If an airport is built costing $10 B, the capital spent on it's construction is an investment that will be paid off when it becomes operational, not before. That is why we must differentiate investment expenditures from operational costs in our National Accounts.  Somehow along the way, among all of the vitriol about stimulus packages and deficits, we lost track of this fact.  An economic stimulus is an investment that creates wealth in the nation's infrastructure, not an operational cost.

Investments in infrastructure are like capital gains in the stock markets, they expand the monetary base, but do not cause deficits, private or public ones, unless the expansion is an exuberance resulting from financial speculation.  We can not create wealth without backing it up with a legacy of value that will provide it with worth.  In the corrupt speculative bubbles or our crony capitalist system, we have allowed monetary generation to accrue in private accounts without creating a legacy of worth, just a legacy of securitized debt over fluff. 

Public infrastructure investments on the other hand do create a legacy of worth.  There is a legacy of worth in an airport, a bridge, an information system,  on works of art or events of entertainment.  These structures can be used to collect fees as revenue to pay back the investors in the form of dividends, or to invest in further improvements and innovations. 

Investment costs in viable infrastructure development must be recouped by securitizing the cash flow that will derived from their operations, not by printing bonds as future IOU's against the treasury.  These instruments would be government guaranteed Public / Private Infrastructure Development Securities (IDS) that are amortized from cash flows derived from the infrastructure's operations, not from the fiscal income of the domain.

The devil already has done the work for us in creating the Wall Street investment banks and hedge funds.  We the People are at present the owners of AIG, so AIG could well be used as a guarantor of the base nominal value of these debentures. If not, Fanny and Freddy can certainly lend and hand in creating government guarantee programs.  A new form of   investments would emerge that provide both long term revenue and security; the only difference being that these GBS are backing public investments, not the private speculative excesses of the elites.

If the Congress can pass appropriate legislation, this public /  private partnership can restart the economy in short order.  We could certainly issue IDS securities for public transit projects, or for a much needed rapid rail connector at both coasts, or for the new alternative energy projects.  Money is no object,there are trillions of dollars waiting in the sidelines for a chance at a good investment.  It is time to invest in real work, creating real wealth which we can leave as a legacy of our being here.  We can not just leave behind a culture of foolish consumption and empty McMansions which our children will never be able to pay off.

This is solution that Zorba the Greek would like.  He would say: " let's get on with life and stop suffering over old books!"    The elites need not worry, I will will not "come out" put them to the public shame they deserve!  For me, It is sufficient to remain in the glow of the dharma.  I do not have an obsession with standing at a medal awards ceremony that will cost me my life!  This is not a competition for power or money.   For those who understand, no further words are needed.

Atlanta, GA
Sun, 24 Jan 2010