Financing Green Growth with Capital Ownership

Financing Green Growth with Capital Ownership Opportunities

• The proposed monetary system involves estimating the total capital formation needed in the economy, dividing it by the number of citizens, and allocating the resulting amount to each citizen's Capital Ownership Account.
• The citizen can then use this amount to purchase shares in a corporation, which will use the money to finance its new capital assets.

Step 1: Periodic Calculation of Capital Credit

• The government or central bank estimates the total capital formation needed in the economy.
• This amount is divided by the number of citizens to determine the Capital Credit allocation for each citizen.

Step 2: Corporation Sells Shares

• The corporation sells shares to the citizen's Capital Ownership Account at the current market price.
• The corporation escapes paying corporate income taxes on the full dividend payout, and the citizen receives the dividend income.

Step 3: Enterprise Acquires Capital Assets

• The corporation uses the money from the share sale to acquire new capital assets.
• The corporation generates profits from using these assets, and pays out a certain amount each year to the Capital Ownership Account.

Step 4: Bill of Exchange and Promisory Note

• The citizen presents a bill of exchange, promising to use the Capital Credit to purchase shares.
• The bank issues a promisory note, guaranteeing the loan amount, and deducts a one-time service charge (not interest).

Step 5: Bank Guarantees Risk Premium

• The bank guarantees to the Capital Credit insurer that it will add a risk premium to the loan amount.
• The risk premium is used to purchase insurance to cover the risk of default.

Step 6: Capital Credit Insurance

• The Capital Credit insurer ensures each loan, taking the place of traditional collateral.
• The insurance company bears the risk of default, allowing citizens to access capital without traditional collateral.

Step 7: Commercial Bank Bundles Loans

• The commercial bank bundles the loans and presents them to the discount window of the Regional Federal Reserve Bank.

Step 8: Rediscounting at the Regional Federal Reserve Bank

• The Regional Federal Reserve Bank rediscounts the loans, providing the commercial bank with the necessary funds.
• The discount rate is smaller than the original discount, as the loan is closer to maturity.

Step 9-16: Loan Repayment and Dividend Payment

• The corporation repays the loan, with interest, and pays out dividends to the Capital Ownership Account.
• The citizen receives the dividend income, and the loan is repaid.
• The money created for the loan is cancelled out of the economy, preventing inflation.

Key Concepts

• Capital Credit: the amount of money allocated to each citizen's Capital Ownership Account.
• Bill of Exchange: a promise to use the Capital Credit to purchase shares.
• Promisory Note: a guarantee from the bank to the citizen, deducting a one-time service charge.
• Rediscounting: the process of discounting the loan at the Regional Federal Reserve Bank.
• Capital Ownership Account: a tax-sheltered account where citizens receive Capital Credit and dividend income.### Insurance Premiums and Loan Quality
• Insurance premiums will attract people's interest due to the quality of loans being scrutinized at every level.
• Loans will be less likely to default due to the vetting process.

Course Logistics

• The recording of the session will be sent to everyone.
• The PowerPoint presentation will be shared, which is important for selling the IDE and making it real.

Reading Assignment and Study Questions

• The reading assignment for the next session (Class 6) is a history dinner at the Madison, which discusses the politics involved in getting Russell Long to champion the ESOP.
• A longer paper titled "The Just Third Way" will be shared, which covers green growth, widespread prosperity, and global peace.

Quizzes and Feedback

• Quizzes will be used to help students understand the concepts and see how much they have internalized.
• Students can take the quizzes multiple times until they get 100%.
• Quizzes will also serve as a feedback mechanism for improving the course structure.

Final Class and Presentations

• The final class (Class 10) will be on December 16th.
• Each student will give a 10-minute presentation demonstrating what they have learned.
• Students should submit a paragraph outlining their presentation before the next class.

Financing Green Growth with Capital Ownership Opportunities

• The proposed monetary system allocates a portion of the total capital formation needed in the economy to each citizen's Capital Ownership Account, allowing them to purchase shares in a corporation.

Step-by-Step Process

• The government or central bank estimates the total capital formation needed in the economy and divides it by the number of citizens to determine the Capital Credit allocation for each citizen.
• The corporation sells shares to the citizen's Capital Ownership Account at the current market price, and escapes paying corporate income taxes on the full dividend payout.
• The corporation uses the money from the share sale to acquire new capital assets, generates profits, and pays out a certain amount each year to the Capital Ownership Account.
• The citizen presents a bill of exchange, promising to use the Capital Credit to purchase shares, and the bank issues a promisory note, guaranteeing the loan amount and deducting a one-time service charge.
• The bank guarantees to the Capital Credit insurer that it will add a risk premium to the loan amount, which is used to purchase insurance to cover the risk of default.
• The Capital Credit insurer ensures each loan, taking the place of traditional collateral, and bears the risk of default, allowing citizens to access capital without traditional collateral.
• The commercial bank bundles the loans and presents them to the discount window of the Regional Federal Reserve Bank, which rediscounts the loans, providing the necessary funds.
• The loan is repaid with interest, and the money created for the loan is cancelled out of the economy, preventing inflation.

Key Concepts

• Capital Credit: the amount of money allocated to each citizen's Capital Ownership Account.
• Bill of Exchange: a promise to use the Capital Credit to purchase shares.
• Promisory Note: a guarantee from the bank to the citizen, deducting a one-time service charge.
• Rediscounting: the process of discounting the loan at the Regional Federal Reserve Bank.
• Capital Ownership Account: a tax-sheltered account where citizens receive Capital Credit and dividend income.

Insurance and Loan Quality

• Insurance premiums will attract people's interest due to the quality of loans being scrutinized at every level, making loans less likely to default due to the vetting process.