Saturday, September 15, 2012

Formula for a New QE That Will Work!

The Federal Reserve

The Fed announced another round of quantitative easing and reiterated that it plans on keeping interest rates near zero for at least another year and a half.  

The Bernanke
Since QE hasn’t worked all that well in the past, why not try something different this time around. My idea makes a lot more sense. Instead of the Fed’s plan of buying 40 billion a month in treasury bonds through Goldman Sacs, (who by the way makes a pretty penny on each transaction) try something new and original. History shows trickle down doesn’t work.  Let’s try trickle up instead.

Break the 40 billion per month into $20,000 increments. Have an old fashioned draft style lottery using the IRS database for families or individuals earning less than $50,000 per year. Add in to this pool those receiving retirement social security of less than $50,000 per year.  Don’t worry if a name is in the pot twice (the banks are double dipping taking money from the Fed and screwing the customer at the same time with higher fees). From this pool, draw two million social security numbers and send out the checks, make them tax free---hey we’re redistributing the wealth here, and want the same tax breaks as the corporations and big banks get.  There will be two million winners each month instead of just a handful of banks and corporations.

Though it’s not as much money, the odds are better than winning the Publisher’s Clearinghouse Sweepstakes!

This will boost the economy several different ways. Some of these people may spend the money to pay off bills, reducing the debt of the masses. Some may even pay off their mortgage or catch up on their house payments; thus, helping the banking sector. Some will buy a new car. Some may just go shopping at the mall. Both of these options boost manufacturing. And maybe even some people will use their $20,000 windfall to start a new small business, creating jobs and putting more people to work!

All Fed has to do is print checks and mail them out (bolstering the U.S. Postal Service) or electronically deposit winnings to an account (Not as good for the Postal Service).

  • This idea will give people real hope they can believe in. 
  • It might even get more people to file with the IRS so they have a chance to win.
  • Two million winners a month is nothing to sneeze at. 

That would be twenty-four million people in a year, about a quarter of the 100 million households in the U.S.

This idea beats the heck out of just continuing to give the banks and Wall Street handouts, hoping the money will trickle down— this way the little guy at least has a chance. And let’s admit--- it makes as much sense as repeatedly doing the same thing over and over again with failed results.  And don’t forget another great advantage---- there is no cost for renting a helicopter.

Okay, go ahead and withhold 5% for taxes. That should cover processing, envelope, a paper check and the postage. We do want to make sure this idea doesn’t cost the taxpayer any money.

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