I would like to propose a solution to the multiple systemic problems now facing the United States. A solution so far, not discussed. Since this country de-pegged from gold in August of 1971, we have been on a long road to bankruptcy.The “dollar”, as the world’s reserve currency has been progressively abused by imprudent fiscal and monetary policy. The debt burden imposed by this on government from the national to the local level is intolerable and will never be repaid. The debt burden that the citizenry toils under is even more intolerable.
Solution: Declare ALL debt both public and private null and void. Complete the bankruptcy proceedings started nearly 38 long years ago.
What would this mean? It means that what ever real estate you now own and owe on is free and clear of debt. It means that your credit card balance drops to zero and your credit card is canceled. It means that your car loan is also canceled. It means that there is no longer any sovereign US debt.
Why not? The Chinese did that in 1949. The Russians have done it twice and Argentina does that every few years whether they need to or not. Means that no state government, county government or city government any longer has any debt. The downside: raises the question of moral hazard. Prudent individuals who did not take on debt would get no direct benefit. Also, lenders, both institutional and individual would be wiped out. But think of the upside, even for those prudent individuals who did not directly benefit from debt relief. Onerous tax burdens would be lifted.
As a bankrupt, we would be back to cash and carry. Only see upside from that. This country in a very short period of time, became the industrial engine of the world. A feat unsurpassed in history as this country became the envy of the planet. ALL done without ONE credit card or one HELOC.
Of course, there would be no money left as all “dollars” in existence (other than in coin collections!) are created out of debt. No real problem there, either. The US Mint holds in excess of 250,000,000 ounces of gold. That gold belongs to the people of this country, confiscated from them in 1933. This does NOT count any gold that may or may not belong to the people located in Ft. Knox (no audit there since President Eisenhower) or the gold “lent” to the Federal Reserve.
M Zero (currency and coin in circulation) and M1 (demand accounts) would be backed by said gold belonging to the people. To ensure on going monetary and fiscal discipline, said gold currency, issued by the US Treasury, would be freely redeemable in gold specie at the conversion rate established based on the amount of gold vs. M zero and M1. Then this country could get back to work creating REAL wealth which is the production of goods and services that people want and need.
Just an idea. What do you think?