The Housing the American Dream interactive TV showcase will show all of us how the homeless can help themselves in ways which will change the world. We do not have to assume RIPs must always be. There is a tried and true alternative. We are not asking for donations; but for Human Investments (HI) in Personal Income Improvement Investments (Piii) which have proven, over centuries to be repaid without default, and provide a decent profit to the lender. Compare that to the 17% 26% defaults on RIPs in the housing industry today. Stable ownership of a house is such an income improver.
Owning a home with extended longevity which is fire-proof, hydrophobic, and low-maintenance, begins lowering costs for future generations and supporting stability and cooperation in community with others.
Most of those without homes today can be helped rapidly, and they will be able to pay for their home and for the services provided to them by better contract terms using an historic and powerful economic tool called Percentage As You Earn (%PAYE) Finance & Finansurance.
Its long history includes ending slavery and indentured servitude within a generation in New England; empowering the Privateers to supply General George Washington with the needed supplies which won the Revolution; making it possible for the Mountain Men to hunt furs as a business, get their catch to market, and do so over a distance of more than a thousand miles. %PAYE kept the peace in New England with native tribes PAYEing for rights to farming, fishing, hunting, and transit.
The %PAYE charging method was still in use for country doctors into the 20th Century. Our economist, Brock d'Avignon, who spent 30 years researching the applications of %PAYE finansurance, surmised this was what might have been the case. He interviewed the last living nurse to assist a horse n' buggy doctor in the rural South, his Grand Aunt Naomi Collins of Jonesboro, Arkansas, who explained to him how this percentage-of-income reckoning worked by reconnaissance of a chicken coop or orchard. She started the conversation by asking, "What did you think the doctor's buggy was used for? Not to transport patients. No hospitals. It was to transport the goods provided for as %PAYEment. Never barter, it was an application of the long in use concept of %PAYE, that accepted percentages-of-income in cash in towns, or the doctor evaluated the value of produce of farmers compared to the value of medical care to either rich or poor. Same percentage-of-income price, different %PAYEment amounts in cash or pies.
Rigid Installment Payments began in the 1940s in the UK, instituted by the House of Lords as part of their plan to end Debtor's Prisons. Making Britain, itself, in effect a debtors' prison was their plan as equity on homes and land built up could be stolen by foreclosure. Over the next decades the practice found its way to America, displacing the original practice of Percentage As You Earn.
In 19th century England, a Hire Purchase (HP) Agreement was first offered to entice a potential buyer into a contract for a small portable chattel debt. HP Agreements did not disguise inability to pay as refusal to pay:
- buyer loses a down payment & all prior installments, if unable to pay
- no transfer of title until all fixed payments & interest are paid, then,
- a single monetary unit upon transfer, creating the rent-to-own fiction the buyer has not already bought a large portion of the item before any difficulty to maintain the lockstep payment pace.
- possible repossession with a sheriff.
RIP loans on a fixed schedule, are actually of recent origin, having begun with Isaac Singer selling sewing machines in 1845. Those 12-easy payments were low cost-impact and went on for only a year. The English House of Lords moved the British economy to installment payments because of RIP's potential to seize equity when the buyer fell behind and end debtors' prisons. The use of RIP loans over 30-years, guarantees equity seizures will take place in down times; enriching the wealthiest and destroying ordinary people.
RIP and Strip loans are the prime source of our economic instability today. They fail to account for the potential for erratic income which can happen to anyone. It should be obvious that the costs of skip-tracing, collections, and legal forced repossession eat up any profit or mark up a RIP lender has. With the common use of RIP & Strip Equity loans, lenders became predators, seizing all accumulated equity as soon as possible. The Federal Reserve subsidizes this.
It doesn't matter what the Federal Reserve prime rate to banks is. In 2008, each bank already borrowed 80-cent dollars at a low cost to relend at 100-cents, in order to throw 100,000 people or 19% in default out of "their" houses. When the third wave of those evictions hit, politicians created disguised inflation by buying the mortgages and derivatives based on mortgages. All $571-Trillion of them.
Keep in mind the operational Federal Debt is $22T, and the Federal annual budget is only $4T. The world is not happy with the reserve currency all being spent on poor Americans with $754,000 homes; so they have started their own. See Asian Infrastructure Investment Bank (AIIB) that all our allies and enemies joined in the past two years except Japan and the Republic of China. Our standard of living is threatened, with no foreign investors for US Treasury bonds to save us again.
Socialism, Communism and Progressivism are not the answer. Isms of all kinds come with biases built in because these are not tools which empower individuals to choose their own ways but ideas which enforce a centralized system which mandates and enforces a specific set of choices.
Fascism of Government Sponsored Enterprises (GSE)s is not the answer either. None of these considers the human fact of erratic incomes. It's time to have equal access and retention of goods and services while denationalizing 92% of housing; 65% of medical care; 95% of tuition debt; and 40% of vehicle and farm tool credit using %PAYE loans & %PAYE finansurance of risk. This is an essential step for moving us to a Sustainable Human Economy.
In 1959, Milton Friedman had posed the question in his book, "Capitalism and Freedom", whether or not it was possible to identify a form of financing which made a secure economy possible. One paragraph on "Pay As You Earn" suggested a Tuition Postponement Option (TPO) for every $1,000 of collegiate tuition. A student would agree to %PAYE 0.35% of their post-graduate income for 15 to 30-years, depending on their major. They could always opt out to an amortization table with interest and insurance on the loan. $10k tuition delayed, would equal 3.5% of income in PAYEment. Friedman knew nothing of %PAYE's history in building America.
In 1970, Robert Poole Jr., of Reason Magazine, wrote an article about Friedman and the use of his TPO at Yale & Duke Universities to enroll minority, women, and low-income students, and retain them in the Ivy League. The TPO program was a success as not one of the 2,600 students failed to PAYE for the funds loaned to them even 15 to 35 years later. It was endorsed by Vernon Jordan, President of the Urban League.
In 1972, Brock read the article, reprinted in Reason. Brock was 18 at the time and working on starting a Van Transport business for blind, handicapped, and elderly people. Brock's goal was to solve the problem, opening the world to the handi-capable, then referred to as 'Shut-Ins'.
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
