My friend, P. Mallela, who is a retired professor of economics (for 15 years) at Northern Illinois University, suggests the following alternative for tackling the debt crisis:
Obama can borrow $100,000 each from 10 million-20 million taxpayers at 5 percent interest for five years. This will give the government up to $2 trillion.
Those earning less than $400,000 could be eligible. Each will get $5,000 interest annually — of which about $1,500 will go back to the government as tax. Money that would otherwise be idle for 10 or more years can thus be put to good use.
The advantage is you recycle the money. Not create more by printing more of what is already a surplus resource. Money, once created, cannot be destroyed, only the location of its impact can be changed.
When you print money, costs are paid right then, while its benefits haven’t accrued. (Remember the housing bubble?) Investment banks are the sole beneficiaries. There is also the likelihood of inflation rearing its head down the road.
He feels this is the wrong time to create money when there is no demand for it. Do it when demand does perk up (in 5 to 7 years). Keynesian models are not relevant today. There is too much of excess supply.
Why build more houses or trinkets to fill them, when there is no space to store even the goods already available?
A man of multiple talents, Dr. Mallela’s plays in bridge have been featured in The New York Times. His 257-word unpublished proof for Fermat’s Last Theorem is far, far shorter than the one by the celebrated author Andrew Wiles (1993) and uses no “modern” mathematics. He doesn’t use a computer, so he can’t share his insight electronically.