Dec 29 2008
Current Economic Crisis: A Sustainable Solution
An Open Letter to President Obama:
Mr. President, here is a house warming present - one that will address our current economic crisis. This is the challenge facing your new home and position. This will garner bi-partisan support and will be passed by Congress.
We really are in such a predicament that no matter what the government does to stimulate the economy it is unlikely to have a lasting enough and widespread enough impact. Simply pay attention to words like “approaching zero interest rate”, “recession”, “deflation”, “cash hoarding” and, then, listen to the alarming sound of the closing bell of the major exchanges. Sure there are some readily identifiable scoundrels, but let’s all stop for a moment and take a little more responsibility than blaming convenient villains. All of us have sprung this Liquidity Trap and it is a very real financial crisis, on both the corporate and personal level.
There is HOPE! $1 Trillion Worth of it! Yes We Can!
A shining beacon of realistic hope has been introduced by The Prosperity Mandate. WITHOUT $1 OF DIRECT GOVERNMENT FUNDING The Fund America plan infuses $1+ Trillion into the banking system, creates millions of jobs, and funds a diversity of endeavors. The keystone of this new financial paradigm is to CONVERT NET WORTH (not government funding) INTO LIQUIDITY that funds the economy.
A micro example: (This is a conceptual demonstration — not necessarily a probable situation) The parents of newlyweds — bankers on one family side and experienced home builders on the other want to ENABLE their kids by providing them a new home, but, they also want to instill self respect, self reliance, and empowerment. Instead of traditional wedding gifts, the two families get together and figure out how much of a mortgage the newlyweds can comfortably afford to pay based on their incomes. With the total costs set by the amount of a conventional mortgage the newlyweds can afford, the two families go to the bank and deposit CDs and pledge them as collateral to secure a loan for the lot acquisition and construction of the newlyweds’ new home. To safeguard their capital the parents agree to pay for a completion bond as risk management.
Fast forward 18 months, and the new home is built, a new mortgage is funded and recorded, paying off the loans and releasing the security pledges. With the help of their families the newlyweds are in a brand new home with a mortgage principal equal to approximately 40% of the fair market value of their neighbors. The newlyweds enjoy the feeling of paying their own way - the families have given a magnificent gift - accomplished without $1 given away.
On a Macro scale, it is more complicated. The Prosperity Mandate outlines the details to set up and safeguard the $1+Trillion “Fund America” program to implement this paradigm. Tax Credits for cash deposited into CDs which are then pledged as collateral on Fund America programs earn Tax Free Interest. The US Government would have to guaranty against bank default the principal on pledged CDs. Be very clear, this is a lot better than the Government writing a $1 Trillion dollar check to stimulate the economy. Risk Management and Oversight with transparent real time accounting have to be imposed, along with banking reporting, regulation and review.
Sustainable and Renewable Answers to the Current Economic Crisis
The $Trillion Fund America plan effects deposits of $1 Trillion into banks, funds economic recovery, enables individuals and communities while instilling self reliance, self respect and empowerment. Fund America programs would fund a diversity of projects from Micro-Finance, Infrastructure construction, Urban Renewal, Venture Capital efforts for Green Energy, Biosphere Ecological Technologies, to Medical R & D. All of this accomplished without any direct government funding, and not $1 dollar funded by the US Government or given away by donors. The very best part of the plan … each time a collateral pledge is released through cash pay back or permanent financing, each CD can be renewed and the cycle starts again … and again.
President Obama, your White House warming gift sits all wrapped up and waiting to be opened, the FUND AMERICA $TRILLION STIMULUS PLAN. You can open your present at www.theprosperitymandate.org This new financial paradigm is ENACTABLE, CODE GREEN, Big Business and Jobless friendly alike, and ready to be implemented for a full economic recovery and do really good works.
Regular Citizens, call your Congressman and Senator to ask for support for The Prosperity Mandate Tax Initiative. 2009 arrives with a recovery plan and a truly sustainable solution to the current economic crisis.
3 responses so far
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I liked the example you gave. The micro example works fine. However, I don’t have much hope that the macro type would actually work. I cannot see any reason why it shouldn’t work. I just know that the government will muck it up with regulations, special adjustments state by state…you name it.
From every point of view, it would be preferred to what they are doing now.
Rich -
Your skepticism has been well and repeatedly earned by our Government. TPM tries to give government the sole role of governing - through setting the vision, enacting tax initiatives and directing where the cash flows and what behaviors receive tax relief.
The whole point of a strong, diverse, bi-partisan, Board of Advisors is to have that be the “General Manager” of the Fund America role out.
For instance, low income housing would be “managed” by the TPM Board of Advisors who would contract with groups such as Habitat for Humanity - set up the entire Fund America TPM Program and monitor it.
Internal administrative infrastruture will be necessary at TPM - and the funding for it is already built into the system. As programs grow, additional expertise will either be hired or contracted for.
On major infrastruture programs, true informed Open Bidding competition would secure realistic best cost.
To add a little bite to enforcement of any future abuses, the Tax Initiative or a separate Federal Law could make any financial fraud or misrepresentation in the pursuit of a Fund America TPM program severly punishable - perhaps 2 to 3 times the normal statutes and levels.
Thank you for your good questions. Keep them coming as I think they help all of us understand the program better. Let us know what you think of the response.
Neal