Only Treasury Department To Issue Money

The United States Department of the Treasury, directed by Congress, should be the only institution with the power to issue money (Treasury Notes). Neither the Federal Reserve, nor any other private bank or banking system should have any power to issue new money. This new money should be managed for the public good, not for private profit as is done today. As such, money should not be sold to the government with the charging of interest, as is done today through the selling of bonds, but should be created without any associated debt. Money is a tool used to facilitate the exchange of goods and services in an economy and the decision to increase or decrease the money supply should be solely to serve this public-interest purpose. Therefore, two statistics should be be paramount in this decision: 1) population change (i.e., annual growth or decline) and 2) the price-level index (basically a measure of the price of several goods and services compared over time). If these two statistics are strictly followed, then these Treasury Notes should not be backed by anything of intrinsic value. However, humans being who they are, eventually corruption will prevent this from happening faithfully, so then, the money supply should be backed by something of intrinsic worth, like gold.

Abolish Fractional Reserve Banking

The reserve ratio of all banks and other financial institutions should be increased from the current 10% (usually) to 100%. The funds for this increase would be provided by debt-free Treasury Notes. In order to keep the money supply stable and prevent hyperinflation, the reserve requirement of banks would be increased at the same rate that payments are made to them with Treasury Notes. Paying off the national debt in such a way need not take more than about one year. (Please see www.themoneymasters.com)

The permanent benefit of transitioning to a non-debt-based money system would be the elimination of the requirement to perpetually pay hundreds of billions of dollars annually in interest payments for merely servicing the national debt. Other benefits include the elimination of the vast majority of inflationary pressures enabling price stability and easy comparability for decades.

Although credit would become scarcer, it would merely be available in quantities that are in line with a natural stability of the system. In other words, fractional reserve banking results in credit that would otherwise not be available, except for the legal ability of banking institutions being allowed the lending of money created out of nothing.

Balanced Budget

Every country and all levels of government should operate under a balanced budget law that balances, ideally, over the business/economic cycle except during emergencies or threats of emergencies. There should never be a balanced budget requirement that forces balancing every year. Of course, it is always impossible to determine exactly at which point in a business/economic cycle we are in, but the idea is that the first thing governments should do when beginning to run up budget surpluses is to pay off the debts that have accumulated during previous years of deficit spending. When practically all the debts are paid and surpluses still keep coming, then politicians can consider increasing spending (preferably short-term spending), cutting taxes (preferably temporary tax breaks) or saving up for the next economic downturn (the ideal choice). A fairly accurate determination could then be made after a few business/economic cycles as to whether enough effort has been made to reduce debts during periods of economic expansion. Debts continually being carried over into new periods of recession would indicate that not enough emphasis is being made to pay off debts during periods of expansion.

Self-Funded Government Programs

As many government services, programs, or operations as practical should try to be financially self-sufficient, meaning that each program or line in the budget should try to generate its own funding. Some examples would include public school lunch programs, Amtrak, customs inspections, the National Park Service, etc. Though commercial advertising could be allowed as a source of revenue in some cases, the main method to increase revenues should be the charging of user fees.

Government Programs Funded As a Percentage of Revenues

The funding for as many non self funded government programs as possible should be automatically pegged to the increases or decreases in revenue taken in by the government. For example, if total government revenues increase or decrease by 5%, funding for such programs will increase or decrease by 5%.

Government Financial Accountability

No significant amounts of money may be spent by any level of government without being accounted for in an accurate, fairly self-explanatory line entry in a publicly accessible budget. Exceptions to this rule can be made but only rarely and only in cases in which disclosure as to the true purpose or quantity of the funds could potentially provide a significant threat to any law enforcement operations or to the security interests of the US. Nevertheless, on a national scale, in no case and under no circumstances should the true purpose and amounts of intentionally misidentified moneys be kept hidden from the members of the relevant Senate committee of the United States and from the President and Vice President. In other levels of government, officials within the top one or two tiers of leadership should know and be accountable for all funds spent in their departments.

Keeping Spending Within Estimates

Although there is no sure way to predict the future cost of a government project or program, perhaps the following suggestion would help keep these costs within estimated budgets. Each entity that enters into a contract with the government would have a sort of ‘on-budget’ credit rating. These credit rating scores would be derived by averaging the performance of each entity’s completed previous contractual commitments to the government (or to any other customer) in terms of percentage over or under budget that the final costs eventually came to be. The lower an entity’s number or credit rating (i.e., average final costs as a percentage of average estimated costs), the better that entity will look in relation to others in the industry and the easier it will be for it to win future contracts with the government.

Budgeting Rollover

Government agencies (or any kind of organization) should not be required or encouraged to spend all of a current year’s budget due to a threat or possibility of any unspent portions of that budgeted amount being revoked and permanently lost at the end of the funding cycle. All unspent amounts should automatically roll over into next year’s budget. Of course, it’s always possible that upper level budget planners could decide that the next year’s budget could be reduced by a certain amount, even up to an amount equivalent to the previous year’s surplus. However, responsible budgeting would ensure that sufficient funds exist to properly accomplish the stated objectives and that funding for subsequent years would not automatically be reduced because of reduced expenses in the current year. Several valid reasons exist for budget lines not being spent (deferred maintenance, planned large item purchases, etc.) and upper level budget planners need to make sure that none of these reasons are a factor before zeroing out a budget line.

An incentive system should be implemented to reward all employees with a bonus or other reward if their department or organization spent less than their budgeted amount, while still achieving their objectives.

Funding/Salaries for Safety, Oversight, Investigative, and Other Agencies

Perhaps a better way to determine the proper funding, staffing, and workload-per-worker distribution levels at several government (and even private sector) jobs including safety oversight (FAA, NTSB, etc.), investigative (FBI, ATF, DEA, etc.), social (unemployment, welfare, child support agencies, etc.) and other agencies or organizations would be to follow the suggested principles illustrated in the following hypothetical example.

Let’s say the National Transportation Safety Board (NTSB) has 400 employees and investigates 2,000 airplane crashes/incidents per year. The first step is to require the industry that is being overseen to pay for all costs relating to its oversight. In this case, the aviation industry would be required to fully fund the NTSB’s aviation branch. This funding structure could take the form of a small additional revenue tax on the industry (mandatory upon all industry participants) perhaps on the order of 0.05% of revenues or whatever will cover the cost. To start, we could take whatever funding that the NTSB’s aviation branch is currently getting from the government that year, and divide that figure by how many incidents it has solved (closed), not merely investigated, that year. For example, let’s say that this figure comes out to an average of $40,000 for each aviation accident/incident that the NTSB investigates. Every year or two, the NTSB would adjust the amount charged to the airline industry to fund the NTSB’s activities. The main point is that this system of funding should cause there never to be a significant disparity or fluctuation in the ratio between the number of incidents that the NTSB investigates and its level of funding.

The next step is to take a poll (which should be done periodically, like every 2-5 years) of all the employees asking them if they think that they are over worked or under worked and whether they think that the overall workload justifies more new hires or even some reductions in personnel. After a rough balance is found between an adequate workload and staffing levels, an employee pay system should be implemented based on a formula factoring the number of workers and the number of units of work completed (solved airplane accident/incident reports, in this example). Naturally, this system would be fine-tuned over time.

So with 400 people solving 2,000 accident/incident investigations per year, it comes out to an average of 5 investigations per person per year. With the NTSB’s aviation branch getting an average of $40,000 per completed investigation, each of the 400 NTSB employees would share a portion of this amount, for example, $10,000. These $10,000 divided among 400 workers comes out to $25 per solved case. In other words, each worker would receive $25 for every solved accident or incident. The other $30,000 would go towards covering the overhead costs of running the NTSB (office rent, utilities, janitorial staff, etc.).

If the investigative employees feel that they are being overworked, they could recommend that more staff be hired. Let’s say they ask for 40 additional investigators (10% more investigators). While the aviation industry would still be charged the same rate, the distribution of those fees would be altered. Instead of workers getting to share $10,000 per incident solved, they would share about $9,000 (10% less because of the 10% increase in the number of workers). In other words, the same earnings get distributed among more people. It would also work the other way. If the NTSB workers feel that they could do the job properly with fewer employees, then each would get higher pay. If things get too far out of whack, the fees charged to the aviation industry would need to be either raised or lowered or other adjustments could be made where needed.

To help insure that investigations are done thoroughly, there should be heavy fines against the organization when it is determined that an original conclusion was wrong, even if it was an honest mistake. Such fines against the organization should be equivalent to the earnings received from multiple successful investigations. The more egregious investigative mistakes would naturally require higher penalties. For example, if it is concluded that an original investigative conclusion was proven wrong, the NTSB’s aviation branch could be fined the equivalent of what it would have earned for two successful investigations, namely $20,000. This means that for each wrong conclusion, each worker would have $50 ($20,000/400 workers = $50) deducted from their take-home pay.

To help insure against the natural desire for workers to earn more money by saying that the caseloads are manageable even though the waiting list of cases being investigated may be piling up, managers can overrule workers’ desires and hire more workers. A maximum number of unresolved and pending cases may be allowed without mandating the hiring of more personnel. However, if the numbers of unresolved and pending cases exceed 200%, for example, of the average number of cases solved in an average year, then more personnel would need to be hired, regardless of what the workers think. Conversely, if the numbers of unresolved and pending cases fall below a certain threshold, then some workers would be let go.

In general, but with some important exceptions, the free market should provide society with all of its goods and services without government subsidies. Utilities, food crops, fuel, school lunches, and most other goods and services should not be subsidized. Goods and services should be subjected to the properly regulated forces of the free market to allow for efficient market feedback concerning supply and demand. Subsidies cause the end users to pay less than the ‘true’ cost of the good or service, thus inevitably leading to wasteful usages of the good or service being subsidized. However, there are some good reasons why some things need to be subsidized, the main one being that certain necessary goods or services are not practicably capable of being financially self-supporting.

Subsidy Exceptions

The main exceptions include services directly related to civil governance, such as politicians’ salaries, election expenses, court costs, police protection, providing for the national defense, etc., because these are essential public goods for which government funding is logical.

Subsidies are also justifiable for funding an educational system designed for the masses to create a fully literate (including culturally literate) and skilled (at a basic level) population, as well as a population that is able to think critically and logically through any circumstances, including during all kinds of emergencies.

Another category for exception may be research and development which includes helping birth new technologies as well as research dedicated to expanding human knowledge. Funding these activities should be a major focus of subsidies because private industry is sometimes incapable or unwilling to invest in such research until the fruits of that research have matured enough to be able to survive by themselves in the free market or because it is unlikely that such activities will ever yield profits. Consequently, such funding is very important for producing the breakthrough technologies that often improve the living conditions of populations or advance the knowledge base for continued human research.

Apart from the exceptions mentioned above, government subsidies should be temporary, have very valid reasons, and recipients should be encouraged to wean themselves off of these subsidies so as to survive in the free market. Utilities like water, electricity, natural gas, etc., should not be subsidized merely because many people consider them essential products and services for society. Their degree of importance does not, in itself, justify government subsidies. However, the government should insure that such basic goods and services, like utilities, are provided to the population without interruption, under fair market prices and with a certain degree of reliability.

Subsidy Rule #1

First, there should never be absolute time limits on how long something could be subsidized, but periodic assessments should be made concerning the viability or worthiness of the cause being subsidized and whether the subsidy should continue or whether it would be wiser to gradually or suddenly cut off the subsidy.

Subsidy Rule #2

Second, government subsidies for causes which are deemed not worthy of continued subsidies, but with potential, should generally have their subsidies phased out over a period of years. Phasing out subsidies, as opposed to suddenly eliminating funding, would give the subsidized products a chance to find other sources of funding, encourage a speeding up of its development, and generally improve its chances of eventual success in the free market. Of course, if conditions warrant the subsidy could be frozen at certain levels or maybe even increased, but these should be the exceptions. Depending on several factors, the rate at which a subsidy is decreased probably shouldn’t exceed 20% of the total subsidy per year but average closer to a 10% annual reduction of the subsidy amount. For example, the year in which a decision was made to eliminate a subsidy for a project would automatically be defined as the base year (100%) for which subsequent subsidy reductions would be based. If the agreement calls for a 10% reduction in subsidy amounts each year, this means that during the next year the subsidy would be reduced by 10%, to 90% of its original, base year amount, and the year after that, it would be reduced by another 10%, down to 80% of its base year funding. Five years later, it would have dropped to 50%, and 10 years later, the subsidy would be at zero. If multiple entities are engaged in the production of a subsidized good or service, this gentle decrease in the subsidy amount would prevent disruptive shocks from being transmitted through segments of that market and would give those participants time to plan for further funding or consolidation. The rate at which a subsidy is reduced could be different depending both on specific developments within a market and individual project qualities.

Subsidy Rule #3

Third, subsidies for the production of a good or service should generally decrease as more and more suppliers enter the domestic or foreign market, depending on the purpose of the subsidy. More companies entering a market can generally be taken as an indication that the subsidized good or service has found favor in the market and that competition is beginning to develop. Greater competition generally means that the subsidized good or service has greater production and/or pricing flexibility, essentially, characteristics that would enable it to better survive in a free market environment.

Social Security as a universal entitlement program should be phased out over a 50 year period, at most. It should be replaced by a New Social Security program, administered at the state level, designed both to ensure that individuals are contributing sufficiently to satisfy the requirements for minimal savings toward their own retirement account and to ensure that retirees, whether or not they have saved enough, would receive at least enough income and/or services to live a basic life in which all of their most essential necessities are met.

Retirement Age

Retirement age should be defined as life expectancy at age 50 minus 10 years. As of 2008, life expectancy in the United States was 78.4 years (both sexes), which places the retirement age at 68.4 years, according to this proposal.

Individual Funding Expectation for 20 Years of Retirement

People should be required to plan to finance their retirement at a most basic level (to keep them at or above the poverty level) until they reach their life expectancy at age 50 plus 10 years. In other words, people should plan to support themselves for 20 years of retirement. People should be encouraged to increase their retirement funding to a point significantly higher than this minimum requirement so that they could live significantly above the poverty level during retirement. Of course, retirees could continue working to supplement their retirement.

Retirees Living Beyond 20 Years of Retirement

If retirees live past these 20 years, and if they do not have any assets left, the government would then fund the rest of their lives at an expense point equal to what their average for their last 10 years have been, increasing, when necessary to accommodate the increasing medical costs as aging continues.

Government-Monitored Savings Plan

Individuals should have wide-ranging freedom to choose the means by which they wish to invest and save for their retirement. Real estate assets as well as any other valuable assets could be included when valuing retirement portfolios. The government, however, being the ultimate guarantor of these funds to one degree or another, should retain the legal authority to periodically review these investments for adequacy and integrity, ensuring that people are not wildly speculating or unwisely risking their money on overly perilous investments. Every worker aged 25 and older would be required by law to subscribe to a valid retirement savings plan. People who fall way behind in their savings schedule or who fail to choose a valid savings plan on their own would subject themselves to a savings plan/schedule chosen by the government. In addition, if it is determined that they fell behind in their savings schedule without justifiable cause, a penalty of 10% of the underinvested amount would be levied with all proceeds going into their own retirement savings account. Savings enforcement can be done by requiring people to submit proof of savings updates to the government every year. Failure to do so will be met with fines and other effective enforcement measures.

Government-Capped Losses of Retirement Account Balances

If, upon the commencement of retirement, the government approved portfolio of an individual’s retirement account suffered a dramatic fall in value over the last 20 years before the retirement date due to falling investment values, the government will retroactively cap the losses of that portfolio to 3% annually for each of the previous 20 years, if necessary. In other words, the Social Security Administration will guarantee a future retiree with around $550,000 upon retirement if that retiree had a portfolio worth exactly $1,000,000 (in constant dollars) 20 years before their scheduled retirement. A retiree with a portfolio worth $1,000,000 10 years before their retirement would be guaranteed around $737,000 (in constant dollars) upon retirement. An account with $1,000,000 one year before retirement would be guaranteed $970,000 upon retirement. In summary, this 3% capped loss guarantee would only be triggered for portfolios whose value is below $1,000,000 at the time of retirement. Reckless investments taken without government approval during these last 20 working years would partially or fully invalidate this guarantee.

Once an individual has met the minimum investment requirements for retirement (namely, $1,000,000 in cash and/or other assets upon the commencement of retirement), that person would be freed from any government mandate to continue contributions to their retirement account. However, contributors should be reminded of the fairly low level of support guaranteed by the government and should be encouraged to continue investing for retirement. Individuals, who have met their minimum requirements, could invest additional funds in any way they see fit without government oversight. The government will not insure any additional funds, however.

Retirees With Insufficient Funds

Individuals who, at the time of retirement have less than the $1,000,000 minimum retirement funding level would still be guaranteed a maximum portfolio loss of 3% averaged over the last 20 years before retirement, but they would naturally have less money paid out during each of their retirement years. They would need to work out a plan with the government to plan for a 20-year retirement lifestyle consistent with such resources. Such retirees would always be guaranteed enough income and/or services to remain above the poverty level, but the government would have an increasing influence on the kinds of goods and services that can be used by such individuals. In other words, people who have not saved up enough for retirement would be, to various degrees, at the mercy of the government as to what they could buy and where they could live, among other restrictions.

Funding for the Historical Sciences

Governments should greatly increase their funding for certain historical sciences (archaeology, paleontology, etc,) even, if necessary, at the expense of funding other areas of science. These historical sciences are the most logical for government involvement not only because these sciences deal with the history of peoples and their relationships with each other and with their environments, but also because governments are the single largest entity influencing or controlling the usage of lands. It is the usage and consequential disturbance of lands that causes potentially valuable historical information to be effectively lost forever. Once this kind of information is disturbed or destroyed, it is practically lost forever. With global population at such high levels and with land use becoming ever more extensive and intensive, we cannot calmly afford to permanently lose more information at even a fraction of the current rate without being severely and justly criticized by future generations. The window of opportunity for finding out about the past is perpetually and permanently closing at a speed which is orders of magnitude faster than in any other scientific field of study. In fact, in most other sciences, the discovery of information does not depend on the preservation of the natural environment but rather on the dedication of time and financial resources. Governments around the world must quickly increase their focus and funding for the historical sciences.

Astronomical Funding Priorities

Manned space flight is expensive.  Robotic alternatives should be sought for all manned space flights, but especially for any place farther than the moon. Manned programs to Mars and beyond is a clear waste of money. There is absolutely no investigation or data gathering that humans could do on Mars that machines alone cannot do.

The only significant infrastructure that is logical to build on a foreign body is a lunar base, especially on the far side of the Moon.  Telescopes built there would enable astronomers to observe virtually at every point in the electromagnetic spectrum without any significant pollution from Earth. Furthermore, such a lunar surface location offers a stable platform, consistently cold temperature (at least for two weeks at a time) and is permanently in earth’s radio shadow. Telescopes could be kept at perpetually low temperatures if they are placed in deep craters near the lunar poles that are permanently shaded from the sun. Temperatures are low enough that active cooling of sensitive detectors may not even be necessary.

The International Space Station should be shut down and the funding diverted to either robotic missions.

Higher levels of government should not be required to pay for requirements they place on lower levels of government. Orders from higher levels of government should be honored by the lower levels just because they come from higher levels of government. If lower levels of government feel that they should not be bound by any mandate from a higher level of government, they should file a lawsuit and argue their case in court. Every level of government has the power to raise taxes in order to fund whatever compliance was mandated by the higher level of government.

None of the responsibility for providing government financial assistance to low-income individuals in need should fall to the federal government but to state and local governments instead. This should be considered a state function, like state unemployment insurance. This would result in citizens of every state feeling satisfied that none of the dollars they pay in taxes will go to welfare recipients living in states at the other end of the country. This gives both the providers and recipients of welfare funds more of a sense of community which may tend to result in a greater degree of oversight and responsibility as to how the funds are distributed by the donors and spent by the recipients.

The diameter of coin money should be sized according to its represented value. Thus, the $1 coin would be the largest diameter, followed by the quarter, then the dime, the nickel, and finally the penny.

Also, coins should not have ‘coin orientation’ but ‘medallic orientation’, meaning that they should be designed so that their front and back sided are oriented in the same direction, just like the pages of a book. Thus, both sides should be oriented in the same direction when a coin is flipped over along its vertical axis.

The practice of ‘franking’ or sending mail at public expense should be banned. At the very most, politicians’ use of franking privileges or funds should be restricted to only covering the costs of sending or shipping (through either mail, telephone, etc.) information that has been requested by a constituent. But even these costs should, ideally, not be borne by the public. The constituent requesting the information should bear all costs associated with receiving that information. Ideally, there should be no franking privileges or funds.  If ‘franked’ mailings are sent at public expense, each mailing should state that fact somewhere on its front cover.

All elected officials should have all of their needs to communicate to their constituents or any other members of the public met by using standard, government-funded and run websites to provide whatever information may be requested.