Bailout idea

I haven't seen supporting data on this one way or another but I don't see much of downside to this idea.

What if the US instituted a policy that waived the 10% penalty of IRA withdrawal? Currently those funds in IRAs are fulfilling some role in the economy but to the owners of those funds they are not directly stimulating the economy. It seems to me that if people could draw on those funds now it would:

• help many with urgent needs
• stimulate production
• put money into circulation
• boost tax revenue as those withdrawals would be treated as income

In terms of retirement, a great many people are now experiencing a negative return on their IRA investments anyway, so that purpose is not being fulfilled (at the moment). My thought is that waiving the penalty would be a temporary measure.

Update: Yes - I know that the fund holders who might do this will not be able to participate in the recovery, when it happens. This is an idea for a quick shot in the arm for the economy while helping people access their own money, in time of need, without an additional 10% penalty.

Peak Everything

Earlier this week we went to a lecture* by Richard Heinberg, the author of Peak Everything.

From what he says you might say that we (civilization) will either have to drastically change soon or we're in big trouble. We are running out of a lot more than oil and water and historically we have just used new sources of energy to increase the pace at which we extract other resources from the earth -- and use even more resources doing it.

So the sudden invention of abundant, cheap and clean energy (say, fusion) would likely increase the pace of other environmental catastrophes. Furthermore, the economics are such that in good times it is not cost effective to develop alternatives and in times like these alternatives may not be able to be developed timely enough for them to help. Another interesting point is that even if there were a sudden shift to an all out effort to develop solar energy, we would run out of essential raw materials (such as gallium) long before photovoltaic sources of energy met our needs.

His point is that the only solution is to replace the growth model of economics with a sustainable steady state model (if maybe even after some scaling back from where we are). That's not something that any population is likely to accept willingly**.

I haven't yet found anything which strongly disagrees with what he says either. Sounds like civilization's response this problem is like the classic case of boiling a frog. Throw him in hot water and he jumps out. But, put him in warm water and slowly increase the heat and he just relaxes...

*Update: The lecture was conducted interview-style and taped presumably for an upcoming episode of Chicago Public Radio's Eight Forty-Eight.

** Update: Professor, author and retired army colonel Andrew J. Bacevich (in spite of being a conservative) said something similar recently during an interview with Charley Rose. The caveat was that -- although true, any president to say this to the public would be voted out of office. He says this was the case with Carter.