I’d like you to take five minutes, sit back, and imagine that you were born a trust fund baby. That is to say, starting at birth, imagine your parents were wealthy enough to invest $10,000 on your behalf in a qualified, tax-exempt trust fund with your name on it, ANNUALLY. By the time you reached your 18th birthday that investment (with all the appropriate costs subtracted out) is generating at least $18,190 of residual income (from dividends) every year. That figure translates into a little over $1500 every month without you lifting a finger.
In other words, when you turn 18 you won’t need to accept a demeaning job (sell yourself) flipping hamburgers, waiting tables, stocking grocery store shelves, or delivering pizza in order to have a little spending money. You can count on at least $1500 dollars-worth of residual income walking in your door every single month, all year long.
Now obviously that’s not a whole bunch of money in today’s economy. But for an 18-year-old who just graduated from high school, that goes a long way toward paying your bills. And presuming you’re still living with your parents, that $1500 goes directly into your back pocket every month. Money is WORKING FOR YOU instead of YOU WORKING FOR MONEY!
What Happens When You Turn 30?
Now let’s take this little scenario one step further and say that age 30 your parents’ annual investments were generating at least $36,190 of residual income annually ($3015 per month.) Now once again, this kind of money does not have you hanging out with Bill Gates or Elon Musk. But over 3 grand of residual income every month would be enough income to allow you to avoid HAVING TO SELL YOURSELF to some dictatorial autocrat (a.k.a. corporate CEO) who sees you as little more than a means to corporate profit. But if you did accept his job offer, this autocratic gent had best make it worth your while and treat you with RESPECT. And if he failed at either you could afford to tell him to take his job and shove it.
By the way, if you were married to someone the same age, and whose parents were similarly inclined, that $36K instantly becomes $72K. And at the age of 30 you’d be light years from being poor. You’d never have to choose between taking a shlock job with an idiot boss and being unable to take care of your family – which is the choice that over 90% of Americans face every day of the week. You could actually explore your potentials/talents and choose to do something with your days, weeks, months and years that make your life meaningful, fulfilling, and worth living instead of having to focus on buck chasing all the damn time.
And What About Age 40? 50? 60? And 65?
In this particular scenario, at age 40 your residual income would have grown to $51,190 annually. At age 50 you’re looking at $66,190 in residual income. At age 60 it would be at least $81,190. And at age 65 your residual income would be at least $88, 690. And if you’re married that $88K becomes almost $190,000 coming in the door. In other words, when you retired you and your spouse would have no need of pensions, Social Security, Medicare, etc. You wouldn’t be billionaires. But you’d have more than enough to cover all your bases without depending on anyone including the government. You could call that economic independence or freedom!
But What if Your Parents Are Not Wealthy?
But what if your parents aren’t members of the 1% and are unable to invest $10K annually – like 99% of Americans today? How would this improbable scenario described above apply to you? If you’re interested in the answer to that question, consider the FOLLOWING FACTS.
On average, the American economy grows at the rate of $4,000,000,000,000 (yes that’s 4 trillion dollars) annually. That translates into about $12,000 for every man, woman, and child in America. But generally speaking, the beneficiaries of this annual growth are currently limited to those people who can afford to buy the stocks, bonds, real estate, and technological developments that account for this growth.
More specifically we’re talking about less than 10% of Americans who have the means to take advantage of this relatively predictable growth, and 90% who lack the opportunity to participate. Thus, we now have a 21st century wealth gap that is wider and more toxic than any time since the stock market crash of 1929 and the Great Depression which followed in its wake.
To make matters worse, this was the case long before the current pandemic oriented economic crisis raised its ugly head. In response to millions of workers losing their incomes and healthcare due to the virus, the Federal government increased unemployment benefits for several months, and issued so called “stimulus checks” to millions of people in an effort to artificially jump-start demand and to prevent the ship of state from sinking into oblivion.
Unpalatable But Necessary Steps
In taking these unpalatable but necessary steps the government has significantly increased the already massive debt load, which means it’s a short-term not a long-term solution. The hope of course is to artificially resuscitate demand, which in turn should recreate jobs and get we the people back to work and lead us all back to where we were before the virus struck.
The problem is that, even before the virus struck, we the people were not in a very good place. Even before the virus erupted over half of Americans were living paycheck to paycheck, unable to afford a $500 bump in the road without having to borrow money in order to pay for it. Things are dramatically worse than they were several months ago before the virus. But the place we were is still not the place to which we the people are longing to return. So, what can we do?
The $4 Trillion Dollar Idea That Creates No Debt!
Now let’s recall that on average, the American economy grows at the rate of $4 trillion dollars annually. Once again, that translates into about $12,000 annually for every man, woman, and child in America. But the beneficiaries of this annual growth are those who can afford to buy stocks, bonds real estate, and new technology. This generally excludes we the people.
The question I want to raise now is, how can we make sure the average American has systematic access to the ownership side of the economy, where MOST OF THE NEW WEALTH IS BEING GENERATED? How can the average Joe gain access to that $4 trillion dollars of predictable growth in order to generate a second stream of investment income, while eliminating the fear and instability that so many Americans suffer from in today’s incredibly imbalanced economy?
Consider the Following Possibility…
• What if the Federal Reserve, through local banks
• issued $12,000 of FULLY INSURED CAPITAL CREDIT LOANS
• to every single American citizen (man, woman, and child regardless of race, gender, religion, sexual orientation, or economic status) annually
• at 0% interest, and…
• allowed the capital credit loan to be repaid via PRE-TAX, FUTURE EARNINGS /DIVIDENDS – NOT FROM PERSONALSAVINGS
• along with a stipulation that these funds could only be used to purchase shares of new and transferred capital assets that were predicted to generate enough future profits to pay for their purchase and to create predictable, stabilizing, residual incomes for their owners?
• Yes, this is BETTER THAN the trust fund baby scenario described above.
This strategy, known as ECONOMIC DEMOCRACY (a.k.a. Capital Homesteading) would cost American taxpayers NOTHING. It creates NO GOVERNMENT DEBT! It creates NO CONSUMER DEBT! And, rather than government debt-backed currency, the purchase would be backed (collateralized) by real, productive, private-sector assets
And it WOULD NOT BE INFLATIONARY. All money created would be instantly backed (collateralized) by the full value of private sector assets that citizens would receive insured loans in order to purchase. Production and consumption (supply and demand) would be systematically balanced. Citizens would actually be purchasing newly issued, full dividend payout, voting shares of companies that need new capital assets in order to grow.
What Economic Democracy Will Do However Is…
• Give every American systematic access to the ownership side of the American economy, where most of our nations’ new wealth is being generated.
• Create a stream residual of income for all Americans thru ownership – not labor
• END AMERICAN POVERTY AND HEAL THE RACIAL DIVIDE
• Stabilize family life,
• Minimize the mental illness known as GREED that so poisons American culture
• In the long run it will help democratize our free market,
• Create millions of new taxpayers, thereby DILUTING and REDUCING the TAX BURDEN on those who actually pay taxes
• Minimize the growing threat of artificial intelligence in Americas’ job market
• Balance the national budget,
• And yes, pay off our massive and ever-growing national debt, etc.
One Simple Example
Here’s one simple example of how Economic Democracy would benefit the next generation of Americans. If implemented, by age10 every child would have had $120,000 (10 times $12,000) invested on their behalf and paying dividends. By age 18 well over $200,000 would have been invested and be generating dividends that would easily pay for a debt-free college education along with all the benefits that would follow in its wake. And imagine the retirement benefits!!
In this moment of political division and strife Economic Democracy literally pays all Americans to pull together, at the same time, in the same direction, towards the same goals! It translates mere political talk (such as…we’re all in this together) into real live, results driven action!
It Systematically Counteracts Concentrated Wealth/Greed!
Over time, each American citizen will accumulate more equity, more residual income, and benefit from their investment income in a way that only the wealthy can today. As the result, the need for federally backed social safety net programs (i.e. Social Security, Medicare, Medicaid, food stamps) will gradually fade into the sunset. More people will be able to pay taxes, which in turn decreases the burden on those among us who still pay taxes. It systematically counteracts concentrated wealth/greed as it gradually democratizes America’s free-market economy!
Yet This Free Market, Trickle-Up, Non-Socialistic Solution Has Been Totally Ignored!!!
If any previous administration had implemented Economic Democracy, today’s COVOD 19/Unemployment crisis would not be such a crisis. We the people could afford stay at home and still have sufficient income to weather a much less severe storm. But to date this Copernican revolution in economics has been completely ignored. But then, desperate times call for desperate measures. It’s high time we seriously consider innovation!
Economic Democracy In Detail
I confess, this commentary has been a generalized portrait in dire need of more detail. So, for a full and detailed explanation of how this strategy could be implemented, go to CESJ.ORG and check out the concept that Dr. Norman Kurland calls the ECONOMIC DEMOCRACY ACT. It’s an ingenious idea whose time is long overdue. And it’s one very good thing that could actually come to fruition as the result of this horrific, COVID 19 crisis.
UBI vs. Economic Democracy Comparison
Stimulus checks are effectively a short-term form of Universal Basic Income (UBI), an idea which has been advocated by among others, former presidential hopeful and serial entrepreneur Andrew Yang, as well as Mark Zuckerberg of Facebook, and Elon Musk of Tesla. Although the suggested annual amount of money issued ($12,000 annually) is the same as Economic Democracy, that’s where the similarity ends. Check out the differences.
Since it issues insured capital credit loans that are paid back via pre-tax future earnings, and can only be used to buy wealth producing capital assets, Economic Democracy creates NO GOVERNMENT DEBT and NO COMSUMER DEBT! UBI and stimulus checks create government debt that will eventually be paid back by we the people (not the 1% who are spectacular at avoiding taxes) in the form of higher taxes.
Economic Democracy systematically creates universal capital ownership opportunity and access to the means of acquiring wealth producing capital assets. UBI does not.
Economic Democracy systematically finances predictable and sustainable growth of the economy. UBI does not.
Economic Democracy systematically enables individual citizens to become economically empowered and liberated through capital ownership. UBI does not.
Economic Democracy systematically enables citizens to become economically independent of the government. UBI does not.
Economic Democracy systematically generates mass purchasing power through ever-broadening citizen ownership of income producing capital. UBI does not.
Economic Democracy systematically creates new owners of advanced technologies and green growth assets UBI does not.
Economic Democracy systematically creates a growing tax base to pay the costs of government, thereby eliminating deficit spending and eventually paying off the currently massive government debt. UBI does not.
UBI/Stimulus checks are simple and immediate. That’s their strength.
Economic Democracy requires some time (probably a full decade) in order for benefits to accumulate. That’s why UBI should start immediately and be phased out over time in favor of Economic Democracy.