Here is a provocative post by Charles Hugh Smith in which he asserts that no fixes are possible, the system must inevitably crash and burn, etc. Charles is part of a cottage industry that has been making this prediction for, in his case, about ten years. Jeremiah recalls hearing the same predictions during the civil rights struggle, then again during the eighties, and – of course – the millennium.
Virtually none of the thousands of emails I receive present a few policy tweaks as credible fixes.
We write “provocative” because, while Jeremiah often feels America has passed the tipping point – his goal is to find solutions. Here are four big ones that all attack the root cause, namely too much money available to too many crooks in Washington.
- Repeal the federal income tax. The central government should be funded by tax collection at the state level. That’s how America worked for the first hundred years. This would reduce the size and power of the central government.
- Bring back Glass-Steagall, or something like it, to keep retail banks from speculating. Allow investment banks to go under, if they make bad bets. If they’re “too big to fail,” then break them up under monopoly law. This would avoid a repeat of 2008, and also curb some moral hazards.
- Speaking of Carter Glass – end the Fed’s dual mandate and restore its original role as a lender of last resort. No “taming the business cycle,” inflation targeting, or other hocus pocus. This would curb moral hazards like hedge fund welfare, and also make it harder to hide bad fiscal policy.
- Transition Social Security toward a defined contribution system. That way, the account would follow the contributor, and the system wouldn’t depend on a permanently young population. This would deprive Washington of a big slush fund, and also avoid a fiscal crisis.
Charles is correct insofar as no one has the political will to make these changes, but – there’s a difference between lacking ideas and lacking nerve. Our job as voters and activists is to keep the solutions top of mind, and then demand leaders who will implement them.