National Rainy Day Accounts

To back up the idea that there may be even better policies than FLOC’s, here is another proposal from my paper “Getting the Biggest Bang for the Buck in Fiscal Policy” in the  section: “3. Household Finance Considerations.”  

… in principle, national lines of credit in times of low demand could be superseded in the long run (at least in part) by a modest level of forced saving in times of high demand, with the funds from these “national rainy day accounts” released to households in time of recession (and also perhaps in the case of one of a well-defined list of documentable personal financial emergencies).  

In the long run, I like National Rainy Day Accounts much better than FLOCs.  But National Rainy Day Accounts seem politically harder to me than FLOCs, because National Rainy Day Accounts require action in advance of a crisis instead of after the crisis hits.  

The title of this post is a link to the paper.