Economist James Hamilton

Another Solution to ‘THE BAILOUT’

The other solution to the financial crises that will immediately and directly help the people and the banking industry is to stop lending all new money into circulation. Start ‘spending’ it into circulation as payment for labor and materials provided in the building and maintenance of public roads and bridges, a benefit to all society and critical for commerce.

This simple, principle change in how we increase the money supply will provide the money we desperately need without an increase in indebtedness or inflation as the money supply increases with productivity gains, greater employment, high-paying jobs and a list of benefits too long to note here.

‘Monetizing’ public roads and bridges as a debt-free wealth brings new money into circulation in lieu of more taxes and more borrowing. One cannot pay debt with debt and get rid of debt. Wealth money is the only way the interest debt can be paid out of our economy.

Because the interest debt is compounding so fast, ‘producing’ our way out of debt must be accompanied by forms of debt repudiation that do not harm citizens.

Consider all primary home residence mortgages paid. This will lower the total indebtedness, allow people to live in their homes and have money to help meet their other living costs. This will create a real economic stimulus.

When mortgages are cancelled, the bank loses the mortgage asset and the loan liability simultaneously suffering no real loss of asset because the only thing the bank actually loaned was an electronic number of no real substance. Those numbers will remain in the economy available for consumption of other economic production including payment of other loans.

Loaning all new money into circulation and the resulting unpayable, compounding debt it creates got us to where we are now. More borrowing will only make our financial predicament more severe.

Please forward this solution to everyone you can think of. Otherwise, the growing, unpayable debt is going to make us a people infinitely more sorry than we are already.