The spreadsheet above shows one year's loan payment from a regular bank and compares it to the payments from a RESCUE bank. The differences are:
Each year, the borrower (buyer) pays
- $20,000 and receives a benefit of $20,000 with a RESCUE bank
- $30,889 receives a benefit of $20,000 and a regular bank loan
- $10,889 goes to the bank as a capital gain on which the bank shareholders may or may not pay a capital gain with a regular bank loan
- $9,111 is reinvested in the house with a RESCUE bank loan.
The community, which includes the RESCUE bank owners and workers, has added $20,000 in wealth compared to adding the same wealth but for a cost of $30,889 with a regular bank loan. This is a productivity improvement of $10,889 on an investment of $20,000 or a 54% better use of the new money introduced into the community.
We can eliminate the cost of money and do the same thing by buying and selling a house with existing money using a permanent home market instead of the current real estate market.
RESCUE banks keep the value of money the same while the money stays within the bank, and every buyer (borrower) of money from the government via the bank pays the same. Wealthy people pay off their loans quickly, and so the money they use is more productive. As they use their money to gain more, they have rapidly accumulated most of the money in the world.
RESCUE banks will put all investors on an equal footing by turning everyone into potential investors, and the best ones will rise to the top. This is especially important with government investments where the bureaucrats who can produce the most real output will rise to the top.
It is relatively trivial to convert an existing loan to a RESCUE loan. It is more challenging to organise permanent asset markets, and the banks that can better mobilise a community will outperform those that ignore their customers.
The problem of choosing investments becomes difficult. The reason is that profit is no longer the determining factor for investment. It is the total value of the assets that are built. For example, it is worthwhile making RESCUE Banks operate more effectively and in helping communities work out the most value for the total community — where value includes other measures besides money.
To read more, visit Rescue Banks — Making Money Democratic.
