A Twelve-Step Program for Economic Recovery

  1. Admit that the real economy is powerless against a de-regulated and de-supervised financial system
  2. Recognize that the fiscal powers of the federal government can restore stability
  3. Ignore the debt-to-GDP ratio; allow it to drift to whatever value is consistent with an economic recovery and a return to high employment
  4. Enact a full payroll tax holiday by setting employer and employee FICA contributions to zero
  5. Provide $1,000 per resident to state governments to help them stabilize projected budget shortfalls
  6. Commit $2.5 trillion to restore our nation’s crumbling infrastructure and build a modern energy superhighway to facilitate expanded use of renewable energy, reduce greenhouse gas emissions and lessen our dependence on fossil fuels
  7. Downsize the financial system; reduce the size of banks to the point that they no longer pose systemic risk
  8. Ban the securitization of non-prime loans
  9. Determine the real worth of bank assets; instruct the U.S. Treasury to conduct a survey of the underlying loan tapes and require banks to aggressively mark-to-market
  10. Stabilize the housing market by creating a Home Owners’ Loan Corporation and bestow upon it a full range of powers, including renegotiation and rental-conversions, as deemed appropriate in each case
  11. Announce a job guarantee program (like the WPA) to provide employment and income to the millions of Americans who will not find jobs in the private sector even after the economy recovers
  12. Carry these messages to elected officials and urge them to practice these principles in all our affairs
About Stephanie Kelton 24 Articles

Affiliation: University of Missouri

Stephanie Kelton, Ph.D. is Associate Professor of Economics at the University of Missouri-Kansas City, Research Scholar at The Levy Economics Institute and Director of Graduate Student Research at the Center for Full Employment and Price Stability.

Her research expertise is in: Federal Reserve operations, fiscal policy, social security, health care, international finance and employment policy.

Visit: Economic Perspectives

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