We, the undersigned are deeply concerned about the current state of the balance sheets of both the federal government and the Federal Reserve System. Given the upcoming budget resolution process and key decisions to be made in the near future by the Federal Open Market Committee, we think it is urgent to put proposals on the table to address our key economic policy problems. After a long period of discussion and a careful review of the available economic science we are urging the adoption of the following proposals:
1. Fiscal Policy: In a move designed to emulate the federal land grant program for state universities in the 19th century, the federal government will grant land and funds for the construction of prisons for debtors and the unemployed (DU prisons). We think, first, that what was good enough for 18th century Britons must certainly be good enough for 21st century Americans. Second, we wish to directly address our output-gap problem. Those defaulting on mortgages, credit card debt, corporate bonds, whatever, will be confined to DU prison, with the length of sentence proportional to the dollar value of the debt owed. Those answering yes on the BLS household survey to the question: "have you actively sought work in the last four weeks?" will be confined to DU prison for a period of 6 months. The federal government will extend sentences during periods of high unemployment. With the goal of generating the revenue to run the DU prisons and, further, to generate the additional revenue required to eliminate the federal government's budget deficit, we propose the following. Embracing the goals of the National Rifle Association, there will be no restrictions on the sale of firearms of any kind. Indeed, each Starbucks outlet will be required to carry a full array of semi-automatic rifles and handguns. Laws prohibiting the taking of human life will be removed from the books. As economists, we recognize that there are externalities, and adopt the time-tested solution of a Pigouvian tax. Firearms will be taxed at a rate we deem commensurate with the value of human lives and the number of lives likely to be taken by an individual firearm. Our estimates tell us that the likely tax for a Glock G19 would be small - on the order of $120 million. Immigration quotas will be boosted, with the new immigrants employed as guards at the DU prisons. These new immigrants will then pay the social security taxes that will support the baby boom generation in their old age.
2. Monetary policy: The Federal Reserve System will be abolished, and replaced by a cat poo standard. The signatories considered a dog poo standard, but came to the conclusion that dogs, unlike cats, will eat anything in sight, so that the quantity of dog poo is potentially unbounded. Cat poo, we reason, is in essentially fixed supply. We recognize however, that there could be problems, and that regulation is needed. The freezing of cat poo will not be permitted, lest the creation of additional freezer capacity and storage of cat feces thwart our attempt to create a stable price level. Further, each female cat will be restricted to two offspring. This will essentially be cap-and-trade. There will be two offspring licenses per female cat, and the cats can trade licenses. These regulations will be enforced by the Office of the Comptroller of the Cat Poo, to be housed in the Treasury Department.
Ed Prescott, no-water-in-sight economist
Mark Gertler, Hudson-river-is-not-fit-for-swimming economist
Robert Lucas Jr., the-water-is-green-so-it-must-be-St. Patrick's Day economist
Paul Krugman, holy water economist
David Levine, Chicago School economist
Marco Williamson, toilet water economist
Michele Boldrin, if-the-river-floods-we-are-on-high-ground-so-don't-worry economist
David Andolfatto, frozen water economist
Michael Woodford, stuck-in-the-water economist
Randy Wright, don't-drink-the-water economist