A Not-So-Modest Proposal to Save the Economy

I have not been active in pol­i­tics since I was sopho­more class pres­i­dent in high school, but I feel strongly enough about this issue to take action. I invite my read­ers on Face­book to check out a new group that I just created:

The main rea­son that the U.S. econ­omy is in such tur­moil is that Amer­i­cans have been liv­ing beyond their means for decades. The result­ing “credit bub­ble” dwarfs the prior ones in the dot-com and mort­gage industries.

Now, the credit bub­ble is burst­ing. Amer­i­cans are increas­ingly unable to pay off their credit cards, stu­dent loans, auto loans, and mort­gages. As a result, banks are col­laps­ing because peo­ple are not pay­ing their bills. Thus, the entire finan­cial sys­tem is under threat.

Many of the pro­posed solu­tions involve giv­ing bailouts to the banks to off­set these losses or nation­al­iz­ing them. How­ever, this does not address the core prob­lem of the unprece­dented level of debt fac­ing Amer­i­cans. If this is not solved, then the stan­dards of liv­ing for mid­dle– and lower-class Amer­i­cans will decline, per­haps permanently.

There­fore, there are two pos­si­ble solu­tions: 1.) Use all of the “bailout money” to pay off as much of the debt held by mid­dle– and lower-class Amer­i­cans instead of giv­ing a lump-sum of cash directly to banks and cor­po­ra­tions; or 2.) Hit the “Reset” but­ton on the U.S. econ­omy and let all Amer­i­cans default on their debts; all debt — or at least all bad debt — would essen­tially be writ­ten off.

Both of these solu­tions have their plusses and minuses. Under the first solu­tion, Amer­i­cans would be freed from their debt, and banks would become sta­ble and sol­vent. How­ever, this may lead to increased infla­tion, and the fed­eral gov­ern­ment would still need to find a way to pay off its increas­ing debt bur­den. But if the U.S. gov­ern­ment is going to spend the money, it should at least be spent wisely. The sec­ond pro­posal would cause many banks to fail, but it would free both ordi­nary Amer­i­cans — espe­cially young peo­ple, the so-called Gen­er­a­tion Debt that will be the ones to face the con­se­quences of this mess — and the fed­eral gov­ern­ment from car­ry­ing an increas­ing bur­den of debt. The econ­omy would need to start over from scratch.

These meth­ods would be painful, but they are the only answers to the long-term prob­lem of debt that now threat­ens the United States of Amer­ica. The patient must face painful chemother­apy in order to kill the can­cer. If Amer­i­cans no longer held a crush­ing amount of debt, they would spend money again. Since roughly two-thirds of the U.S. GDP is based on con­sumer spend­ing, this would also jump-start the economy.

If you agree with this pro­posal, then I encour­age you to join this group and send it to your friends. I hate Inter­net spam and numer­ous group invi­ta­tions as much as the next per­son. But if the Inter­net can elect a pres­i­dent, then it can affect pub­lic pol­icy as well. I have not been involved in pol­i­tics since I was sopho­more class pres­i­dent in high school, but I believe in this issue strongly enough to take action.

Sec­ondly, please con­tact as many pub­lic offi­cials as pos­si­ble and tell them about this plan. The elites in polit­i­cal and finan­cial cir­cles will hate this idea because it may hurt them while it helps ordi­nary Amer­i­cans — but Barack Obama was elected pres­i­dent despite the Repub­li­can and Demo­c­ra­tic party machines try­ing their best to stop him in the pri­mary and gen­eral elec­tions, respectively.

We need to save the United States.

Samuel J. Scott
Ris­hon Lezion, Israel
(a for­mer Boston jour­nal­ist and cur­rent MBA stu­dent)
Blog: http://samueljscott.com
LinkedIn: http://www.linkedin.com/in/samueljscott

Just, please: Do not friend me unless I know you personally.