Government Funding for Community Organisations

Over the past 14 years, White Label Personal Clouds has designed cheaper ways to introduce new government money into communities and increase the circulation rate of existing money to increase the rate of investment. The ideas will increase the productivity of the financial system and have led to several proposals to the government. These include funding affordable housing (50% lower cost), solar panels and batteries for every household (50% lower cost), water conservation (increased savings of water), funding R&D and education, funding infrastructure, increased capital productivity for startup ventures (doubling investment from the same amount of money), and paying local community organisations if members walk.

The projects are never considered because the government uses bank loans as the main way to introduce new money into the economy. For example, governments subsidise loans by giving first-home buyers money towards a deposit for a loan. On solar panels, governments give interest-free loans or higher feed-in tariffs. On water, governments set up water trading systems. All of these are variations on the existing system of loans. The idea behind using loans is to let money markets decide on the most efficient way for society to use new money. Unfortunately, its implementation is an expensive way to add new money to the economy.

Letting loan markets decide on the allocation of new money has led to an extraordinary increase in the money supply and its derivatives, endemic inflation, and the obscene distribution of wealth where a dozen people have as much wealth as billions of people. In Australia, it has led to an unnecessary cost of living crisis for the most vulnerable because loans are distributed to those who already have money and are never given to the people who need them the most. However, it is worse than that, as it leads to the absurd situation that the wealthier a country becomes, the less productive it is and where we trash the planet to increase the money supply rather than increase the welfare of humans and keep the planet habitable.

Introducing new money into the economy is at least twice as expensive as it needs to be because new money loans should be cheaper than loans of old money. However, they are the same, and people who access new money through loans have a significant advantage over people who cannot access new money through loans. Because they have an advantage, they can accumulate more money at the expense of those without the same advantage. Loans of new money are cheaper than loans of old money because governments supply new money at nearly zero cost, and the borrowers pay for it by repaying the loans to banks, who then destroy it.

When they use compound interest, banks collect double the interest from borrowers. The banks don’t collect more money as they charge all the loan costs to the borrowers and do not charge the lenders for the banking service. To increase the money supply, borrowers have to make enough profit from the money to pay double interest plus the money created. Using existing money should be cheaper because creating new money is unnecessary. Unfortunately, most loans create new money even when plenty of existing money is available.

The net effect is that wealthy people with assets, money or the ability to borrow do not have to pay for the banking service. It is called capital appreciation without cost to the lender. Society creates far too much new money, and the operation of the financial system means that some people become very wealthy and store their unused money in tax havens and inflated assets like housing. Unfortunately, the majority have little or no wealth. We know that economies with disparities in wealth have low productivity and even less investment, and — over time — economies weaken as rulers become despots to maintain their advantages over those with less total wealth.

The government needs to consider projects that improve the efficiency of the financial system. The assumption is that money markets ensure money is used most efficiently. The rationale for this approach is that the user pays, and the owners of money and assets collect all the profits for themselves.

We have built an economic system in which the main objective is to produce more money rather than produce more goods and services for less.

Fortunately, solutions are low-cost and relatively simple to deploy, and the savings rapidly cover the costs. Unfortunately, the already wealthy control the necessary changes and can afford to pay to convince people that the current system is OK.

Housing is an example. The cost of a house is the cost to build and maintain it. If the house is already built, the cost is the maintenance and operating costs. However, once we sell the house, the cost of occupying it increases dramatically. It increases because once an asset is monetised, we have to pay to use the money, operate the financial system, and give a major share of any profits to the financial system.

1. The first savings that can be made immediately, for no cost to the community or the bankers, is the change from compound interest to simple interest. This reduces the time to buy a house for the same amount of money by about 30% because the loan is repaid in less time. The seller gets the same fee for the same amount but over a shorter time.
2. The second saving is to put the title into a common entity so that ownership can be transferred one payment at a time. This will save the cost of monetising the asset, which will be half the interest cost.
3. The third saving is the cost of transferring the title, most legal costs, and the buying and selling costs.
4. The fourth saving can be governments only requiring banks to collect interest and to monitor the expenditure of money to ensure that it is spent on building or buying houses for first-home buyers that they can purchase incrementally through the community organisation and where the profits must be used to increase the housing supply to other communities.
5. It makes all housing affordable because people move into houses for which they only need to pay a maximum of say 25% of their income.
6. The government does not have to use taxes to implement the above. It all comes from productivity improvements in how money is spent into society.

Society will benefit because money is spent on producing things that communities want.

However, there has to be control over the amount of money created for little or no cost and given to communities. The control method is for all new money investments to share the profits with the buyers of the goods and services produced by the investments and for the profits to stay in the same community that produced the goods and services.

The approach works for all financing. It provides competition and the ability to make a profit. It removes the need for governments to collect taxes to redistribute profits to the community. It more than pays its way by making more efficient use of money.

The government can easily implement it by insisting that all its loans with any bank be treated as high-interest simple loans, where the more interest is paid, the faster the loan is paid off and the lower the interest cost.

Suppose the government needs to make capital expenditures for a school, community batteries, solar panels, insulation, or roads. In that case, it can ask citizens to pre-pay taxes that earn a discount on tax rather than interest income. This will eliminate capital costs and provide the community with low-cost assets.

R&D and Innovation Funding

Innovation and R&D to find cheaper ways to produce goods and services can be paid with new money through community organisations. Assume we need to build an information system that will cost $1,000,000. Once built, it will cost $200,000 a year to maintain. It will sell its product and receive fees of 10% of the funds that pass through it to develop further and find lower-cost ways of operating the economy. Assume it will fund affordable housing and assume each homeowner passes $25,000 annually through the system. The income per household per year is $2,500, and the income from 80 dwellings will be paid to operate the system. The profit from greater than 80 dwellings will go to the community owners of the properties, and the profits will fund further innovations.

Not all innovations will be as successful, but the profitable few will continue to fund further innovations to lower the cost of building and maintaining houses, benefiting the community that makes and shares the innovations.

The initial $1,000,000 can be supplied through the banks as new money loans, with interest paid for the bank to handle the money transfers. However, the community will own the systems. This approach will require no tax dollars to fund ongoing innovation.

The approach works for all R&D, education, training and other knowledge acquisition.

Importantly, it can quickly fund climate adaptation and the decarbonising of the economy.

Questions asked by Reader Mark Spain. Answers from ChatGPT

Q1: Rewrite the Article Showing the Logical Steps.

Q2: Explain the courage needed and the simple steps a government could take to implement this.

Q3: How can the case for advocating this be compelling and impossible to ignore?

Q1: Rewrite the Article Showing the Logical Steps

Step 1: Introduction to White Label Personal Clouds

• Background: Over the past 14 years, White Label Personal Clouds has developed innovative strategies to inject new government money into communities while enhancing the circulation of existing money.
• Purpose: These strategies are designed to boost investment rates by making the financial system more productive.
• Proposals: The company has made several proposals to the government, focusing on various sectors, such as affordable housing, solar energy, water conservation, research and development (R&D), education, and infrastructure.
• Outcome: These proposals aim to lower costs, double investment efficiency, and reward community organizations for promoting healthy activities like walking.

Step 2: The Government’s Approach to Introducing New Money

• Current Practice: Despite these innovative proposals, the government continues to rely primarily on bank loans to introduce new money into the economy.
• Examples: The government offers subsidies or interest-free loans to first-time homebuyers, provides higher feed-in tariffs for solar energy, and establishes water trading systems.
• The flaw in the System: All these methods are variations of the traditional loan-based system, which is costly and inefficient for introducing new money into the economy.

Step 3: Consequences of the Loan-Based System

• Negative Effects: Relying on loan markets to allocate new money has led to several issues:
• A significant increase in the money supply and its derivatives.
• Persistent inflation.
• A highly unequal distribution of wealth, where a small number of individuals hold as much wealth as billions of people.
• Example from Australia: In Australia, this approach has contributed to a cost-of-living crisis, particularly affecting the most vulnerable, as loans are primarily given to those who already have money.
• Broader Implications: The loan-based system leads to a paradox where wealthier nations become less productive, focusing on increasing the money supply rather than improving human welfare or protecting the environment.

Step 4: The Cost of Introducing New Money

• Higher Costs: Introducing new money through loans is unnecessarily expensive because new money should, in theory, be cheaper than existing money. However, both are treated equally, giving an undue advantage to those who can access new money through loans.
• Mechanism: New money is supplied by the government at nearly zero cost, but banks charge borrowers significant interest to repay the loans. When compound interest is applied, the costs double, making the system even more burdensome.
• Problem with Compound Interest: Banks charge all loan-related costs to borrowers, allowing wealthy individuals and entities to accumulate more wealth without bearing the cost of banking services. This further exacerbates inequality.

Step 5: The Resulting Wealth Disparity

• Wealth Concentration: The current financial system creates a situation where wealthy people do not have to pay for the banking services that facilitate their capital appreciation.
• Societal Impact: This leads to an oversupply of new money, with the wealthy storing excess funds in tax havens and inflated assets, like housing. Meanwhile, most people have little or no wealth, reducing overall economic productivity and investment.
• Political Implications: Over time, economies with significant wealth disparities weaken, leading to a rise in despotic rulers who maintain their power by exploiting these inequalities.

Step 6: Proposed Reforms to Improve the Financial System

• Need for Change: The government must consider projects that enhance the efficiency of the financial system, moving away from the assumption that money markets always allocate resources most effectively.
• Flawed Assumptions: The current system prioritizes profit for money and asset owners rather than the efficient production of goods and services.
• Solutions: The reforms suggested by White Label Personal Clouds are low-cost, simple to implement, and can yield quick savings, but the wealthy, who benefit from the status quo, resist these changes.

Step 7: Specific Reforms for Housing

• Housing Costs: The cost of a house should be limited to its construction and maintenance, but once monetized, the cost of occupying a house increases significantly due to financial system fees.
• Savings Opportunities:
• First Saving: Shift from compound interest to simple interest, reducing the time to repay a loan by 30%.
• Second Saving: Transfer house ownership gradually through a common entity, cutting monetization costs by half.
• Third Saving: Reduce legal and transaction costs of buying and selling properties.
• Fourth Saving: Ensure that banks only collect interest and monitor expenditures, directing profits towards increasing the housing supply in other communities.

Step 8: Broader Economic Implications

• Affordability: These changes could make housing more affordable by capping housing costs at 25% of household income without requiring additional taxes.
• Efficiency Gains: The savings would come from productivity improvements in how society creates money.
• Control Measures: To avoid excessive new money creation, profits from new money investments should be shared with those who buy the goods and services, ensuring that wealth remains within the community.

Step 9: Application Across Different Sectors

• Widespread Application: This approach can be applied to all types of financing, providing competition and eliminating the need for government taxes to redistribute wealth.
• Government’s Role: The government can implement these reforms by treating its loans as high-interest simple loans, accelerating loan repayment and reducing interest costs.

Step 10: Funding for Public Projects

• Capital Expenditures: For capital projects like schools, solar panels, or roads, the government can ask citizens to pre-pay taxes, offering discounts rather than interest income. This can reduce capital costs and provide the community with low-cost assets.

Step 11: Funding Innovation and R&D

• R&D Financing: Innovation and R&D can be funded with new money through community organizations, where profits from successful innovations are reinvested to further lower costs.
• Example: A community could build an information system costing $1,000,000, with maintenance costs funded by a portion of the revenue generated from affordable housing. This would allow the community to own the system and continue funding innovations.
• Long-Term Impact: Successful innovations would continue to finance further R&D, benefiting the community and supporting the economy's decarbonization.

Conclusion

• Overall Benefit: The proposed reforms would lead to a more efficient financial system, reduced inequality, and greater investment in public goods and services, ultimately creating a more sustainable and equitable economy.

OpenAI. (2024). ChatGPT (4o) [Large language model]. https://chatgpt.com/c/ca46cca9-5a36-4536-b6e3-aeedf7ed9446

Q2: Explain the Courage Needed and the simple steps a government could take to implement this.

Courage Required

1. Challenging Powerful Interests: The proposed reforms would reduce the advantages wealthy individuals and financial institutions enjoy. These groups significantly influence policy decisions and often resist changes threatening their interests. The government must have the courage to prioritize the long-term welfare of the broader population over the short-term gains of a powerful minority.
2. Overcoming Political Resistance: Financial reforms that reduce the profitability of banks and large financial institutions are likely to face strong political resistance from lobbying efforts and within the government itself. Implementing these changes requires political leaders willing to withstand pressure and potential backlash.
3. Shifting Economic Paradigms: The current economic system is deeply rooted in the idea that financial markets are the best resource allocation mechanisms. The proposed reforms challenge this notion by suggesting that a more community-focused approach can lead to better outcomes. This shift requires thinking beyond conventional economic wisdom and embracing new models.
4. Risk of Short-Term Disruption: Any significant change to the financial system can cause short-term disruptions. The government needs the courage to manage these disruptions and communicate effectively with the public about the long-term benefits of the reforms.

Simple Steps for Implementation

1. Initiate Pilot Programs: Start by implementing the proposed reforms on a small scale through pilot programs in select communities. For example, a pilot program could test the effectiveness of switching from compound to simple interest on loans in a specific region. This allows the government to gather data and demonstrate the benefits of the reforms before scaling them nationwide.
2. Legislate for Simple Interest Loans: Pass legislation mandating the use of simple interest for all new government loans. This would be a straightforward and immediate step to reduce the cost of borrowing for citizens and businesses while also shortening the time needed to repay loans.
3. Create a Public Entity for Housing Ownership: Establish a public or community-based entity to hold property titles. This would allow for gradual ownership transfer and reduce the costs associated with property monetization, making housing more affordable and accessible to a larger population.
4. Implement Community Investment Models: Encourage community organizations to manage and distribute new money for affordable housing, R&D, and infrastructure development projects. The government could provide initial funding and support to these organizations, helping them sustain themselves.
5. Reform Taxation and Pre-Payment Systems: Introduce a system where citizens can pre-pay taxes for specific public projects, such as infrastructure or renewable energy installations. In return, they would receive tax discounts, reducing the need for borrowing and lowering overall project costs.
6. Increase Transparency and Public Awareness: To gain public support, the government should launch a campaign to educate citizens about the benefits of these reforms. Transparency in how the reforms are implemented and how they benefit the community will be crucial for maintaining trust and support.
7. Monitor and Adjust: After implementing these reforms, the government should closely monitor their impact and adjust as needed. This iterative approach ensures that any unforeseen issues are addressed promptly and that the reforms' benefits are maximized.

By taking these steps, the government can gradually transition to a more equitable and efficient financial system while demonstrating the courage needed to challenge the status quo for the greater good of society.

OpenAI. (2024). ChatGPT (4o) [Large language model]. https://chatgpt.com/c/ca46cca9-5a36-4536-b6e3-aeedf7ed9446

Q3: How can the case for Advocating this be Compelling and Impossible to Ignore?

To make the case for these financial reforms compelling and impossible to ignore, the advocacy strategy should focus on clear communication, strategic framing, broad coalition-building, and effective use of data and narratives. Here’s how this can be achieved:

1. Frame the Reforms as Solutions to Pressing Issues

• Tie to Current Crises: Connect the reforms directly to the most pressing issues facing society today, such as the cost of living crisis, economic inequality, climate change, and housing affordability. Present the reforms as financial adjustments and as necessary solutions to these critical problems.
• Emphasize Long-Term Benefits: Highlight how these reforms will lead to long-term economic stability, increased productivity, and a fairer distribution of wealth. Stress the point that the current crises will worsen without these changes, making the status quo untenable.

2. Use Clear, Accessible Language

• Avoid Jargon: Communicate the concepts in simple, straightforward language that anyone can understand. Avoid technical, financial jargon that might alienate or confuse the public.
• Simplify the Message: Break down the key benefits into easily digestible points, such as “lowering housing costs,” “reducing debt burdens,” or “making the economy work for everyone, not just the wealthy.”

3. Leverage Powerful Data and Examples

• Present Hard Evidence: Use compelling data to illustrate the inefficiencies and inequities of the current system. For example, show how much the average person could save on a mortgage with simple interest instead of compound interest.
• Case Studies: Highlight successful pilot programs or similar reforms in other countries or regions that have led to positive outcomes. Demonstrating real-world success can make the case more convincing.

4. Craft a Compelling Narrative

• Storytelling: Use storytelling to make the issue relatable. Share stories of individuals and families who have suffered under the current system and how the proposed reforms could change their lives. Personal stories can resonate more deeply with the public and policymakers than abstract concepts.
• Moral Argument: Frame the reforms as a moral imperative. Emphasize fairness, justice, and the government's responsibility to ensure that the economy works for all citizens, not just the privileged few.

5. Build a Broad Coalition of Support

• Engage Stakeholders: Build alliances with diverse groups, including community organizations, small businesses, social justice advocates, environmental groups, and labour unions. A broad coalition shows that these reforms have widespread support across different segments of society.
• Influence Leaders and Experts: Garner support from respected economists, financial experts, and influential thought leaders who can lend credibility to the case. Their endorsements can help sway public opinion and political decision-makers.

6. Use Media and Public Campaigns Effectively

• Media Campaigns: Launch a media campaign across various platforms — social media, television, newspapers, and online publications — to raise awareness and keep the issue in the public eye. Use infographics, videos, and testimonials to convey the message powerfully and memorably.
• Public Events and Advocacy: Organize public events, town hall meetings, and debates to engage the community and create a sense of urgency. Encourage grassroots movements and petitions to demonstrate public demand for the reforms.

7. Highlight the Costs of Inaction

• Consequences of the Status Quo: Clearly articulate the risks of not implementing these reforms, such as worsening inequality, continued economic instability, and environmental degradation. Make it clear that inaction will lead to significant negative consequences for society.
• Financial Implications: Present the economic costs of maintaining the current system, such as the inefficiencies in housing finance and the long-term burden of compound interest on borrowers. Show how these costs will escalate over time if changes are not made.

8. Push for Political Accountability

• Pressure Lawmakers: Use the momentum from public support to pressure lawmakers into action. Clearly, voters are watching and that inaction or opposition to the reforms could have political consequences.
• Clear Policy Proposals: Provide policymakers with clear, actionable steps they can take to implement the reforms. This makes it easier for them to champion the cause and ensures that the proposed changes are seen as practical and feasible.

By combining these strategies, the case for financial reforms becomes compelling, urgent, and impossible to ignore. The focus on real-world benefits, clear narrative, and broad support can create a powerful movement that drives meaningful change.

OpenAI. (2024). ChatGPT (4o) [Large language model]. https://chatgpt.com/c/ca46cca9-5a36-4536-b6e3-aeedf7ed9446