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Economic Inflation Thought Model:

Conditions

What if we have a large pool of money at the FRB which acts as a buffer to keep the economy stable.

When times are good, we increase taxes to fill the pool.

When times are bad we spend money from the pool to increase market demand.

Proposal

What if we take money from the pool and deposit one dollar into the checking accounts of everyone receiving less than the median income in any given month. What would be the effect on the economy?

What if we increase the monthly deposit to ten dollars per month? or

What if we increase the monthly deposit to one hundred dollars per month? or

What if we increase the monthly deposit to one thousand dollars per month? or

What if we increase the monthly deposit to ten thousand dollars per month?

and so forth until something happens.

What will happen?

• Inflation.
• The median income would go up.

What else?

• Market demand will also go up because there will be more money in the economy.
• Therefore, employment in the profit making part of the economy will also go up.

Assumptions:

• Inflation needs to be controlled.
• We have a national sales tax to partially replace the business income tax.

To control inflation

Therefore, we also increase the national sales tax to reduce the money supply and reduce inflation. We use the national sales tax to refill the pool.

Questions:

• Is this method a self correcting control on inflation?
• Is this a method to increase average income without reducing worker productivity?
• Is this a method to increase market demand and therefore the number of jobs available?
• Does this method adversely affect the global market?

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