I would like to revisit the topic of “SwapRent as A New Alternative Economic Policy Management Tool for Governments” that was published at Larry Dolye’s blog, Sense on Cents – Navigating the Economic Landscape, on August 24, 2010.
The proposed concepts and methods in that article were first mentioned in my previously published article in the quarterly journal Housing Finance International of IUHF back in December of 2009. The essential points are that through the newly invented “Cash Flow Sharing” method of a SwapRent(SM) contract, Government could act as a conduit to channel private sector’s capital into local neighborhood communities as a new way of stimulating our national economy aimed directly at homeowners and small businessmen at the grassroots level.
It could bypass banks, Wall Street fat cats or any other types of financial intermediaries to avoid money being hi-jacked by them again. It could also be done totally without further leveraging with more debts. Free market based investors from around the world would get to enjoy the future partial “Shared Appreciation” of the properties in those neighborhoods that they have chosen to invest in, like a conventional equity investor on any other assets would.
This free market based economic stimulus solution is based on the true meaning of capitalism to solve the current economic ills of the Western economies by using a creative and innovative method based on the simple “Shared Equity” or more precisely, a new variation of a “Shared Cash Flow” economic concept.
No taxpayer’s money would be involved for economic stimulus so it would not increase any more budget deficits and hence, non-Keynesian.
No debt capital would be involved to inadvertently blow up further other asset bubbles either (like those unwise and fateful QEs would) and hence, non-Monetarist.
There is a need to create a new name for this kind of new economic concept and new business method to conduct economic stimulus activities to manage a country’s economy. The convenient name I came up with is simply “SwapRentism” at the moment. I would welcome any other suggestions for our consideration.
It is an unconventional and innovative method of plain equity capital based economic stimulus program for various levels (federal, state and municipal) of governments to adopt. It could also be used in conjunction of any other conventional economic stimulus programs to avoid political or personal ideological resistance.
The old time economists and behind closed door economic policy makers may have to swallow their pride, come out of their cocoons, open up their minds and learn something new, for the benefits of our human societies.