Putting Money In Its Place? By the President in Iraq?

["John Gelles" <indexed-savings@xxxxxxxxxxxxx>]

William F Hummel [as ammended below] offers food for thought:

--  In the era of fiat money [and all other forms of money known to
    man], there must be a way to control its abundance [relative to
    things it can buy], to ensure that it remains a viable store of value.

-- That means what is issued must also be recaptured [-- if and when
    its quantity (as a flow behind offers to buy) becomes too strong,
    relative to the flow of things offered for sale (both new and used,
    tangible and intangible) ] . . .  The only mechanism to accomplish
    recapture [if it becomes necessary] in the real world is compulsory
    taxes and/or borrowing, or some EQUIVALENT thereto. --

The above thought, which offers a reason for NOT flooding markets
with money enough to cause hyperinflation, is not presented here as
an abstract model of money -- rather it is presented in the context of a
policy recommendation to increase the flow of money as government
spending to buy as much as possible of the real things government
may want -- like homeland defense, jobs in public & private sectors of
the total economy (plus the tangible things that must be produced for
the jobs to pay attractive wages), computational and administrative
systems to keep government and the private sectors effective in an
economic and political sense, safe streets, good schools, top-notch
affordable medical care for all, etc., etc., (including victory over
terror inside and outside Iraq.)

The flow of money indicated above would be greatly increased if
all its goals were achieved. The emphasis at this point is, therefore,
on finding an EQUIVALENT to "taxes and/or borrowing" to support
the increase -- BECAUSE vastly increased taxation or deficits are
so UNPOPULAR as to be non-starters as new policy.

The "equivalent" would be "compulsory savings" or "voluntary
savings -- if compulsory was not necessary".

Savings are "popular" when they do NOT depreciate on account of
inflation. So, if they are "equivalent", why don't we use them?

We do not use them because they would have to be removed from
competition with income for everyday necessaries (including what
people are accunstomed to think of as necessary).   (If not, price
control and rationing might very well have to augment ordinary
savings to keep price affordable.)

        Removal from the realm of ordinary savings means a new
form of savings -- imitative of keeping money under the mattress
or in safe-deposit boxes. We do not want to do this because we
are used to ordinary savings that can feed money as loans at
interest to spenders.

One can imagine a million variations on this theme of "creating
money together with equivalents of taxes and/or borrowing" --
to motivate real production free from risk of hyperinflation:

        We could introduce Iraqi money printed as dollars on one
side and Iraqi units on the other. By law, the money could be used
to buy anything America has for sale, anywhere on earth. By the
same kaw:

        American sellers could could be licensed to
sell and buy all over Iraq in person and on the web. This
money would be spent into circulation to hire Iraqi security
personnel to make Iraqi streets safe day and night. It would be
similar to Military Payment Certificates and would have no
effect on the national debt or deficit.

    John Gelles