Letter to U.S. Senators on Stability and Prosperity
November 5, 2005

Dear Honorable Senator,

This letter is about enhancing prosperity, stability and competitiveness of American households including your constituents.  Vast majority of households have zero savings as they must spend most of their earnings on basic necessities like healthcare, education, food and housing.  At the same time, the number of households with $20 million or more in net assets is increasing by 3000 every year, according to some estimates.  The growing prosperity of a tiny fringe of households and almost zero net-worth of the rest seems quite alarming and unstable. 

The reason for why the WTC bombers were mostly Saudi Arabians could be that Saudi Arabia has one of the largest unemployment rates despite exporting more than one trillion dollars worth of oil since Gulf War I.  This is mentioned in a letter sent to Honorable President Bush, which is available at a site dedicated to stability and prosperity: http://www.pro-prosperity.com/USPresident030105.html. One should pray that the declining prosperity of the vast majority of American households, if true, does not lead to similar catastrophe within USA.  This obviously behooves the Honorable Senate to ask the following questions:       

  • Does the household income measure prosperity when all the earnings must be spent for survival?  The vast majority of households are left with no savings.
  • What should be the national economic goal?  Should it be (i) growth in gross domestic products or (ii) prosperity measured by growth in net household assets?   
  • Does the growth in gross domestic product translate into prosperity of, say, the middle absolute majority of households?
  • Why does the government not collect data on net assets of individual households to measure and broadcast growth in per capita net household assets of at least the middle absolute majority who have the democratic power to amend policies?

Once I wrote a rather strong letter to the Federal Reserve Board Chairman, dated June 21, 2001.  This was very exciting to many including my students at the University of Illinois.  Before 9-11 I had discovered something very eerie in the stock markets, which I wrote to the FRB and SEC: http://www.pro-prosperity.com/Greenspan062101.html. My ultimate inference based on observations was that the FRB was adversely affecting household prosperity by tinkering with short-term interest rates to punish the stock markets.  I had argued that punishing the stock markets was not within the purview of a Central Bank.  The Central Bank does not have such a mandate.

In October 2003, FRB Governor Ben Bernanke gave a very important speech on how raising interest rates to punish stock markets had adversely affected the economic activities in USAhttp://www.pro-prosperity.com/BernankeStockPriceInterestRate100903.html.  This is quite consistent with my June 2001 letter to the FRB Chairman.  In May of 2002, a Federal government agency had sought my candidacy for a post of Director of Market Surveillance in the SES cadre.  Perhaps my letter then was circulated through government regulatory agencies.  The point of stating this is that the contents of that letter must have caused a lot of anxiety in many federal agencies.  It is quite encouraging indeed that Dr. Bernanke has stressed for stability and prosperity upon his posting as the FRB Chairman. http://www.pro-prosperity.com/usa/ProsperityStabilityBernanke.htm.

In June 2001, I had also written to the SEC Chairman to amend the current financial security trading laws in order to protect the interests of the vast majority of American households. http://www.pro-prosperity.com/SEC-Chairman062101.html. The Congress banned after hours trading by mutual fund managers through new laws passed in 2003.  But this is an insignificant remedy compared to what should be done to serve the best public interest, as argued in my letters: http://www.pro-prosperity.com/USCongress030105.html & http://www.pro-prosperity.com/USPresident030105.html, sent to the U.S. Congress and President.  Wall Street has already paid billions of dollars in fines due to some of these initiatives that led to the SEC and the NY State investigations. 

Potential adverse effects of the current laws and new laws needed to enhance prosperity and stability are described in a book, “Prosperity: Optimal Governance Banking, Capital Markets, Global Trade, and Exchange Rate.” This book uses the principles of economics and prevailing wisdom to show in plain English how prosperity is enhanced or eroded.  For example, how short-selling of financial securities is socially suboptimal is established in plain English.  It took seven years to cut the jargons of economics and finance to come to a form that is easily understandable to common people: http://www.pro-prosperity.com/Citizens%20Publishing/citizenspublishing.html.

This missive does not intend to promote the book, though I believe that the Congress should fund this research at the University of Illinois where I work.  Of course, if you buy the book, it will be a token of support for the research in public interest that I have spent most of my productive life on.  In any case, I am grateful to the Congress to pass a resolution to praise my alma mater, Indian Institute of Technology, in the wake of my letters to the President and Banking and Finance Committee Chairmen in Congress. http://www.pro-prosperity.com/usa/USCongressIIT.htm.

With profound regards,

Sankarshan Acharya