Four Sure Fire Ways to Fix the US Economy
by Any one of these four steps if done enough would end the current economic downturn and start to get people back to work instead of out of work.
The Federal Reserve Purchases Homes
Many people believe that falling home prices are the real culprit in the current economic downturn. If home prices stopped falling in value and started rising many of the bad assets on banks balance sheets would become good assets again as people would stop abandoning their homes and be able to sell them for more than their mortgage. Making many loans good again would improve bank balance sheets and allow the banks to make loans again. The Federal Reserve can cause this to happen by directly purchasing homes in the open market. The Federal Reserve has the authority to do this from the Federal Reserve Act. The first sentence in the Act states that the Federal Reserve exists, “to create an elastic currency.” Buying homes and putting money back into the US economy would create an elastic currency. In reality it has been the loss of money in the economy which has been the real culprit causing the downturn. Buying homes on the open market would address the loss of money. If the Federal Reserve purchased homes on the open market until people started spending money again at normal levels the downturn would end.
The Federal Reserve Purchases Stocks
The Federal Reserve can go into the open market and make purchases of stocks including the common shares in the nations most beleaguered banks. Such purchases in the open market would be a great boon to bank stocks and as those stocks rose in price the banks asset sheets would improve and they would be able to lend more money out again. Purchasing stocks in the open market would address the fundamental problem effecting the economy which is the loss of money from the economy from all the financial write-offs. As the write-offs have continually occurred money has been continually lost from the economy causing our currency to become inelastic. The Federal Reserve was charged by the Federal Reserve Act to “furnish and elastic currency” and purchasing stocks in the open market would do so. Doing what Congress charged the Federal Reserve to do is certainly legal and if the Federal Reserve did purchase stocks in the open market until people started spending money again at normal levels the downturn would end.
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