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The solution to the economic controversy between stimulus and austerity

Jun 05, 2012

There is a running debate today among those who believe in government "stimulus spending" and those who believe in "austerity."

Neither is the real solution, although both have consequences that can be seen as good and bad (a combination).

Remember in early 2009 that hundreds of billions of dollars were spent as a stimulus program. Now the pendulum is swinging the other way because the economic problems have remained with us.

Both sides recognize that companies have a lot of money (via Wall Street), but are not hiring here in America. Both sides tend to ignore the fact that the "free trade" policies of both of the major political parties is the reason why the jobs are being moved offshore.

People want bargain prices, and government takes credit for keeping down the rate of inflation--that is, we get lower prices because they are being made by people from other countries who are willing to work hard for low wages.

Americans don't want to pay higher prices for "Made in America."

When one company goes overseas, all of its competitors have to do the same in order to remain competitive and stay in business. In this way, the multinational corporations make lots of money, but the people on Main Street remain unemployed.

They say that "free trade" is "good for America. What they mean is that it is good for the corporations that are big enough to set up factories in low-wage countries.

The result? We have a high unemployment rate, which lowers tax revenues and slows the rate of borrowing money (to buy houses, cars, etc.) Since all money is created by borrowing, this means that less money is being created, and we have a shortage of money on Main Street--even while Wall Street has a glut of money.

The shortage of money has to be alleviated by someone. Someone has to borrow the money. Hence, we have the "stimulus" spending, where government borrows more money to make up for the shortage of money on Main Street.

The big problem is that the government has used most of that stimulus money to bail out Wall Street instead of putting it into Main Street. So this stimulus money has had limited value, while putting the government further into debt.

Enter the "austerity" advocates. Because the stimulus "did not work," they want to contract the money supply further. They want the government to stop going further into debt. That sounds good, but under our present Babylonian debt-money system, to stop borrowing is the kiss of death. It would contract the supply of money and cause the worst depression ever known.

The solution is to take from the Federal Reserve Bank the right to create money and return it to the US Treasury where it belongs. Replace each Fed debt note with a debt-free Treasury Note. This will turn debt-based money into money that actually represents wealth.

God has been putting pressure on the whole world to overthrow the Babylonian debt-money system. In the end, the governments will have no choice. It is only a matter of time.


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Category: Financial

Dr. Stephen Jones


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