I began reading this article by Greg Mankiw, and started to come up with ideas. It led me to contemplate the entire relationship of Taxes and Recessions. Taxes possess little power to incite Recessions, but they also have little power to inhibit Recessions; even though Conservatives would claim Taxes are a great economic retardant. National debt, though, can have an immense impact on the Inflation rate, and some impact upon Recessions; though I suspect a vastly lesser curative than economists, Conservatives, and Liberals would acclaim. Politicians, on the other hand, are incited by Business to spend other peoples’ money quite liberally, as long as the money which is spent is not their own. It is from this point that We began discussions on national debt.
I review the presented information so far, and conceive of the notion that What must be done is to incite Business to expend their own funds on public finance. Business possesses the largest capacity to aggregate funds in society rapidly, and tend to increase that function even faster during Recessions. The Answer to Stimulus questions must, in the final analysis, be to incite Business to underwrite the Cost of Stimulus. They are the only entities which can capture the capacity to pay for Stimulus in the first place, and/or the potential to raise that potential during Recessionary times. Once this conceptionalism is derived, it becomes only a question of Accounting procedure to induce Business to start financing such Stimulus efforts. It is known that under full employment Labor can assume a greater share of the underwriting of public finance, but this capacity reduces drastically under Recessionary conditions; a factor which must be brought into the equation before Accounting procedures can be introduced.
My idea is the issuance of a new type of Treasury, one which will incite Business interest. I will call this form of Treasury a guaranteed Interest Treasury. It will respond to normal Interest rates until it falls to a Minimum of 3.5%, and will be a 3-year or less Issuance; the catch being that it can only be cashed by payment of future taxes to the Government. Business can purchase any level of such Treasuries, up to an estimated 3-year payment of their estimated future taxes. Inducement to purchase these Treasuries will be gained by Congressional approval for the Treasury to raise the minimum Interest rate up to 5.5% on specific issued Treasuries under this format. The program holds a number of benefits for Stimulus. It has the potential to reduce taxation under recessionary conditions. It presents a method of Investment under recessionary conditions to businesses restricted by limited Consumption at all times, but especially under Recession environment. It presents a potential added value to capital construction, and a source for potential government support for such capital construction; at rates which are an effective Zero Cost to Government. I like my idea, and await the debate which will tear apart my idea. lgl