A Little Ray of Sunshine

Thursday, November 10, 2005

Targeted inflation

This is one of those things that make no sense to me. I've decided, though, that it's not because I don't understand economics. Economisists don't understand economics. I get it just fine. You get your money, you pay your bills, you can do what you like (within the law) with the rest. Works the same for government or companies as it does for an individual.
Put me in as Fed Chairman, and I'll tell you what I'd do. I'd do targeted deflation. Yes, I'll decrease the amount of dollars out there. This will be popular with the elderly who have fixed incomes. Their purchasing power will go up. And they vote. So it would be a politicly viable move, even. We might have to put a cap on maximum interest rates temporarily to decrease the number of bankruptcies. The credit card companies would scream, of course, but they'll still make plenty of money. Actually, they'll make more money, relatively speaking, because each dollar they collect will be worth more. It'll hurt the poor, but no moreso than inflation does. I'll target deflation over a number of years until we reach the point that we can make dollar size coins out of gold, and have them be worth a dollar. Of course, there will be a lot fewer dollars around, but there won't be any less money. Cents will just be worth more. The value of denominations will slowly be redefined. It'll be a long process, of course. Probably take at least fifty years. And the Fed. Gov. will have to get it's sorry rear out of debt at the same time.
I've got an idea as to how we could accomplish that, too. Simply require that before any other fed. bills are paid, it must pay all the interest due on loans plus ten percent of the principal. Of course, how we could get that made into law elludes me.


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