My idea will bring about ECONOMIC MIRACLES

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Red Stranger

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I just realize that my idea regarding reimbursement salaries (as described here) can bring about economic miracles. You can call it the Economic Grand Unification Theory. It encompasses all the ideas proposed by conservatives as well as liberals.

I would make 1 adjustment to my initial proposal. You CAN put your money in a savings account. You can do 1 of 3 things with the money in your credit card.
1. Buy stuff with your credit card and get it reimbursed. You'll also get 2% cash back for whatever you buy. You get a tax credit if you spend the amount on preventive care.
2. Put it in a savings account where you'll have no access to for two years.
3. Put it towards your retirement account, where you'll gain 5.5% interest/ year, but you don't have access to it for 10 years or until you're age 55 (whichever is sooner).
*When you take out money from your saving accounts they go towards the credits on your credit card.

It's the best economic system because:
1. By having to report your expense, we can eliminate illegal purchases like drugs.
2. This would promote Trickle Down Economics. Since investors and business venturers don't like having dead money, they're more likely to spend it than to dump them all into the saving accounts (you'll see the effect even if only 10% of the people are encouraged to spend more). This would promote a bigger consumer economy. Now the rich people may buy a new car every 2 years instead of every 3. They'll then sell the used car to the middle class for a lower price. The middle class will sell their cars to the lower class.
3. For the people that likes to save, they'll be encouraged to put the money towards their retirement funds. This would help the old as well as eliminate the burden on the working class from having to pay for social security.
4. The population will be healthier because they're encouraged to get preventive care. This would be better than universal health coverage.
5. This would open up more jobs since you can use the money on your credit card for purchases or (legal) services.
 
Red Stranger said:
1. By having to report your expense, we can eliminate illegal purchases like drugs.
Click to expand...

Couldn't one pay for drugs in cash (like people do now) and still have not to report it?
 
I don't see how this differs at all from a normal economy. The other differences are that all transactions are made using a credit card instead of cash and that savings accounts don't allow you to freely move money out of them. (Plus some minor things like tax credits for "preventive care", which I suppose is meant to be things like shots and dental appointments and whatnot. Tax credits are a side note to the entire enterprise, and we use them now for things like buying hybrid cars.)

Edit: Also, if everyone is paying taxes, they'd have to budget perfectly in order to have exactly the right amount of money not locked up in a saving account/retirement fund for taxes.

Edit2: Okay, I see what makes it different. The difficulty is that raising all incomes universally will cause inflation to adjust the prices of everything proportionately upward, so any increase in income disappears. Then, the main difference is that you have to spend your income within a year of receiving it, which is interesting but not practical; it prevents long-term investment.
 
Red Stranger said:
I just realize that my idea regarding reimbursement salaries (as described here) can bring about economic miracles. You can call it the Economic Grand Unification Theory. It encompasses all the ideas proposed by conservatives as well as liberals.

I would make 1 adjustment to my initial proposal. You CAN put your money in a savings account. You can do 1 of 3 things with the money in your credit card.
1. Buy stuff with your credit card and get it reimbursed. You'll also get 2% cash back for whatever you buy. You get a tax credit if you spend the amount on preventive care.
2. Put it in a savings account where you'll have no access to for two years.
3. Put it towards your retirement account, where you'll gain 5.5% interest/ year, but you don't have access to it for 10 years or until you're age 55 (whichever is sooner).
*When you take out money from your saving accounts they go towards the credits on your credit card.

It's the best economic system because:
1. By having to report your expense, we can eliminate illegal purchases like drugs.
2. This would promote Trickle Down Economics. Since investors and business venturers don't like having dead money, they're more likely to spend it than to dump them all into the saving accounts (you'll see the effect even if only 10% of the people are encouraged to spend more). This would promote a bigger consumer economy. Now the rich people may buy a new car every 2 years instead of every 3. They'll then sell the used car to the middle class for a lower price. The middle class will sell their cars to the lower class.
3. For the people that likes to save, they'll be encouraged to put the money towards their retirement funds. This would help the old as well as eliminate the burden on the working class from having to pay for social security.
4. The population will be healthier because they're encouraged to get preventive care. This would be better than universal health coverage.
5. This would open up more jobs since you can use the money on your credit card for purchases or (legal) services.
Click to expand...


This will cause another stock market crash, you know this I hope? Massive purchases on credit is a very bad idea, as the money technically doesn't exist. So, what happens when people have to pay those massive credit card bills? They don't have the money, so they go to take out a loan. Banks only have so much money to give out, so what happens when the banks give out the last of their money (this includes the $100,000 guaranteed by the Federal Government)? The economy crashes, and we're back in October 1929 again, only worse, since now its 300 Million people, not 160 Million or however many people we had back then.


Also, your system forces people to work with credit, which is inherently dangerous even on a small scale, and it only makes the above scenario all the more likely.
 
Red Stranger said:
It's the best economic system because:
1. By having to report your expense, we can eliminate illegal purchases like drugs.
Click to expand...
What about things like garage sales? You couldn't have a garage sale if everything is computerized. Very few garage sales I know of accept credit cards.

2. This would promote Trickle Down Economics. Since investors and business venturers don't like having dead money, they're more likely to spend it than to dump them all into the saving accounts (you'll see the effect even if only 10% of the people are encouraged to spend more).
Click to expand...
A savings account isn't "dead" money, it's just money that is invested very conservatively. Spending money on consumer goods, among other things, is an individual decision, and shouldn't be promoted or discouraged by the state.

This would promote a bigger consumer economy. Now the rich people may buy a new car every 2 years instead of every 3. They'll then sell the used car to the middle class for a lower price. The middle class will sell their cars to the lower class.
Click to expand...
People do that already. My car was bought from someone that wanted to buy a new one.

3. For the people that likes to save, they'll be encouraged to put the money towards their retirement funds. This would help the old as well as eliminate the burden on the working class from having to pay for social security.
Click to expand...
Again, people do it already. 401k plans, IRAs, mutual funds, etc.

4. The population will be healthier because they're encouraged to get preventive care. This would be better than universal health coverage.
Click to expand...
How does computerizing the currency do that?

5. This would open up more jobs since you can use the money on your credit card for purchases or (legal) services.
Click to expand...
U.S. currency should already be considered valid for just about every good and service in the U.S.
 
Cuivienen said:
I don't see how this differs at all from a normal economy. The other differences are that all transactions are made using a credit card instead of cash and that savings accounts don't allow you to freely move money out of them. (Plus some minor things like tax credits for "preventive care", which I suppose is meant to be things like shots and dental appointments and whatnot. Tax credits are a side note to the entire enterprise, and we use them now for things like buying hybrid cars.)
Click to expand...

The fact that it's similar to the current economy is the genius behind this system. But my system encourage people to either contribute to the consumer economy or put money towards their savings account. Stacking away money (therefore making it useless) would be discouraged.
 
Cheezy the Wiz said:
This will cause another stock market crash, you know this I hope? Massive purchases on credit is a very bad idea, as the money technically doesn't exist. So, what happens when people have to pay those massive credit card bills? They don't have the money, so they go to take out a loan. Banks only have so much money to give out, so what happens when the banks give out the last of their money (this includes the $100,000 guaranteed by the Federal Government)? The economy crashes, and we're back in October 1929 again, only worse, since now its 300 Million people, not 160 Million or however many people we had back then.


Also, your system forces people to work with credit, which is inherently dangerous even on a small scale, and it only makes the above scenario all the more likely.
Click to expand...

Another good point. There's no way to control inflation or deflation with credit.
 
Red Stranger said:
The fact that it's similar to the current economy is the genius behind this system. But my system encourage people to either contribute to the consumer economy or put money towards their savings account. Stacking away money (therefore making it useless) would be discouraged.
Click to expand...

This is what people do anyway. I know of no one who keeps more than a thousand dollars in a checking account unless about to write a very large check. Thus, everyone is already contributing to the consumer economy in the way you suggest your method will encourage: they save their money or they spend it. The amount of cash sitting around or in checking accounts is miniscule compared with the amount in savings accounts or being spent. Also, people owning small amounts of gold or gems or other investments that contribute very little to the economy are healthy for the economy anyway since they add some diversity and some protection against massive devaluation.

Edit: Plus, with some cash lying around, it is possible to benefit from exchange rates with foreign currencies changing.
 
I would make 1 adjustment to my initial proposal. You CAN put your money in a savings account. You can do 1 of 3 things with the money in your credit card.
--First problem. Credit cards are not as liquid as money. They're near money, but not money.

1. Buy stuff with your credit card and get it reimbursed. You'll also get 2% cash back for whatever you buy. You get a tax credit if you spend the amount on preventive care.
--You're already getting cash back, which is a credit of sorts. Also, why are you getting 2% cash back...Couldnt sellers raise their price by 2% to compensate?

2. Put it in a savings account where you'll have no access to for two years.
--Liquidity problem, big time.
3. Put it towards your retirement account, where you'll gain 5.5% interest/ year, but you don't have access to it for 10 years or until you're age 55 (whichever is sooner).
--Okay, but liquidity still. We have these types of accounts but you can withdraw but with penalty.

Firstly you'd have to have massive infrastructure to require CC and CC only. This would be very costly. In addition you change how liquid money is, which changes how M1, M2, and M3 behave, which means the behavior of the Fed would change.

I am sorry, but your proposal would introduced a sickness to our monetary system. Please go back and re-read Friedman as he's the best monetarist and his theories currently hold the day on how we conduct our monetary affairs.

Liquidity. Liquidity. Liquidity
 
Yeah, no. If I want to tie up funds in an illiquid vehicle it's already at the top of the investment pyramid in either
a. a retirement account
b. private equity
c. hedge fund
d. real estate
e. deferred comp

Liquidity is critical for all the other investments at the bottom of the pyramid.
Cash, munis and equities which I can access worst case in 3 days.
 
Red Stranger said:
But my system encourage people to either contribute to the consumer economy or put money towards their savings account. Stacking away money (therefore making it useless) would be discouraged.
Click to expand...

As far as I've learned, we don't have that problem in the U.S. anyway. The average savings per person is negative, or at least close to zero.

Thats assuming you are from the U.S, because savings are much higher in Japan and Europe.
 
Okay, so are you seriously telling me an average CFC poster has managed to come up with a better plan that all the economists and nobel prizes have proposed so far?
 
Economic miracle? Yeah, if it didn't cause a total economic meltdown, it would be a miracle. You are basically cutting out a lot of liquidity and investment opportunities.
 
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