Likewise, I would suggest that a proposal being thrown around to mint trillion dollar coins is radical. It is stupid. It does not address the underlying SYSTEMIC problems. But the fact that such an idea is being discussed in public hints at a willingness to go farther in our thinking than we have hitherto.
As this article notes, “there have been 250 sovereign defaults since 1800″. In all cases of which I am aware, what happened was a government spent more than it could raise in taxes, borrowed heavily, and eventually was unable to make its payments. It said to the creditors some version of SORRY, then reset its ledgers. Obviously, there are many ways in which this happens, many ways in which creditors get some of their money back (invasion was at one time considered an acceptable option, if memory serves), but the fact remains: you can at some point just say: you aren’t getting your money back.j
There were 1.3 million private and business Chapter 7–total liquidation–filings last year. This means people and companies–like Solyndra–reached points where they could not hope to pay their bills, and simply walked away from their debts.
My proposal (click on the first picture, with the mechanic, here) is a default that is utterly unique, unlike anything I’ve seen tried, and unlike almost all proposals I’ve seen. It is most like the Chicago Plan, which called for 100% reserve banking.
The simple and ineluctable fact is that increasing productivity should be leading to increasing income per hour worked, and corresponding opportunity for leisure. John Keynes 15 hour work week would have come into being, had he not lived to teach us to borrow and spend.
There is nothing wrong with the value of our money increasing steadily–as it would were new money and new claims on our new wealth constantly being created–IF there is no public or private debt, as there would not be, if we had true Capitalism and free markets in the banking sector.
My proposal will work. I am convinced of it. I am not an economist, but I have thought it through carefully, and often, and see no foundational flaws. Defaults are common. Mine is simply a democratic default, which erases the debt of EVERYONE, not just the government.