Modern Monetary Theory points out that the money supply increases when governments permit banks to deposit money in a bank account. Banks do this by depositing new money in borrowers' bank accounts when they provide or extend a loan. Almost all new money is introduced into the economy this way.
Money Creation and Asset Markets provide another way to increase the money supply by a local community using new money to create or buy assets for the community. Money used to create or buy an asset within a community is a low-cost way to introduce new money as it removes the cost of debt. Unlike loans, it treats all community members equally and does not create traditional debt.
This is the opposite of the current debt system that favours wealthy people. Today, 80% of new money created with bank loans goes to the wealthiest 1%, and no new money goes to the poorest 10%. Providing new money directly to the community is a low-cost way of introducing new money into an economy compatible with the current system. It gives the Reserve Bank and government another way to control the money supply.
If we use the community approach, new money will come to the community and stay within the community. House prices will remain the same, but the cost of buying a house will halve as the cost of debt is removed. Investors in housing will receive a 10% inflation-adjusted annuity for twenty years, which is double the time of a typical superannuation annuity of the same amount. The community approach to money creation is democratic as it treats all participating community members equally.
If you are in any of the categories below or just interested in a fairer, lower-cost way of introducing new money into our economy, please fill out this form to join and help prepare a community proposal to the government to provide a lower-cost way to adjust the money supply compared to the current system of bank loans.
While the approach can be used for any community asset, it is proposed to start with the immediate cost of living issue of unaffordable housing.
People who will benefit from community-funded housing include
- Prospective home buyers and renters who have difficulty raising a deposit or enough income to service a bank loan.
- Homeowners who have paid off their properties but need funds for extensions, repairs, and other maintenance.
- Buyers who have a mortgage but would like to reduce their payments or reduce the time to pay off their loan.
- Homeowners or investors looking for a safe investment that gives them an inflation-adjusted annuity income stream of 10% for 20 years.
- Self-managed super funds looking for an alternative to becoming a landlord or investing in the stock exchange.
- Existing landlords who would like to relieve themselves of the worries of being a landlord while still having a property investment that tends to increase with inflation.
- Downsizers who wish to move to another property and realise some of the capital gains in their current house.
- Empty nesters who wish to remain where they are but “sell” some of their existing home to support themselves.
- Government departments who are responsible for providing affordable housing and government rental assistance.
- Builders, architects, and developers who wish to provide affordable housing.
- Professions and Trades that support homeowners.
- Others who are interested in providing new money for other community assets like roads, electricity, education, etc.
Register your interest in helping prepare a proposal to the government on Community Capital
Pass on this article to someone else who will be interested.
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Community-Funded Housing FAQ
What is community-funded housing?
Community-funded housing is a proposed system where new money is introduced directly into a community to create or purchase assets, starting with housing. This eliminates the need for traditional debt (like mortgages) and aims to make housing more affordable for everyone.
How does community funding differ from traditional bank loans?
Unlike bank loans that create debt and primarily benefit the wealthy, community funding treats all members equally. It bypasses the cost of debt and keeps the newly created money circulating within the community.
What are the benefits of community-funded housing for prospective home buyers?
Prospective buyers struggling with down payments or loan repayments would find it easier to acquire homes as the cost associated with debt is removed. This effectively reduces the cost of buying a house without impacting the market price.
How does community-funded housing benefit existing homeowners?
Homeowners can utilize this system for home improvements and renovations or to reduce their mortgage burden. It also provides a safe investment opportunity with inflation-adjusted returns for those who have fully paid off their properties.
What are the advantages for investors in a community-funded housing system?
Investors can receive a 10% inflation-adjusted annuity for 20 years, a significantly better return than traditional superannuation annuities. This system also provides a less stressful alternative to being a landlord while retaining a property investment linked to inflation.
How does community funding benefit government departments?
This system provides a new tool for governments to manage the money supply and address the pressing issue of affordable housing. It can supplement existing government programs for housing assistance and rental support.
Who else can benefit from community-funded housing?
A wide range of stakeholders benefit, including builders, architects, developers interested in affordable housing projects, professionals and trades supporting homeowners, and even those interested in funding other community assets like roads, education, and utilities.
How can I get involved in this initiative?
You can register your interest and contribute to developing a proposal to the government advocating for this community-centric approach to money creation and housing affordability. Share this information with others who might be interested in participating.
