The RED dollar plan - comments?

When speaking of $700 billion, “trickle down” does not seem to be an adequate term. “Dollar Deluge” seems more accurate, but the problem remains the same:

How to keep the funds transferred to the banks etc. from either just sitting on their books to improve their balance sheets or even worse, being used to invest in factories etc. in faster growing foreign economies. - “Worse” as US tax payer funds are already making new factories in China and new banking centers in Dubai etc. under the Republican trickle down ideology.

In Das Kapital, Carl Marx said:
"A Capitalist will sell you the rope to hang him with.” (Translated from the German of course - I read the original years ago.)

It the global economy, a slight revision is needed as follows:
Capitalists tax payer funds will build the factories that take their jobs away.

Perhaps the solution is the “Red dollar bill” I.e. A new red paper dollar*, equal to an old one but only in the USA. Red dollars are illegal to export or import and have no guaranteed value outside of the US. (In fact will be confiscated if presented to Branch of US banks.) I.e. Red dollars are very much like the “occupation currency” of WWII.

Paulson gives red paper dollars to the banks for their preferred shares, “toxic trash” etc. not electronic credits on their computers. Banks can lend them out to home buyers, builders, companies needing cash to meet their payrolls etc, in the US. In the US they have the same validity for “all debts, both public and private” as the old green ones, but cannot be used to pay for any US exports. I.e. they have no value outside of the US, except to some smuggler willing to risk jail time and confiscation of them whe trying to bring them back into the US. Likewise jail time and confiscation for anyone trying to smuggle them out in the first place, so their should not be much demand for them out side of the US. No foreigner would even pay a dime for one and no one in the US would sell one for less than a full green dollar as they can buy anything a green dollar can inside the US.

Any comment on my “red dollar plan”?
Or do you have a better idea to keep the $700 billion from just making things worse for Joe American?
-----------
*Red 10 dollar, 100 dollar bills etc also, of course.

 

Log in or Sign up to hide all adverts.

Yes, cut $700 billion worth of the military empire.

Sell Guam for $700 billion!

There are lots of ways to downsize everything...except the American ego.

 

Log in or Sign up to hide all adverts.

By their very nature, green dollars would be more valuable than the red. I would expect things like black market shops that exchange 3 red dollars for 1 green dollar cropping up. As for how this would affect Joe American? I suspect what would happen is that big business would easily manage to hoard green dollars while small businesses would be stuck with the red, making it that much harder to compete.

 

Log in or Sign up to hide all adverts.

Yes, its like government price fixing.

All it does is create a black market and shortages.

 

Why can't we have a one world currency?

Or maybe in 100 years we'll forget about having country borders?


Hmmmm... anyway, I don't think the red dollar plan will work. I knew many people who would happily trade you 100 dollars worth of food stamp food (which they'd go down to the store with you to buy for you) in exchange for $35.


Or maybe we have to just accept that the end of an empire is near?

 

If they existed, please do me the favor of selling your red ones to me. I will give nine green ones for ten red ones as they I can pay the $9 admission to the movie and still have a dollar left over.

By law, the RED ones are "legal tender" for ALL debt, both public and private - pay your taxes with them, pay for your new car with them, pay for your resturant dinner with them -pay ALL bills with them. - did you miss that part of post 1?

I admit that the Mexican worker who wants to send funds back to his mother still in Mexico may need to give me a few more red ones to get my green ones, but that is a very tiny fraction of what dollars are used for.

What is the "very nature" of the green ones which makes them significantly more valuable to the typical Joe American. Certainly 3 to1 is rediculous discount - it is same as saying I need only pay 1/3 of the price of a new car.

 

We could and have had in the past. (Gold and silver and to some extent precious stones, like diamonds) However, currency that can be made with a printing press will be, by some government. To have a world fiat currency you must first have only one government in the world. That is possible but not very desirable (at least by the people who want to eat a balanced diet three times a day) as it cannot be democratic.

Until population growth is reversed, a democratic world government would respond to the hungry masses. At least the problem of obesity in the US would be solved. Raising cattle pig and chickens etc. for meat would be illegal. - Very inefficient production of consumable food. You would be a "forced vegetarian" - is that your desire? There are many things wrong with Fiat money, but not as many as with gold etc. money - why every country has switched to the fiat system which can have (but admittely does not always) the currency in circulation expanded during economic slow downs and contracted druing inflation periods to make the natural economic cycles less extreme.

IMHO, a modest rate of inflation is desirable, if not essential, (I think it is essential) for social stability. - It is an automatic redistribution of wealth - some relief for debtors. Without that, the rich ALWAYS get richer and the poor always get poorer, until many are starving and you have the chaos of someting like the French revolution. The starving masses gain control and cut the heads off of the formerly rich. Magabie better die a natural death soon or he will lose his head. (Well probably not literally now that guns exist but after he is dead, there is a good chance his head will parade thru the streets on a pole for thousands to see, spit at etc.)

After much experimentation, Humanity seems to have finally discovered how to regulate the supply of fiat money (well the US is still ignorant as to how). Most governments now use "inflation targeting." For example, Brazil has a target of 4.5% annual inflation, and uses several central bank tools to keep within the + or - 2% tolerance bands. Infaltion is now approaching the upper band limit so the basic interest rate is slightly above 13% and the banks must transfer 52% of all demand deposits to the central government; (however, just a couple of days ago, to compensate for slowing demand for some exports, now what they send to the federal government can include high quality loans, mortages, etc. they have made as well as cash. - The Brazilian version of what many central banks are doing - buying assets of banks. Interestingly this is less a step to socialism than the US version. The central bank is not the owner, but by letting the banks keep more money they are helping with liquidity problems that do exist in the smaller banks.)

 

Guam isn't worth anywhere near that much, trust me, I've been there and it isn't near any shipping lanes or aircraft flight lanes either. I'd say it is worth about a few million, if anyone really wanted the place.

Please Register or Log in to view the hidden image!

 

The very nature is that the greens can be used outside of the US, the reds can't. This affects Joe American on vacations and Joe Business on imports. Perhaps 3 to 1 is an exaggeration but my main point of the green's higher value still stands. Sure, for purchasing every day things like groceries, taxes, credit cards, reds are fine. But, if things have to be imported in on greens, then the red price on things will have to be higher to compensate. Yes, people will accept a green total of a red price, but that would be the buyer's loss.

 

OK, I admit that (and a small differential value), even that currently the US is sending more dollars out than are returning in a negative trade balance anyway but that is offest by a combination of borrowing and FDI (foreign direct investment). NONE OF THAT WOULD CHANGE, by the existence of RED DOLLARS circulating inside of the US. Yes some American would go to Europe with only green dollars, but so long as the present flow of green dollars (borrowed , FDI and negative trade) sum remains positive, so What?

Do not missunderstand. I am not suggesting that the heavy reliance on borrowing is a good thing. Just the opposite. I am trying too keep the $700 billion from just building still more factories in lower production cost locations so that it the borrowing does not get even worse! (Trickle down has killed many jobs in the US by building these factories the closed the more expensive production ones in the US.) Lets at least stop funding the construction of the foreign factories, call centers etc. that make for the export of US jobs.

That is the whole idea behind the "RED dollar plan" -at least put the $700 billion into productive US investments, not into Chinese etc. ones.

If you have a better idea as to how to keep the $700 billion making jobs in the US, instead of China, Dubai etc. please post it.

To see how the dollars are currently making dubai boom See:
www.cityscape.com **
One (only one) project there is to cost 94 billion dollars! The world's highest building is more then 2/3 done and it soon will be second highest as the new one will be a full kilometer tall! Let stop that growth there and make it in the US if that growth is to be funded with US dollars!!!!

------------------
** Sorry, that link is being re done. Here are some others:

See at least the first 30 sec of this one first: http://www.metacafe.com/watch/949045/worlds_tallest_building/

This one shows Donald Trump know where good investments are: http://www.metacafe.com/watch/yt-qdQL3qKii4s/dubai_worlds_fastest_growing_city/

http://www.metacafe.com/watch/yt-8JAZdBLUpQA/dynamic_architecture_dubai_2_energia_energy/

See this one if you want to know how the other (not half) 0.05% lives:
http://www.metacafe.com/watch/yt-0lXclgws7n8/the_palm_island_dubai_nakheel_uae/

http://www.metacafe.com/watch/46352/dubai_palm_island/

Why settle for one fixed view? Rotate the whole building Differentially floor by floor:
http://www.metacafe.com/watch/yt-iY0Uuyf8Xhw/dynamic_architecture/

Dubai is where it is "at" - not stoggy old urban decay USA.

This one tells some of the technology being used to make these "all homes have water water front for your yacht" artificial islands in the gulf; Including how the world's only privately owned high resolution satellite is used to guide the construction. See it at :
http://www.metacafe.com/watch/yt-wlfwumKgKko/mega_structures_dubais_palm_island_episode_3/

 

Before I respond, I have to ask, can red dollars be exchanged for green ones or for foreign currency?

 

No, not legally, but some would no doubt on a black market. Red dollar can not leave the US and within the US, RED dollar can only be used for buying materials, paying salaries, etc. If for some reason, you should want to buy red dollars with green ones, that is legal, but not the reverse exchange. I admit the validity of "Gresham's Law" -I.e. mainly Red dollars would circulate. Effectively green dollars would be hoarded and be replaced by RED ones until the economy recovers and the government could take them out of circulation.
(This is why I made them red - to help Americans learn the evils of spending more than they earn.)

Letting red dollars buy Euros, etc. would be the same as letting them leave the country and be used by foreigners to buy US exports etc.

 

Then I don't think it will work. All companies would have to do, the one's that could afford it anyway, is slowly but surely switch their accounting methods to spend red dollars domestically and green dollars abroad. The lower labor costs and laxer regulations in other countries is simply too much of an advantage to ignore. Not to mention you wouldn't have US buildings like the ones being built in Dubai. Such buildings are meant to encourage both domestic and foreign occupants (more the latter with the dollar getting weaker and weaker), and there is no way foreigners will want to do business within the US if they get the red currency in exchange.

It's a result of globalization. Who wants to do business in a currency that is worthless outside of a country?

Now that I think about it more, I feel like a monetary policy of that nature would only cripple America further. We would drive out the businesses that haven't already been driven away by our regulations, taxes, and high labor costs, and Americans as a whole would lose purchasing power. It's a very isolationist policy.

 

Yes I admit that Gresham's law is valid. (said so in last post, but by edit -perhaps after you read?) No harm in that - Joe American will do the same - just in case he wins some lottery and can afford to visit Europe. I.e. everyone will hold on to their green dollar and spend a red one if they have both - that is Gresham's law in action, but it does not hurt trade if the red one by law is "legal tender" for all debts public and private also.

Back in 1963, I often went to banks and took $100 dollars of change, saved the high silver dimes and turned the rest back at another bank. - had several thousand in silver in 1965 to sell at a priemium (> 50% gain as I recall) Gresham's law is as valid as any of physics. On last day a paper dollar would buy a silver dollar at the DC treasury, I was in the line with several thousand others. I realised I was too far back, and went with the unrully mass that surged to the door. - I got one 1000 coin bag (about 55 pounds) and one 100 coin bag. I left by a back door and turned down several offers of $2000 for my bag of $1000 15 minutes later. I should have taken the offer as the treasury had already sorted the coins. They missed one rare one (worth $115 as I recall) and closed the window when only the 3 million rare ones were left - the end of the "silver certificate" era.

We agree on this 100%. It is exactly what is happening now. What I am trying to stop, instead of promote with $700 billion more green dollars that will also leave the country to make more factories etc. in foreign lands.

No not accurate or a problem as the foreigner visitor is a net spender - True when he get change in the store for buying some thing it will be red dollars but as he is a net spender, he just uses those red dollars to pay for restuarant meal later that eve.

Any one who thinks thay can make money in that country, buy goods with it and ship them home. Also tourist will still come with the dollar weak as they are now. I am most sure currently the turist trade is more than 2 to 1 in favor of the US now. My wife's family thinks that every thing in the US is so cheap that they have all been within the last year and one daughter is thinking she could buy clothing on the summer clearance sales AT RETAIL, pack her suit cases full, avoid custons duty as they are "her clothing" and sell at enough profit in Brazil (summer just starting here) to pay for the trip. NONE OF THIS IS CHANGED BY RED DOLLARS CIRCULATING IN THE US.

You will need to tell me why you think that - the false statements you made above are not the reason.

 

Yes, all true, but I'm not talking just about tourists and those who would make purchases within the US. I'm talking about foreign investors who expect to be paid in currency that they can use worldwide. For example, let's say you have a foreign food franchise that originates from the Middle East. Of course starting up won't be a problem. Purchasing real estate, goods, etc., from within the US with the weak dollar would be very easy. But the profits would end up being in red dollars. Some of that can be turned around to reinvest within the US, but what does the foreign company do if they want to send profits back home? And that's assuming that the company does most of it's purchasing within the US of US goods, which chances are won't be the case. Taking into account the need to import supplies, the foreign company has less and less of an incentive to come to the US.

As for my comment on reducing purchasing power for Americans as a whole, I go back to my comment that imports would have to be purchased by green dollars. As green dollars are inherently more valuable than red ones, the "red price" of practically everything (considering how much we rely on imports) would have to be higher. As most Americans would be stuck with red dollars, they would end up paying an invisible "imported-by-green-dollars" tax, similar to the invisible inflation tax that Americans are paying now.

I hope the above paragraphs clarify.

 

That would of course depend on where "back home" is, but I will stick with your Mid East assumption. One thing I could suggest is to buy a container load of Westinghouse or Train air conditioners and ship them home to sell. - See how my Red dollar even helps US exports.

Please Register or Log in to view the hidden image!

Yes, I can agree with all that, but this "green4red" tax is a good thing for a country which imports more than it exports -will help reduce imports and as noted above the red dollar plan will increases exports.
Also, as I have already noted in response to your prior statement of this concern, There is a net influx of green dollars so they will be available for paying for the imports.* I.e. the sum of FDI, borrowing, trade balance and net tourist spending is positve still. As the red dollar plan boost exports and cuts imports, the amount of borrowing from China, etc. can be reduced.

It is clear, but does not weaken my case for the red dollar -try again.
------------
*This fact does not necessarily guarantee that the importer has the needed green dollars. Thus I need to relax my prior unqualfied "No." Importers with a bill from foreign shipper of goods, can take that bill to the bank (or US govermnet exchange office?) present it, and buy the green dollars they need for importing with red dollars. I had not thought thru this needed exception when replying with unqualifed "No." - thanks for helping me see this needed modification. I have not yet thought about how they will be priced - perhaps normally by banks in competition with each other and the government exchange office is only the "green dollar seller of last reasort" ? US prints new green dollars if it needs to. - Always good for the US to get real goods sent to its population for mere pieces of paper - why life has been so good for so many Americans - We screwed the Chinese with paper we will now make nearly worthless. -Dumb communistic Chinese deserve that, don't you agree?

Please Register or Log in to view the hidden image!

Please Register or Log in to view the hidden image!

 

That's much too big of a handicap. Profits need to be free to be spent on anything, not just made in USA products. Especially considering that cheaper products, and probably just as good quality, will be available from elsewhere, presumably China or Japan. Why bother going through the trouble of setting up shop in the US with its regulations and taxes, where the general populace is going to have reduced purchasing power anyway regardless of whether or not the red dollar system is set up, when you can do business elsewhere, make even more money, and be free to gobble up US products at cheap cheap prices?

Undoubtedly there are some who will take advantage of the opportunity. But I think on the whole it would be seen as a disadvantageous environment to most.

Hmm, with your edit on green dollar policy, I'm unsure of the effects. I'll wait till you clarify further on how green dollars would be handled, especially exchanges between green, red and other currencies.

Well, it is partly China's fault for continuing this farce. All they have had to do, for some time now, is cash in dollars, just like how in face of dollar inflation countries on the Bretton Woods system came to cash in dollars for gold.

 

If the French, Germans Chinese etc do not find it attractive to build factories, own and operate businesses, office parks, hotels etc in the US that is just fine with me - less, (often subsidized) commpetition, for Americans who do so. They only do it to extract wealth form the US. I can remember back about 40 years ago when the Japanese bought Rockafeller Center in NYC and thinking to myself: "If this foreign owership of the US gets to be common, all is lost." GM would not be going bankurpt if Japanese did not build cars in the US, and it would have responded to the need for smaller more efficient cars instead of trying to keep at least the big car market alive, IMHO. - It was just too hard to switch and go head to head with companies that had been making them by the 10s of millions for many years already.

The US should never have lived so "high on the hog" (I hope a "Limee" or is it an "outbacker"? like you is familiar with that expression) that now it must "sell the farm." I am not an isolationist, I favor free trade, but not foreigners owning much of the means of production in the US. They only do that to take profits from Americans. Convert Americans into their wage slaves. If RED dollars discourage that - more to their credit IMHO. - try again.

Should be clear now. Red dollars can only buy goods and services in the US or pay salaries EXCEPT when an importer need to buy green dollars to pay for imports and can prove that is their use. Good way to insures this, is the importer who has only red dollars gained by selling in the US goes to the bank, gives Both the bill for the imports and the bank's demanded amount of red dollars (he can go to another bank if he thinks that is too much) to the bank. In return bank issues him a "Paid for X dollars of imports from Y certificate" to him, and he goes back to work, home etc. He never gets his hands on the green dollars - the bank sends them to seller Y. If that not clear ask a specific question.

I agree. Probably the CCP does too, but they are coming from a 100% controlled economy to a partially free market one. They guaranteed employment - kept very low efficiency factories open to to avoid firing people etc. The are now building efficient factories (with the FDI and technology of the West), but still do not dare let there be many unemployeed workers.

Thus they need to sell part of their production to the West still, but less every year. I estimate that in less than two decades, perhaps in only one, they will be hard pressed to produce all they need to satisfy the long term contracts for raw materials, food stock, and energy they are signing in Africa and South America AND supply the growing number of urbanites with the high living standard they can pay for. (Their buying of goods and services rose 18.8% in 2007 Price of pork chop has nearly trippled! - Local consumption is growing much faster than Chinese production and it is part of the double digit GDP.) Also until very recently the number of pesants flooding into the main cities was nearly a million each month - now China is building dozens for big satellite cities and moving industry to them etc. - Good urban planning in practice. China is developing it interior, even modernizing its far west. Building a 1000 mile large diameter pipeline to take energy from the Western regions. etc.)

As I have posted many times: in the not too distant future it will be a great economic advantage to China to tell the west:
Go To Hell - We do not need you to buy our goods any more. Your green paper is worthless.
I.e. dump their treasury bonds to send US and EU into even deeper and longer lasting depression* so that the price they pay African and SA for these imports is much lower, with oil in surpluss of demand etc. - more accumulating saving on the imports than the one time losses on the Treasury bonds.
--------------
*Like Brazil, Australia will still be growing, not in depression or even recession but only modestly as an "economic colony" of Asia, especially China. We need to form an iron-ore cartel, etc. - Screw the chinese with high prices, not compete with each other for their business etc.

 

The problem is people pay through those newfangled EFTs these days. Do we really want to start a horse race to see how we can keep red and green 1s and 0s separate in each individual's account.

Another thing. What happens when I give the gas station red dollars and the refinery/or whoever has to pay the Saudis green dollars for the crude oil?