SMB owners, especially the top 2-3% of SMB owners, are God’s chosen people.

Since Big Business = Big Government… conservatives should favor policies that systemically favor SMBs.

And I have mentioned in my first blog post, the recent growth of central state policies can be DIRECTLY blamed on the failure of the Fed to keep NGDP on a level target in 2008. The Fed’s economy so royally screwed, gave us Obama for 4 more years even after he shat Obamacare on us.

Repeat after me: When people are afraid, they need their mommy (government).

The smart approach is put the US economy at a nice, but unexciting level of growth, basically forever.  Market Monetarism insures we won’t have a economic catastrophe so nightmarish that a socialist can convince people there is a crisis in capitalism.

Without depressions and deep recessions, America will be a daddy only country (insert positive gay joke here).

So, right now, the Fed is currently printing money (QE), and using the fresh dollars to outbid anyone else for the T-Bills Goldman Sachs is selling.

Sumner admits these are free profits for GS, but wants to poo-poo it. The Austrians are enraged.

The question is moot.

INSTEAD, once we have NGDPLT in place, we should re-imagine the Fed injecting money into and removing it from the money supply.  We should turn it first and foremost into a futures system for SMB owners.

Here’s how it would work:

1.  An SMB owner would deposit money into a Fed account.

2.  He’d only be able to bet that NGDP was going to come in soft, but the odds / payoff would slightly favor the players, and not the house.

3.  If NGDP comes in too soft (the economy is slowing down) the Fed prints the new money and pays off the SMB owners.

4.  If NGDP comes in too strong (the economy is overheating) the Fed takes some money out of SMB accounts.

5.  Generally, the odds are slightly in SMB owners favor, so much so, that being an SMB owner becomes the thing that the best and brightest want to do.

So not only does NGDPLT end crazy booms and busts, it helps out SMB owners exactly when things start to slow down.

At EXACTLY THE RIGHT MOMENT, when prices are just about fall, and small bear market opportunities avail themselves….

The SMB owners are FLUSH!  They can take their windfall winnings and go buy up something cheap, being sold off (hopefully by a Fortune 1000 as the economy cools down).

And when things are running a bit too hot, the Fed take a bit of the cash out of each SMB owner’s account…

And the SMB owners are AWARE!  Since, they get the first real taste that things are about to cool down, they are first movers to batten down the hatches.

There may be some arguments from economists that this may not be enough injection and removal from the economy to move the ball.

This is impossible.

When I say the odds slightly favor the SMB owners in the betting, I mean they will be pay whatever odds are necessary to get the majority of SMBs to use this system.

If after God’s chosen people have been serviced, the Fed has to buy /sell a few Treasury Bills from Goldman, who cares?

The new money goes to SMB Owners first, and that’s all that matters.