America needs an economic plan that employs a qualitatively new approach to debt management and strengthening our nation’s economic foundation. It needs a plan that is citizen-centered, rather than politically-driven.
It is time for an economic recovery plan in America that will offer a fresh start for American families. It is time for U.S. citizens to be granted direct access to liquidity transfers through a Citizens Credit Facility. Considerations of a new direction in the recovery plan must include these critical factors:
1. Economic health at the family level must be restored before America can hope to regain financial vitality and economic liberty for citizens
Despite trillions of dollars in bailouts, big bank pump-priming and stimulus programs, the U.S. economy remains mired in debt. According to the St. Louis Fed, Total Consumer Credit Owned and Securitized, Outstanding recently hit a record $4.97 trillion. Corporate Debt as a percent of GDP is over 50%, a record high.
As of February 2021, the U.S. national debt stands at $27.9 trillion. State government debt has reached $1.227 trillion, with local government debt at $2.102 trillion. Unfunded pension obligations are currently approaching $7.0 trillion. America is drowning in debt.
2. The national debt of the United States remains as an enormous, potentially destabilizing problem for the future of our country, and America must have a plan to address it – a plan that will stimulate the economy and generate healthy, long-term tax revenue growth – and reduce dependency on government.
America’s true, GAAP-based sovereign debt has been reported in the U.S. Treasury Statement of Social Insurance in the Financial Report since 2005. The GAAP-based debt, which accounts for the Net Present Value (NPV) of unfunded liabilities, was recently estimated at $86.6 trillion. This represents 550% of the U.S. GDP, and it represents 150% of the global GDP. The U.S. sovereign debt is clearly “beyond containment.” There is no feasible way of bringing it back under control. The GAAP-based deficit over the past 7 years (2008 – 2015) has averaged more than $5 trillion per year (with the 2015 deficit coming in at approximately $6.0 trillion). At these levels, the Government could take all of the income earned by everyone in America, and it still would not cover the deficit. America’s sovereign debt is now clearly “beyond containment.”
Debt is deflationary, and liquidity is critical for preserving our nation’s economic viability. The Federal Reserve, over the long term, is faced with a ‘print or collapse’ scenario. With their goal of maintaining an “interest rate cap,” the Fed will need to engage in on-going liquidity support to underpin Treasury Auctions. Risk is rising for on-going, long-term Dollar debasement with potentially devastating costs for millions of American families and destabilizing consequences for the nation’s economic system.
3. U.S. citizens deserve nothing less than the same access to liquidity, for resolving debt burdens and financial distress at the family level, that have been accorded to major U.S. and foreign financial institutions.
The Federal Reserve has opened the Fed Discount Window (“Fed Window), extending credit (providing liquidity at “zero” or “near zero percent interest”) to the very U.S. bank holding companies, and foreign banks with U.S. subsidiaries, which led us into the financial crisis in the fall of 2008 with their excessive risk exposure to subprime debt and credit market derivatives.
Two of the global banking giants, Goldman Sachs and Morgan Stanley, earned free interest via privileged their access to credit extensions at the Federal Reserve Discount Window. Within two years Goldman Sachs was paying out $111.3 million in “delayed bonuses” for the years 2007 and 2009 (NY Times 12-15-10).
The Fed Window was also opened up to foreign banks, including: Dexia SA (DEXB) – Brussels, Paris; Depfa Bank Plc – Dublin; Arab Banking Corp (at the time “29 percent owned by the Central Bank of Libya”).
Additional foreign banks/financial centers, as members of the Fed’s designated Primary Dealers, were allowed access to the Fed Window: BNP Paribas Securities Corp; Barclays Capital Inc; Credit Suisse Securities; Daiwa Capital Markets America, Inc; Deutsche Bank Securities, Inc; HSBC Securities (USA) Inc; Mizuho Securities USA, Inc; Nomura Securities International, Inc; RBC Capital Markets, LLC; RBS Securities, Inc; SG Americas Securities, LLC; UBS Securities LLC.
The Leviticus 25 Plan assumes an 80% participation rate by 300 million U.S. citizens. The initial rollout would involve an $21.6 trillion funding operation, $14.4 trillion into participating citizen Family Accounts (FAs) and $7.2 trillion into Medical Savings Accounts (MSAs). This liquidity operation, which would be delivered through a ‘Citizens Credit Facility,’ would not be prohibitive, in light of the trillions of dollars in Federal Reserve and Treasury outlays over the past five years to major U.S. banking and financial institutions (Morgan Stanley, Citigroup, Bank of America, State Street Corp, Goldman Sachs, Merrill Lynch, JPMorgan Chase, Wachovia, Lehman Brothers, Wells Fargo, Bear Stearns) and major foreign financial institutions (Royal Bank of Scotland, UGS AG, Deutsche Bank AG, Barclays, Credit Suisse, Dexia, BNP Paribas).
The Federal Reserve’s various credit facilities, Discount Window transactions, emergency loans, Foreign Exchange swap lines, Interest on Excess Reserves (IOER) for foreign banks, and Treasury’s TARP and stimulus programs have done little to improve the financial status for the majority of American families. These government programs have also done nothing to change the dominance and risk profile of “too big to fail banks,” and they have done little to lessen the counterparty default risk in the global derivatives markets.
5. The Leviticus 25 Plan, once fully implemented, would immediately balance the budget of the federal government. The federal budget deficit for FY2020 came in at $3.311 trillion. The CBO projects that federal budgets will add $12.987 trillion in additional deficits for 2021-2030. The actual deficit totals are likely to be considerably higher than the CBO’s current forecast.
The Leviticus 25 Plan recapture provisions would eliminate those budget deficits and further generate a $383 billion budget surplus for each of the first five years. This includes the significant benefits which would accrue from the elimination of new interest expense over the course of that 5-year period, and the additional dynamic benefits of a resurging national economy would be exponential.
The $383 billion budget surplus each of the first five years following implementation would be transferred back to the Federal Reserve for ongoing reductions of the Citizens Credit Facility balance sheet.
The Book of Leviticus, Chapter 25 outlines a divinely inspired plan which “the Lord spake unto Moses” in proclaiming a unique period of Jubile. “And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof” (verse 10).
Debtors – bondmen and bondmaids – were granted liberty from their indebtedness. Property was returned to the rightful owners, and distinct benefits were accorded “the poor, who now were acquitted from all their debts, and restored to their possessions” (Wesley). Leviticus 25:17 sets forth the solemn reminder, “Ye shall not therefore oppress one another; but thou shalt fear thy God: for I am the Lord your God.”
Jubile “set bounds both to the insatiable avarice of some, and the foolish prodigality of others, that the former might not wholly and finally swallow up the inheritances of their brethren, and the latter might not be able to undo themselves and their posterity forever, which was a singular privilege of this law and people.” (Wesley)
Jubile provided a fresh start with economic liberties and a societal rebalancing to counter permanent class structures.
America needs a plan that is modeled upon these divine concepts – an economic recovery plan that directly benefits American citizens in a timely manner.