FAQs

FAQs  – The Leviticus 25 Plan

1. How much would the Leviticus 25 Plan’s initial credit extension expand the balance sheet of a Fed-based Citizens Credit Facility?
The Plan assumes a participation rate of 80% of the 300 million U.S. citizens (approximately 240 million Americans). 300 million X 80% X $90,000 = $21.6 trillion

2. Why is a Plan like this so vital for reigniting economic growth?                         Answer: Total U.S. public and private debt, also called “All sectors; Credit Market Instruments; Liability, Level” reached $81.829 trillion (updated Q3, 2020 – St. Louis Fed).  The massive debt obligations carried by the U.S. will be a debilitating drag on future economic growth, and a detriment to the financial security of American families.

3. How can the Leviticus 25 Plan effectively restore liquidity to American families, while at the same time reducing pressures from the U.S. sovereign debt problem?  The Leviticus 25 Plan does not require additional borrowing by the U.S. Treasury. The Plan is capitalized by credit extensions, direct to American families, from the Federal Reserve. Treasury revenue gains, directly related to the “recapture provisions,” will be transferred back, periodically, to the Federal Reserve to shrink the Fed balance sheet back down to pre-expansion levels.

The primary benefit of The Leviticus 25 Plan flows from the massive debt reduction effect (mortgage and consumer loans) at the family level. As an example – A family of 4, with $200,000 in their Family Account, choosing to pay off a $100,000 mortgage balance (20-year maturity), would no longer have a $600-$700 principle/interest mortgage payment obligation each month. This would free up funds each month for saving, investing, additional debt elimination, and discretionary cash purchases.

It should also be noted that by paying off a $100,000 balance on a given mortgage, those families would actually save over $200,000 each in principle and interest costs, that they would have paid over the remaining life of their respective mortgages.

Perhaps most importantly, massive debt reduction at the family level would help insulate Americans against the economic fallout from future, potentially severe, economic contractions.

If 1,000 families (4 members per family) in an average-size community, all chose to pay off similar mortgage obligations, that community would benefit by $600,000 to $700,000 of ‘new money’ coming into that community each month for the next 20 years. This would provide healthy economic stimulation for the economy, and it would generate growing tax revenues, while reducing “income protection” costs in government.

The big picture benefit of The Leviticus 25 Plan: it would take a large proportion of the trillions of dollars paid out to banks and other lending institutions (debt service) each year, and redirect those dollars to American families, small businesses, and to federal, state, and local government entities. In addition, government entities would benefit from massive cost savings in social welfare spending.

4. Wouldn’t the initial $21.6 trillion disbursement direct to U.S. citizens lead to hyperinflation?
No. By far, the greater hyperinflation threat would be realized by NOT shifting away from the current big-government, central-planning approach to managing the nation’s financial affairs.

The U.S. government and the Federal Reserve have already set America on a hyperinflationary track with the snowballing federal deficits, stagnant economic growth, runaway social/entitlement spending, and the on-going Permanent Open Market Operation activities necessary to support orderly Treasury auctions and rate cap management.

The Leviticus 25 Plan, on the other hand, would improve economic and healthcare efficiencies in the marketplace and revitalize economic growth. It would generate a balanced budget for the federal government for each of the first five years and alleviate current, persistent pressures to ‘print’ fiat currency.

A. A large percentage of the $21.6 trillion credit extension will simply replace money that is already being spent by federal and state governments (welfare spending, healthcare benefits claims, unemployment benefits, etc.). This replacement spending would not be inflationary.
B. The disbursements ($7.2 trillion) into Medical Savings Accounts (MSAs) would generate new efficiencies in the healthcare marketplace, significantly reducing costs – over time.
C. A large percentage of the $14.4 trillion going into Family Accounts would be allocated to reduce mortgage and installment debt. “Debt service” is not inflationary.

The Leviticus 25 Plan would support prices and counter persistent deflationary pressures in the global economy. Over the longer term, by supporting free market allocation of capital rather than a big government allocation of capital, it would promote new efficiencies in nearly all markets across the economic spectrum, thereby stabilizing prices and minimizing inflationary risks.

If America does not change its current track, there will be a dramatic inflationary reset ahead.

5. Is there any type of ‘fail safe’ mechanism that would minimize the danger of some participants in the Plan simply “blowing” their money?
Answer: Yes, there is a ‘fail safe’ mechanism. When prospective participants apply for the plan, the banks / financial institutions must verify that they have properly screened the applicants for credit risk and job history. If an applicant family has a poor credit history / poor job history they would not be eligible to receive a lump sum deposit into their Family Account (FA), but would receive only 3-month incremental deposits – to manage their family’s affairs.

At the same time under current big-government programs, many are “blowing it” now: food stamp-for-drugs fraud, SSI fraud, SSDI fraud, EITC fraud, Medicaid and Medicaid fraud, Workman’s Compensation fraud.

Furthermore, the government has already “blown” billions of dollars with worthless and
ineffective stimulus programs, massive financial infusions for foreign banks, IMF transfers to foreign nations, emergency loans and discount window transfers to scores of major financial institutions, including JP Morgan, and Goldman Sachs (providing over $100 million in bonuses to Lloyd Blankfein and upper level GS management).

Participants in The Plan would be “off” all or most of the federal/state “means-tested welfare programs” for a period of five years. Government social welfare programs would not be available during the defined participation period or between incremental deposits, if they did not properly manage their Family Accounts and Medical Savings Accounts. Their recourse would then be to turn for help to: family members, community groups / churches / other religious and charitable organizations.

An improving job market would also support newly motivated workers moving into the market.

6. Won’t banks and other lending institutions get hurt by the Plan?
On the contrary, the Government’s central-planning approach to the handling of the financial crisis banks has led to sluggish economic growth – which is not beneficial to the banking industry. Banks continue to need, and receive, liquidity support from the Federal Reserve. Major financial institutions have taken on significant exposure to various derivatives – which are entirely dependent upon the strength of the counter-parties. Fragile elements remain embedded within the system. The banking industry needs market-based economic growth.

The Leviticus 25 Plan will benefit banks with increased cash reserves and stronger loan portfolios. Loan loss reserve requirements should contract as loan loss provision decreases.

Non-performing loans (non-accrual and restructured loans) would improve, with non-performing assets declining substantially over time. An improving economy, with significantly reduced debt burdens, would generate new loan demand, over time, from credit-worthy borrowers.

7. Does the Plan affect small business taxes – or corporate taxes?
No. The Leviticus 25 Plan does not affect current tax law regarding small business or corporate taxes. Tax reform in those sectors, to improve the business climate for American businesses, would need to be addressed independently of the Plan.

Reducing “corporate welfare” ($90-100 billion per year) would also be a key factor in support of deficit reduction – and should be addressed on its own merits. It would also help to level the playing field between large corporations and small business in America.

The Leviticus 25 Plan’s liquidity restoration benefits for families would generate healthy, market-driven economic growth, benefiting both small businesses and large corporations.

8. How will The Leviticus 25 Plan affect government tax revenues?

The Leviticus 25 Plan assumes that approximately 80% of U.S. citizens would participate in the Plan.  The Plan assumes that wealthy Americans, with typically large annual tax refunds, would not participate.  It also assumes that a percentage of low-income Americans, receiving significant social and medical program benefits  would not opt out of those programs in order to participate. 

The Plan therefore assumes an 80% participation rate, with an initial draw on the Citizens Credit Facility of $21.6 trillion – with $14.4 trillion deposited into the Family Accounts and $7.2 trillion into Medical Savings Accounts of participating families.  See FAQ for further details.

Recapture provisions alone would yield a return of approximately 8.0% ($1.915trillion) per year, resulting in a projected $8.186 trillion recapture over the first five years.  This projection does not take into account the dynamic benefits of an improving economy and less dependence upon government by the general population.  Additional revenue gains for the U.S. Treasury, as well as for state and local government entities, would begin immediately and would be significant, setting the nation and individual states on track for a balanced budget.                 

 

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