- August 10, 2013
President of the United States
In learning that the FOMC board is split where they offer no viable horizon to the government, I write to share a straw man idea on how to stabilize the economy. It is meant as a way to pay down debt; where affording to borrow more; where the dollar can sustain in value; where not impacting the tax payer; where Gold standards need not be sought as an alternative; where banks and industry can thrive; and where liquidity is brought to both Wall and Main Street.
In the following, I have outlined this as an Investment Based Economy.
- For a twenty first century economy, we do have Wall Street; and the acumen of financial science in investment management. This can be used to pay for government sponsored programs while adding significant liquidity on the street.
- I propose a simple base case for your consideration. In the US there are government programs such as Medicaid, Medicare, education and other which is the burden of the taxpayer. I see that these programs can be paid for otherwise where not imposing on government reserves, and where businesses and taxpayers can have more of their money for other things.
- As an example let’s say that there is a government program called ‘X’. X could be financed by a publicly traded investment instead of based on taxes.
- Structured as a fund managed by member banks, similar to a municipal bond, consider if 25% of the investment was for the sole purpose of paying for X; and while 75% was managed by institutional investors as a tax free investment. The return on the 75% could replenish what is being used in the 25%. When the 25% exceeds its normal level, a tax exempt return is provided to investors.
- The return is to be immune from taxes. The dollar is strengthened as one outcome; and also returns can be compounded as real dollars and not ones devalued in spending ability due to taxes.
My questions are: what institution would not want to participate in this. Why wouldn’t our government want to obtain revenue from it; and what main street investor would shy away from it?
The 25% can first be built by the Fund’s initial returns, where with momentum it can meet the necessary threshold for its stated purpose.
Like in the government’s case, in being more creditworthy, businesses and taxpayers in having more of their money for other things are considered likely to borrow more which should also make our institutional and commercial banking systems improved.
The model requires considerable thought, consideration and tailoring in just to put out a test case for its refinement. But in its success, more implementations can be brought to Wall Street.
The U.S Treasury would in effect become the most valued client on Wall Street. For this, I have also designed departments required to manage this business relationship. This design is in a book I authored in 2007 that is called the ‘New Deal’.
Yours very truly,
Orion Karl Daley
Author: The New Deal – isbn 1419670948