Well, I sure don't know why Lincoln or Kennedy were murdered.

But it does seem absured for US to print money, and then pay interest on it to get it into circulation. I think I understand that it is based on treasury notes which are interest bearing, and hence loans to the government.

But why not just print and spend the money on government projects, and regulate the tax struture to bring it back in after an appropriate time?

It should be possible to determine how many dollars should be in circulation at any given time, and not exceed the necessary amount so as to avoid inflation.

I doubt the major bankers of the world would like it very well, and therefore, it won't happen.

But I think it would be a good thing for our economy.

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Originally Posted by galveston

But why not just print and spend the money on government projects, and regulate the tax struture to bring it back in after an approrpriate time?

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For the same reason that the stimulus bill's "shovel ready jobs" programs aren't working. The government MISSPENDS the money.

You see, it takes time before any money can get into the system through government spending on special projects.

The idea in the stimulus bill was to create projects that would improve the infrastructure of the USA... build bridges, tunnels, roads, and buildings necessary for the growth of the country, while at the same time creating construction jobs. And the idea SOUNDS like a good one.

The problem is that it takes time to get permits for all these projects. They need to first be studied for feasability, for environmental impact, etc. The permit process for a major construction job like a bridge or tunnel can take years... even if it is the government doing the project.

Then there's the costs... union wages, material costs (the government always pays too much for its materials), setting up contracts (legal fees will run in the millions or even billions), engineering fees, architectural planning, environmental mitigations, etc.

All the while, nothing is getting built. No jobs are being created. Nothing is actually happening... but money is going out the door. Mostly to be held in escrow until completion of the project (which means it isn't getting into the hands of construction workers or anyone else for that matter).

It can take 5-10 years before a government project even begins to build anything. 5-10 years while NOTHING is being stimulated. And all of this assumes that the licensing and permits will be approved... that some egghead from the EPA doesn't put the project down out of fear of the damage to be caused to the endangered rats or cockroaches of the area.

This is what has been happening with the stimulus bill's "shovel ready" jobs that were anything but "shovel ready". So they have all been scaled down. Now, instead of building new roads and bridges and tunnels, the government is paying to widen and repave some already existing streets. Such jobs aren't nearly as large, don't have nearly the number of employees and don't pay nearly as much as the stimulus bill's original plans. Which means that there is very little stimulus from these projects.

This is the reason that your idea, which sounds wonderful, cannot (and IS NOT) work. The projects that CAN stimulate the economy will take years to approve, and the ones that can get quick approval aren't big enough to stimulate anything.

BTW, issuing bond debt isn't a way for the government to get money out to the public (stimulus). It is a way for the government to obtain capital so that it can fund itself. I think you are confusing the two. Government's issue bonds to borrow money, not to make it available to the public.

They lower interest rates to get money into the hands of the public. They also decrease taxes to get money in the hands of the public.

Lowering interest rates does several things:

1) It makes borrowing more attractive. Borrowed money is then spent by individuals or business, which causes a stimulating effect to the economy.
2) It makes savings LESS attractive and thus promotes investment or spending instead, both of which have a similar stimulating effect.

Decreasing taxes does several things as well.
1) It puts money (disposable income) directly into the hands of the people. The people then spend that money (or at least a portion of it). That spending causes a stimulating effect. More goods purchased means more jobs created to produce more of the goods. More jobs means more money earned. More money earned means more spending. More spending means more goods purchased. This cycle is known as "pump priming".
2) It makes hiring of additional employees more affordable. When businesses hire additional people, those people earn more money, which is then spent. More spending means more goods purchased. See number 1 above.

In my opinion, the best way to put money in the hands of the people is to cut taxes.

People have been complaining recently that Bush was a fool for lowering taxes during a time of war. But they forget that Bush lowering taxes decreased the unemployment rates, got people working again, and caused the pump-priming that is mentioned above. He STIMULATED the economy. Argue as much as you want about Bush "overspending on the war" while lowering taxes, but the effect of it was actually an increase in tax revenue for the government. You don't have to believe me... just look at the IRS statistics for the last 10 years. They are publicly available. You'll see the jump in tax revenue after the Bush tax cuts, despite the lower tax rates. That's because while people and businesses paid a lower RATE for taxes, the actual dollar amounts they paid were HIGHER because their incomes were higher. Yes, the war cost us a lot of money, but the government was actually taking in MORE than it ever had before.

Anyway, that's the deal. Bond issues aren't about stimulus. They are about raising capital. Stimulus comes from other activities that put money in the hands of the people.

Elliot

Well said Elliot.

I wasn't thinking in terms so much as stimulus, but rather questioning whether there might be a better way for government to adhere to the Constitution in the matter of providing currency.

That is a question that goes back to the beginning of the country. You appear to represent the opinion of Jefferson . A central bank was proposed and pushed by Hamilton. There has been a vigorous debate about it's utility since.

The Titanic was sunk by stupidity for failing to give way to an immovable object, the lettuce was minding its own business at the time, both JFK and Lincoln were shot for radically moving the goal posts, so what are the odds on Obama, who opened the debate again on the white/black divide
As you say nothing like a good conspiracy theory