Juvenile Court, see the effects, not of poverty, but of fatherlessness and dpendendence policies. I've spent lots of time in Newark, NJ and Paterson, these cities have pockets are completely intractable crime and poverty - half a century and counting - and year after year nothing changes, it gets worse, if anything. Millions, if not billions spent - for what. Nothing that's what.
It goes on and on, multi-generational, and all under the political control of people who are the very same race, who use the people under theor control to squeeze every posssible dime out of everyone else -and all the money goes right in their pockets, or some phony 'anti-poverty' scam which employs their friends and relatives. This is not something I read about, this is something I know first hand - the populations of these places exist as a means to make a very small group of people rich and powerful, all of them making it off the imisery of their community. The people who they point thier fingers as the cause of this misery aren't with light years of the community, but they exist as bogeymen so that the people in the community can have someone other than their leaders to place the blame on.
But, it is the leadership that gets rich and powerful, who call the shots, who ensure that the people under their boot heel remain exactly where they are: poor, dependent, impoverished, growing up in fatherless homes, with no will to be educated.
You want to talk about "abuse of human rights" it is the people who have put in place dependence policies that for half a century have led to a system where continuation of poverty is the goal, so that the leaders can use that poverty as a stick by which they can beat the system.
And these so called "leaders' get to again blame the "system" this time, stop and frisk, which makes not a damn bit of difference overall. Stop and frisk? A cop comes in and rifles through your pockets - big deal - it happened to me about six times as a kid and each time I shook it off within minutes, as did my friends. But it is another distraction and misdirection that these sociopaths can use to get people's eyes off of them as the cause of the problem, and why, despite decades things never change, conditions never really improve.
This article is unfortunately spreading ignorance and justifying institutional abuse of human rights.
The 90% of the people who are thrown up agains the wall and were innocent sure as hell dont show up at "police-community meetings" whatever those might be. Because they have been marginalized - duh...
Also what is the cause of crime in the first place. It is first and foremost a broken society that fails to give black people - and poor people in general - a fair chance. All of the people in these high crime areas are victims - abused by systems that lock them into low wages sometimes not even living wages, for hard work, poor schools and then their kids given NO chance, no hope, no nothing. This is pure abuse of human beings.
Meanwhile, you grow up in a rich area, you got to wall street and you run the country, tell the cops who to abuse. You lose money, take it from your pals who run the treasury. Let the taxpayer deal with it - heck you mostly dont pay tax on your income anyway, as you have paid your congressman to classify your type of income as "investment" and exempt it from tax that even your janitor pays. This is high-tech-robbery.
Meanwhile the rest of the folks are locked in a vicious cycle. And whatever little they got you rob them of it legally.
The solution is a fairer society - not MORE abuse by cops.
Perhaps the way to defeat these pro-crime efforts is to label them the racism they are. The people who suffer when they succeed are all black and hispanic. This is of no concern to the proponents.
If the countries on the international community were to adopt the NYPD pro active techniques when Americans with guns and assorted weapons go abroad, the world would be a much better place.
Federal Reserve System
20th Street and Constitution Avenue N.W,
Washington, D.C. 20551
20th Street and Constitution Avenue N.W.
Washington, D.C. 20551
Dear Governor Stein: March 26, 2013
How Monetary Easing Suppresses Economic Growth
And Therefor Increases The Prospect of Unemployment
Let me begin by stating that monetary policy of our nation the last one hundred years has been biased in favor of debt over savings. In Macro Economics we are aware that the total returns on investment in the American economy is equal to 10% of whatever is invested in a given year. But the growth of the nation’s money supply understates the total return on investment and potential economic growth by 70% because a 3% growth in the money supply only captures 30% of the total return on investment in the economy leaving the remaining 70% to possibly be made up by credit provided the banks are willing to lend.
The current economic downturn was brought upon us as a result of variable rate mortgages which were created by the banking industry to prevent banks from having to hold on to low yielding loans during periods of high inflation. In the old days before the banking industry had the competition they now do from nontraditional lending sources banks were able to bundle their low yielding long term mortgages with higher yielding short term business and personal loans and sell the bundled securities as a means of recapitalizing their cash reserves so that they could issue more loans. The Driving down of interest rates to make loans more attractive to borrowers overlooks the banking industry’s desire not to be stuck with low interest loans during high inflationary times on their books. The risk to rewards ratio of low interest loans the banking industry does not find attractive which is why they are not willing to issue loans in great numbers currently.
If interest rates are not high enough to encourage banks to make loans, businesses that may wish to expand and hire more people are held back from doing so if they cannot obtain the capital. Have you all at the Federal Reserve considered how more expensive energy costs are as a result of your keeping interest rates artificially low screwing American savers and depositors in process and raising the cost of insurance as well? If the insurance industry’s returns on investment in government bonds are meager they will have to raise premiums higher and more frequently. If University endowments earn lower returns on investments in government bonds they also would be more likely to raise University tuition costs.
As I stated above, the total return on investment into the American economy is equal to 10% of whatever is invested in a given year. Interest earned on government securities, bank deposits, dividends paid on corporate equities and all forms of capital gains make up the total return on investment in the American economy, and any government policy that serves to reduce the total return on investment in the American economy, such as monetary easing, taxing interest earned on bank deposits, charging punishing bank fees against accounts that fail to maintain a minimum balance, or taxing capital gains, will tend to slow economic growth in the economy.
Don’t you believe that monetary policy and fiscal policy should be more intimately related to one another? If monetary policy is going to be successful in containing both inflation and deflation than there would logically need to be sensible restraints placed on government spending relative to the growth of the money supply just as there needs restraints on the growth of the money supply relative to the total return on investment in the American economy. Is it not true that just a money supply growing faster than the total return on investment in the American economy would create an inflationary environment a government spending rate that exceeds the rate of growth of the money supply would also create an inflationary environment?
If the total return on investment in the American economy is equal to 10% of whatever is spent in the economy shouldn’t the money supply reflect that truth and rise accordingly minus a currency stabilization factor of 200 points or 8% and shouldn’t government spending be contained by being limited to a rate of growth equal to 200 basis points less than the growth of the money supply or 6%
Don’t you realize, if we raised the growth of the money supply by a factor of 2 2/3 from 3% a year to 8% a year more accurately reflecting the true total return on investment in the American economy of 10% less 200 basis points to serve as a currency stabilization factor (because you would not want to raise interest too high as a result of incomplete data causing you accidentally to add too much currency to the money supply and cause higher inflation), we would be able to increase spending from the recommended 20% less than 3% or 2.4% by the same factor of 2 2/3 to increase spending to 6% without having to raise taxes, nor deficit spend, and we would be able to cut taxes back to a flat 20%. And pay down the national debt within two decades if the other fiscal and monetary reforms recommended here were followed. Please read on.
Gerald P. O’ Driscoll
1000 Massachusetts Ave, NW
Washington, DC 20001-5403
Phone: (202) 842 0200
Fax: (202) 842 3490
Dear Senior Fellow O’ Driscoll: March 19, 2013
Reforming Monetary and Fiscal Policy to Facilitate the Retiring
Of the National Debt within One Generation or Two Decades
Some questions to begin with. Why is it when the total return on investment in the American Economy is said to be 10% of whatever is invested in a given year in the American Economy, the money supply only reflects 30% of the total return on investment in the American economy with an annual 3% growth in the nation’s money supply?
Allowing for imperfect data always being behind the curve of whatever is currently happening in the economy would it not make sense for the growth of the money supply to more closely reflect the total return on investment in the economy minus a currency stabilization factor of say 200 basis points for an 8% growth in the money supply to insure against an accidental over inflating of the money supply?
With an underfunded growth in the money supply in hard currency as opposed to an expansion of credit is it any wonder why all levels of the American economy are overburdened with debt, including the three levels of government, the private sector and American households?
Does it not make sense if we are spending 40% more a year to finance the Federal Government than we take in in revenue a year that we would want to cut spending not just enough to obtain a balanced budget but enough to obtain a 20% surplus? Imagine if we spent 20% less than we take in in revenue every year and invested that 20% in the nation’s and world’s equity markets and did not touch more than 50% of the yearly accumulated dividends and reinvested the other 50% of dividends and continuously added a consistent 20% annually never drawing on the principle except during an economic downturn. Would we not be able to fund additional government services without having to raise taxes nor run deficits and keep tax rates stable long term?
If Social Security, SSD, SSI, Medicare, Medicaid, Federal Flood Insurance, Federal Deposit Insurance, Workmen’s Compensation and Unemployment Insurance at the Federal, State and Local levels of government respectively were financed as legitimate insurance by the Federal Reserve Bank investing those funds into their own dedicated interest baring accounts made up of corporate dividend paying equities and not simply commingling them in to the governments’ general funds accounts the accruing interest on those funds will help finance those funds at lower cost to the tax payers while paying out higher benefits without running a deficit.
If government spending is kept at 2.4% or 20% less than the growth of the nation’s money supply we could save 48% of the cost of President Barack Obama’s $46 Trillion spending plan or $22.08 Trillion and if we were smart and deposited those savings into the Social Security, Medicare, and Medicaid Trust Funds in the form of corporate dividend paying equities to the tune of $7.36 Trillion each, converting the three programs into legitimate insurance programs or Dividend Reinvestment Plans otherwise known as D.R.I.P.S we would make these programs partially self-sustaining and viable long term.
I believe our nation’s monetary policy understates the growth of the nation’s money supply by 70% relative to the total return on investment in the American Economy which is said to be equal to 10% of whatever is invested in the American Economy in a given year. If we were to increase the rate of growth of the money supply by a factor of 2 2/3 to 8% from the current 3% a year, government spending could be increased to 6% a year without having to raise tax rates and it would be feasible to introduce a flat tax of 20% and pay off the national debt in two decades if we restructure the American Economy as I outline here.
See Editorial opinion of Congressman Paul C. Broun, enclosed, after letter to the Managing Editor of The New York Times commenting on Congressman Broun’s Editorial Opinion.
Please read on.
620 Eighth Avenue
New York, NY 10018
Faxing: (212) 556-3622
Dear Managing Editor Baquet: March 20, 2013
Correcting Congressman Paul C. Broun Jr.’s (Republican from Georgia) Editorial Concerning the Ryan Budget Plan Because There was at Least One Error in
The Math He Used to Illustrate His Points
In the third paragraph of Congressman Broun’s editorial opinion, on March 19, 2013 the Congressman presented some math to back up his position that Paul Ryan’s spending plan is not much different than the spending plan of President Obama. But using only the numbers presented in the third paragraph of Congressman Broun’s Op-Ed we can see Congressman’s Ryan’s Plan is 68% of President Obama’s plan or nearly 1/3 smaller because the 3.5% growth rate in Congressman Ryan’s budget plan is 68% of the 5% growth rate of President Obama’s plan.
If President Obama’s Plan is indeed calling for $46 Trillion, (as the third paragraph of Congressman Broun’s letter illustrates) of new spending over the next decade and Congressman Ryan’s plan is 68% of President Obama’s plan than the spending under Ryan’s plan is equal to $31.28 Trillion and not the $41 Trillion quoted in Congressman Broun’s Op-Ed in the same third paragraph. $31.28 Trillion/ $46 Trillion is equal to 68%. But $41Trillion/$46 Trillion equals 89%, so someone’s math is off by a great deal. If Congressman Ryan’s plan differed by only 11% with President Obama’s plan than Congressman Broun would be correct that there would not be much difference between the two plans.
Using only the figures provided by Congressman Broun’s Op-Ed and extrapolating from those figures$ 46.00 Trillion-$ 31.28 Trillion=$14.72 Trillion and not the $5 Trillion Congressman Broun implied when the third paragraph stated Ryan’s Plan would cost $ 41.00 Trillion which is $ 5 Trillion less than the Obama Plan.
If our government leaders were smart, they would take the $14.72 Trillion in savings over the next decade and deposit them into the Social Security, Medicare, and Medicaid trust funds in the form of corporate dividend paying equities (stock) only, which would provide each fund a revenue stream to supplement the taxes that support these programs so that they can be converted from Legalized Ponzi Schemes in to Dividend Reinvestment Plans or D.R.I.P.S. which would make the funds partially self-sustaining as dividends are constantly reinvested back into the funds as commercial insurance funds do, by the Federal Reserve Bank, as part, as part of its monetary policy oversight, of regulating the growth of the money supply and to provide price stability by fighting the twin evils of inflation and deflation. What better way is there to regulate the growth of the money supply but to invest in the world’s equity markets?
To pay down the debt in the least painful manner without draconian budget cuts nor draconian tax increases and to keep inflation under control to spur job creation government spending should rise at a rate of 20% less the growth of the nation’s money supply which grows at a rate of only 3% a year, which would leave government spending to grow at a rate of 2.4% a year which at the end of ten years would provide the nation $ 22.08 Trillion in savings which could be invested in the Social Security, Medicare, and Medicaid Trust Funds providing each Fund $ 7.36 Trillion in corporate dividend paying equities. This would make government entitlement programs into engines that drive economic growth with the Federal Reserve doing the investment as part of its monetary policy as stated in the above paragraph, instead of being drags on economic growth because they are not backed by investment in the nation’s and world’s equity markets.
Currently the Federal Reserve is spending $85 Billion dollars a month or $ 1.02 Trillion a year to keep interest rates artificially low to support home owners being able to obtain low interest loans which the banks are not providing, the rise in the sales of existing homes and new construction has been financed by private equity firms in all cash deals which make up a significant portion of the homes being bought and sold. The Federal Reserve should instead take the $3 Trillion dollars it already has in mortgages on its books and deposit those funds into the Social Security Trust Fund to replace the $2.7 Trillion of worthless government bonds. (How can the government both sell bonds to others and buy government bonds from its self while paying interest to itself, as well as others? That is the definition of a Ponzi scheme.)
The Federal Reserve is not stimulating the economy but is suppressing economic growth. Because the total return on investment in the American Economy is equal to 10% of whatever is invested in the American Economy in a given year and dividends on corporate equities, interest paid on bank deposits, and capital gains of all kinds make up that 10% total return on investment in the American Economy. Any government policy that serves to reduce the total return on investment in the economy, such as, quantitative easing, taxing the interest on bank deposits, and the dividends earned on corporate equities and all other forms of capital gains serves to slow economic growth by reducing investment in the American Economy.
If the Federal Reserve switched from suppressing interest rates and buying mortgages to allowing interest rates to rise up to 5.5% the historic norm and bought corporate equities instead, banks would start lending again and corporations would start hiring. Half the money the government raised selling government bonds at 5.5% could be deposited into a high interest savings account to create an infrastructure bank to do infrastructure investing intelligently instead of pissing money away on foolishness, and the remaining 50% of revenue from the sale of government bonds could be invested into the world’s equity markets to purchase dividend paying corporate equities only, to finance the purchase of greater amounts of dividend paying corporate equities to keep trading costs low and to maximize upside return on investment. When the government bonds that financed the purchase of corporate equities reach maturity the accumulated reinvested dividends on corporate equities would be used to pay down the national debt. As more workers are put back to work and taxes rise both as a result of more people being employed and as a result of completion for labor by employers pushing up both wages/ salaries earned and the taxes collected on the same, larger chunks of the national debt could be retired painlessly especially if the reforms for restructuring the entire American Economy at the Federal, State and Local levels of government suggested hear are followed.
In coming decades, government could generate revenue from nontax sources such as selling 50% to 80% of the space in newly constructed government office buildings, condominium style, and utilize the revenue from the sale of commercial condominiums to pay down government debt. The monthly maintenance fee collected from commercial condominium owners could be utilized to finance the operational expenses of government agencies such as the government worker’s salaries and benefits. Local governments would be able for the first time to collect real estate taxes from the nongovernment residents of government office buildings because condominium owners pay taxes on their condo units and not the real estate management company and also because governments have had sovereign immunity from taxation and that precluded local governments from taxing government entities. Additionally, government office buildings could cogenerate and produce their own electric power on site and sell surplus electrical power to the power grid authority or the independent operator of the power grid and utilize those funds to cover its other operational expenses.
Government under no circumstances should be permitted to replace private sector utilities and produce electrical power neither for tax payers who run businesses nor for home owners. We need to move away from centralized control concerning electric power production if we want to bring down the cost and as well improve the efficiency of the delivery of electric power. Trading one form of centralized command and control concerning private sector utilities for another centralized government monopoly would not benefit rate payers or tax payers. Our national policy concerning the production of electrical power should move toward having every building erected in the country from homes, to office buildings, factories, and the various forms of apartment buildings cogenerate producing electrical power on site using their own electric generator to produce electric power as a byproduct of heating hot water and using the revenue obtained by selling surplus electric power to cover the operational and/or maintenance costs of such buildings.
The goal is to not starve government of revenue, but to replace 25% to 50% of government tax revenue with revenue from nontax sources as I already mentioned above. All levels of government must be downsized simultaneously and overlapping government interests must be dealt with as joint ventures from the Federal, State, and Local governments instead of separately and redundantly, so as to reduce the cost of government while improving the efficiency of operation in the delivery of government service.
The separate social service delivery systems of the Federal, State and Local governments can be merged and consolidated into a single nationwide social service delivery system financed jointly but administered by the local levels of government where the same government workers who process Local social services would also process State and Federal social services within the same city or state. The work force would be shrunk through attrition instead of layoffs because 2% of the government work force at the Federal, State, and Local levels of government retire every year, and simply replacing only half of retiring workers with new hires over a 11 year period would allow the combined Social Service delivery systems to be shrunk by a third through retirements. 2% times 3 levels of government; times 1/2 as many workers times 11 years equals 33% or 1/3 of the work force. Combining one Federal, State and Local Social Service office into a single office would allow money saved on rent and utilities in private sector landlord owned buildings to instead be used to pay down debt.
Additionally, the three levels of government could in coming decades, house their separate court systems within the same office buildings in the same city or state, dividing such office buildings into thirds. While each court system would employ their own judges, prosecutors, law clerks and secretaries, they could save money sharing the same security personnel and the same maintenance personnel and obtain other operational efficiencies.
The consensus among many economists is that we need short term stimulus while bringing down the cost of government over the long term which this plan clearly illustrates how to go about achieving those seemingly contradictory policy objectives in a coherent manner by linking fiscal policy reform with monetary policy reform to provide stimulus in the short term that will rev the engine of the nation’s economy high enough to generate the revenue necessary to paying down the debt in what I believe would be one generation or two decades while shifting some operational savings towards infrastructure modernization and towards converting entitlement programs into legitimate insurance programs.
I do not believe we need to raise taxes to pay down the national debt but do need to raise the rate of growth of the money supply from the current 3% a year to 8% a year more closely and realistically reflecting the true total return on investment in the American Economy which is equal to 10% of whatever is invested in the American Economy in a given year minus a small discrepancy of 200 basis points, or 2 percentage points to serve as a currency stabilization factor. Because under the very best of circumstances data collected by the Federal Reserve is always behind the curve of what is currently happening in the economy and because data is imperfect, you would want to insure against accidently putting too much currency in circulation and causing inflation.
Raising the growth of the money supply from 3% a year to 8% a year more closely reflecting the true total return on investment in the American Economy would mean increasing the growth of the money supply by a factor of 2 2/3. Under a sound monetary policy you would want to keep the rate of growth of government spending 200 basis points below the rate of growth of the money supply or 6% to prevent government spending crowding out private sector investment and adding to inflationary pressure building up in the economy if your objective is to generate a surplus and not merely a balanced budget. As it so happens, if you increase the growth of the money supply by a factor of 2 2/3 from 3% a year to 8% year you could move from spending 2.4% I recommend currently with a money supply rate of growth of 3% which is 20% less than the current rate of growth of the money supply, to a government spending rate of 6% a year, because 2 2/3 of 2.4% equals 6%. And if you increase the rate of growth of the money supply by a factor of 2 2/3 you can actually afford to introduce a flat tax equal to 20% and manage to pay down the debt within two decades.
Our economic problems stem from the fact that for an entire century the Federal Reserve has been understating the growth of the money supply in hard currency by 70% relative to the total return on investment in the American Economy if we correct that error and raise the growth of the money supply to 8% we can afford to pay down the debt while cutting taxes back to a flat 20% provided the other structural reforms I recommend here are implemented.
Please read on.
620 Eighth Avenue
New York, NY 10018
Faxing: (212) 556-3622
Dear Dr. Krugman: March 22, 2013
What is the Reason Why There is No Inflation after 4 Years of Monetary Easing?
You have been asking in your column the last few years where is the inflation the Republicans have been afraid would arise if we continued with monetary easing? I believe both the enormity off the debt and the large numbers of unemployed people in America are providing counter balancing deflationary pressure to offset any possible inflationary pressures building up in the American economy, for example, in the last 21 out of 23 months wages have fallen because we are now in a buyer’s market for labor which usually coincides with high unemployment. When people’s wages fall so does their purchasing power and their demand for goods, shrinking demand provides deflationary pressure to counter balance inflationary pressure.
Another factor that I believe accounts for the lack of inflation is my theory that the Federal Reserve has been understating the growth of the money supply in hard currency by 70% relative to the total return on investment in the American economy, which is said to be 10% of whatever is invested in the American economy in a given year because when the total return on investment in the American Economy is said to be 10% and the money supply grows at only 3% than the growth of the money supply in hard currency captures only 30% of the total return on investment in the American economy leaving the remaining 70% to possibly be made up through credit causing our economy to be biased toward debt and way from savings.
If we were to have the growth of the money supply to more closely reflect the 10% total return on investment in the American economy we might have the money supply grow at a rate of 8% a year with a 200 basis points discrepancy called a currency stabilization factor to insure against an accidental over supply of money due to imperfect data collected by the Federal Reserve. And if we were to have sound fiscal policy tied to sound monetary policy we would stipulate that government spending similarly grow at a rate that is 200 basis points less than the growth of the money supply or 6%.
Under current monetary policy with a money supply growth rate of only 3% a year we should keep the rate of government spending to 2.4% a year or 20% less than the growth of the money supply if we are interested in paying off the debt, generating surplus revenue, and not contributing towards inflationary build up in the economy. But if we were to expand the rate of growth of the money supply to 8% more closely tracking the total return on investment in the American Economy, that would call for raising the rate of growth of the money supply by a factor of 2 2/3 which means government spending could also be increased by the same 2 2/3 to 6% a year because 2 ¼ times 2 2/3 equals 6% which happens to be 200 basis points below the rate of growth of the money supply.
Following current monetary policy protocols, if we kept government spending to 2.4% a year which is 48% of the 5% rate of government spending President Obama’s Budget plan calls for, we could save $ 22.08 Trillion dollars over the next decade and if we were smart we would channel all other government spending savings to stock the Social Security, Medicare and Medicaid Trust Funds with dividend paying corporate equities to provide these programs an additional revenue stream apart from the taxes collected to support these programs which means adding S7.36 Trillion to each of these programs which would make these programs more solvent while also stimulating the economy.
If we were to increase the money supply by a factor of 2 2/3 than it would not be necessary to raise taxes and in fact we could cut taxes back to a flat tax of say 20% and be able to pay down the debt over the next two decades quickly with very little pain and suffering for the American people if we right size our government intelligently. My objectives here are to pare back government in an intelligent manner, at all levels of government, so that over the next four years we could transition our economy to raising hourly compensation by 50% so that we could reimagine the typical work week from being a 40 hour, 5 day work week to instead being a 30 hour, 3 day work week or shrinking the work week by 25% so a workers gross and net pay could rise by 12.5% under flat tax.
Dealing with Income Inequality
To deal with the subject of income inequality we could also stipulate that Chief Executive Officers’ in corporations’ wages and salary compensation be pegged to 400 % of the minimum wage and that the minimum wage would be pegged to the median percentage increase of wages and salary in the economy. With a current yearly full time minimum wage salary of $15,080, Chief Executive Officers earning 400 times the prevailing Minimum Wage would be allowed to earn in wages/salary $6,032,000 a year with no limit on stock compensation. My objective here is not to reduce total compensation of the top brass of a corporation but to simply shift an even greater share of the top brass’s compensation to stock options and stock grants from wages and salary to free up cash for corporations to pay the people on the lower rungs of the corporation higher wages or salary who do not receive stock options. If publicly traded corporations wanted to escape this provision they could compensate all employees in both wages/salary and stock grants giving their employees 80% of financial compensation in the form of wages/salary and 20% of compensation in the form of stock grants the amount of stock granted to each individual worker would be commensurate with their base salary. . ***Publicly traded corporations could compensate top brass of the corporation (Vice Presidents, Members of the Board of Directors, C.E.O’s, C.O.O.’s, C.F.O’s, C.I.O’s and Chairpersons with 20
% of financial compensation in the form of wages /salary and 80% of financial compensation in the form of stock grants or stock options, which would be the opposite of lower rung employees.***Denotes changes from the original.
Robert M. Solow
Nobel Laureate Emeritus
Professor of Economics
77 Massachusetts Avenue
Cambridge, MA 02139-4307
(617) 253.1000 TTY (617) 258.9344
Dear Dr. Solow: March 9, 2013
We Are What We Owe As A People
I am writing in response to your recent article in a February 2013 edition of The Wall Street Journal, “Our Debt, Ourselves.” After reading your column I thought I would write you to see if you might support my prescription for addressing our current economic problems. I understand you currently believe we need to provide short term stimulus to get our economy out of the economic doldrums while also acknowledging over the long haul we must make greater effort to pay down our debt.
Currently, the Federal Reserve is spending $85 billion a month to shore up mortgage lending by keeping interest rates low in order to stimulate the economy, but I believe the policy is misguided, instead of stimulating the economy the policy is actually suppressing economic growth by reducing the total return on investment in the American economy. In Macroeconomics Courses it is taught that the total return on investment in the American Economy is equal to 10% of whatever is invested in a given year, and that the interest on bank deposits, government bonds, corporate equities, and capital gains of all kinds make up the total return on investment in the American economy, therefore, any monetary or fiscal policy that serves to suppress the total return on investment in the American economy will also slow economic growth as the past four years of sub 2% economic growth has demonstrated.
I believe the Federal Reserve should shift from buying government bonds to buying only corporate dividend paying equities to stock the Social Security, Medicare, and Medicaid trust funds with $9.18 Trillion (3.06 Trillion Each) over the next 9 years, in hard financial assets to replace the $2.7 trillion in worthless government bonds in The Social Security Trust Fund, that only serve as I.O.U.’s for money the U.S. Treasury borrowed to pay for other government services.
The reason I suggest only dividend paying corporate equities is that they would provide a revenue stream to finance the purchase of further amounts of dividend paying equities without having to sell current stock to finance the taking of new positions in other companies so that trading costs are kept to a minimum while upside potential growth in investment could be higher. The last thirty years we have failed to address the underlining reason we are struggling to keep entitlement programs solvent long term which is the fact they were not set up like traditional private sector insurance funds that have a pool of compounding revenue to pay for the services insurance companies provide. Insurance companies largely live off the compounding interest of invested premiums and principle hardly ever having to touch the principle itself and insurance companies constantly replenish both compounding interest and any principle they may have drawn upon to pay out claims to clients which is why insurance premiums tend to raise premiums after claims have been paid out to particular clients. If government entitlements were converted into legitimate insurance with the Federal Reserve doing the investing as part of its monetary policy oversight, government insurance would be able to do the same. Those who use more resources will see their premiums rise faster while those who use fewer resources would see the premiums grow more gradually relative to everyone else.
In addition to providing $85 billion a month for Social Security, Medicare, and Medicaid over the next 9 years, I believe the Federal, State and Local governments should provide the American workforce two tax exemptions of 10% each for the purchase of Health Insurance Plans and Personal Retirement Plans with pretax dollars on a use it or lose it basis where you get the tax exemption only if you buy the Health Insurance or Personal Retirement Plan. Instead of privatizing entitlement programs as Republicans would like to prefer, I believe it makes more sense to convert existing entitlement programs into legitimate insurance with the Federal Reserve doing the investment and creating a tax environment that would facilitate all Americans purchasing their own health insurance and their own retirement plans as back up redundancies just as our nation’s communication and electrical circuits have back up redundancies so should our nation’s healthcare and retirement systems, furthermore, I believe the Federal Reserve should push interest rates to 5.5% as quickly as possible and put half the revenue aside to fund infrastructure projects and the remaining 50% of revenue should be invested by the Central Bank into the worlds equity markets in dividend paying corporate equities and over the term of the government bonds repeatedly use the corporate equities dividends to acquire more corporate dividend paying equities and when the government bonds finally mature use the accumulated compounding dividends to pay off the government the interest on government debt. Of course, the increased levels of taxes collected over the term of the bonds as greater numbers of Americans are put back to work and competition for labor drives up wages and the taxes collected on the same which could be used to pay off larger chunks of the national debt.
I estimate, in today’s dollars, the two above tax exemptions for 10% each would provide a permanent $3 Trillion economic stimulus equal to 20% of Gross Domestic Product., and if copied Worldwide with an estimated $64 Trillion in Global Domestic Product that would come to about $12.8 Trillion in American equivalent monetary units, which could put hundreds of millions of workers worldwide back to work or to work for the first time while providing the nations of the world the revenue to retire their sovereign debt as increased employment would lead to higher taxes being collected.
Have you ever questioned our monetary policy where the rate of growth of the money supply is only 3% a year non compounded while the total returns on investment in the American economy is said to be 10% of whatever is invested in the economy in a given year? Which means the growth of the money supply understates the total return on investment in the American economy by 70% because a 3% growth in the money supply captures only 30% of the total return on investment leaving the remaining 70% of the of the total return on investment in the American economy in a given year to be made up by credit (or debt) which accounts for the excessive debt at all levels of the economy including government, the private sector and American households. Shouldn’t the growth of the money supply more closely reflect the actual return on investment in the American economy of 10% minus a currency stabilization factor of say 200 basis points because the Federal Reserve never has access to the most current data reflecting what is presently happening in the economy and you would not want incomplete data to cause the Fed to accidentally put too much currency into circulation and setting off inflation in the process.
The Federal Reserve is charged with regulating the growth of the money supply and maintaining price stability by fighting both inflation and deflation. What better means is there to regulate the growth of the nation’s money supply but for the Central Bank to invest in the World’s equity markets as part of its monetary policy oversight? If the Federal Reserve does not quickly begin raising interest rate as a means of spurring banks to begin lending again we will be faced with a deflationary spiral similar to what Japan has been dealing with since the mid 1990’s. Wage compensation has fallen 21 of the last 23 months while GDP contracted by 0.1% in the fourth quarter of 2012, exactly what you would expect to see on the cusp of a deflationary spiral downward. Does it not make sense that if wages continue to fall and consumers with smaller pay checks continue to hold off from consuming non essentials that producers will be forced to cut prices on products and services they sell in order to spur increased demand?
The Republicans have been concerned that the Fed’s policy of cheap money would ultimately cause runaway inflation but economists like Paul Krugman, Joseph Stiglitz and you believe we need more stimulus currently. Paul Krugman has long been saying that the Feds policies are not contributing to inflation nor are they crowding out private sector investment. While it seems with the extremely low interest rates being paid on bank deposits and government bonds government spending isn’t crowding out private sector investment because when government spending usually crowds out private sector investment interest rates generally rise in response. But a low interest rate on loans that banks will not issue serves the same purpose of making money scarce as much higher interest rates on money that banks are willing to originate.
Mortgage lending has not been helped by the artificially lower interest rates. The increased numbers of homes now being sold are being financed as all cash transactions by private equity firms as investment vehicles. The Federal Reserve said it does not want to raise interest rates until unemployment falls to 6.5%, if it sticks to that policy it may indeed be a very long time before unemployment falls below 6.5% because the Federal Reserve has gotten their priorities twisted because falling rates of unemployment should not be seen as a prerequisite to raising interest rates but raising interest rates should be seen as a prerequisite for getting banks to increase loan originating because employers cannot do the hiring to reduce unemployment if they cannot get the funding to expand their business. Interest rates on loans must rise high enough so that banks rewards to risk ratios are more favorable to banks issuing more loans.
Please read on.
Professor Charles M. A. Clark
Senior Fellow at the Vincentian
Center for Church & Society at
St. John’s University
8000 Utopia Parkway
Queens, NY 11439
1 (888) 9STJOHNS (toll-free)
Jamaica, NY 11439
Dear Professor Clark: February 18, 2013
Fake Issues Clouding the Economic Debate on How to
Reinvigorate the American and World Economies, A 20/20
Economic Prescription for Jump Starting the Economy Globally
I am writing to you concerning an article that appeared on February 16, 2013, in the Tablet, the Newspaper of the Brooklyn Diocese, where you were quoted, saying, “Fake Issues Cloud the Economic Debate”. I agree with much of what you said in that article. This year being, the hundred anniversaries of both the creation of the income tax and the Federal Reserve Bank many of the issues that contribute to income inequality are not being discussed such as both monetary and fiscal policy at the Federal, State, and Local levels of government respectively.
In Macro Economics it is taught that total return on investment in the American Economy is equal to 10% of whatever is invested in a given year, yet the money supply of the nation grows at only 3% a year which contributes to a potential 70% shortfall in economic growth relative to the total return on investment in the American Economy because when the total return on investment in the American Economy is 10% and the money supply grows at only 3% the growth of the money supply in hard currency only captures 30% of the total return on investment in the American economy leaving the remaining 70% of the total return on investment to be made up by debt, which accounts for why all segments of the American economy are over burdened with debt at the government level, in the private sector, and in American households.
The Federal Reserve Bank was created to fight both inflation and deflation in order to maintain price stability. Under sound monetary policy, the growth of the money should reflect the total return on investment in the American economy and grow accordingly, but because the data collected by the Federal Reserve is never a complete picture of what is happening at the moment the most recent data is studied you would need the growth of the money supply to have a small discrepancy, called a currency stabilization factor equal to 200 basis points less than the total return on investment at 10% for an 8% growth in the money supply to insure against an accidental over supply of money being put into circulation due to imperfect data and accidentally raising inflation. Government spending must be put under similar restraint as the growth of the money supply.
Such a policy if it were implemented would allow for 4% wage growth without inflation because the increased number of monetary units put into circulation more closely reflecting the total return on investment in the American economy would loosen the slack in the growth of the money supply, and promotes higher economic growth. While a too loose monetary policy in the short run can be inflationary, a too tight monetary policy in the long term would also be inflationary because a too tight monetary policy would be biased towards greater amounts of debt in all segments of the economy, including government, the private sector and American households.
Government spending crowds out private sector investment if government spending grows at a rate that exceeds the growth rate of the money supply. Ideally, to contain the growth of inflation you would want government spending to grow at a rate that is 20% slower than the rate of growth of the money supply, which is 3% a year which would leave government spending to grow at a rate of 2.4% a year. All levels of government should bank 20% of their revenue a year. With a money supply growth rate of 8% government spending would be limited to 200 basis points less than the growth of the money supply or 6%. I must state clearly, the growth of government spending is the single greatest contributing factor concerning the rate of inflation after the rate of growth of the money supply
The Federal government currently takes up 25% of Gross Domestic Product and the State and Local governments collectively contribute another 18% to Gross Domestic Product for a total 43% of Gross Domestic Product which means for every percentage point growth in spending by government above the rate of growth of the money supply contributes 25 basis points of inflationary pressure at the Federal Level and 18 basis points collectively at the State and Local levels of government to the overall rate of inflation. Containing the growth of government is the best way to contain the growth of inflation. If the rate of growth of the money supply exceeds the total return on investment you will tend to have higher inflation. If government spending grows at a rate of growth that exceeds the growth of the money supply you will again have higher inflation because all private sector expenses related to the business, including higher taxes or higher borrowing costs due to government borrowing crowding out private sector borrowing are passed along to the customer in the form of higher prices for goods and services and/or smaller quantities or less service for the same purchasing price or lower wages and fewer benefits for workers. People will tend to be more conscious of rising price changes but less conscious of falling quantity per price point or put another way, rising unit cost when the total number of units are shrinking.
The solution to a sovereign debt problem is to create a sovereign wealth fund where 20% of all incoming revenue would be either saved in a high interest savings account or invested in the equity markets in dividend paying equities only to buy and hold keeping trading costs down. (Dividend paying equities provide a revenue stream) The dividends paid on such equities could be reinvested to acquire additional dividend paying equities. If government consistently invested 20% of all incoming revenue in the equity markets and did not draw down more than half the accumulated interest earned in a given year and did not touch the principle except during an economic downturn, it would be possible for government to somewhat live off the accumulated interested on savings to fund government programs provided a consistent 20% of revenue is put aside into the sovereign wealth fund.
Kraus’s Economic Law of Relativity
Intelligent monetary policy would also stipulate that the average spread in interest rates paid on deposits and the interest rate charged on loans would never exceed more than 20% on average. Allowing for clients with credit histories worse than average and clients with credit histories better than average you could have a spread in the rate of interest of a few basis points plus or a few basis points less than the 20% average but the overall spread would not exceed 20%. Such a policy would insure against liquidity traps where banks lacking sufficient funds to continue lending money without having to borrow it from the Federal Reserve or other commercial bank and being rebuffed in their quest to obtain additional funds.
Liquidity traps happen because the rate of savings is not sufficient to fund loan activity because banks are not paying enough on savings in interest to encourage people to save or to increase their rate of savings. The solution to a liquidity trap is to raise the rate of interest on deposits as a means to raising the rate of savings. During a liquidity trap, banks recognizing their clients are not saving enough to fund additional loan activity become hesitant to lending to other banks because it would leave themselves with less operational funds. If the spread between the funds paid on deposits and the interest on loans were not to be more than 20% on average, no matter how high the rate of interest on loans there would be sufficient revenue to fund loan activity but as the spread between interest paid on deposits relative to the interest charged on loans grows wider than there will not be enough revenue to sustain loan activity and bank’s profits would be squeezed as happened in the late 1980’s. So, to make clear, it is not high interest rates on loans alone that cause a slowdown in loan activity but a high rate of interest on loans made relative to declining interest being paid on savings that cause loan activity to slow and profits to be squeezed because when people are not being paid good interest on their savings they find better things to do with their money.
If the rate of interest on short term loans of five years or less were to rise to an absurd rate of interest such as 20% and the interest rate paid on savings were to rise to an equally absurd rate of 16% or 20% less than the interest rate on loans, than the bank should have little trouble originating new loans because at a rate of interest of 16% being paid on savings more people would be willing to deposit more money into the bank to sustain loan activity the bank wishes to engage in by originating loans. Equally important, people who under ordinary circumstances would not seek a loan with an interest rate of 20% when interest rates paid on savings are considerably much lower than interest rates charged for loans would be more inclined to take out a loan at 20% interest if they were being paid interest on their savings of at least 16%. So with such a policy, no matter the interest rate charged for loans, banks would be able to operate profitably.
When financial institutions gouge their customers with exorbitant interest rates and fees in the short term those financial institutions undermine their own profitability in the long run. Again I must state, that is what happened in the late 1980’s and before every other banking crisis that ever existed. Interest rates on savings and interest rates on loans moved in opposite directions with the interest rate on savings falling while the interest rate on loans rose. Falling interest rates on savings discourage people from saving their money in the bank and encourage people to save their money elsewhere, even if it is kept in a home safe, cigar box, coffee can or under the mattress at home where it does the economy no good because it is not available to circulate in the nation’s banking system nor larger economy.
In September of 2005, the Federal Reserve Bank of Chicago reported that 25% of American families lacked a savings or checking account and spent on average $600 a year transacting their financial needs in check cashing stores. At that time, those figures came to 19.25 million families and $11.5 Billion.
The Propensity to Save Money in a Bank Rises and falls with the Rate of
Interest Paid on Bank Deposits Relative to Other Means to Earn Returns on Savings
The lower the interest rate on loans the more risk adverse financial institutions will be and therefore the higher the credit criteria. Conversely, the higher the interest rate on loans, the less risk adverse the financial institution and the more lenient the credit criteria. What matters is not the interest rate that attracts borrowers to pursue obtaining a loan but the interest rate that encourages financial institutions to lend money. What matters is not the number of borrowers that pursue obtaining a loan but the number of borrowers who were approved for loans that were sought. The Federal Reserve’s artificially low interest rates these past four years are what have kept economic growth below 2% a year the scarcity of available loans at 3% interest are why businesses are not hiring. As I said earlier, in Macro Economic Theory, it is said that total return on investment is equal to 10%. The interest rate paid on savings, dividends paid on corporate equities, and capital gains of all kinds make up the total return on investment in the American economy, suppressing the total return on investment by keeping interest rates artificially low does not stimulate the economy but reduces economic growth.
Monetary and fiscal policies that serve to suppress the total return on investment in the American economy (such as monetary easing, and higher capital gains taxes and higher income taxes) will also tend to slow economic growth. Financial institutions are often foolishly more concerned about losing money they do not currently possess than they are concerned with losing money that is already in their possession. Banks for example do not wish to make mortgage loans at 3% in the present because they fear the possibility of failing to make a mortgage loan at some unspecified time in the future for some unspecified greater rate of interest more than 3%, rather than take a sure 3% originating a mortgage loan, they settle for 25 basis points interest or a ¼ of a point interest on funds left at the Federal Reserve foregoing the opportunity to earn a sure 1200% more. (3% is 1200% more than .25% or a ¼ of a point.)
Banks desire to have a deposit to loan ratio as close to a 100% as possible but foolishly believe they earn greater profits the wider the gap between the interest rate paid to depositors on savings for the use of client’s money and the interest rate charged to clients on a loan for the use of bank funds but failed to calculate the lost opportunity cost of slower rising cash reserves causing banks to have to endure the expense of issuing fewer loans before having to resort to borrowing money from other banks. When clients look for a bank to deposit their savings, don’t they usually look for a bank that pays the highest rate of interest on deposits? When borrowers look to take out a loan don’t they look for a bank that is charging the lowest rate of interest on loans? Therefore the banks that are most competitive offering the highest interest on savings and the lowest interest to borrow money would likely have a deposit to loan ratio closer to 100% than banks that have a wider spread in the interest paid to clients for depositor’s funds than the interest rate charged to borrowers for the use of banks funds, also; cash reserves would rise faster allowing the bank to generate new loans more quickly and therefore earn greater profits.
Minimum balance requirements and the punishing bank fees charged against accounts that fail to maintain a minimum balance should be outlawed and the taxes charged on interest earned on deposits should be repealed at the Federal, State, and Local levels of government because such policies are counterproductive to encouraging people to save more. Capital gains taxes should also be outlawed because capital gains are taxed at the corporate level before they are distributed. Currently the savings rate or investment rate (savings equal investment) of the nation is 12.3% but the nation needs to have a savings or investment rate of at least 20% of Gross Domestic Product if we are to jump start this economy. Real wages after accounting for inflation have fallen 21 out of the last 23 months and Gross Domestic Product contracted by 0.1% in the last quarter of 2012, and if wages are allowed to fall any further we will be facing a similar deflationary spiral that Japan has been dealing with since the mid 1990’s especially because in the last decade our population has endured its slowest growth in a century and with a deflationary spiral, paying off the national debt would be made much more difficult as fewer workers will be paying into government entitlement programs and a far greater number will be withdrawing money from entitlement programs. Declining wages will necessarily mean declining tax revenue and declining tax revenue means it will take longer to pay off the debt.
The real reason the Federal Reserve is engaged in monetary easing is to force Americans to invest in the stock market in order to chase higher interest than what banks have been paying the last four years in order to stimulate the economy by increasing investment in the equity markets. A more efficient and quicker means of increasing investment in the stock market would have been to raise interest rates to 5.5% and take half of the money raised selling government securities and reinvest it back into the equity markets in dividend paying equities only to buy and hold to keep trading costs down and to maximize upside potential return on investment. The dividends would be used to purchase more dividend paying stock over the term of the government bonds that financed the purchase of corporate equities and the accumulated reinvested dividends would be used to pay off the government debt along with the increased taxes that would be collected over the term of the bonds as more workers are put back to work and competition for labor drives up wages and the taxes collected on the same.
The Federal Reserve Bank does not want interest rates to rise because it would mean an additional trillion dollars would be spent servicing the national debt but if interest rates were pushed up higher the cost for oil and other commodities that rose higher in response to the interest rate on government bonds being artificially suppressed, and would fall as interest rates on government bonds rose, and the decline of cost of producer inputs to production would spur business to begin hiring again and the savings on oil and other commodities would more than offset the increased interest on the national debt. Furthermore, if the government was forced to spend a trillion dollars more servicing the national debt that would also mean government having to spend a trillion dollars less elsewhere in the budget so overall spending and the interest costs on the national debt would also fall.
The banking crisis of the 1980’s that caused the consolidation of the banking industry leading to a lack of competition resulting in banks charging evermore fees against customer’s accounts was brought on by the Carter Administration’s decision to begin taxing the interest earned on bank deposits in an attempt to raise enough money to pay off the then ¾ or a trillion dollar debt, causing the state and local governments to follow suit. Inflation coupled with rising interest rates to borrow money and falling interest rates on savings plus taxes on interest earned and punishing bank fees for failing to maintain a minimum balance forced many in the middle class to close their bank accounts because they could no longer afford to keep them open. Rising interest rates to borrow money and falling cash reserves as a result of customers closing bank accounts squeezed bank’s profits severely causing the banking crisis of the late 1980’s.
Raising taxes rates to pay down the national debt is not the most efficient means of retiring the national debt nor is it the least painful. In the past 33 years every time a grand bargain was proposed where there would be “A Balanced Approach” that called for increased taxes coupled with spending cuts the taxes were immediately increased while the spending cuts never materialized which is why the national debt has exploded from $750 Billion during the Carter Administration to $16.5 Trillion currently. Austerity alone, without tax increases would provide the economy its necessary stimulus provided that spending reductions in one part of the budget facilitate moving revenue to another part of the budget where it could be used more efficiently. Saving money on operational expenses and channeling some of that money to paying off government bonds would stimulate the economy as the cost of financing the national debt would fall as greater amounts of debt is retired. If we spend 40% more a year than we take in, in revenue, and we truly are interested in balancing the budget we should strive to cut spending to bring it in line with revenue which in this case would mean for every $1 cut in taxes we would cut a $1.60 in spending, because we are not just interested in eliminating the deficit but also generating surplus revenue to finance the creation of a sovereign wealth fund, which would generate interest that could be utilized to pay off the interest on the accumulating national debt.
Monetary Policy and Variable Rate Mortgages and the Relationship
Between Savings and Lending to Promote Higher Economic Growth
In the American Economy a 20/20 Perspective
The Interest rate growth on variable rate Mortgages should be limited to 10% in the first decade of the loan and should not be allowed to increase by no more than 20% over the entire term of the loan no matter how long the term of the loan and the potential intermediate maximum increase in the first decade of the loan should be spelled out along with the potential maximum rate of interest over the term of the loan. Borrowers forewarned of the potential increases in interest rates over the term of the loan can budget more wisely putting more away in savings during the teaser period or entry rate of interest when the loan was originated to cover eventual interest rate increases over the term of the loan. The reason for limiting the rate of increase in interest is because most working men and women do not have the benefit or luxury of being able to increase their rate of income by as much as 25 basis points a month as might occur if interest rates on loans were to rise after borrowers obtained a loan.
Additionally, if the interest rate on variable rate mortgages should rise over the term of the loan than the interest rate paid on deposits should rise as well and in proportion with the rate of increase on loans thereby keeping the interest rate paid on deposits and the interest rates paid on loans within 20% of each other. Savings are needed to sustain loan activity and the best way to reduce the incidence of liquidity traps which can impede economic growth is for interest rates on deposits and loans to move in the same direction proportionately.
Prescription for Retiring the National Debt in Less
Than Two Decades Is to Create a Sovereign Wealth Fund
If we are serious about retiring the national debt in the least painful manner without draconian budget cuts nor draconian tax increases while making Social Security, Medicare, Medicaid, SSI and SSD, Federal Flood Insurance and Federal Deposit Insurance at the Federal Level, and Workmen’s Compensation and Unemployment Insurance at the State level, and all other government entitlement programs solvent long term, we must completely restructure the American economy at the Federal, State, and Local levels of government because the Federal Government cannot pay down the national debt with tax increases nor spending cuts without doing our struggling economy graver harm.
A Major Contributing Factor to Income Inequality is
The Progressive Income Tax as it is Currently Construed
When we raise taxes on the rich to make them Pay Their Fair Share and tax them excessively that causes them to attempt to lower their entire tax burden by moving jobs overseas and when people are laid off and are forced to take lower paying jobs to re-enter employment that contributes to greater income inequality because higher unemployment drives wages down as it has been doing for the last 21 of 23 months and income inequality increases while tax receipts decline.
Reforming Individual Income Tax Policy
A more progressive tax system would tax everyone at the same tax rate and come with three tax exemptions. Two of the tax exemptions would be for 10% each to facilitate the purchase of a Health Insurance Plan and a Personal Retirement Plan with pretax dollars and would be exempt from both income and payroll taxes. The third tax exemption would be called the Minimum Wage Exclusion Tax Exemption and would be pegged to 62% of an individual’s first hundred thousand dollars and the prevailing Minimum Wage. Minimum Wage worker’s effective tax rate would fall to 7.6% from the current 10%. All workers would receive the Minimum Wage Exclusion Tax Exemption and pay the same tax rate for that potion of income, but because it is pegged to 62% an individual’s first hundred thousand dollars and the value of the prevailing Minimum Wage it would disproportionately favor those earning the Minimum Wage or slightly more because it would make up a larger share of the income of those who earns less, preserving our current tax codes progressivity while being fair to all tax payers. Those earning above the Minimum Wage would pay a flat tax of 20% on their income exclusive of the 62% exemption from income taxes and payroll taxes on their first hundred thousand dollars. Because within the last 80 years, no matter how high the highest tax rate the Federal government has set it has not managed to bring in more than 20% of Gross Domestic Product in tax revenue which is nature’s (or God’s) way of preventing the federal government from taking more than 20% of the American Public’s income in taxes or twice the amount that God asks the faithful to put aside to serve God’s purposes.
My reasons for pegging the Minimum Wage Exclusion Tax to both 62% of the prevailing Minimum Wage and 62% of an individual’s first hundred thousand dollars are so t
Deja vu! The tactics of officer Serrano secretly taping and attempting to goad his superior officer into suggesting illegal police tactics reminds me of the situation I became involved in 1995 in San Antonio as a police lieutenant. After two federal trials, one decision reversed in our favor at the 5th Circuit Court of Appeals, we were found by a jury to have been legally conducting police activity.
Ms. MacDonald, thank you for your untiring work, over many years, explaning street level police preliminary investigations and ferreting out jaundiced views and journalistic fraud.
Harry Griffin, Assistant Chief of Police (Retired)
San Antonio Police Department
The NYT has become little more than a source of far left hot air. Save a tree! Cancel it.
Maybe New York will rise to the occassion and get the politics right with returning Veterans. Change is good for all communities. New York Times need a face lift to survive and its time it grows up and support the faithful readership. The race card is not the way to go because it could be the wrong card to play this go around. Be Truthful!
The NYT is now part of the Democratic party. Playing the race card is what they do. Nothing new to see here.
@ Michael Dickerson
Truth knows no ideology.
Take a trip down Memory Lane...
One night, probably in 1880, John Swinton, then the preeminent New York journalist, was the guest of honour at a banquet given him by the leaders of his craft. Someone who knew neither the press nor Swinton offered a toast to the independent press. Swinton outraged his colleagues by replying:
"There is no such thing, at this date of the world's history, in America, as an independent press. You know it and I know it.
"There is not one of you who dares to write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping my honest opinion out of the paper I am connected with. Others of you are paid similar salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the streets looking for another job. If I allowed my honest opinions to appear in one issue of my paper, before twenty_four hours my occupation would be gone.
"The business of the journalists is to destroy the truth, to lie outright, to pervert, to vilify, to fawn at the feet of mammon, and to sell his country and his race for his daily bread. You know it and I know it, and what folly is this toasting an independent press?
"We are the tools and vassals of rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance. Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes."
(Source: Labor's Untold Story, by Richard O. Boyer and Herbert M. Morais, published by United Electrical, Radio & Machine Workers of America, NY, 1955/1979.)
Heather McDonald is a right wing ideologue and canot be trusted to ever be truthful.
Congratulations on this outstanding article.
For too long, the NYT has been living off their past reputation.
The fact that the NY Times lies is only a surprise to those who haven't been paying attnention for the past 20 years.
In an ideal world, Joseph Goldstein would be fired and serve time in prison for malicious defamation.
Deputy Inspector Christopher McCormack seems to be an examplary commander. Leave it to The Times
to try to make him the bad guy.
Oh gee...a guy who detests being cop looking for a large payout. Gee, in New York? I am shocked...shocked...and the NYT trying to find racism everywhere except what they thrust at whites? Gee, Im shocked again. TWO stops in a YEAR in a neighborhood that makes Syria look like Mayor Bloomberg's mansion? Yeah ok...maybe the real racist is the cop who wont stop people BECAUSE of color...maybe we should bus in some whites to make him feel better...
God save us from utopian socialists who are always convinced they're smarter than we are. "He knows best wh0 wears the shoe where it pinches." German Proverb
God save us from utopian socialists who are always convinced they're smarter than we are. "He knows best where wears the shoe where it pinches." German Proverb
The NYT is not a newspaper it is a propaganda organ of the left wing Democrat party. Anyone failing to recognize this is to stupid to be voting.
The Times has become a joke. It tried really hard to keep up with Prez Zero and his lies
This is a failed nation, it is now dominated by stupid people and parasites. There are simply more takers than makers. You can fix a failed government, but you cannot fix a failed people. Practically everyone not white voted for Obama, that cannot be fixed, and as Rush said, you do not want to run against Santa Claus. Fully 73% of black children are born out of wedlock, as the Democrat party has created a welfare state so that the Government has replaced the black male as the head of the household. Even with that, and record black unemployment, practically all blacks voted for Obama. This cannot be fixed. Practically all young people voted for Obama, and they as well have record unemployment. This is doom, and do not say you are sad for young people, as they voted for this. It will only worsen. Practically all unmarried girls 30 and under voted for Obama for free birth control. This is depraved, a failed people, cultural decline. Even with Detroit and all the other big cities the Democrats have destroyed, and states like CA, NY, IL, and the European Union welfare state and everything in the Northeast being destroyed by liberalism in full view, the Stupid and Depraved of this nation re-elect the worst president in American history. This is fatal, you cannot fix stupid, just hope you are not young, and enjoy the ride as long as it lasts.
Where to even begin with this? Let's start with the New York Times, a once great newspaper which has sacrificed its greatest asset - credibility - in order to score political points.
You can no longer be assured that a fact reported on in the Times happened, not only as described, but at all. The need to create a context, to have a story line that is in accord with the editor/publisher's view of the world means that nothing written in the New York Times can be trusted.
In short the Times has zero credibility.
Here, the Times starts with the assumption that the New York Police Department is racist, and that its 'stop and frisk' policy is an expression of that racism. The reporter then writes and researches from that angle, along the way ignoring facts that would question the assumption, and twisting other facts to support the assumption. There is no hint of objectivity, or that it is "facts" that are reported - the object is to show that the NYPD is racist and the policy is an expression ofthat racism - so what you get is more like a legal brief than a news story.
In one sense the Times is following in an old newspaper tradition when it reports the way it does. The difference, however, is that the Times has long claimed to be different than the tabloids with which it competes, it holds itself to some higher standard. But, the days when the Times could lay any claim to being better than the Post of the Daily News are long gone - the old New York Times is dead and buried.
The many misstatements, exaggerations and other nonsense highlighted in this article amply illustrate that the Times has not only become like its rivals, in many ways it is outdoing them - niether the Post nor the Daily News have the same kind of credibility issues that are now part and parcel of today's New York Times. The analysis done in this article could be done for any headline article written in the Times these days with the same conclusion - that nothing in the paper can be trusted.
An organizations usually gets its culture from the person at the very top and at the New York Times that person is "Pinch" Salzberger. Salzberger is singlehandedly responsible for the decline of the Times - the loss of credibility, the crusading nature shown in every article, the studied ignoring of facts should they get in the way of a story, are all at his behest.
The paper has suffered for it economically since Salzburger has halved - at least - its potential audience. If any newspaper could have survived today's chalenging environment it was the New York Times,. However, under Salzburger's leadership the Times has little chance of maintaining its present form.
In fact, Salzburger has done what in another time would have been considered impossible - he has made the New York Tmies less trustworthy than the National Enquirer. After all, the Enquirer investigated and printed the Edwards scandal, something the Times didn't touch until the very end. And, the Times has yet to report on the many infidelities of Bill Clinton, something that has long been front page news at the Enquirer, which even published a front page photograph of Clinton's mistress.
The Times, however, doesn't touch political scandals - unless the politician has an "R" after his or her name.
The New York Times would have fit in well with Hitler,s Germany and the Nazis propaganda machine!
Follow the money...race-baiting is highly profitable for those who have mastered the art. In our uninformed electorate, those who demagogue the crime issue can look forward to being elected or being appointed...and getting rich in the process.
P.S. -- LOVE Heather MacDonald! She strips away the bark better than any reporter I know of.
As Paul Harvey used to say "...and that's the rest of the story." Thank you for filling in the blanks. Sounds like a good police commander committed to his area of responsibility
The Color of Crime: Race, Crime and Justice in America
There is more black-on-white than black-on-black violent crime.
Of the approximately 1,700,000 interracial crimes of violence involving
blacks and whites, 90 percent are committed by blacks against whites.
Blacks are therefore up to 250 times more likely to do criminal violence to whites than the reverse.
Blacks commit violent crimes at four to eight times the white rate.
Hispanics commit violent crimes at approximately three times the white rate,
and Asians at one half to three quarters the white rate.
Blacks are twice as likely as whites to commit hate crimes.
Hispanics are a hate crime victim category but not a perpetrator category.
Hispanic offenders are classified as whites, which inflates the white
offense rate and gives the impression that Hispanics commit no hate crimes.
Blacks are as much more dangerous than whites as men are more
dangerous than women.
How to destroy a City, State or Nation turn it into a predominantly Black and Hispanic Population of uneducated low IQ takers ruled by Democrats and Liberals and in a very short time you will have a high crime, third world waste land like Detroit! With States like Calif., Ill. NY etc. and in a few years a third world Nation of Poverty, Misery, Crime and Corruption!.
Can't wait for the annual homocide rate to get up to 2000 again in NYC. Which will ironically result in cries of racism. But the dead will still be dead and besieged communities will still suffer under the violence. Too bad.
The saddest thing about this case is that those most in need of protection are going to be less protected. All in the name of .... protecting them.
hey Dred, you want stats how about blacks are 8 times more likely to commit gun murders then whites. they are also 10 times more likely to get killed
Oh and the NYT deserves to be relegated to the top of the dung heap of propoganda media outlets. Hopefully it will fail before the nation does. God knows how the Times has been diligently working to end the existence of the greatest nation the world has seen while being utterly oblivious to the consequential effect upon itself.
Liberal ideological blinders plus trying to make a name for himself as a journalist equals injustice, lies, and people hurt.....all day at the NYT.
I hope that the charge of racism becomes so trite that it's like claiming your mother wears army boots. The Progressives of this country have worn that moniker out to the point where it's now the tattered, unrecognizable, ineffective old saw it has become.
How about we remove the police from the street and let the residents stew in the criminality they've blessed themselves with until they wise up and do a better job of raising their young men.
In the long run, it'll be cheaper.
@Dred Scott: Whatever your real name is it should include "idiot" as a middle name. Heather MacDonald would agree in a heartbeat that Whites should be stopped and frisked if she were writing about Tuscaloosa or Newtown. That she was not and the fact that high crime areas in NYC have a preponderance of minorities will always elude your comprehension because you like the Al Sharptons and Obamas of the world see racism everywhere and can't see objectivity even it it ran over you.
Dred, if your argument is to base city policing patterns to prevent outliers like the three you mentioned, by all means do so. And when the inner-cities/city propers become virtually uninhabitable due to the increase in crime, you can pat yourself on the back. I know you think you threw some kind of intelligent gotcha at Heather, but it's so stupid that I'm actually embarrassed for responding to it.
If you want to understand how to really read the NYT, you have go back and look at the Stalin show trials in the late USSR. YouTube is an excellent place to watch actual footage, much of it with English-language commentary, of the trials from the 1930's, cleaning Lenin's loyalists out of the party, and the ones held in the late 1940's, which eliminated the remnants of the people who had helped install Communism in Eastern Europe.
Listen to the 'logic' of the prosecution. Black becomes white, up becomes down, loyalty to the Party is turned into proof of espionage, etc.
Orwell did not have to go very far for his inspiration for 1984.
Once you understand the 'logic' of the Far Left, reading and understanding what passes for news in the NYT becomes much easier.
Keep up the good work. It is very unfortunate that it is so difficult to get the truth out.
Obama blacks should not be stopped by police.
Just move far away from these animals.
Let them kill/tax/eat each other.
Atlas has Shrugged.
Stop-and-frisk only benefits poor people who live in bad neighborhoods. Who cares about them? The Times is right to throw ghetto-dwellers under the bus. They don't live on the Upper West Side, and they don't subscribe to the Times. Let them fend for themselves.
Dear Heather Mac Donald: I submit that the statistics from 2012 show that the vast majority of mass shootings in the U.S.A. were committed by young White Males. I point to Tuscaloosa, AL, Aurora, CO, and Newtown, CO as just 3 examples and will let Columbine slide since it didn't happen in 2012. Please give me one reason why the NYPD shouldn't be racially profiling young White Males starting at 0600 tomorrow morning. Tell Me Something Good! Even if it uses the same hastily constructed arguments like the ones you used in this article....
Do you suppose that could have something to do with the fact that 75% or more of all crimes are carried out by blacks!
As a former police supervisor, sounds like Serrano is just covering his lazy ass. A rating of 3 out of 5? He sounds like a 1, at best.
Higher percent of crime committed by 'born on welfare' demos.
It'a wonder that anyone wants to be a police officer these days. They're damned if they do, damned if they don't. Especially in NYC with a rotten rag like the Times which can't report anything honestly.
The issue is with the idea of "the right people." The officer, not any kind of offender, is or was frequently stopped. The right people are not repeat offenders since the police stopping people have no idea if the person is a prior offender, except in the bogus infringement of 'trespassing' on public property, and is simply a young male of color.
Officer Serrano, who continues to work in the 40th Precinct, said that as a Hispanic man in the Bronx, he himself had been stopped many times. "It's not a good feeling," he testified.
The tack taken by the NYT in this article is probably the clearest proof I've seen this year that "progressiveism" is a form of mental illness. EIther that, or it is the most hypocritcal ideology ever to be spawned.
While continuously announcing for all the world to hear, their love of the downtrodden minorities, almost every action they espouise has the effect of making things worse for the intended benediciary.
I have learned, over the years, that when confronted with this type of conundrum, to look for a hidden agenda. I suspect that what progressives really want is for everyone to be beholden to them so that progressives can dictate, in minute detail, how everyone shall conduct their lives.
When the "citizens" get their due and the courts find stop & frisk to be a violation of somebody's rights NYC will turn into a big version of Chicago or Detroit.
It's the Progressive thing to do. As the mayor says, get over it.
I applaud Heather MacDonald's work. She should be in line for a Pulitzer at the very least. Officer Seranno's actions are obviously motivated by a cash settlement for his lawsuit rather than wait for a retirememnt which won't come too soon. I stopped reading the NYT in 1990. Its biased, fast and loose reportage ultimately turned it into a 3rd rate yellow press. The Sulzberger's should realize it has long been over for them. They should give it up and retire to Cuba. As for Goldstein and Scheindlin, I question their ability to perform their jobs in a real world. Goldstein performs the unpardonable sin of reporting his own biased conclusions without reporting the facts from the other point of view. Scheindlin has always been a shocker as a judge. Her opinions also lack any nexus to reality. A reading of any of them produces a wonder at her reasoning and logic, as well as their disconnect from a strict construction of the US Constitution. As a retired former city prosecutor and judge,I was, and still am appalled by the arguments of the so-called "civil rights" propounders who ignore the rights of victims in favor of those who commit crimes, all in the name of filling their organztions' coffers through hysteria, shock and their own biased leanings. Cheers for MacDonald and the City Journal.
The attacks against honest policing borders on the insane. Do they really want to subject the poor to that terrible evil? It can get worse if the police get inured to baseless criticism. A State police chief lamented to me years ago that in some housing areas, tired police who were targets didn't want to go there, because "It's just blacks killing blacks and us when we try to police there. Is THAT what the NY Times wants?
Further confirmation (if i needed it)of why I stopped reading the "Times" years ago. It stopped being a newspaper and became a journal of (predictable) opinion.
The link you provided does not back up yoru assertion. Crime rates in NYC are not at a record low, tho murder rates are.
Why Are Crime Stats Up in New York City? -- Daily Intelligencer
Jun 20, 2012 – Major crimes are up 4.2 percent so far in 2012, (mostly "apple picking" ie ipod iphone thefts....)
The only bias evident in the Times piece was in Goldstein's reporting.How sad, that a flagship newspaper has sunk so low, but when crime starts rising again they'll be the first to critize the NYPD.
A facilitator from Common Ground is a very poor example of someone praising the Police. I would trust that facilitator like I would a Stasi agent in old East Germany.
It seems that the nyt has become a radical rag, of course writers like goldstein and freidman take care of themselves and their finances. They are busy denouncing the US local gov and foreign friends. The nyt has long be trading on its old reputation. It is time to relegate it to the trash bin of history
Yes, tiredofthedifferences, I get the point, which is that you are a bonehead. The police do not arrest people simply because they MIGHT be carrying a weapon; if so, they'd have to stop everyone, because anybody MiGHT be carrying a weapon. My understanding is that a candidate for stoppage must display characteristics and behaviors in locations and at times which, in the experience of the police, strongly suggest they might be armed. And, don't forget how many young blacks and Hispanics are alive today because these proactive measures are in place.
no problem -- but it should be applied to all residents throughout the five boroughs ... be surprised what other nationalities are carrying in their pockets ... one doesn't know until they are searched ... oops sorry cant treat non-blacks like blacks cause that would be inhuman!! Get the point?