Hot Potato: Food for Thought
Where Did All the Money Go?
Getting Out of Debt
1997 August 01

A balanced mixture of personal property taxes, higher income taxes, and printing money can pay off the national debt without wrecking the US economy.

One percent of tangible assets (cash, stocks, bonds, and real estate) would be forfeited to the government each year. This would have a cooling effect on the economy, as would higher taxes. The cooling effects would be balanced by printing money. This has a heating effect on the economy and would also decrease the value of the dollar, which in turn would increase demand for American goods and services. With the right balance, the debt could be paid off without damaging the day-to-day economy. These measures should include phasing out subsidies and phasing in a high fuel tax.

While the government should not be denied access to the tools Roosevelt used to rescue America from the Depression, a mechanism must be in place to reduce debt when the economy is working. This is one of the pillars of Keynesian economics, and one rarely respected because it is so painful. The best protection is an informed public which does not demand subsidies, increased benefits, and tax cuts.

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