Policy LabPolicy analysis with the thesis up front and every source locked · built on PLACES I NEVER HEARD OF
Universal Social Security · part 7

The money dial: a central bank that pays people instead of banks

2026-11-04 · universal social security, central bank, money supply, inflation, national
ThesisToday the Federal Reserve adds money by buying bonds from banks, and it reaches people only after it reaches asset prices. Instead, let the Fed credit new money to the Direct Payment Fund, where it goes out as the same weekly deposit to everyone. A rule written in statute sets the amount: real growth above 2 percent, minus 1.5 times any inflation above target, applied to the money supply. When prices run hot the dial turns negative: the fund withholds money from circulation and the deposit dips until prices settle.

The dial does what interest rates do today, but the money goes to everyone at once rather than to whoever borrows first, and when it has to tighten, the deposit shrinks instead of mortgage payments growing.

The dial this year
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New money, 2030 economy
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Deposit in the shock year
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Turn on the shock to see two years of 6 percent inflation: the line drops below zero and the fund withholds.

How it works

Each year the Fed computes one number: real growth minus 2 percent, minus 1.5 times any inflation above 2 percent. It multiplies that by the money supply (M2, about 73 percent of GDP) and credits the result to the Direct Payment Fund. At 5 percent growth and 2 percent inflation the dial is 3 percent, about $650 billion of new money in 2027, paid out as part of the weekly deposit. If inflation reaches 6 percent the dial is −3 percent: the fund holds back that much from the deposit and the money leaves circulation. Withdrawal is capped at 4 percent of M2 a year.

Why it does not just cause inflation

An economy that grows needs more money to carry its trade; today the Fed supplies it through banks and bond markets. The dial supplies the same growth-matching amount, by a fixed rule, through people. It adds nothing beyond what growth absorbs, and it pulls back automatically when prices rise faster than target. The rule is in statute, so a Congress that wants a bigger deposit has to change a law in public, not lean on the Fed.

As the banks' role grows

The Fed no longer works through bank reserves to reach the economy; it works through the fund. Banks stop being the channel for new money and become the channel for everything else: withholding, filing, audits, the deposit itself, and housing. Their income comes from the fee on those flows (proposal 6), which grows with the fund, not from being first in line for new money.

What could go wrong

A deposit that dips during a price shock is a deposit people notice; the political pressure to suspend the dial will be strongest exactly when it matters. Measuring real growth and inflation in real time is hard, and revisions would move the deposit after the fact. And the Fed would still need its lender-of-last-resort tools for a banking panic; the dial replaces rate-setting, not crisis management.

Sources (3)
  1. Money Stock Measures (H.6) — Board of Governors of the Federal Reserve System · original · M2 about 73 percent of GDP. Not yet locked.
  2. Statement on Longer-Run Goals and Monetary Policy Strategy — Federal Open Market Committee · original · the 2 percent inflation target the dial uses. Not yet locked.
  3. Discretion versus policy rules in practice — John B. Taylor, Carnegie-Rochester Conference Series, 1993 · original · the 1.5 response to inflation is borrowed from the Taylor rule. Not yet locked.

Numbered references in the text point to this list. "Locked" means we hold a dated copy of the file on the PLACES platform so the figure can be checked later even if the publisher changes the page.