Self liquidating scrip money

In the current economic circumstances, Fisher’s stamped money scheme might work in the following way: 1) the Treasury sends

In the current economic circumstances, Fisher’s stamped money scheme might work in the following way: 1) the Treasury sends $1,000 in special stimulus checks (scrip) to every household; 2) each check is worth twenty dollars; 3) the checks must be stamped every two weeks to retain their validity as legal tender; 4) the stamps are sold by the government at a price of $0.80, or four percent of the scrip’s twenty-dollar face value; 5) after one year, all scrip checks bearing twenty-six stamps may be exchanged for twenty dollars in ordinary currency from the Treasury; and 6) when a twenty-dollar scrip check arrives at the Treasury, it will find waiting there $20.80, which is the sum of the twenty-six “stamp tax” payments.Twenty dollars covers the Treasury’s outlay, and the remaining $0.80 is used to offset administrative costs.Since there is no future tax liability associated with stamped money, households need not increase their saving on this account.

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In the current economic circumstances, Fisher’s stamped money scheme might work in the following way: 1) the Treasury sends $1,000 in special stimulus checks (scrip) to every household; 2) each check is worth twenty dollars; 3) the checks must be stamped every two weeks to retain their validity as legal tender; 4) the stamps are sold by the government at a price of $0.80, or four percent of the scrip’s twenty-dollar face value; 5) after one year, all scrip checks bearing twenty-six stamps may be exchanged for twenty dollars in ordinary currency from the Treasury; and 6) when a twenty-dollar scrip check arrives at the Treasury, it will find waiting there $20.80, which is the sum of the twenty-six “stamp tax” payments.

,000 in special stimulus checks (scrip) to every household; 2) each check is worth twenty dollars; 3) the checks must be stamped every two weeks to retain their validity as legal tender; 4) the stamps are sold by the government at a price of self liquidating scrip money-8 .80, or four percent of the scrip’s twenty-dollar face value; 5) after one year, all scrip checks bearing twenty-six stamps may be exchanged for twenty dollars in ordinary currency from the Treasury; and 6) when a twenty-dollar scrip check arrives at the Treasury, it will find waiting there .80, which is the sum of the twenty-six “stamp tax” payments.Twenty dollars covers the Treasury’s outlay, and the remaining

The Treasury’s end-of-year receipts (not including administrative costs) are equal to the amount the Treasury advanced to the public at the beginning of the year.

The stamped-money plan is propelled by everyone’s attempt to avoid paying the “stamp tax.” In trying to avoid this tax, each citizen speeds the circulation of the stamped money, which is the program’s intended effect.

Moreover, the faster the stamped money moves, the smaller is each citizen’s tax burden.

But unlike currency, stamped money cannot be hoarded without cost.

.80 is used to offset administrative costs.Since there is no future tax liability associated with stamped money, households need not increase their saving on this account.

self liquidating scrip money-60self liquidating scrip money-20

At the end of this multiplier process, the increased volume of money would be chasing more, not fewer, goods.

Moreover, the stamped-money plan has an extra margin of safety in that the high-velocity stamped money would be extinguished after one year, replaced by its slow-footed counterpart – ordinary currency.

For example, suppose a business takes in and pays out $600 in stamped money during a two-week period, $550 of which turned over before “tax stamp day” in the middle of the month.

In this instance, the business pays a tax, not of $24 (= 4% of $600), but a tax of $2 (= 4% of $50), which is a “sales tax” rate of only 0.33% on $600 of stamped-money sales.

Unlike the spring 2008 stimulus package, the stamped-money program outlined above is self-liquidating.

The Treasury’s end-of-year receipts (not including administrative costs) are equal to the amount the Treasury advanced to the public at the beginning of the year.

The stamped-money plan is propelled by everyone’s attempt to avoid paying the “stamp tax.” In trying to avoid this tax, each citizen speeds the circulation of the stamped money, which is the program’s intended effect.

Moreover, the faster the stamped money moves, the smaller is each citizen’s tax burden.

But unlike currency, stamped money cannot be hoarded without cost.

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