Way Forward   A New Way Forward —William Greider and Others http://www.intensedebate.com/people/JOHN_GELLES [ copy of comment on William Greider input to ANWF protest website ] Beyond mending. even improving, current credit systems, we urgently need to create a direct safety-net fool-proof ID credit system (or card) for individuals with a permanent address. The purpose of the system is to protect aggregate demand from demand-deficits too large for the global economy to stand. The universe of debtors owing the system money they have spent to eat and keep a roof over their head, etc., will be limited to identifiable people in need who can be accounted for at least cost. The limit to monthly new credit will be high enough for the system to protect against the aggregate demand deficit and low enough to avoid reasonable fear of accelerating inflation. Simultaneously, we must support current plans for Obama-nomic sustainability, i.e., education, health, energy, infrastructure, economic-political-homeland/global security, etc. Fundamental change in economic belief must be advance to equate the "things that money must buy" with the "money to buy them". Only then will ordinary people see that the money to pay to support their parents (Medicare, SS, etc. ) will never be too high--because it will equal the cost of the things they need. Such cost is the same as the high earnings from the then plentiful jobs younger people will hold. If actual output of food, housing, medicine, etc., is short, automation will cure that shortage. If there is a future shortage of money, as there is today, it will be the fault of the monetary system of production. That is, the system will need more managed money than debt-based systems supply. Computer information systems can correct effective demand to raise demand to equal supply and raise supply (via automation, know-how, freedom of enterprise, and simplicity ) to meet need. 8 Steps for Rebuilding a Just Economy March 24th, 2009 by William Greider This rough outline leaves out lots of particular regulatory issues, but the core goal of reform is creating a banking and financial system that serves the society and economy, not the other way around. Everything being done now to rescue and restore the old order gets in the way of creating something truly new and valuable for the future. Those of us throwing logs in the path of bailouts are denounced as naysayers or worse, but the financial titans are trying to foreclose just solutions by stampeding Congress and the President into adopting ill-considered ideas. If Wall Street gets its way, the so-called “reforms” will ratify a corporate state — a grotesque hybrid that combines the worst aspects of both socialism and capitalism. It will concentrate power even further at the top. Capitalism with its inherent tendency toward monopoly will have the power to monopolize democracy. See my //Washington Post// piece in the Sunday Outlook section, March 22 2009. My new book — Come Home, America — describes the need for “patriotic realism.” That is the essence of what we are selling. Deconcentrate power, liberate people and smaller enterprises, workers and investors to help shape the country’s future from many different perspectives. This is how democracy was meant to work. Some points I recommend people consider: 1. Euthanasia for insolvent banks. Transferring their losses to the public will not restore the trillions in capital the nation has lost and the bankers destroyed. It merely relieves the bankers, their creditors and shareholders of the pain. Government must step up and take control of the system to supervise a just unwinding of the mess– whether we call it nationalization or something else. Handing out money and leaving the bankers in control is nutty, also morally wrong. The public understands this. Only Washington does it see the irrationality of what they are attempting. 2. The Fed must be democratized and effectively stripped of its peculiar anti-democratic qualities. A new federal agency — accountable to elected Congress and elected President — can be formed with the working parts of the central bank except without heavyweight bankers on the board of directors at 12 regional banks. SEE especially the NY Federal Reserve Bank’s board. 3. Because of its gross failure, the reformed Fed would be confined to conducting monetary policy and stripped of its regulatory functions. A different section of Treassury can assume responsiblity for regulations, including strong anti-trust law and other rules that limit and guide financial behavior. 4. The law against usury will be restored. The banking/and financial firms will be stripped of “too big to fail” protection and put on formal notice that at a certain point in their growth banks will be treated as “too big to save.” At that point, they will be stripped of all government protections and subsidies, therefore doomed. 5. A new banking system — smaller and more diverse and responsible to the public interest– can arise to fill the hole left by the demise of Citigroup et al. This is where the great public resources should be devoted, not to saving the mastadons. I would add the category of public banks operating as non-profit cooperatives (like North Dakota State Bank) can be an important cross-check on private commercial banking — a competitve model that offers credit on non-usurious terms and keeps the big boys honest. These would be chartered with special attention to providng financing for small entrepeneurial enterprises that need reliable credit and start-u p capital for enviromental innovation and other public priorities. This is the new frontier in finance and cannot wait for conventional bankers to understand its importance to the country. 6. Once the FR is domesticated in a democratic fashion, it must then be reformed to assume broader supervision of the nonbank financial firms in the “shadow banking system,” every institution of accumulated capital that does lending and interacts with regulated commercial banks in dangerous ways. Hedge funds, private equity, pension funds mutual funds etc. See my recent Nation article, “Fixing the Fed” for further explanation of how the Fed failed its duty and how it can repaired with internal reforms. 7. Our first political challenge is to throw logs in the path of Wall Street’s “reform” agenda and prevent Congress from again taking hasty action that makes things worse and blocks real reform. The anxious desire of Congress (and probably Obama) is to run a package through quickly and assure the public the whole mess will be taken care of by the cloistered, secretive Federal Reserve and the black box will expend public money beyond public scrutiny.