Global Reserve Currency

Joseph Stiglitz in his excellent latest book, "Freefall," advocates the creation of a new global reserve currency (ICCs) with "annual emissions." "This would thereby increase global aggregate demand and strengthen the global economy." He acknowledges that the world is able to produce much more, but many have no money to buy it. So why not create more? (He also argues that such a reserve currency would reduce the need for countries to run trade surpluses to accumulate reserves.)
The IMF could create the new reserve currency. Stiglitz cleverly calls it an "emission" and not a loan that would create the obligation to pay interest, much as I have been advocating to solve the problem of inadequate demand currently in the US.
The following is from a 1999 report to the UN from a special commission that Stiglitz chaired.
"the international agency in charge of creating global reserves would simply issue the global currency, allocating ICCs to member countries, much as IMF Special Drawing Rights are issued today. There would be no “backing” for the global currency, except the commitment of central banks to accept it in exchange for their own currencies. This is what would give the ICCs (or SDRs) the character of an international reserve currency, the same way that acceptance by citizens of payments in a national currency gives it the character of domestic money. However, if the issues of global currency received by countries are considered deposits in the IMF or the Global Reserve Bank, and the institution in charge of managing the system is allowed to buy the government bonds of member countries or to lend to them, then these investments would be the “backing” of the global currency, just as domestic moneys are “backed” today by the assets of national central banks (the government bonds in their hands and their lending to private sector financial institutions).

Tax Cuts for Rich

If the tax cuts for the rich are extended, I will be deeply discouraged.
The facts are noted by Paul Krugman in his New York Times column of August 22.

"According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.
And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year."

This extension is unconscionable, immoral, and surely not in the interest of most citizens. Are the American people not able to understand their own self-interest?

Copter Cash could improve Japanese economy

Japan's economy remains in the doldrums. Consumers are saving and firms are desperately reducing prices. The problem is deflation, not inflation. The Bank of Japan has pushed interest rates to near zero with little stimulus to investment. To make matters worse, Japan's currency is rising against the dollar, depressing exports.
What's the answer when traditional monetary policy has no effective options?
Answer, Copter Cash. Create more money to overcome consumer reluctance to spend. This could be done by Bank of Japan and the Japanese treasury directly creating money without borrowing and incurring debt obligations.
By the way, this would be a good policy for the US as I have proposed in earlier blogs. Dropping cash from helicopters would be crude, but every one could be sent a check, and of course the government could spend on infrastructure. How would you like a high-speed trans-country railroad to bring us up to European standards? A country without high speed rail is a second rate country. Or maybe you would like a national electric grid that could prevent power failures and be able to transport solar-driven electricity from sunny areas to cloudy cities.

Recession Policy in Germany

Germany is enjoying economic growth despite the world-wide recession. Their policy reported by the New York Times makes a lot of sense to me:
"Government officials here are confident they found the right approach, including a better solution to unemployment. They extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions."