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Under the current system prices just keep going up. This means that the price of everything needs to change over time. We need to provide a stable economy without the wildly swinging boom or bust signals which mark the current design.

The goals of the economy need to be changed to provide full employment, low inflation and increased efficiency.

Inflation is the enemy. It seems to be caused by too much money in the economy for current conditions. But rather than just using interest rates to control the money supply let's just take money out when over heated and put money in when stimulation is required.

One way of having too much money is letting the federal government borrow rather than tax to pay for government programs. The federal budget is the largest pool of money in the system.

If we establish an inflation tax which can be adjusted rapidly, we could directly control the money supply without having such wild swings in the interest rates.

This inflation tax would increase income tax withholding rates during periods of inflation and use the money to fund the 401K type retirement funds for the tax payers whose withholding went up.

These funds can be used to invest in new businesses in under developed areas of the world at the small business or individual level. Thus money would be moved from areas which are over heated to areas which need more stimulation. This is a win - win situation.

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