“There’s no such thing as Retirement today; it is an imaginary illusion! Retirement basically is when one reaches financial independence.”
The essay “No such thing as Retirement?” that appears on the America’s Party Web site is a powerful explanation of how binary economics can solve the problem of Retirement and at the same time significantly grow the American economy:
I’m glad you asked!
“How will Joe Lunchbucket get money for a Capital Homestead Account and Retirement?”
One of the most ‘conventional’ questions/comments that comes up when talking about Capital Homesteading is;
“It’s a nice idea,… but!” — “Where are you going to get the money? You can’t get money except by saving it yourself or borrowing it from somebody who has saved it. And there is no way that you can afford the interest payments on that. Because that’s thrift and capitalism. The only other way is to redistribute. Is this another redistribute of wealth scheme? Or are you suggesting to take the money away from somebody else who has saved it. That would be theft and socialism.”
Not that they’re listening but, the answer is?
The common belief is that you can’t get money for investment — to buy capital (productive assets) — except by saving it yourself or borrowing it or just taking it away from somebody who has managed to save, is true. “But!” — is as far as Joe Lunchbucket’s thoughts will go. This belief has a critical error, it assumes that the only way to save is to cut consumption and accumulate cash. And this therefore is what Louis Kelso and Mortimer Adler called “the slavery of past savings.” Which was written about in the book “The New Capitalist.” Did I mention that Joe can’t read?
Beyond conventional thinking there is another way: Let the capital pay for itself out of its ‘own’ future earnings. That’s worth repeating Joe; Let the capital pay for itself out of its ‘own’ future earnings. Anybody can “create money” by promising to pay for something he or she receives now or in the future and having the promise accepted. It’s called “credit.” When it’s used to purchase food, clothing and shelter (consumer goods) now and pay later, it’s called “consumer credit,” and it’s pretty much the worst form of credit possible. Joe consumer-credit, Bad! When it’s used to purchase ‘capital’ that pays for itself out of future earnings, it’s called “capital credit,” and can be the very best form of credit — and of creating money. Besides it will also help finance the future growth which this economy sorely needs.
This is called “future savings.” Instead of reducing consumption in the past or now to finance new capital, increase future production from new capital that you’ve promised to pay for, out of future profits. You don’t save to save now, produce later. You can produce now, and save later. Joe do you get it? In other words, get “capital credit” now. Credit is nothing more than a promise to repay a loan out of future profits. You can use the promise itself as money to buy capital, then use what the capital produces to repay the loan. It’s a lot easier and faster than saving now and then producing later, and in a much broader and larger in scale. The same basic architectural model of financing used by every 100% leveraged ‘Employee Stock Ownership Plan.’ “How did they do that?”
Here is how, it could work. Joe Lunchbucket gets a notice in the mail from the government that the Congress passed the Capital Homestead Act of 2012, assuming ever Joe has the means to receive such notice. A government survey of the capital growth needs of the economy has been determined that in the coming year new and existing small and large ‘for-profit’ companies wants to sell $2.31 trillion (with a capital ‘T’) worth of newly-issued, full dividend payout, full voting shares to meet their growth and modernization needs in response to the demands of their U.S. and global customers. The Act gives all financially sound companies a way to invest in new capital and create new jobs to meet new customer demand for new and better products and services and even begin to construct and modernize new infrastructure through citizen-owned for-profit corporations. The obvious keywords, is new and citizen owned.
The notice informs JL (that’s “Joe Lunchbucket”) that, as a new right of citizenship under the Act, like the political ballot, Joe has the right, if he chooses, to receive a free government-issued Capital Credit Card that for the coming year will entitle Joe to receive free of charge capital credit to purchase $7,000 worth of the newly-issued shares of “qualified” companies with interest-free “new money.” The Capital Credit Card isn’t money, but it allows Joe to get productive credit, another form of money, to buy capital (productive assets) that can pay for itself.
Joe will not be at risk if the loan cannot be paid off, because the loan will be insured by one of several “qualified” private capital credit insurance companies and/or reinsured by a for-profit capital credit reinsurance company established by many capital credit insurers, and not government insurance. Joe’s loan is to be entirely backed by the anticipated profits in the form of dividends on each of the “qualified” shares that Joe, with his advisors, decides he wishes to buy, with added backup from the capital insurance pool if the shares fail to earn a dividend. After the Capital Credit-loan on each of the shares is repaid, Joe will receive outright all future dividends directly as “supplemental income” over and above income received from his work and all other sources.
The notice would also inform him (and his family members) that he should go down to his local commercial bank that is a member of the Federal Reserve System to set up in his own name a “Capital Homestead Account” (CHA). Like an Individual Retirement Account or “Super-IRA”, a CHA would be “tax-shelter” for Joe to build up a growing accumulation of income-producing investments to meet his future consumption needs. Joe’s CHA is designed to distribute dividend incomes during Joe’s working career as well as when Joe retires or becomes disabled.
Joe’s Capital Credit Card would authorize his CHA “tax shelter” to be the legal vehicle for receiving each year’s loan to purchase “qualified” shares that Joe wants to buy from the market — and would allow Joe to defer taxes on the income used to purchase the shares until he takes the assets out of the CHA or dies . . . at which point the assets become income to Joe’s heirs, not to the estate. The heirs, not the estate, pays taxes, unless the heirs put the assets into their own CHAs, in which case taxes are again deferred.
Each annual loan for buying additional shares would take the form of a promissory note backed with a “bill of exchange” that Joe “draws” or “issues.” Joe’s bill (which, like any bill, has to be paid) is backed in turn by the full stream of future profits paid out to Joe’s CHA. These anticipated (but obviously uncertain) future profits would in turn be backed by the “future savings.” These future savings take the form of the future capital goods and future consumer goods and services that the company issuing the new shares expects to produce with the money the companies receive from the sale of shares to Joe’s CHA.
The local commercial bank “discounts” Joe’s bill of exchange (gives him less than the face value of the bill), issuing a promissory note in return. The discount covers the cost of the bank’s own services and the risk premiums to be paid out of future dividends expected on the shares purchased by Joe’s CHA. Each bank’s promissory note is thus a form of asset-backed (non-fractional) “money” over and above money issued by the government in the form of coins and official currency. Bills of exchange discounted by member banks of the Fed can be rediscounted in the financial markets or directly at the (re)discount window of the regional Federal Reserve Bank to be backed by the Fed’s promissory notes: newly-issued currency or Fed demand deposit accounts under Section 13, paragraph 2 of the Federal Reserve Act. In other words, “money” is anything that can be used in settlement of a debt, and new capital credit can be created in ways that it can be repaid entirely with “future savings,” making it possible for today’s propertyless ‘Joe, Jane and Junior Lunchbucket’ to own future capital. Maybe the entire Lunchbucket family could open their Capital Homestead Accounts at the same time.
And that is how we the Joe Lunchbuckets will finance the future and help pay down the debt. Aren’t you glad you asked?
Help Pass Capital Homesteading Now!
http://americaspartynews.com/talk/forums/thread-view.asp?tid=22867&posts=3
