Book Description

This is an abbreviated version of The Denver Plan (to be published). The Denver Plan is based on the strikingly simple idea that unemployment is just the symptom of a deficient flow of money: if the flow of money could be mended, unemployment would disappear.The recent Great Recession, as well as all previous recessions, provided confirmation of this link between the flow of money and unemployment. As in previous recessions, once the flow of money is restored so will the unemployment rate; but the 'normal' rate has never dropped all the way down to zero. Why? Because there are other monetary flows that are deficient.As described in The Denver Plan, money does not flow equally throughout all sectors of the economy. The sectors that are shortchanged in the flow of money suffer unemployment and become less economically productive. The Main Flow of MoneyThe financial system determines the flow of money that keeps the economy going. People deposit their money into financial institutions, which in turn create the flow of money into the economy. But, that flow of money is erratic and subject to periodic breakdowns-such as the one that caused the recent financial crisis. The Denver Plan prescribes a 'full reserve lending' regime (100% of the saver's money remains as reserve, while the financial institution borrows from the Fed in order to lend to its customers). In this way, the crucial flow of money into the economy can be as steady as the economy needs it to be.The Upward Flow of MoneyIn any unregulated economy, money flows from those who have less to those who have more. Big business hoards business opportunities, and hence the flow of money, thus contributing to the 'normal' level of unemployment.The Denver Plan prescription: Government should limit the potential for growth of large corporations through the imposition of salary and income caps; while helping small businesses stay competitive by reducing their tax burden and making low-interest loans available to them.The Government SectorGovernment's inability to balance its budget constrains its power to create jobs-in both the public and the private sector-by limiting its investment in public services and in the nation's infrastructure.The Denver Plan prescription: Since most of the money flow ends up in the pockets of the rich, they should be asked to pay a larger portion of their income in taxes. The Foreign Trade SectorTrade deficits account for a large portion of 'normal' unemployment. The hundreds of billion dollars, lost to our trade deficit, correspond to millions of American jobs lost to trade-surplus countries. The Denver Plan calls for negotiations leading to a balanced trade agreement-especially with trade-surplus countries. Solving All Other ProblemsThe most amazing aspect of The Denver Plan is that in the process of correcting the flow of money to end unemployment, it would solve the problems that concern us most today, such as the faulty financial sector, the lack of universal health insurance, the future funding of Social Security, Medicare, and Medicaid, poverty and gross inequality, our energy dependence, funding for green energy, global warming, high cost of medical care and prescription drugs, street crime, home security, illegal immigration, global poverty, and even wars and terrorism.