$ 4 TRILLION DOLLARS! On average, that is how much the US economy grows annually. That is, on average, how much new value the American economy creates each year. 330 MILLION! That’s the approximate population of the US in 2021. So if you divide $ 4 trillion by 330 million people, you will find that, on average, the American economy grows at a rate of $ 12,000 per person, annually.
With those figures in mind, let’s explore what happens if the Federal Reserve, through local banks, issues a CAPITAL CREDIT worth $ 12,000 at ZERO PERCENT INTEREST to every man, woman, and child in the U.S. ., ANNUALLY. My question at this point is, has any money been spent? The answer is NO MONEY HAS BEEN SPENT! All that has happened is that $ 4 trillion of capital credit has been issued, all of which is WAITING TO BE SPENT.
Note here that CAPITAL CREDIT is different from CONSUMER CREDIT because it can only be used to purchase wealth-generating capital assets (stocks, bonds, land, buildings, machinery, patents, copyrights) that are expected to produce regular and predictable dividends for their owners.
Now all of a sudden a person decides to use their equity credit to buy $ 12,000 worth of first-class stocks. At this point $ 12,000 HAS BEEN SPENT. But it is IMMEDIATELY guaranteed (insured so that neither the local bank nor the Fed is at risk) for the value of solid, premium stocks that have been purchased at zero percent interest.
In order to speed up the ownership process, the new owner can also repay this equity credit loan using DOLLARS BEFORE TAX generated by their shares. In other words, the new loan is automatically guaranteed. The owner does not inquire into his savings account. They do not put a second mortgage on the family home. They pay off the loan using dividends / FUTURE EARNINGS BEFORE TAX. In investment circles, this strategy is called “leveraged buying.”
On average, the loan will pay itself off (pay off automatically) 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 will find that $ 120,000 has been invested on behalf of the owner before their 10th birthday. By the time they reach college age, more than $ 200,000 will have been invested in their name, providing them with all the residual income they will need to attend college, without incurring COLLEGE DEBT. 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 guaranteed for the value of the purchased wealth-building asset. The self-liquidating loan is then repaid in pre-tax dollars over a predictable period of time so that neither the individual nor the government incur 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 the event that strong, top-of-the-line stocks don’t perform as expected and don’t pay off.
The Biden / Harris Golden Opportunity …
Now if you multiply this scenario by 330 million people a year, you will see how the new Biden / Harris administration could pull our economy out of the WORST ECONOMIC CRISIS the United States has experienced since the stock market collapsed in 1929. In the process, they would create without public debt and without individual debt.
In a decade and a half, this strategy, if applied, 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 reduce the tax burden on Americans currently paying taxes, allow social safety net programs to fade to the end, balance the budget, and possibly even pay. National debt.
16 frequently asked questions
1. Where did the $ 4 trillion come from? It comes from NEW WEALTH / VALUE (from a naturally expanding US economy) created (on average) annually. It is destined to happen! Someone will have access to and benefit from this newly created and predictable wealth. The EDA suggests that many (like us people) should have access to the means necessary to participate on the property side of the economy, NOT just a few.
2. Will the EDA not 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 will 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 just 1% (the few)?
3. Isn’t the EDA socialist? No, it’s not. Capitalism has to do with PRIVATE PROPERTY. Socialism has to do with PUBLIC PROPERTY. In that sense, EDA has to do with private property. But it systematically counteracts wealth / power concentration. It also democratizes our free market economy. In the process, SUBSCRIBE THE POLITICAL DEMOCRACY.
4. Won’t the EDA 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 REDUCE taxes for most people who currently pay taxes. It even offers the potential to PAY THE NATIONAL DEBT.
5. Let me calculate. A family of 4 would receive $ 48,000 (4 X $ 1,200) of principal credit annually. And a family of 10 would receive $ 120,000 (10 X $ 12,000) of principal credit annually. Right? So the Economic Democracy Law does not effectively pay a couple to create many children in order to get a lot of money? The short answer is that since the credit line is not transferable, parents do not have access and do not benefit directly from it. But more importantly, research shows that as income increases, the frequency of childbirth decreases. So, in both respects, EDA will not encourage the overproduction of children.
6. How is economic democracy different from universal basic income? Simple and relatively immediate RBU. That is your strength. It is consumer oriented and its size remains relatively constant over time. It is also insured / collateralized by higher public debt. Therefore, the UBI is a SHORT-TERM SETTLEMENT and creates DEPENDENCE on the government. In contrast, EDA is more complicated and requires some time (5 to 7 years) before residual income is generated. EDA is investment-oriented, which means it accumulates and grows over time. It is also backed by secured capital assets that build wealth and that guarantee / insure every transaction. By doing so, you do NOT create long-term debt for either consumers or the government. Therefore, the EDA is a LONG-TERM FIX that should be gradual as it creates more people INDEPENDENT from the government.
7. Is Economic Democracy Similar to an Employee Stock Ownership / ESOP Plan? Yes. But instead of covering only those who work for employee-owned businesses and who have access to an ESOP, Economic Democracy uses the same strategy to COVER EVERYONE (regardless of age, gender, race, religion), the majority of who 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 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 and benefit from the ownership side of the American economy, where all the new builds up. wealth. being created. However, it has yet to be formally tested in a locale.
9. What percentage is used to calculate an average ROI and profit potential? Using very conservative estimates, we chose 15% as ROI BEFORE TAX. Historically, prior to the recent swings and hugely inflated stock values today, a POST-TAX ROI was in the neighborhood of 9-12%. The payback period is calculated by dividing one by the rate of return and rounding to the nearest whole number. Therefore, 1 / .15 = 6.666 (round 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 property side of the US 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 the EDA affect the boom / bust nature of the US economy? It effectively removes the imbalances that are responsible for the bust / boom dilemma.
12. Does EDA appeal primarily to conservatives or primarily to liberals? To be honest, this is a strategy that appeals to BOTH SIDES of the island. Appeal to the fiscally conservative Republican who wants to dominate spending and live within our means. It also appeals to the liberal Democrat who wants a level playing field where everyone has an equal opportunity. And since it consistently promotes government independence (that is, freedom), the only people who disapprove of the EDA are the autocrats who want to control us, the people.
13. Why didn’t the mainstream media inform “we the people” about such a revolutionary economic strategy? Simply put, all major media (including CNN and MSNBC) are owned and controlled by the one percent. And one percent prefer to keep “we the people” in check and in the dark about revolutionary ideas that threaten to undermine their concentrated power / wealth. We are allowed to see and hear what the media owners allow us to see and hear. In other words, the mainstream American media offers little more than profitable propaganda that, in the long run, supports the concentration of wealth / power.
14. Why doesn’t academia present this strategy to all of its future economists? To be honest, most economists never knew about economic democracy. They cannot teach what they do not know. But in the 21st century, academia relies heavily on business funding (that is, 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 employment in the process. The bureaucrats (conventionalists) hardly ever move the ship.
15. Who is the main proponent 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 passed in Congress? Who does it belong to? Who controls it? Who benefits? In the case of EDA, every person in the US owns and controls wealth-generating assets, and benefits from this strategy.