Posted by WARREN MOSLER on September 30th, 2008
Short version updated for current events.
If you agree, please distribute, including your Congressman, Fed officials, FDIC contacts, etc.
- Have the FDIC remove the $100,000 cap on deposits and extend insurance coverage to include Fed deposits at member banks.
- Have the Fed set 1 month, 2 month, and 3 month lending rates for member banks in addition to the fed funds rate, which, with the above, it can now lend to unsecured in unlimited quantities on demand.
- Instantly normalizes bank liquidity, returning it to where it was designed to be all along.
- Largely eliminates the need for banks to use the interbank market.
functionally replaces the TAF and the Treasury lending facility without their shortcomings.
- Declare a payroll tax holiday and have Congress put the full faith and credit of the US behind all social security and medicare to eliminate the function of the trust fund regarding solvency.
This supports demand. The taxes can be restored as needed should the economy be deemed ‘too hot’.
- Crisis ends within hours.
- Markets recover instantly.
- Economy recovers instantly.
- Financial sector muddles through as restored incomes and growth allow the institutions to grow out of their issues.
This can be looked as a plan that ‘gives the tax payers their money back’ vs the reverse from the current TARP that has no direct effect on anything in any case.