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Inflation Tax

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

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.

Inflation is the enemy. It seems to be caused by too much money in the economy for current conditions. But rather than 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. So, we just let the Federal Reserve control an inflation account.

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.

The inflation tax can be a national sales tax on all products and services. We can use the proceeds from this tax to fund a national savings account. 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.

If the federal deficit is too large we could use this money to pay down the federal debt.

If the federal budget is in balance we, could just deposit this money into individual saving accounts which are invested in the stock market.

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