$4 TRILLION DOLLARS! On average that’s how much the American economy grows yearly. That’s, on average, how much new value is produced each year by the American economy. 330 MILLION! That’s the approximate population of the USA in 2021. So, if you divide $4 trillion dollars by 330 million people, you’ll find that, on average, the American economy grows at the rate of $12,000 per person, yearly.
With those figures in mind, let’s analyze what happens if the Federal save, by local edges, issued $12,000 worth of CAPITAL CREDIT at ZERO PERCENT INTEREST to every man woman and child in the USA, yearly? My question at this point is, has any money been spent? The answer is NO MONEY HAS BEEN SPENT! All that’s happened is that there’s been $4 trillion dollars of capital credit issued, all of which is just WAITING TO BE SPENT.
observe here that CAPITAL CREDIT is different from CONSUMER CREDIT because it can only be used to buy wealth producing capital assets (stocks, bonds, land, buildings, machinery, patents, copyrights) that are expected to provide regular, predictable dividends to their owners.
Now suddenly, one person decides to use their capital credit to buy $12,000 worth of blue-chip stock. At this point $12,000 HAS BEEN SPENT. But it’s immediately collateralized (secured so neither the local bank or the Fed are at risk) by the value of the rock substantial, blue-chip stock that’s been purchased at zero percent interest.
In order to speed up the ownership course of action, the new owner is also allowed to repay this capital credit loan using PRE-TAX DOLLARS yielded by their stock. In other words, the new loan is automatically collateralized. The owner does not dig into his/her savings account. They don’t put a second mortgage on the family home. They pay the loan off using PRE-TAX, FUTURE EARNINGS/dividends. In investment circles this strategy is called “a Leveraged Buy-Out.”
On average, the loan will pay itself off (it’s self -liquidating) in 3 to 7 years. But the dividends continue to flow, creating a RESIDUAL INCOME for their owner. Multiply this scenario by 10 years and you’ll find that $120,000 has been invested on behalf of the owner by their 10th birthday. By the time they reach college age, over $200,000 will have been invested on their behalf which will provide all the residual income they’ll need to attend college, while incurring NO COLLEGE DEBT. And at retirement, the owner won’t need social security.
To repeat, not one thin dime is spent UNTIL a buy is consummated. Once that happens the loan is immediately collateralized by the value of the wealth producing asset purchased. Then the self-liquidating loan pays itself off with pre-tax dollars in a predictable amount of time so neither the individual or the government incurs any long-term debt. And to make things already more obtain, a small percentage of the buy price is used to INSURE the complete transaction, just in case the rock substantial, blue-chip stock fails to perform as expected and does not pay itself off.
The Biden/Harris Golden Opportunity…
Now if you multiply this scenario by 330 million people yearly, you’ll see how the new Biden/Harris administration could rule our economy out of the WORST ECONOMIC CRISIS America has experienced since the stock market crashed in 1929. In the time of action they would create no government debt, and no individual debt.
Within a decade and a half this strategy, if employed, would little by little 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 who would reduce the tax burden for Americans currently pay taxes, allow the social safety net programs to fade off into the sunset, balance the budget, and possibly already pay off the national debt.
16 Frequently Asked Questions
1. Where does the $4 Trillion dollars come from? It comes from NEW WEALTH/ VALUE (from a naturally expanding American economy) produced (on average) yearly. It’s destined to happen! Someone will have access to and will assistance from this predictable, newly produced wealth. The EDA indicates the many (as in we the people) should have access to the method required to participate in the ownership side of the economy – NOT just the few.
2. Won’t the EDA be inflationary? No, it won’t. Notice this strategy does not add one dime to the projected annual growth of the American economy. It’s going to happen anyway. So, the EDA does not dilute or devalue existing money levels. The only question is, who gets to participate and assistance? Will it be we the people (the many)? Or only the 1% (the few)?
3. Isn’t the EDA socialistic? No, it’s not. Capitalism is all about PRIVATE OWNERSHIP. Socialism is all about PUBLIC OWNERSHIP. In that light, the EDA is all about private ownership. But it systematically counteracts concentrated wealth/strength. It also democratizes our free market economy. In the time of action it UNDERWRITES POLITICAL DEMOCRACY.
4. Won’t the EDA increase my taxes? No, it won’t! What it will do is create tens of millions of NEW TAXPAYERS who will in turn help current taxpayers shoulder the tax burden. This will truly REDUCE taxes for most people who currently pay taxes. It already offers the possible of PAYING OFF THE NATIONAL DEBT.
5. Let me calculate. A family of 4 would receive $48,000 (4 X $1,200) of capital credit yearly. And a family of 10 would receive $120,000 (10 X $12,000) of capital credit yearly. Right? So, doesn’t the Economic Democracy Act effectively pay for a associate to create lots of kids in order to get lots of money? The short answer is that since the line of credit is non-transferable, parents have no access and do not directly assistance from it. But more importantly, research shows that as income increases childbirth frequency decreases. So, on both counts, the EDA will not encourage the overproduction of children.
6. How is Economic Democracy different from Universal Basic Income? UBI simple and it’s comparatively immediate. That’s its strength. It’s consumer oriented and it remains comparatively continued in size over time. It’s also secured/collateralized by increased government debt. UBI is consequently a SHORT-TERM FIX and creates DEPENDENCE on government. In contrast the EDA is more complicated and it requires some time (5 to 7 years) before residual incomes are truly being generated. The EDA is investment oriented, which method it accumulates and grows over time. It is also backed by insured, wealth producing capital assets that collateralize/obtain every transaction. By doing so it creates NO long-term debt for either consumers or government. consequently, the EDA is a LONG-TERM FIX that must be little by little phased as it creates more people who are INDEPENDENT from government.
7. Is Economic Democracy similar to an Employee Stock Ownership Plan/ESOP? Yes. But instead of covering just those who work for employee-owned companies and who have access to an ESOP, Economic Democracy uses the same strategy to COVER EVERYONE (in spite of of age, gender, race, religion), most of whom without the required method to participate in the (predictably profitable) ownership side of the American economy.
8. Has Economic Democracy been tested in a pilot project to see how it performs in real life? Yes and No. The basic mechanics of this strategy have been thoroughly tested in the approximately 8000 employee-owned companies that have been produced over the past 50 years. As we said in the past question, the EDA is really just an expansion of the of the ESOP strategy that aims to give all Americans an equal opportunity to participate in and to assistance from the ownership side of the American economy where all the new wealth is being produced. However, it has however to be formally tested in a national setting.
9. What percentage is used in order to calculate an average ROI and payoff possible? Using very conservative estimates, we chose 15% as the PRE-TAX ROI. Historically, before the recent wild swings and grossly inflated proportion values of today, a POST-TAX ROI ran in the neighborhood of 9 to 12%. The payback period is calculated by dividing one by the rate of return and rounding up to the nearest integer. consequently 1/.15 = 6.666 (round it up to 7 years).
10. How does Economic Democracy reduce wage slavery in the US? By giving everyone (as opposed to a few) authentic access to the ownership side of the US economy (where almost all the new wealth is generated) and creating residual incomes 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 pay check.
11. How will the EDA impact the bust/expansion character of America’s economy? It effectively eliminates the imbalances that are responsible for the bust/expansion dilemma.
12. Does the EDA allurement mostly to conservatives or mostly 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 method. It also appeals to the liberal Democrat who wants a level playing field where everyone has an equal opportunity. And since it systematically contributes independence from government (i.e. freedom) the only people who disapprove of the EDA are autocrats who want to control we the people.
13. Why would the mainstream media fail to inform “we the people” about such a revolutionary economic strategy? Quite simply, the complete mainstream media (including CNN and MSNBC) is owned and controlled by the one percent. And the one percent prefers to keep “we the people” under control and in the dark about revolutionary ideas that threaten to undermine their concentrated wealthy/strength. We’re allowed to see and hear what media owners allow us to see and hear. In other words, America’s mainstream media delivers simply profitable propaganda that, in the long run, supports concentrated wealth/strength.
14. Why doesn’t academia introduce this strategy to all their 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 largely dependent on corporate funding (i.e. the one percent) for their existence. So already if they are familiar with Economic Democracy, academicians can ill provide to introduce this revolutionary strategy to future economists without risking their own employment in the time of action. Bureaucrats (conventionalists) hardly ever rock the boat.
15. Who’s the dominant proponent of the Economic Democracy Act? That would be the Center for Economic and Social Justice (CESJ.ORG), headquartered in Arlington, VA.
16. What are the three big questions that the CESJ wants to ask about any legislation that gets run by Congress? Who owns it? Who controls it? Who benefits? In the case of the EDA, every individual person in the USA owns and controls wealth producing assets, and benefits from this strategy.