Insight Spring: Fixing A Dead Economy, State Debt Solutions
October 7th, 2010
Insight Spring: Fixing A Dead Economy, State Debt Solutions
Published on October 7th, 2010 @ 09:42:05 am , using 846 words
Insight Spring
Frank Houck
How have they happened before?
If we think back to what we already know that works, you don't have to go back that far. Successful economic systems require that there is a gaining of wealth at the citizen level giving everyone expendable cash.
The gold rush days are in that category. In a place where there was nothing, gold was discovered. Businesses are attracted to citizens with expendable cash. Over night there were hotels built, hardware stores, Soloons; every kind of business you can think of. And as long as there was gold coming out of the ground for a large number of people, the businesses prospered, hired employees and the economy grew.
If the gold that was mined was in the hands of one person, would a city be built? No. There would have been no business to support only one customer. The key to successful economic growth is that all the citizens have to prosper from the local business environment.
This kind of environment occurs any time there is a distribution of wealth to a large number of citizens giving them the expendable cash that is necessary to grow business: Cattle towns, oil towns, military base towns, vacation resorts etc.
When the citizens have expendable cash, businesses will always spring up to take advantage of that wealth. As the people spend more, businesses are created and more people are hired creating even more wealth. As long as the reason for the distributed wealth exist, the economic system will spiral upwards.
How can a stimulus package do that? The easy answer is it can't. What would happen in the gold town if the people were told the gold would run out in 2 weeks. The most you would see in the city would be tents at best. And that is what you can expect from any temporary source of revenue as expendable cash.
What it takes to create a viable solution to create jobs and to remove debt
If you concentrate on the viable tools you have to work with, it really isn't that hard to remove all the government debt and create jobs as well as increase the economy.
This solution requires no taxes, no government involvement, no new legislation, no impact on the citizens, a truly commercial engagement of the business community with the government for the people's and government benefit.
There are five points that I am going to prove for you with this analogy. This is a real life situation and I chose it because you are familiar with it and it will make more sense to you. This gives you the methodology. This methodology is not about building bridges; bridges are just a business, it could be anything, and if applied properly, will be everything.
Analogy:
Consider now that there are no bridges going from San Francisco to Oakland.
What that would mean is: anyone going from Oakland to San Francisco would have to travel the full length of the peninsula, approximately 200 miles.
At a cost of gas of $3.00 a gallon and a gas mileage of 25 miles to a gallon, all citizens would be buying 8 gallons of gas at $3.00 a gallon for a total of $24.00 a day just to commute.
In this scenario the proposal might be: The private sector pays for and builds a bridge between San Francisco and Oakland. To cover the cost there would be a $5.00 toll for use of the bridge. There are approximately 500,000+ commuters between the two every day. That's a return of 2.5 million dollars a day in revenue or 75 million a month. The bridge would be paid for in short order, then the bridge would be turned over to the state and the revenue would then be the state's. The state could also use the the revenue from the bridge to make a direct contract with a lender to receive funds in advance based on the revenue of the bridge.
The citizens were paying $24.00 to commute; now it is $5.00 saving the citizens $19.00 a day or $570.00 a month. That savings represents additional expendable cash for the citizens, and an increase in the economy of $285,000,000 a month.
In this scenario the state pays nothing. It does nothing. It receives 75 Million dollars a month in new revenue. The citizens' cost of living goes down by $570 dollars a month. And the economy is increased by $285,000,000 a month.
A business government partnership can be arranged with businesses interested in expanding as long as the effect of the arrangement lowers the cost of living of the citizens. I won't go into that here; it just serves to make the process complicated. Business will seek out expendable cash. If you create an environment for that to happen that is beneficial for the business, it will grow.
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