Many millions of people in the US. have been tragically affected by the terrible hurricanes that swept through Florida, Texas, Louisiana,Puerto Rico, the Caribbean islands and now the horror of a mass shooting in Nevada.Mexico also suffered a tragic loss of life in the recent earthquake.
Some Canadians were also victims in the hurricanes in the Caribbean and also in Nevada four Canadians were among the 58 killed and several wounded at the concert shooting . We send our condolences to all those affected.We also send our best wishes for a full recovery to those who were hurt.We wonder whether these events like the Lisbon earthquake in the eighteenth century will cause a major rethink of the prevailing view and ideology about climate change and regulation of fire arms. The Lisbon earthquake of 1755 certainly had a major impact as Voltaire’s Candide made clear.
Let us begin with the large outstanding public debt of Puerto Rico. President Trump has floated the idea of forgiving some of that debt. That is a smart idea. The U.S. GDP was $ 18.56 trillion (2016) The broadly defined money stock M2 is as of Aug. 2017, $13.649 trillion. It would very easy to refinance Puerto Rico’s debt- it is about $70 billion over a fifty year period- by having the Fed acquire the debt by retiring the outstanding Puerto Rican Bonds and gradually reissuing them a low rates of interest as the economy there is rebuilt and recovers and amortizing it over fifty years . In addition to help with the necessary rebuilding of Texas, Florida, Louisiana and other areas hit by natural disasters it would be a good idea to create a special infrastructure fund under the auspices of the Federal reserve whereby bonds which financed the essential repair of damaged infrastructure could be issued guaranteed by the Fed and where necessary purchased by the Fed. the bonds could also be long term bonds and managed to keep interest rates low. A one trillion dollar fund would be possible without having an inflationary impact. M2 has increased from 2008 by about 50 % or five trillion without any real appearance of inflation. These measures would increase M2 by about 8 % and help solve some problems that the US faces in the short to medium run in the aftermath of these terrible events.