If the Fed really wants to fix the problem and not excerbate it they should get the government to eliminate all taxes on gasoline, fuel and heating oil, reduce by a percentage all wages paid to government employees, and stop playing games with the money system.”

(1) Eliminate taxes on gasoline? Oh wonderful idea- you have just increased the DEMAND for more oil from countries that hate us. Better to increase it and suppress demand.

(2) Heating oil? Okay that is good.

(3) Why do people always want to cut the pay of teachers, police and firefighters? The 3 person staff that run our village only make $14-15 an hour – and this in a place where the median list price is $389,000. In fact, during the Great Depression, the only stable incomes where from such jobs and they were the only people who had any money to spend. Why not cut the wages of CEOs who make 364 times the average worker as compared to the 40::1 ratio of 1980. Easy to do – just tax any CEO earnings above the 40::1 ratio at 100% and invest in infrastructure.

@Comment by Pat

“First of all, this is very different situation than the Great Depression. We are tied to worldwide markets (and visa-versa) to levels never before (in 1920 we were largely isolationists). ”

Pat you are confusing international affairs policy and economic policy. The US was most certainly NOT isolationist in economic matters in the 1920s or 30s. Exporting goods was an enormous part of the economy. Problem was that the crash was international because of global trade and the linkage of currencies. The gold standard tied the US dollar to every other currency and international agreements prohibited cutting the dollar so as to cause inflation. In order to inflate the currency, FDR took the US off the gold standard.

@@@ For those not trained in the history of the Great Depression, I always recommend “Freedom from Fear: The American People in Depression and War, 1929-1945″ (Oxford History of the United States) by David Kennedy as a good comprehensive 1 volume start on learning more.

BTW Pat would do you suggest we export? Vacations? Bric-brac junk bought from junk for resale? What does the US actually make (and don’t say ‘financial services advice’ which is were the growth has been the past 15 years or more) If WWII occurred today, we would all end up speaking German as we don’t have a 10th of the manufacturing capacity in operation now that we did then.

I think there is one problem with your thesis that US businesses can do OK by exporting. Our manufacturing base has done nothing but shrink in recent years. What are we going to export?

Perhaps that would be the way to get people to cut consumption of fuel….drop all fuel taxes and just finance the roads directly, by charging tolls on all limited access roads in the U.S. The tolls will have to be very high to carry these roads, especially if we also no longer fund them from the general budget.

I’ll bet that after a rough transition period, we would no longer need to subsidize public transit. Half the motorists would be out of their cars, especially teenagers. Others would look for places to live much closer to work. The forty-mile commutes would end very soon.

Now, if we can stop throwing $14 Billion a year in direct subsidies at the commercial airlines, the railroads might blossom again, too, with no help. Short-hop air travel would be prohibitively expensive without subsidies.

There are many places where we could make large cuts in our national budget, many of them in places the public would never miss. TIF districts and other tax funded “gimmes” for the developers of redundant commercial retail are obvious targets. My city has 190 TIF districts that are diverting billions of dollars in future taxes away from city services and into the back pockets of developers. Then, there are the pure-waste projects that are soaking up hundreds of billions more.

http://xroads.virginia.edu/~HYPER/ALLEN/cover.html