Give the Money to People, Not the Banks

Give the Money to People, Not the Banks

by: Richard Cook

The world’s population is huge and growing. It currently stands at 6.7 billion. In some quarters there is a virtual state of panic over how many people there are and the effects of so-called overpopulation on the earth and its resources.

But no one knows how many people the earth could support because we don’t have an economic system that provides a fair distribution of resources. Countries like the U.S. are choking on a surplus of goods and services. Elsewhere in the world people are starving.

The problem with the world economy does not lie on the side of production. Modern technology is an incredible dynamo of productivity. The worldwide auto industry, for instance, is capable of producing far more cars than can be sold.

Today’s economic downturn is not happening because of a failure of production. It is happening because of a failure of consumption. This points to a fundamental flaw in the system of distribution. It really indicates a failure of the monetary system. We are in this recession because consumers in the U.S. and elsewhere don’t have money to buy what they want or need. Their ability to buy is decreasing because unemployment is rising.

What had fueled the economic expansion that preceded the current recession was bank lending–debt. But lending and debt have a limit. When people can no longer pay off their loans they can no longer buy things, so they quit spending. The economy then contracts. Governments try to prime the pump by encouraging more production and more lending. This is the rationale for supply-side economics. But it’s crazy to try to get people to produce more when we don’t have enough money to buy what we need.

The answer is to introduce consumer purchasing power without requiring people to borrow. It’s literally to give away money at the level of individuals and families. If we had an international authority such as the U.N. which gave every person on earth sufficient money to provide themselves and their loved ones with a subsistence living–food, shelter, clothing, and transportation–this money would then feed into the economy at the grassroots level. The production system would find entirely new sources of markets. Corporations would find the outlets for their products they lack, and the economic system would begin to move into equilibrium. I believe that such a system applied worldwide could support the present population with room to spare.

Where would the money come from to do this? It would be invented out of thin air the way banks do today. Except instead of being loaned at high rates of interest so the financiers can prosper at the expense of everyone else, it would be given directly to people. The U.S. government is in the process if giving $6 trillion to the financial industry to restart lending. It should and could be given to citizens and taxpayers instead.

Don’t believe me? Let’s try it and see.