Dear Fellow Economists and Other Concerned Citizens,
As you know, thanks to rampant fraud, regulatory failure, corporate greed, political kickbacks, and policy failures, our financial system collapsed in 2008, wiping out millions of long-term jobs and trillions in lifetime savings.
The severe economic fallout continues. Twenty-seven million Americans remain out of work or short on work. What once were comfortable retirements for millions of elderly are now daily struggles to make ends meet. And our most precious commodity -- our children -- are suffering badly. One in five is impoverished.
The financial crisis has helped drive our government broke. It can no longer handle its short-term bills, let alone deal with its massive long-term obligations to pay Social Security, Medicare, and Medicaid benefits to baby boomers.
Anxious economies don't function well, and ours is marked by deep uncertainty and a severe crisis of confidence. No wonder. We all know what happened in 2008 could happen again.
The financial system is poised to re-detonate; its fundamental problems haven't been fixed. We've retained "trust me" banking, where banks borrow money to gamble, pocket the winnings, and leave taxpayers to cover their losses.
The system has no firewalls. One bank's failure leads to another. The government has propped up the system with extraordinary guarantees that would require printing trillions were push come to shove. Unfortunately, that shove and the resulting hyperinflation could come from our fiscal insolvency, which the politicians continue to exacerbate.
It's time to fix the financial system from scratch. Limited Purpose Banking does that. It provides a "show me" banking system that can't fail, even if Uncle Sam defaults, and is remarkably simple to implement. Prominent economists and policymakers, including Bank of England Governor, Mervyn King, and former U.S. Secretary of Treasury and U.S. Secretary of State, George Shultz, have either strongly endorsed the plan or urged its careful consideration.
Please read the plan. If you like it, please endorse it and forward the url -- www.thepurpletaxfinancialplan.org -- to other economists and concerned citizens.
Laurence J. Kotlikoff
Professor of Economics, Boston University
PS, Please also check out www.thepurplehealthplan.org, www.thepurplesocialsecurityplan.org, www.thepurplefinancialplan.org, www.thepurpleenergyplan.org, www.thepurplegenerationalbalanceplan.org, www.thepurpleeducationplan.org, and www.thepurpleplans.org.