A plan is herewith presented whereby local governments will start 4,000 Narrow, State-Chartered, Community Banks and specialize in giving 4% mortgage loans.
Introduction to a plan for "The Establishment of Community Banks by Local Government". 4/23/09
A plan is herewith presented whereby local governments will start Narrow, State-Chartered, Community Banks and specialize in giving 4% mortgage loans.
Banking (like wars) is one of the few things the people can’t efficiently do on their own.
Please note: this plan does not have to be implemented all-at-once. It can be started with one trial bank. How about starting it at one bank in Washington D.C.?
A glossary follows the plan -- it is intended to define all the words that may be new to the reader.
An introductory note of historical importance that emphasizes the importance and power of leverage.
... “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” ... Archimedes / (this plan uses the leverage inherent in Fractional Reserve Banking)
GOALS -- The goals of this plan are to solve our current Home Mortgage, Money and Banking problems by providing 4% home mortgages to the American Public
ABSTRACT -- Give communities a State-chartered Narrow Bank operating under existing law, including Fractional Reserve Banking and a place to sit and they will create all the money this country can use to support affordable housing through 4% mortgage loans.
The Community Banking Plan -- How to easily solve our Home Mortgage, Money and Banking problems
1. This plan provides for the establishment of 4,000 Community banks (Bank) -- one in each community-area of about 75,000 people. Each Bank will sign a contract with the State for a State Charter that will spell out, in detail, what that Bank will be doing. For the most part, at the beginning of this program all Banks will focus on placing 4% / 30-year mortgages on single-family, owner-occupied homes wherein the owners have put down 20% of the purchase price as a down payment and have sufficient verified income such that the mortgage payment will not exceed a to-be determined percentage of that verified income (probably between 20 and 30%).
2. All levels of government will be involved in this plan in a very simple arrangement that will thereby serve to naturally provide the checks and balances that are inherent in the Constitution. Those checks and balances are missing from our existing banking system that is essentially run by the Federal Reserve System that is outside any of the branches of government established by the Constitution.
3. Participants in the new Money and Banking system and what they will do:
(a) Legislative Branch of the Federal Government: Will pass laws telling how the money and banking system will operate
(b) Executive Branch of the Federal Government: Will manage the money and banking system in accordance with laws passed by Congress.
(c) The Federal Reserve System: Will be put into the Executive Branch of the Federal Government and which will work in concert with the Treasury Department of the Executive Branch and be renamed
“The United States Third Millennium Central Bank”.
(d) The 50 States: Will, in contractual agreements with Local Governments, set the terms of the charters which will specify, for each bank, which specific duties the Community Banks will perform and the rules under which the banks will operate.
(e) Local Governments: Will manage the Community Banks with government employees who will work only for the banks.
4. It is anticipated that at some future date, this program might be expanded to cover other low-risk loans such as inventory loans and farm loans to common people and small businesses.
5. Banks will be extremely narrow -- no deposits will be accepted. That will cut overhead to an absolute minimum.
6. There are 50 million owner-occupied homes in the U. S. A.
7. There are 300 million people in the country.
8. 20 million homes will be covered by these 4% mortgage loans.
9. There will be 4,000 banks -- one for every community-area of 75,000 people.
Using the natural wealth of our nation wisely
to solve our current money problems (12/2/08) The natural wealth of this country is (A) our land, (B) our knowledge and (C) the various skills of our people. With proper management, we can produce whatever food and material goods we need many times over. We should have complete confidence in (A), (B) and (C) and follow the plan below.
1) Start keeping the government’s books with double-entry bookkeeping. Keeping track of (a) income / (b) expense / (c) assets and (d) liabilities. That automatically, accurately and sensibly turns "expenditures" into "expenditure / assets" whereby a dollar invested in a worthwhile asset becomes a dollar of assets.
2) Set up depreciation schedules for the wealth produced by the expenditure / assets. That means we will be keeping an accurate account of our assets and overall financial status.
3) Spend government money in the future only on things that will create wealth and provide a 20% return on the expenditure / assets. Most good companies would consider a 20% return very conservative on their investments. There is no reason our country can’t get that level of returns.
4) Realize that (A) good health, (B) good education and (C) adequate housing are always worthwhile wealth producers. The government should spend whatever is needed in those three areas.
5) Pass laws that will prohibit mortgage banks from selling off the loans they provide for mortgages. That will insure that the lenders want the loans to succeed and be paid off. It will make sure that the lenders have skin in the game. That should stabilize the future housing markets by removing the temptation to "bundle" mortgages into strange financial instruments. The lenders will have to learn to live on the interest from their loans. That should not be difficult -- it was always the way things were done in the past.
6) Change the Federal Reserve to "manager / bankers" who will follow rules set down by Congress. Take away the money creating powers which were "farmed out" to the FED in 1913.
7) Follow the Constitution and return the MONEY CREATING power to Congress.
8) That will mean Congress can print whatever money our country needs.
9) The Government should never borrow money --- it has the constitutional power to print whatever money it needs (as do all soveriegn nations).
10) Pay off all debts immediately with our newly printed money and never go into debt as a nation again.
11) Embark on a bold program of wealth generation by investing in basic infrastructure to (a) turn seawater into fresh water and (b) build a nationwide system of pipes and pumps so we can (c) deliver the water efficiently wherever it is needed for irrigation, personal and industrial use. At that point, we will probably be able to feed half the world and turn food into various forms of wealth through trade with other countries.
12) Spend whatever is needed for other worthwhile infrastructure repair and creation -- including schools and research facilities.
13) Ignore those that will say that printing money is inflationary. That is nonsense. If the printed money is spent on wealth-producing assets it will be neither inflationary or deflationary within this country. On the world money markets our dollars should seek its natural level of value. If we are efficient -- our dollars will be worth much. If we are laggards, our money will be worth little. We should not be afraid of international wealth-producing competition.
I hope President-to-be Obama realizes --
(a) Congress has the Constitutional right to simply create the money needed for his plan.
(b) The plan should focus on programs that will create real wealth -- and
(c) The government should immediately switch to double-entry bookkeeping which will mean expenditures on wealth-producing assets need not be expensed immediately -- they can be expensed in accordance with a dedicated depreciation schedule. All sensible businesses use double-entry bookkeeping and depreciation schedules. Without proper accounting, the business managers would never know the financial status of the enterprise.
(d) I suggest we start with a comprehensive natonwide water reclamation program which will include nuclear desalination plants along both coasts, and an interstate network of pipes to bring the water where it is needed. The pipes could be under, over and next-to our highways and byways.
(e) A well run program could easily pay for itself many times over by the prodcution and sale of food.