The grants or alternatively preferred government insured capital credit would finance the purchase of new or existing productive assets needed by businesses. Future earnings on the shares would pay off the grants or loans. Once the grants or loans are repaid, the money created to purchase the capital would be cancelled, avoiding both inflation and deflation. The capital itself would continue to be a source of wealth and generate consumption income for its new owners.
Capital Credit Insurance
A note about insurance: Once the economy has recovered, capital credit loans would be insured and guaranteed against loan default by private capital credit insurers, commercial risk insurers or a federal government reinsurance agency (a' la the Federal Housing Administration mortgage insurance concept) -- the Capital Diffusion Reinsurance Corporation (CDRC) -- through which the loans would be guaranteed. The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government's responsibility for the health and prosperity of the American economy.
Such capital credit insurance would substitute for the security now demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percent) to overcome the collateralization barrier that excludes them from access to the means to finance their ownership of wealth-creating, income-generating productive capital. (A portion of their capital credit allotment will be used to cover the one-time cost of capital loan insurance and bank service charges.)
Before the loan is made, the lender, risk insurance company, and other entities will first determine the "feasibility" of each particular loan. ("Feasibility" means that the enterprise's new capital investment is expected to generate enough profits to pay for itself within a reasonable capital cost recovery period. Such a feasibility analysis will judge the soundness of the enterprise that needs to purchase the new capital assets, including the quality of its management and workforce, its current and future markets, etc.)
Self-liquidating capital credit, collateralized by capital credit insurance, is critical for stimulating the economy's recovery and responsible growth. Insured, interest-free capital credit should be made available annually on an equal basis to ALL citizens exclusively for investment, turning today's non-owners into economically independent owners of productive capital simultaneously with the responsible growth of the economy. This credit would finance the purchase of new or existing productive capital assets needed by businesses. Future share earnings generated by the investments would pay off the acquisition loans -- in other words, past savings or reductions of current consumption income would not be necessary to finance capital formation.
Once the commercial bank loans are repaid, the money created to form the new productive capital would be cancelled, avoiding both inflation and deflation, and continue to generate consumption income for its new owners.
Every new productive capital increment added to the economy would generate future earnings to pay for its financing. Consequently, normal market forces would synchronize effective demand and supply for economic growth. This would continue as long as the new capital assets serve as an additional source of consumption income for today's non-owning citizens, particularly the poor and others who do not have sufficient and secure incomes, thus reducing the need for government taxpayer redistribution and dependency on welfare, open and concealed. In this way, workers and other current non-owner citizens would help sustain economic growth and secure their own financial independence as they grow their wealth by becoming owners of the future increase in capital productiveness.
No Hoarding Or Injustice
The response to our nation's health and economic crisis, during the epidemic and post-COVID-19, cannot be another money-making, hoarding, and capital ownership-concentrating opportunity for the already wealthy capital ownership class and Wall Street. We need honest, third-party oversight and strict protections to ensure equal opportunity of participation in the rebound and growth of our economy on the part of EVERY citizen. We need to impose strong regulation and accountability to ensure there are not no-strings-attached "stimulus" handouts for corporations and corporate executives, such as stock buybacks and executive bonuses, and stop such advantageous handouts from occurring and enhancing their personal wealth. Otherwise, millions of Americans will never escape financial peril.
Further, the insurance industry companies, who receive a federal government bailout, must not be permitted to raise premiums on Americans due to the effects of the COVID-19 outbreak on private employer-based healthcare plans.
We must stop the Federal Reserve from preemptively monetizing unproductive debt, including bailouts of banks "too big to fail" and Wall Street derivatives speculators, and billionaire private investors, and begin creating an asset-backed currency that could enable every child, woman, and man to establish a super-IRA or asset tax-sheltered Capital Homestead Account at their local bank to purposely acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income.
We must also ensure that any corporation that benefits from emergency aid does not lay off workers, pays workers a livable wage, finances growth by issuing and selling new shares and does not rip-off consumers.
Citizen-Owned Federal Reserve
One feasible way to significantly broaden capital ownership simultaneously with the responsible growth of the economy is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers.
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
