The Early Shift

Posted by spaul on 04/17/2009

early-shift_thumbnail.jpg Paul Krugman and Nouriel Roubini still see tough times ahead for the economy. Chinese-made drywall showing up in American homes is turning out to be just plain nasty. Manufacturing is expected to continue its contraction for up to six more months.

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James Flaherty P.O. Box

James Flaherty
P.O. Box 98
Guilford, CT 06437
(203) 458-3101

July 30, 2010

Barack Obama
The White House
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear Mr. President:

There is a grim reality for many, many of our citizens, people who have worked long and hard and honestly for many years, but now find that there is no longer a place for them or a way to provide for themselves and their families. The economic situation is much more dire than is being reported in the news. And your reelection is dependant on you changing the way things are and quickly!

Fully one third, the bottom third, of our nation's people are now experiencing a life destroying economic depression! The next third or our people are now experiencing a very difficult recession. And the top third of our nation's people are still doing well enough that they are little aware of the difficulties of the less fortunate in our country. Many at the bottom now suspect you are one of the top third and that you really don't care.

There is a straight forward way to reverse the job loss trend in the United States. In so doing, you will re-ignite hope in millions of Americans, who have now given up their belief in the fundamental goodness of our country and these people will vote for you. If you accomplish this one thing, reversing the job loss trend in our country, you will guarantee your reelection. But, it is up to you to act, immediately!

By executive order, you, Mr. President, need to establish an Alternative Energy Bond Fund. The money from this fund would be expressly and solely used to fund the growth of the Alternative Energy Sector of the economy. This funding method could very quickly stimulate many million of permanent jobs, greatly strengthening the currency and the overall economy. It would also establish an enormous export industry. All these things would be very good for the people of the United States and for your reelection prospects.

It would work like this. The investing public would buy bonds that offer a per year return of 4-6%. The money would be placed in a fund that provides loans to anyone who wished to make a legitimate purchase or investment in alternative energy goods, services, or manufacturing. The loans would be repaid with 7-9% interest. The interest would be returned along with the principle to the fund, where it would once again be loaned out for further AE funding. The loans could be administered through existing business and financial structures and processes, those already in place to do loan vetting and financial do-diligence.

These loans would provide money to purchase a hybrid car or a solar heating system or a solar electric system or a wind power system for a home or a business. It would also provide funds for the startup or enlargement of businesses that manufacture alternative energy products, or provide related services. The funds would be provided to large businesses, such as the owner/operator of a solar power generation plant or a wind power plantation capable of producing megawatts of power to supply hundreds or thousands of customers. It would supply funds for energy savings devices and services, such as a manufacturer of a new more efficient type of building insulation, or it would pay to have that insulation installed in a building. It would be given to a home owner who wanted to install a heat pump to increase the efficiency of their existing heating and air conditioning system. It could provide the funds for the startup of a business that created software programs that allowed electric distribution companies to reduce energy losses by some amount.

It would supply all the providers and all the consumers of alternative energy goods, services and systems of any size with loans to quickly spur the growth of the Alternative Energy sector of the economy. The possibilities are endless.

Because the money to repay the bonds would come from the energy created and sold or from the reduction of a cost through energy savings, the bonds would be directly self financing. In fact, they will be the first bonds to ever pay for the goods or services that directly back their creation by producing the energy needed to back them. Instead of being backed by gold or silver, these energy bonds would be backed by the very real energy they produce or save. The electricity generated by a home solar electric system will save the home owner more money in electric bills than the cost of repaying the loan and the interest of 8%. From the repayment of this loaned money, the bonds are repaid along with the 4 to 6 % interest paid the original bond holders. In essence, the captured solar energy creates new money in the American financial system and it is the antithesis of the money now coming into existence through debt creation, money that is steadily weakening our nation and it's economy. This self repayment characteristic is unique to investing in alternative energy systems that capture new energy or save energy. This new type of Alternative Energy backed money will strengthen our economy and our nation in all ways and it is the solution to the worsening fiscal debt situation that is presently destroying our country's financial stability. Alternative Energy tech spending will repay with a net cash flow, in effect creating massive amounts of strong new capital for the United States.

Although these bonds would directly compete for available capital now placed in the Treasury Bills that are financing the Federal Deficit, the enormous economic and job growth that would result from the development of the alternative energy sector, would soon increase tax revenues and help pay down the debt. This transfer of money would create a business boom similar to the tech boom of the 1990's, with it's resultant tax revenue surplus. The difference is that this business boom will be much more fundamental to our overall economy, affecting all other present sectors, and it will be much larger and more long lasting. It will take 25-35 years to completely overhaul our present economic base and it's energy foundation. It will substantially change our transportation, manufacturing, service industries, the consumption of goods, banking and financial services. It will also create a new export situation, as the U.S. becomes the largest supplier of alternative energy systems, products and services on Earth. It will quickly become the main spring driving the American economy!

During the successful establishment of the AE sector, having paid off all the bonds, the fund residual of 1-2% will have grown to hundreds of billions of dollars, . This remaining money could be put into the Social Security Trust fund to help all of our citizens, or perhaps it could be turned into a permanent research and development fund, to help keep the country at the forefront of scientific research.

Some of it might be used to provide low interest loans for people who choose to pursue scientific and technological educations.

The establishment of an Alternative Energy Bond Fund and the necessary administration structure is a relatively simple way to quickly and permanently turn the economy and the job situation around, while, at the same time, doing many good things for our country.

It is the one indispensable tool you need to create hope for millions of financially dispossessed citizens, thereby guaranteeing your reelection in 2012.

The people with hope of a new job are going to vote for you. The people with no hope are going to vote for the other guy. You'll also enjoy the virtue of having done what is good for our country.

Sincerely,

James Flaherty

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