Miles Kimball revives the Social Credit Movement:
I proposed an addition to the toolkit of fiscal policy: “Federal Lines of Credit” or FLOC’s. Here is the idea. Imagine that the economy is in a recession and the President and Congress are contemplating a tax rebate. What if instead of giving each taxpayer a $200 tax rebate, each taxpayer is mailed a government-issued credit card with a $2,000 line of credit? ($4,000 for a couple.) Even though people would spend a smaller fraction of this line of credit than the 1/3 or so of the tax rebate that they might spend, the fact that the Federal Line of Credit is ten times as big as the tax rebate would have been means it will probably result in a bigger stimulus to the economy. But because taxpayers have to pay back whatever they borrow in their monthly withholding taxes, the cost to the government in the end—and therefore the ultimate addition to the national debt—should be smaller. Since the main thing holding back the size of fiscal stimulus in our current situation has been concerns about adding to the national debt, getting more stimulus per dollar added to the national debt is getting more bang for the buck.
I have a new paper that spells out the argument in greater detail. It has the same name as this post. Here it is: “Getting the Biggest Bang for the Buck in Fiscal Policy.”
Next up: Robert Hall on Silvio Gesell, to be followed by Ed Glaeser on Henry George...
