I would agree with those that say that throwing money at those who will spend it on consumption does little for society in the long term. We want to give money to people to spend but make sure that the money is spent on addressing a pressing social issue such as reducing greenhouse gas emissions.

The mechanism of choice of lazy governments to distribute a lot of money quickly is the existing social security system.

We can set up an alternative way to distribute money to people quickly and ensure the money is spent on ways to reduce greenhouse gases.

Give all low consumers of energy a cash Reward because they consume little energy but require them to spend their cash Reward on infrastructure to reduce greenhouse gases. Those that can't think of a way to spend their Rewards can sell them - at a discount - to those who can.

We can use mains electricity per person as a surrogate for low energy consumption and we can ask people to register if they want to participate in Rewards. To register they call a phone number, identify themselves, identify their electricity meter and say they want some Rewards. Our back end systems can easily calculate Rewards. If people cheat they will never get another Reward.

If they want to get cash then they put their Rewards up for auction by giving a bank account where to put the money.

We can make sure that the Rewards are spent on reducing greenhouse gases by requiring them to be spent through an electronic market place where the merchants are those who can prove their products or services reduce greenhouse gases.

If we use this mechanism we need not raid the surplus and we can distribute as many Rewards as needed to stop the recession. We can ensure that Rewards money is invested in ways to give more value than the amount spent. This means Rewards may be inflated (they sell at a bigger discount) but the regular currency will not be inflated.

Not sure if it will work actually. The $10.4 billion is shrapnel compared to the potential liabilities. Flushing the nation with cash may give a brief 'surge'. After that then what? Another $10 billion, then a deficit?

$10 billion is roughly $500 per person. I think Bush spent $600 and look what didn't happen.

The great risk in the traditional Labor policy of spending their way out of a downturn is that they risk having our foreign debt called in. If that happens any stimulus will disappear like an icicle on a hot stove, and Labor will be history for a generation. Look at what is happening in eastern europe at the moment, and what has just happened in Iceland, to get a measure of the peril. The rate at which capital is fleeing Austria at present brings to mind the failure of the austrian Credit Anstalt in 1931, the event which is considered by many to have signalled the start of the depression. A more practical plan would be to announce plans to allow the erection of shanties in city parks for the homeless to live in, in the event that this becomes necessary.

"Ï'm only an economist".

Yes, and doesn't it show Nicholas! Your article is so 'fiscal'.

I don't mean to be rude, but there seems to be no thought of anything apart from the immediate financial situation associated with the looming depression.

What an excellent opportunity this recession, or more to the point; slight stalling of rampant growthism, presents!

It is just what we need to get our collective headspace around the notion...and absolute necessity...of developing a sustainable society!

Unfortunately, there are still many people out there...indeed the vast majority of economists and politicians...who just want to restore our system so that we can continue with never-ending population growth, ever-greater resource consumption and the concomitant destruction of our future.

They all need a big bloody boot up the backside.

What is of course forgotten, is that there are also many benefits
to a bit of a recession. Lets face it, money had kind of lost its
value, as people with near unlimited credit, bid up houses, bid up
shares, bid up commodities etc.

As Warren Buffett says "When the tide goes out, we see who is swimming
naked" ie. those who have overborrowed or overlent, those who forgot
the fundamentals, will pay a price for their foolishness.

Mark Faber points out that simply printing money to overcome any
recession, is a bit like applying a coat of whitewash to the building,
it does not solve the problem of it being structurally weak.

Americans and Australians are guilty of not saving enough, spending
more then they earn and borrowing the rest, which is not sustainable.

A recession forces people to address the reality, to stop spending
more then they earn and pay off some debts. Yes its painfull, but
its paying for sins of the past and has to be faced. Just applying
a coat of whitewash, with Govt giveaways, is not going to address the
fundamentals of the problem. Its little more then a feelgood
exercise to solve short term problems and delay reality for a bit
longer.

Spot on, Yabby!

Yabby the Americans and Aussies are guilty of letting the corporates take control.The US Federal Reserve a private banking cartell owns and prints the US currency.This means that they own the GDP by the people who produce it.Each year extra money is put into our economies to equal growth.Their Federal Reserve then loan the money to the US Govt and that Govt then taxes the people for the privildege of being productive.The US Federal Res have intentionally printed more money than real increases in GDP.It was a debt trap from which ultimately they will benefit.You are witnessing the results right now.

Our Banks borrow from this international cartell which in turn puts us in more debt.Each working Aussie has a foreign debt of over $60,000.00.The ordinary people in US are in a similar dilemma.Our debt has almost doubled with the devaluation of our dollar to 55c US.
Are you beginning to understand?We are slaves to this international Banking Cartell which includes,J P Morgan,Rothschild,Bank of England Bank of Japan etc. They are at the apex of this debt pyramid scam.

Arjay, any Govt can print money. Result is that money then loses
its value through inflation. Look what happened in Zimbabwe, when
it was taken to the extreme.

We could simply print more dollars, net result being our Dollar would
lose value much faster, inflation would increase, interest rates
would go through the roof. Its not a solution to anything.

Yes our current account is bad, our trade deficit is actually not
so bad. Current account includes all interest payments, insurance
payments, dividends paid from Australian companies to overseas
investors etc.

Now what would happen if Australians saved more and spent less?
Our current account would improve dramatically, less need to borrow
from overseas. More dividends would be paid here, rather then sent
overseas. Etc.

Take a look at countries with a healthy current account. Their
interest rates are far lower then ours, as they are not dependant
on overseas investors for their money.

Yes, the US may try to print its way out of its problems. The results
will show up in the value of their $ and in inflation.

At the moment the US largely depends on the good graces of the
Chinese, Japanese and Middle East.

Wall St used to be the central point of exchange for these loans,
many made to Australia as well. Now that it has lost all credibility, I'd say that other financial centres in Asia etc, will
take over that role.

Yabby ,we in Aust own our Reserve Bank ,while the US Federal Reserve is privately owned.They ,the Federal Reserve dictate the terms to the US Govt,since it is they,who supply sustainance.

This cartell of international banks are borderless and have no alliegence to any particular country.They play one country/philosophy against another.Their ultimate objective is power at all costs.The individual,morality,values,family etc means nothing to them.

Google Stephen Lendman,"Dark Secrets of the Temple."It will give you an insight ito the history of the US Federal Reserve and the financial debacle we now have to endure.

Arjay, some snips from Wickipedia:

The Federal Reserve System is an independent government institution that has private aspects. The System is not a private organization and does not operate for the purpose of making a profit. The stocks of the regional federal reserve banks are owned by the banks operating within that region and which are part of the system.[26] The System derives its authority and public purpose from the Federal Reserve Act passed by Congress in 1913. snip. It also generates revenue independently without need for Congressional funding. Congressional oversight and statutes, which can alter the Fed's responsibilities and control, allow the government to keep the Federal Reserve System in check. Since the System was designed to be independent whilst also remaining within the government of the United States, it is often said to be "independent within the government."[27]

The 12 Federal Reserve banks provide the financial means to operate the Federal Reserve. Each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. Member banks are privately owned banks that must buy a certain amount of stock in the Reserve Bank within its region to be a member of the Federal Reserve System. This stock "may not be sold, traded, or pledged as security for a loan" and all member banks receive a 6% annual dividend.[27] These member banks must maintain fractional reserves either as vault cash or on account at its Reserve Bank; member banks earn no interest on either of these. The dividends paid by the Federal Reserve Banks to member banks are considered partial compensation for the lack of interest paid on the required reserves. All profit after expenses is returned to the U.S. Treasury or contributed to the surplus capital of the Federal Reserve Banks (and since shares in ownership of the Federal Reserve Banks are redeemable only at par, the nominal "owners" do not benefit from this surplus capital); the Federal Reserve system contributed over $29 billion to the Treasury in 2006.[29]

http://en.wikipedia.org/wiki/Federal_Reserve_System

Nicholas; You dreaming of the past points up the whole problem.

It is summed up with this now well known saying in some circles;

If someone thinks that they can have infinite growth in a finite
world they are either a madman or an economist.

Nothing happens without energy. Energy production is flat therefore
growth will be flat. The economic model has to changed from one of
growth to a sustainable economy that is regulated by the amount of
energy available. Money is the slave of energy.
For too long economists have been telling us the opposite.

Wake up !