A Copernican revolution in the American economy!
$4 BILLION DOLLARS! On average, that’s how much the US economy grows annually. That is, on average, how much new value is created each year by the US economy. 330 MILLION! That’s the approximate population of the US in 2021. So if you divide $4 trillion dollars by 330 million people, you’ll find that, on average, the US economy is growing at a rate of $12,000 per person, annually.
With those numbers in mind, let’s explore what happens if the Federal Reserve, through local banks, issues $12,000 in EQUITY CREDIT at ZERO PERCENT INTEREST to every man, woman, and child in the US, ANNUALLY? ? My question at this point is, has any money been spent? The answer is NO MONEY WAS SPENT! All that’s happened is $4 trillion dollars of equity credit has been issued, all of which is WAITING TO BE SPENDED.
Note here that CAPITAL CREDIT is different from CONSUMER CREDIT because it can only be used to purchase wealth-producing capital assets (stocks, bonds, land, buildings, machinery, patents, copyrights) that are expected to yield regular and predictable dividends to their owners.
Now all of a sudden a person decides to use his equity credit to buy $12,000 worth of blue-chip stocks. At this time, $12,000 HAS BEEN SPENT. But it is INSTANTLY collateralized (insured so neither the local bank nor the Federal Reserve is at risk) for the value of the solid blue chip stocks that were purchased at zero percent interest.
In order to expedite the ownership process, the new owner can also repay this home equity loan using PRE-TAX DOLLARS produced by their actions. In other words, the new loan is automatically guaranteed. The owner doesn’t dig into his savings account. They do not put a second mortgage on the family home. They repay the loan using FUTURE PROFITS/DIVIDENDS BEFORE TAXES. In investment circles, this strategy is called a “leveraged buyout.”
On average, the loan will pay itself off (it is self-liquidating) in 3 to 7 years. But the dividends continue to flow, creating RESIDUAL INCOME for its owner. Multiply this scenario by 10 years and you find that $120,000 has been invested on behalf of the owner by his 10th birthday. By the time they reach college age, more than $200,000 will have been invested on their behalf, providing all the residual income they’ll need to attend college, without incurring COLLEGE DEBTS. And upon retirement, the owner will not need social security.
To repeat, not a penny is spent until a purchase is consumed. Once that happens, the loan is instantly secured by the value of the wealth-producing asset purchased. The self-liquidating loan is then amortized with pre-tax dollars over a predictable period of time, so neither the individual nor the government incurs long-term debt. And to make things even more secure, a small percentage of the purchase price is used to SECURE the entire transaction, in case strong, blue-chip stocks don’t work out as expected and pay for themselves.
The Biden/Harris golden opportunity…
Now, if you multiply this scenario by 330 million people annually, you see how the new Biden/Harris administration could lead our economy out of THE WORST ECONOMIC CRISIS America has experienced since the stock market crashed in 1929. In the process , they would create without government debt, and without individual debt.
Within a decade and a half, this strategy, if employed, would gradually eliminate poverty and a myriad of related problems, including STRUCTURAL RACISM. It would also systematically democratize the free market economy, create millions of NEW TAXPAYERS that would lower the tax burden for current taxpaying Americans, allow social safety net programs to fade into sunset, balance the budget, and possibly even pay The National Debt.
16 Frequently Asked Questions
1. Where does the $4 trillion come from? It comes from NEW WEALTH/VALUE (from a naturally expanding US economy) created (on average) annually. It’s bound to happen! Someone will access and benefit from this newly created predictable wealth. The EDA suggests that many (like us people) should have access to the means necessary to participate in the property side of the economy, NOT just a few.
2. Won’t the EDA be inflationary? No, he will not. Note that this strategy does not add a penny to the projected annual growth of the US economy. It’s going to happen anyway. Therefore, the EDA does not dilute or devalue existing currency levels. The only question is, who can participate and benefit? Will we be the people (the many)? Or only 1% (the few)?
3. Isn’t the EDA socialist? No, it’s not. Capitalism is all about PRIVATE PROPERTY. Socialism is all about PUBLIC PROPERTY. In that sense, the EDA has to do with private property. But it systematically counteracts the concentration of wealth/power. It also democratizes our free market economy. In the process, TAKE ON POLITICAL DEMOCRACY.
4. Will the EDA not increase my taxes? No, he will not! What it will do is create tens of millions of NEW TAXPAYERS who, in turn, will help current taxpayers shoulder the tax burden. This will actually LOWER taxes for most people who currently pay taxes. It even offers the potential to PAY OFF THE NATIONAL DEBT.
5. Let me calculate. A family of 4 would receive a $48,000 (4 X $1,200) home equity credit annually. And a family of 10 would receive a $120,000 (10 X $12,000) home equity credit annually. Good? So, the Economic Democracy Law does not effectively pay for a couple to have many children to obtain a lot of money? The short answer is that since the line of credit is non-transferable, parents do not have access to and do not directly benefit from it. But more importantly, research shows that as income increases, the frequency of work decreases. So, on both counts, the EDA will not encourage the overproduction of children.
6. How is Economic Democracy different from Universal Basic Income? Simple UBI and it’s relatively immediate. That is his strength. It is consumer oriented and its size remains relatively constant over time. It is also guaranteed/collateralized by higher public debt. The UBI is therefore a SHORT TERM FIX and creates DEPENDENCY on the government. In contrast, the EDA is more complicated and requires some time (5-7 years) before any residual income is generated. The EDA is investment oriented, which means that it accumulates and grows over time. It is also backed by wealth-producing insured capital assets that guarantee/insure every transaction. By doing so, it does NOT create long-term debt for either consumers or the government. Therefore, the EDA is a LONG TERM SOLUTION that should be phased in gradually as it creates more people who are INDEPENDENT of the government.
7. Is Economic Democracy similar to an Employee Stock Ownership Plan/ESOP? Yes. But instead of covering only those who work for employee-owned companies and have access to an ESOP, Economic Democracy uses the same strategy to COVER EVERYONE (regardless of age, gender, race, religion), most of whom lack the means to participate in the (predictably profitable) property side of the US economy.
8. Has Economic Democracy been tested in a pilot project to see how it works in real life? Yes and no. The basic mechanics of this strategy have been extensively tested in the approximately 8,000 employee-owned businesses that have been created in the last 50 years. As we said in the previous question, the EDA is really just an expansion of the ESOP strategy that aims to give all Americans an equal opportunity to participate in and benefit from the property side of the American economy where all the new wealth is located. . being created. However, it has not yet been formally tested in a national environment.
9. What percentage is used to calculate the average ROI and payout potential? Using very conservative estimates, we choose 15% as the PRE-TAX ROI. Historically, before the recent wild swings and today’s massively inflated stock values, the AFTER-TAX ROI was between 9-12%. The payback period is calculated by dividing one by the rate of return and rounding to the nearest whole number. Thus 1/.15 = 6.666 (rounded to 7 years).
10. How does Economic Democracy reduce wage slavery in the United States? By giving everyone (as opposed to a few) legitimate access to the ownership side of the American economy (where almost all of the new wealth is generated) and creating residual income for everyone, Economic Democracy reduces the need for anyone to sell their assets. most productive hours. of the day (week, month, year, life) to an employer in exchange for a paycheck.
11. How will the EDA affect the boom/bust character of the US economy? It effectively eliminates the imbalances that are responsible for the bust/boom dilemma.
12. Does the EDA primarily appeal to conservatives or liberals? To be honest, this is a strategy that appeals to BOTH SIDES of the island. It appeals to the fiscally conservative Republican who wants to control spending and live within his means. It also appeals to the liberal Democrat who wants a level playing field where everyone has an equal chance. And since it consistently promotes independence from government (ie freedom), the only people who disapprove of the EDA are the autocrats who want to control us the people.
13. Why doesn’t the mainstream media inform “we the people” about such a revolutionary economic strategy? Simply put, all of the major news outlets (including CNN and MSNBC) are owned and controlled by the one percent. And the one percent prefer to keep “we the people” in check and in the dark about revolutionary ideas that threaten to undermine their concentrated wealth/power. We are allowed to see and hear what the owners of the media allow us to see and hear. In other words, the US mainstream media offers little more than lucrative propaganda that, in the long run, supports concentrated wealth/power.
14. Why doesn’t academia present this strategy to all its future economists? To be honest, most economists have never been introduced to Economic Democracy. They can’t teach what they don’t know. But in the 21st century, academia is heavily dependent on corporate funding (ie the one percent) for its existence. So even if they are familiar with Economic Democracy, academics cannot afford to present this revolutionary strategy to future economists without risking their own jobs in the process. Bureaucrats (conventionalists) almost never rock the boat.
15. Who is the main defender of the Economic Democracy Law? That would be the Center for Economic and Social Justice (CESJ.ORG), based in Arlington, VA.
16. What are the three big questions that the CESJ wants to ask about any legislation that is being processed in Congress? Who is the owner? Who controls it? Who benefits? In the case of the EDA, every individual in the US owns and controls wealth-producing assets and benefits from this strategy.