Leonard C. Tekaat says:

THE PEOPLE’S ECONOMIC RECOVERY PLAN
Rebuilding the Primary Home Market and Strengthening Our Financial Institutions

Objectives
1. Create economic policies which help people to succeed financially. Increase the middle class’s disposable income to increase aggregate demand which will decrease unemployment and government deficits.
2. Stabilize primary home prices.
3. Create new mortgage terms that fit the current economic conditions.
4. Control inflation and inflation expectations without creating a recession and higher interest cost.
5. Reduce foreclosures to normal rates and eliminate the foreclosure inventory as quickly as possible by selling the homes to qualified primary home buyers.
6. Return Fannie Mae and Freddie Mac to profitability to eliminate any loses to taxpayers. Return them to their core business of securitization of primary home mortgages.

Rebuilding the Primary Housing Market
Economic Analyst Creates Solution to Unemployment and Foreclosure Crisis
New Mortgage Terms Will Increase People’s Disposable Income. Decrease Mortgage Payments, the Unemployment Rate, Government Deficits, Principal Balances, and Strengthen Our Financial Institutions.
There are three entities that make up our economy, the enterprise entity, the financial entity, and the government entity. The government and the financial entity were created to improve the operation of the enterprise entity. The financial entity and the government entity cannot exist without the enterprise entity. The enterprise entity creates almost all food and products. The government and financial entities create the protection and means of exchange for the enterprise entity. The size and scope of each entity must be maintained to their degree of necessary to have a strong and efficient economy. The enterprise entity must always remain the strongest of the three entities. Currently the financial and government entities are weakening the enterprise entity by denying it a stable means of exchange. Banks and the government are not creating the means by which the middle class and small businesses can restructure their credit obligations.
It stands to reason that if we can increase a large portion of the population’s disposable income without deficit spending or creating too much money, inflation expectations would not be created. With confidence in the value of the dollar increased and stabilized we can get on with the business of raising the standard of living of all our citizens. We can turn our attention away from hording gold and other commodities to protect our wealth. Real economic growth can be obtained. Full employment can be achieved and the federal and state deficits can be decreased by increasing the growth of our economy.
The People’s Economic Recovery Plan does not cost the taxpayers a dime. It does not require the federal government to purchase the bad mortgages or help homeowners with their mortgage payments. Nor does it require the federal government to pay the banks to modify the mortgages. It only requires the people to stand up and be heard.
The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, has operated since 1968 as government sponsored enterprises (GSEs)
Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Banks and mortgage investors are doing the same thing during the Great Recession. They are not investing in home mortgages because of the collapse in home prices. Fannie Mae was established in order to provide local banks with investor money to finance home mortgages, in the secondary mortgage market, in an attempt to raise levels of home ownership and the availability of affordable housings and financing.
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis. These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine how mortgage interest rates are structured and what the terms of most mortgages will be. The banks service most of our home mortgages. The banks collect the mortgage payments and enforce the terms of the mortgage contracts.
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.
First of all, let us introduce ourselves. We the people, are the middle class. We don’t ask very much from our government. We work hard to become self-sufficient. We want a fair shake from our enterprise economy, and our financial institutions, Fannie Mae and Freddie Mac.
We want a mortgage, and economic policies that allow us to succeed. Currently we are fighting an up-hill battle; many of us are losing the battle and have become government dependent.
We want to keep our homes. If we can restructure our mortgages with terms that make sense, we will continue to make our mortgage payments, and not allow our homes to go into foreclosure. The new mortgage terms we want will reduce government deficits, the unemployment rate, and improve the financial condition of the financial institutions that serve our economy.
We want the Zero Inflation Taxation Policy to be enacted. This change in our income tax code will affect all consumers, investors and businesses. We do not want our economy to create another worldwide economic crisis. This policy will discourage the excessive use of credit during the inflation economic cycle. The excessive use of credit when equity values are increasing too much causes most financial economic crises.
How will new mortgage terms and the Zero Inflation Taxation Policy help our economy?
Many economists argue that we must reduce the unemployment rate first to solve the foreclosure crisis.
This assumption is wrong. It is the other way around.
Aggregate demand and people’s confidence must be increased over a long period of time to have a sustainable economic recovery. The foreclosure and underwater mortgage problem must be addressed first to improve the unemployment rate and total demand in our economy.
How we go about increasing aggregate demand is very important for the future of our economy.
If we can increase aggregate demand without increasing the money supply too much, as deficit spending stimulus programs do, the dollar will increase in value. With confidence in the value of the dollar restored, we can then get on with increasing the standard of living of all our citizens, not hording gold or other commodities to protect our wealth.
If done correctly, a restructuring of the middle class’ mortgages with a lower starting mortgage interest rate, and a principal reduction plan will increase total demand, which would allow our economy to recovery with less money creation than with deficit spending programs.
The new mortgage terms must also be acceptable, and beneficial to mortgage investors, and the financial institutions. If it is not beneficial to them, they will not embrace the new terms, and offer the mortgage to the public.
Currently the financial institutions are offering the homeowners the 5/1 Adjustable Rate mortgage. People don’t like this mortgage because the interest rate can go up each year after 5 years.
The new mortgage, will have a lower starting interest rate than the current 5/1 Adjustable Rate Mortgage. The interest rate on the new mortgage will increase at 1/4 percent a year, and stop increasing at 5 percent.
This change in the 5/1 ARM will increase primary homeowners disposable income substantially the first year, and then taper it off as the economy improves, and employment increases.
For example, a family with a six percent mortgage interest rate. The new mortgage would have a three percent starting mortgage interest rate. If they currently have a $1500.00 monthly interest payment, the interest payment would drop to $750.00.
These terms would be available to every primary homeowner, with or without an underwater mortgage. If you multiplied that $750 dollar increase in purchasing power by millions of people, aggregate demand on Main St. would increase enough to facilitate an economic recovery from the middle up.
The new mortgage terms will allow underwater mortgages to have their principal balances reduced monthly, equal to an additional 30% of their monthly mortgage payment.
The monthly reduction in principal balances is good for the economy in general, for the financial institutions, and for the homeowners. If the homeowner can see that sometime in the near future, the home’s value will equal the unpaid principal amount of the mortgage, they will not add the home to the foreclosure inventory.
Well that’s all great for the homeowner. How do mortgage investors and the financial institutions benefit from the plan?

The benefits of the new mortgage terms to financial institutions and mortgage investors are the following:
1. The home and the mortgage will become more valuable with the homeowner remaining in the home, and continuing to make their mortgage payments. Also the homeowner will be protecting the home, and maintaining it.
2. By reducing the principal balance monthly, the financial institutions do not need to mark down the mortgage to the current value of the home. The mortgage remains a performing asset, and maintains a higher value than a non-performing asset, a foreclosed home, or a short sale.
3. By maintaining most of the value of the mortgage on their books, the financial institutions do not need to continue to re-capitalize themselves with federal government debt.
4. The home’s value will, sooner than later, pass the unpaid balance of the mortgage as the home increases in value because of the increase in aggregate demand. In other words, the collateral’s value will stabilize and then increase. The increase in the value of the collateral will strengthen the financial condition of the financial institution.
5. Even though the interest rate has been reduced for the first year, and then increase for 6 years, the financial institutions will be collecting interest on a much larger loan than if they sold the home at market value, and put a new mortgage on it.
6. The financial institutions do not have the added expense of a foreclosure, a sale, the home’s security, property taxes, damages, repairs, insurance and legal cost.
7. The principal reduction process for the underwater mortgages will only last 10 years, or until the unpaid balance of the mortgage equals the then current possible selling price of the home, which ever occurs first.
8. With an increase in total demand, it may take much less time to balance the supply of homes to demand. In that case the lien holder will not need to subtract very much off the unpaid principal amount.
9. The plan will allow the primary home market to stabilize in a much shorter time than has been predicted.
10. Many mortgages can be restructured without much cost, with a modification agreement letter sent to the homeowner by the financial institutions that hold unsecuritized mortgages.
11. There is no need to re-qualify the homeowner before the modification letter is sent.
If the homeowner fails to make the new lower payments, then serve them a foreclosure notice.
12. With aggregate demand increasing, employment opportunities will increase. This should make it possible for the homeowner to get a job before the home is foreclosed.
13. Most investors and second lien holders would prefer restructuring the mortgage, under the new terms, to a foreclosure, short sale, or a refinance. The reason being is that with a foreclosure, short sale, or a refinance, the mortgage will be reduced to below the current market value of the home. Any part of the mortgage above the current value of the home will be lost.
14. The foreclosure inventory will be quickly sold to primary homeowners. To qualify for the new mortgage terms the home must be owner-occupied. With the foreclosure inventory reduced, housing prices will stabilize, and then slowly rise.
15. When a person buys a new home or pre-owned home, the buyer will have to qualify using the maximum 5% interest rate, but their starting interest rate will be the same as everyone else. The same terms would apply if the homeowner had to refinance, if the investor or financial institution did not agree to the new terms.
16. With the economy operating at full potential the financial institution will make more money than if the economy is in recession.
Currently the only way the banks will loan money to Main St. is if the Federal Government guarantees the loan. Under the current monetary policies can you blame them? They don’t know when the Fed will raise interest rates again and cause another recession. The Zero Inflation Taxation Policy will correct this situation. It will stabilize interest rates and reduce the cost of long term loans because the savings and money investment rate will increase during the inflation cycle, without increasing the cost of credit.
With the new mortgage terms the collateral prices will stabilize and prices will slowly increase. Banks will again be able to make loans to Main Street.
With the new mortgage terms available people can have their mortgages restructured without the financial institutions increasing the money supply, or the financial institutions going through a lot of unnecessary paper-work. The state and federal governments’ deficits will decrease, and full employment will be obtained. The foreclosure crisis will be resolved.
WAIT A MINUTE. ISN’T THIS HOW WE GOT IN TROUBLE THE LAST TIME. WERE NOT INTEREST RATES TOO LOW FOR TOO LONG? NO … We got into trouble because a credit bubble was allowed to expand for too long until it popped.
The financial institutions and mortgage brokers were talking people into signing a mortgage that the buyer couldn’t afford to pay as the interest rate changed on the mortgage. The stimuli in the income tax code for people to go into debt and the high primary home’s annual appreciation rates made people too eager to sign these mortgages with bad terms.
Interest rates were not too low before the financial crisis occurred.
Before the credit crisis occurred, mortgage interest rates were 100% above the Consumer Price index.
What was wrong was the Consumer Price Index did include the cost of owning a home, only the cost of renting a home. So when we had inflation in home prices of 30% a year, the Fed said the inflation rate is 3% and the mortgage rate is 6% there is nothing wrong. There is no bubble in primary home prices. The Fed or Congress did not attempt to deflate the bubble. A few months later the bubble popped and market crashed!
If the financial institutions say that a 3% starting interest rate is too low. I would like to point out that 3% is the same amount above the Fed Rate, when the Fed rate was 2.75% and mortgage interest rate was 5.75%. The markup is a little over 100%.
With the Fed Rate at .25%, the 3% mortgage interest rate is marked up 12 times. If an automobile manufacturer built a car for $20,000.00 and marked the car up 12 times, the sale price of the car would be $240,000.00. With the mortgage interest rate a 5% that is a twenty times markup. The car would sell for $400,000.00.
My point is that the banks are marking up trillions of dollars of debt. This is why the banks were able to pay the TARP money back so quickly. The financial institution’s profit margin is currently very large.
How do we get the financial institution to realize that the new mortgage terms will be beneficial to them and would make them profitable again?
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis.
These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine what the interest rate and terms of most mortgages will be. If these financial institutions would offer to purchase the new mortgage from the mortgage origination industry, the banks would offer the new terms to the public. The banks and other mortgage servicers service most of our home mortgages. They collect the mortgage payments and enforce the terms of the mortgage contracts. The banks sell most of the mortgages they originate to Fannie Mae or Freddie Mac or government housing agencies.
When I talk about the financial institutions, I am referring to Fannie Mae and Freddie Mac. Currently our government is the conservator of these financial institutions. The government is by the people and the government is for the people. Therefore Fannie Mae and Freddie Mac are under the conservatorship of the people.
Taxpayers have a majority financial stake in these financial institutions. These financial institutions would not exist today if it were not for the taxpayers loaning them billions of dollars. Therefore the citizens of the United States own these corporations and should have a say in their home foreclosure policies and terms of the mortgages they own, control or purchase.
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.
Fannie and Freddie should make the business decision that in the long run restructuring all the mortgages would be a good business move. Congress or the people should inform the financial institutions about changing their policies. Congress is the voice of the people. If the US Congress won’t do it, then the people should peacefully picket the corporations until they change their business policies.
The government has passed many regulations to help prevent another bubble from occurring. The solution to preventing another bubble has not been enacted yet.
For more information Google three words “foreclosure crisis solved” to go to my websites.
Be sure to read part two of this article.
Leonard Tekaat
Leonard C. Tekaat is a retired economic analyst and economic scholar. He has over forty years’ experience in the financial world of home financing, small business, and investing in the housing market. He is Chairman of a special Committee for Economic Reform and A Better Economic Future.

There are two parts to the People’s Economic Recovery Plan.
The first part I have already explained to you; get the economy growing again by creating jobs in the private sector by increasing aggregate demand, without deficit spending or expanding the money supply too much
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The second part is more important than the first part.

In the past, problems arose when we slowed down the economy with the incorrect tool. The incorrect tool is the Federal Reserve’s higher interest rate policies.

Instead of the Federal Reserve using higher interest rates to slow down the economy, we should first use the income tax to keep the economy balanced. I don’t mean we must increase the amount of taxes the government should collect.

We need to put the ZERO INFLATION TAXATION POLICY into effect. I will explain why we need this policy and how it works later.

When modern recessions occur in our economy, they are almost always preceded by the excessive use of credit and the concept of the citizens that their money is losing purchasing power (inflation psychology).

To prevent another bubble from occurring we must understand how economic bubbles occur. As the economy heats up, equities increase in price. With higher collateral prices, people are able to get more credit from financial institutions. The new money is either spent, or invested, which increases profits and causes higher prices, because of the increases in the money supply, and aggregate demand. This creates the “herd effect”, as more, and more people join in to obtain the easy “paper profits” that can be had.

Let me ask you a question. Why were people willing to pay the extremely high prices for primary homes? Why did the bubble occur in the primary home market and not as much in the rental home market?

In the late nineteen nineties there was a recession beginning to occur. The Federal Government was running a surplus in their budget. There was talk about deflation occurring. To stimulate the economy Congress passed and President Clinton signed a new guiding policy, (tax law) that allowed people to profit greatly from the sale of their primary home.

Remember you have to have a trigger to start a bubble. That trigger is always easy “paper profits.” The air in the bubble is excessive credit use or leveraging.

The primary home price bubble was created by several things coming together.

The first, and which I believe to be the most important, is the change in the income tax that allowed up to $500,000.00 of capital gains on the sale of a person’s primary home to be tax exempt. This tax policy gave the seller a good reason to sell and the buyer a good reason to buy. The buyer was expecting to reap the same tax free money in a couple of years as the previous owner had done. (Untaxed “paper profits”)

The Fed would have had to raise interest rates to 45% for a person to have the same return on a money investment or savings account, if the home had an annual increase in price of 30%, as we had in 2002 through 2005.

Is it any wonder the Fed Chairman said, “If there is a primary home price bubble, we will fix the economy after the bubble pops?” They could not do anything about the primary home price bubble if they had tried, without crashing the entire economy, which he didn’t want to take the blame for.

Some other things that contributed to the primary home price bubble are:

1. The change that allowed underwriting standards to be lowered on primary home mortgages. Wall St. created the Collateralized Debt Obligation and Mortgage Back Securities.
2. The Federal Reserve’s inability to put a halt to the feeding frenzy in the primary home market.
3. The government’s desire to increase home ownership; let the risk to the economy be dammed.
4. The policies that allowed the banks to keep their profits but pass the cost of the bad loans to the taxpayers, through Fannie Mae and Freddie Mac
5. People all over the world looking to invest their money at higher interest rates and in safer positions.

Profit is not a bad thing. We all want and need to make a profit. It is when it becomes a feeding frenzy that creates a danger to the economy, as it did with the primary home price bubble.

Currently Congress allows the Federal Reserve to handle monetary matters. The Fed and its member banks have control of the money supply. The very same people that profited from the un-balancing of the economy, and the excessive money creation schemes.

It was not beneficial for the Federal Reserve System and Wall St. investment banks to stop the economy from running over the cliff. They get more business as people realign their investments to the crash. They then earn more commissions as the economy recovers.

The Fed uses higher interest rate policies to slow down the economy when inflation is occurring.
Using higher or lower interest rates to control inflation and inflation psychology is very slow and inefficient. Changing interest rates takes a long time to affect the economy. By the time they take effect, the economy can be in trouble again.

Higher interest rates are bad for the economy because they reduce demand from the bottom of the economic ladder by increasing unemployment, foreclosures, and personal and business bankruptcies. Then large and small businesses close their doors, and lay off their employees, reducing demand further.

When the economy recovers, there are fewer employment opportunities, and less competition in the market place.

With less competition in the market place, we quickly return to where we started from, but with less supply, and more demand.

More people have left the private sector, because it is so unstable, and have joined the government dependent ranks to receive a paycheck, or just a check, with no work involved.
Our businesses have moved overseas because of our inability to control the ever-increasing cost of doing business in the U.S., the cheap labor cost overseas, and the tax advantages we give them in our tax code. They have left their fellow citizens high and dry, with fewer employment opportunities.

People need productive jobs to maintain their standard of living, not credit maneuvering procedures using leveraged fiat money. Fiat money maneuvering is what our nation has been using more and more, since the world went to floating exchange rates, to prevent its bankruptcy.
The businesses that have moved their production to foreign countries are abandoning the ship like rats do when a ship is sinking.

Our economy will not continue to sink if we join together, and change the policies that guide our economy. We are still the largest economy in the world. I am sure that we all want it to stay that way.

The lesson that needs to be learned from all this, is that we cannot continuously stimulate the economy with tax incentives, and not end up going over the cliff. The tax incentives must change as quickly as our economy changes from the recession cycle to the inflation cycle.

This process of larger and larger loans can be slowed down if you use the correct tool. The correct tool is to take the profit out of the madness in the very beginning of the occurrence. We need to change our guiding policies to maintain our economy as an engine of prosperity for all our citizens.

It would be much better for our economy if we used the income tax to remove excessive demand created by people that want to profit from inflation or they want to protect their money from inflation and taxes, when inflation first begins to occur in our economy, than to use the higher interest rate policies of Fed.

Taking excess demand out of our economy caused by inflation expectations from people at the top of the economic ladder, with the income tax, will maintain balance in the economy without raising cost. Normal production and consumption can continue to take place as the income tax fights inflation and inflation psychology.

Our economy creates the most jobs, and increases in people’s standard of living when it remains in a slight upward imbalance.

In other words, we need an economy that has stable prices and stable interest rates. We need guiding policies that creates an economy where businesses and our citizens can make long term plans. An economy where “real wealth” is created, not “paper profits”

Inflation is created when there is insufficient money in the saving pool, because new money must be created when the savings pool is empty.

With the Fed and the Federal government pumping money into the economy, very soon there will be too much money in the economy, chasing too few products and services.

Economic activity does picks up. The economy will be coming out of the recession cycle again.
After the recession cycle, when equity prices are increasing, the banks will make every effort to loan the money out as fast as they can. This causes the economy to heat up, and inflation to be created. The Fed will then raise the cost of the means of exchange (credit), making it too expensive to use to facilitate the exchanging of goods and services.

Without a reasonably priced means of exchange, to facilitate the exchanging of goods and services, the Main St. economy slows down because of the extra cost to do business. Unless people can increase their income to pay the increases in prices, a recession is created once again. If people are able to increase their disposable income by the use of credit, or increases in wages or other income, the higher prices are incorporated into the price structure of our economy.

But the added cost of the means of exchange (credit) causes the cost of production, and consumption to increase, causing prices to rise again. The price structure of the economy increases across the whole economy, just like if you had another commodity that affected almost every step in the production and sale of products, like oil or energy.

If interest rates go up from five percent to six percent that is a 20% increase in the price of the means of exchange (credit). If oil went up 20% from $80.00 a barrel, the price would jump to $96.00 a barrel. These increases in prices would soon be reflected in the price structure of our economy. When prices and wages increase in our economy it makes our exports uncompetitive in the world markets. We then lose jobs and businesses in our economy and some of our businesses move overseas.

It is very difficult for an economy to lower its price structure, because of all the underlying cost that makes up the prices of goods and services. The economy repeats its cycles again, and again, similar to a dog chasing its tail. The price structure of the economy goes higher and higher. The banks collect more interest and fees based on larger loans and mortgages. The government collects more taxes based on higher wages and prices.

Our current monetary control policies create a higher price structure in our economy.
It would be much better for our economy, if we had an automatic adjustable tax policy, than a bank controlled adjustable interest rate to control inflation and inflation psychology.
The Zero Inflation Taxation Policy would not raise production and consumption cost. It would increase the savings pool during the inflation economic cycle. It would stabilize interest rates, and lower the cost of long term credit.

It is more important to have stable interest rates than a static tax policy. If the income tax is a balanced tax, people will maintain a balance in their financial affairs.

We will reduce the chances of creating another bubble in the economy, by changing our higher interest rate policies for the Zero Inflation Taxation Policy to help control inflation and inflation psychology.

Basically the Zero Policy works like this: As inflation begins to occur, the tax on interest earned on debt investments and savings would decrease, based on the true annual inflation rate. At the same time, the interest tax deduction would decrease based on the true annual inflation rate. In this way the excessive use of credit during the inflation cycle would decrease. The value of money would increase during the inflation cycle, without increasing cost, and the price structure of our economy.

The economy would stay closer in balance, and production would have the time, and the money it needs to balance supply with demand. Our economy would become more efficient, and competitive in the world economy.

If prices of equities increase more than 1 or 2 % a year, we must increase underwriting standards, and percentages of equity to loan amounts. This pertains to all of our commodities, and equity markets.

When prices are increasing more than 1 to 2 percent annually, it is a sign that too much money (debt) is being created.

After the Zero Inflation Taxation Policy is put into effect, Interest rates would be determined by a market unaffected by inflation psychology, or the income tax.

The income tax’s stimulating policies would be automatically neutralized at the correct time in the economic cycles of our economy with the Zero Inflation Taxation Policy. The time that they are neutralized would be determined by how our economy is performing, not by a 541-member politically divided committee that can’t come to a decision until the economy has already gone over the cliff.

Can you imagine managing a business with a 541-member committee? This is why micro managing our economy will never work.

Our economy is dynamic. It is continually changing through the economic cycles of recession to inflation. Our guiding policies are static. For our economy to become an efficient engine for prosperity our guiding policies must change as quickly as our economy changes. The guiding policies must not be biased to one economic activity or investment over another. The long term capital gains tax should be the same percent rate for all long term capital gains. The income tax must be a Fair Tax, but not a static tax.

Financial institutions have a very difficult time when the Federal Reserve uses higher interest rates to control inflation, and inflation psychology.

When the Fed causes short-term interest rates to increase, this action by the Fed reduces the value of the banks’ loans, and the banks’ costs go up.

Even if you have a rise in prices of only 3% a year, over a ten-year period, prices will have risen thirty percent in ten years.

This means that the person holding money (debt) as their store of wealth has lost 30 percent of their purchasing power. The money has gone down in value by 30%.
The people who have hedged themselves against inflation, hopefully they have invested in something that has gone up in value by 30%.

In any case, this imbalance of value must be corrected at some point, or no one would ever invest in a debt obligation. Our credit economy would collapse.

The Zero Inflation Taxation Policy improves on this situation.

Instead of waiting 10 years to have a recession to correct the imbalances of value, the correction would occur at the end of the year.

One person would pay a little more tax, and the other person would pay a little less tax if inflation were occurring. The government would not receive an increase in tax revenues unless we had real growth in our economy.

If a recession was occurring or the economy was not in balance, the stimulating effects of the income tax would be in full force.

The Zero Inflation Taxation Policy is a kind of guarantee of sorts.

The government and other borrowers would not be continually encouraged to create money and not hold money as an investment.

Businesses, investors and people in general would know that, if they created too much money, creating the inflation cycle, they would have to pay a little more tax. The holder of the debt would have some of their purchasing power returned by paying less tax until the economy balanced itself.

Real growth in the economy is what we’re looking to achieve, not an artificial economy based on an ever increasing fiat money supply.

If you Google “foreclosure crisis solved”– Remember those three words “foreclosure crisis solved”, you will find my websites. You will find more information on the Zero Inflation Taxation Policy.

We don’t need more federal government deficit spending, or quote “investments” as President Obama outlined in his State of the Union Address.

After the economy improves, these “investments” should be made, if necessary, to improve the productive capabilities of our economy, after we pay down the national debt and deficit, and have the excess savings pool to pay for them.

This is how Japan, China, Germany, and other countries have made their public investments. They have used excess savings to improve their infrastructure.

When the bank account is empty, it is empty!

If you support this economic recovery plan it will cost the taxpayers very little, because it does not require the government to purchase the bad mortgages to restructure them.

Congressmen and Congresswomen under the terms of the new mortgage most foreclosures are unnecessary, and government liabilities will decrease! If you like the idea of solving our economy’s problems with a smaller deficit, and a more common-sense approach to helping our economy to grow, please say so.

If the middle class does not inform the financial institutions, and the government of the correct way to improve our economy and control inflation and inflation expectations, to bring about their financial recovery, and the economy’s recovery, the government, and the financial institutions will continue to contribute to the demise of small businesses and the middle class.

May God bless the middle class with the new mortgage terms; God save America if they are not so blessed.
God bless the middle class people of the United States of America with the wisdom and strength to stand up, so they can make themselves heard!

Leonard C. Tekaat

christopher gilfedder says:

Dear Simon,
just watched your Bill Still interview. I’m totally in tune with your basic ideas. Could you explain to me how the issue of personal and commercial debt will be eased/solved under a reformed monetary system? For example, lots of people have no choice but to get into debt such as overdrafts/credit cards just to meet their daily living expenses. Others are crippled with mortgages. How will these difficult situations be eased? Thanks. Chris Gilfedder

Will Williams says:

…the sound does not diminish the message… Bill is an econ Patriot… I am glad to see you connected…