THE QUADRILLION DOLLAR SOLUTION

I sent our taxes in on the 13^th, then attended Pat Roberts’ town hall meeting. Roberts appeared to be quite comfortable, due in large part to his popularity and years of experience. There were a large number of dignitaries present compared to the very few I saw at Tim Huelskamp’s event the day before. It’s good to know what side one’s bread is buttered on. Being seen or photographed with Pat Roberts is like money in the bank. Being seen around Tim Huelskamp is toxic.

During the Q&A session a young woman, probably a university student, asked something that’s on the minds of a lot of young people.  Shouldn’t the rich pay “a little bit more” in taxes as a matter of fairness to the rest of us? There was an aura of fear that hovered over her, understandably so. Like a lot of people her age she’s worried about her future. Jobs are scarce, the federal government is in big time hock to the People’s Republic of China, and hyper-inflation may be waiting in the weeds. As things stand today her share of the federal debt is 138 thousand bucks. Give it a few more years and her share will increase to 177 thousand.

She needs help. If I’d only known before I mailed the checks in. I’d have signed them over to her.  That would have been far better than seeing the taxable portion of our retirement nest egg being spent by the General Services Administration on booze, bonuses, and a Vegas holiday. 

Actually, I don’t think she was asking a question. I think she was silently screaming, “Somebody help me! I’m doomed before I ever launch my career.”

I’ve been thinking about this for a few days. How do we fix this god-awful mess? How are we going to slice this American pie? What’s a fair sized slice? Who does the slicing? And, what happens when the pie runs out because everyone is eating pie and there’s no pie makers guild around to make more pies?

I was stumped till early Sunday morning. Then I read the Washington Post. Sheila Bair, former Chairperson of the FDIC has come up with an ingenious solution for everything that ails America. All it would take, according to Ms. Bair, would be for the Federal Reserve to tweak its easy money policy just a tad.

Since the financial meltdown a few years ago the Fed has been lending money to the banks and hedge funds that got us into this mess at near zero interest rates. Seeing opportunity knocking, the banks and hedge funds have been re-investing the money in high-yield securities. The “carry trade” profits have been enormous. Talk about a gravy train.

As soon as I saw the rest of her solution I realized we’ve been looking at things the wrong way. Instead of trying to punish the culprits we just need to find a way to get on the train. And, Sheila Bair has found it.

Her recommendations? Have Ben Bernanke print 1.2 quadrillion (that’s a bit more than 10 to the 15th power) dollars and lend it to us at the same rate it’s being given to the fat cats. Then send a $10 million check to 120 million American households. Families could divvy up the loot. Each person would be free to re-invest the money however he or she pleased. Young people could buy Google stock or Portugal bonds, depending on how much risk they’d be willing to take.  Retirees like Nancy and me could buy ten year bonds at two percent and live like royalty. Then, in years eight through ten we could spend like drunken sailors till all the money is gone.

It’s a beautiful plan. As Bair observed, “Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.”

I’m really excited. This is the hope and change I’ve been looking for.

There are a couple of potential hitches. First, Congress would have to approve the plan. I think this would be relatively easy. Our government is addicted to borrowing and spending. For those who think this may be even too large or complex for our government, keep in mind that they’re the guys who’ve given us a 73,000 page tax code. The second hitch would be what to do when the loans come due and we’re tapped out. Again, that’s relatively easy. In ten years we’d all too big to fail.  We could then declare collective bankruptcy and demand a bailout of $20 million per household. It would work. After all, congress loves bailouts every bit as much as they love borrowing and spending.