A Copernican revolution in the American economy!
A Copernican revolution in the American economy!
4 trillion dollars! On average, that’s how much the US economy grows annually. That’s, on average, how much new value the US economy creates each year. 330 MILLION! This is the approximate population of the US in 2021. So if you divide $4 trillion by 330 million people, you find that, on average, the US economy is growing at a rate of $12,000 per person, annually.
With these numbers in mind, let’s consider what if the Federal Reserve, through local banks, issued $12,000 in ZERO PERCENT INTEREST CAPITAL LOAN to every man, woman and child in the US, ANNUALLY? My question at this point is, has money been spent? The answer is NO MONEY WAS SPENT! All that has happened is that $4 trillion of equity credit has been issued, all of which is waiting to be spent.
Note here that CAPITAL LOAN is different from CONSUMER LOAN because it can only be used to buy capital assets that produce wealth (stocks, bonds, land, buildings, machinery, patents, royalties) that you expect that give regular and predictable dividends to their owners.
Now, all of a sudden, a person decides to use their equity credit to buy $12,000 in prime stocks. $12,000 has been spent at this point. But it is INSTANTLY guaranteed (insured so that neither the local bank nor the Fed is at risk) by the value of the top-tier shares that have been bought at zero percent interest.
In order to speed up the ownership process, the new owner can also repay this home equity loan using the PRE-TAX DOLLARS generated by their stock. In other words, the new loan is automatically guaranteed. The owner does not look into his savings account. They do not put a second mortgage on the family home. They repay the loan with pre-tax income/dividends. In investment circles, this strategy is called a “leveraged buy.”
On average, the loan will be repaid (self-liquidating) in 3 to 7 years. But the dividends continue to flow, creating a RESIDUAL INCOME for its owner. Multiply that scenario by 10 years and you’ll find that $120,000 has been invested on the owner’s behalf before their 10th birthday. By the time they reach college age, they will have over $200,000 invested on their behalf, providing all the residual income they will need to attend college while incurring NO COLLEGE DEBT. And in retirement, the owner will not need social security.
To repeat, not a penny is spent until a purchase is consumed. Once this happens, the loan is instantly secured by the value of the wealth-producing asset purchased. The payday loan is then repaid with pre-tax dollars over a predictable period of time, so neither the individual nor the government incurs any long-term debt. And to make things even safer, a small percentage of the purchase price is used to INSURE the entire transaction, just in case the top-notch, solid stock doesn’t perform as expected and isn’t compensated.
Biden/Harris’ golden opportunity…
Now, if you multiply that scenario by 330 million people a year, you can see how the new Biden/Harris administration could pull our economy out of the WORST ECONOMIC CRISIS America has experienced since the stock market crashed in 1929. In the process would be created. no public debt, no individual debt.
Within a decade and a half, this strategy, if implemented, would phase out 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 reduce the tax burden on current tax-paying Americans, allow social safety net programs to fade into the sunset, balance the budget, and , possibly even paying off the national debt.
16 Frequently asked questions
1. Where did the $4 trillion come from? It comes from NEW WALTH/VALUE (from a naturally expanding American economy) created (on average) annually. It’s meant to happen! Someone will have access to and benefit from this predictable, newly created wealth. The EDA suggests that the many (as in us the people) should have access to the means to participate in the property side of the economy, NOT just the few.
2. Will the EDA not be inflationary? No, it won’t be. Note that this strategy does not add a dime to the projected annual growth of the US economy. It will happen anyway. EDA therefore 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 just 1% (the few)?
3. Isn’t the EDA socialist? No, it is not. Capitalism is about PRIVATE PROPERTY. Socialism is about PUBLIC OWNERSHIP. In this sense, the EDA refers to private property. But it systematically counters concentrated wealth/power. It also democratizes our free market economy. In the process SUBSCRIBE POLITICAL DEMOCRACY.
4. Won’t the EDA increase my taxes? No, it won’t be! What it will do is create tens of millions of NEW TAXPAYERS who will in turn help current taxpayers shoulder the tax burden. This lowers 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 $48,000 (4 X $1,200) of capital credit annually. And a family of 10 would receive $120,000 ($10 x $12,000) in home equity credit annually. right? So the Economic Democracy Act doesn’t effectively pay for a couple to raise lots of kids to get lots of money? The short answer is that because the line of credit is non-transferable, parents do not have access to it and do not directly benefit from it. But more importantly, research shows that as incomes rise, the frequency of childbirth declines. Therefore, in both respects, the EDA will not encourage the overproduction of children.
6. How does economic democracy differ from universal basic income? Simple and relatively immediate UBI. This is its strength. It is consumer oriented and remains relatively constant in size over time. It is also guaranteed/collateralized by an increase in public debt. UBI is therefore a short-term fix and creates DEPENDENCE on the government. In contrast, EDA is more complicated and takes time (between 5 and 7 years) before residual income is generated. EDA is investment oriented, meaning it accumulates and grows over time. It is also backed by secured capital assets and wealth generators that guarantee / insure each transaction. Doing so creates NO long-term debt for either consumers or the government. So EDA is a LONG TERM FIX that needs to be phased in as it creates more people INDEPENDENT of 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 businesses 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 American 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 thoroughly tested in the approximately 8,000 employee-owned businesses that have been created over the past 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 ownership side of the economy North America where all the new wealth is found. is being created. However, it has yet to be formally tested in a national setting.
9. What percentage is used to calculate an average ROI and payout potential? Using very conservative estimates, we chose 15% as the pre-tax ROI. Historically, before the recent wild swings and today’s wildly inflated stock values, an AFTER-TAX ROI was around 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 US? By giving everyone (as opposed to a few) legitimate access to the property part of the American economy (where almost all new wealth is generated) and creating residual income for everyone, economic democracy reduces the need for anyone to sell their most productive hours. of the day (week, month, year, life) to an employer in exchange for a paycheck.
11. How will EDA affect the boom/bust nature of the US economy? It effectively eliminates the imbalances that are responsible for the bust/boom dilemma.
12. Does the EDA appeal mainly to conservatives or mainly to liberals? To be honest, this is a strategy that appeals to both sides of the isle. It appeals to the fiscally conservative Republican who wants to reign in spending and live within our means. He also appeals to the Liberal Democrat who wants a level playing field where everyone has the same opportunities. And since it systematically promotes government independence (ie freedom) the only people who disapprove of the EDA are the autocrats who want to control us, the people.
13. Why wouldn’t the major media inform “we the people” about such a revolutionary economic strategy? Simply put, all of the mainstream media (including CNN and MSNBC) is 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 rich/concentrated power. It allows us to see and hear what the media owners allow us to see and hear. In other words, America’s mainstream media offers little more than profitable propaganda that in the long run supports the concentration of wealth/power.
14. Why doesn’t academia introduce this strategy to all its future economists? To be honest, most economists have never been introduced to economic democracy. They cannot teach what they do not know. But in the 21st century, academia is largely dependent on corporate funding (ie the one percent) for its existence. Thus, even if they are familiar with economic democracy, academics cannot afford to introduce this revolutionary strategy to future economists without risking their own jobs in the process. Bureaucrats (conventionalists) hardly ever rock the boat.
15. Who is the main defender of the Economic Democracy Act? That would be the Center for Economic and Social Justice (CESJ.ORG), based in Arlington, VA.
16. What are the three main questions that the CESJ wants to ask about any legislation that passes through Congress? Who is the owner? Who controls it? Who benefits? In the case of EDA, every person in the US owns and controls wealth-producing assets, and benefits from this strategy.
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