Proposal for the UK
- Immediately suspend all VAT and other national transactions taxes.
- An immediate one time 1% of GDP fiscal transfer from the national government to regional governments
- A national service job for anyone willing and able to work to create an employed labor buffer stock for enhanced useful output price stability.
Regarding troubled banks, insolvent institutions should be taken over by government and reorganized to allow for the assets to be sold in an orderly manner and to avoid business interruption for bank clients. When this takes place, uninsured foreign currency liabilities of the insolvent institutions should all be dissolved.
Unfortunately, national budget deficit myths persist and will likely not allow this type of policy to be implemented.
On a technical level, the BOE should sell UK credit default insurance until the cows come home to get those premiums down and dispel notions of UK default risk.
Warren B. Mosler – 23, Jan, 2009