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1 of 27 Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610 Thomas J. Kraus Executive Director Global Destiny Creative Concepts Because Money Does Grow on Trees 599 Ralph Avenue Brooklyn, NY 11233 Phone: (917) 795-6610 [email protected] President Barack Obama The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Call the President Phone Numbers Comments: 202-456-1111 Switchboard: 202-456-1414 TTY/TTD Comments: 202-456-6213 Visitor's Office: 202-456-2121 Dear President Obama: August 29, 2016 On the Yellow Brick Road to the Reform of the Federal Reserve, and Behind the Curtain of the Wizard of Oz: Holistic Monetary, Tax and Fiscal Policy as Part of a Comprehensive Plan for Restructuring the American Economy to Retire the National Debt within 20 Years without Tax Increases Igniting a Real Estate and Stock Bull Market that will Carry the Nation into the Twenty Second Century People in the financial services industry should be focusing their efforts on reforming the Federal Reserve and lobbying the federal state and local governments on their collective need to downsize the government bureaucracy and get their financial houses in order. All financial services companies or businesses should come under Federal Deposit Insurance, including insurance companies, stock and bond brokers, Hedge funds and not just traditional banks. The premiums paid into Federal Deposit Insurance, like any other commercial insurance should be invested in the global equity markets by the Federal Reserve as part of its monetary policy. When the financial service companies need to be rescued or bailed out they would be bailed out with the collective reinvested returns on invested Federal Deposit Insurance Premiums. Government Agencies and departments should each be required to bank 24% of their annual allocation of funding into dividend reinvestment plans otherwise known as D.R.I.P.S. They should be required to have to reinvest 76% of the dividends earned on investments continuously to acquire additional dividend paying equities. Previsions should be made in the tax code to permit citizens and business to exempt from taxation 24% of their

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Thomas J. Kraus Executive Director

Global Destiny Creative Concepts

Because Money Does Grow on Trees

599 Ralph Avenue

Brooklyn, NY 11233

Phone: (917) 795-6610

[email protected]

President Barack Obama The White House 1600 Pennsylvania Avenue NW Washington, DC 20500 Call the President Phone Numbers Comments: 202-456-1111 Switchboard: 202-456-1414 TTY/TTD Comments: 202-456-6213 Visitor's Office: 202-456-2121 Dear President Obama: August 29, 2016

On the Yellow Brick Road to the Reform of the Federal Reserve, and Behind the Curtain of the Wizard of Oz: Holistic Monetary, Tax and

Fiscal Policy as Part of a Comprehensive Plan for Restructuring the American Economy to Retire the National Debt within 20 Years without Tax Increases

Igniting a Real Estate and Stock Bull Market that will Carry the Nation into the Twenty Second Century

People in the financial services industry should be focusing their efforts on reforming the Federal Reserve and lobbying the federal state and

local governments on their collective need to downsize the government bureaucracy and get their financial houses in order. All financial services companies or businesses should come under Federal Deposit Insurance, including insurance companies, stock and bond brokers, Hedge funds and not just traditional banks. The premiums paid into Federal Deposit Insurance, like any other commercial insurance should be invested in the global equity markets by the Federal Reserve as part of its monetary policy. When the financial service companies need to be rescued or bailed out they would be bailed out with the collective reinvested returns on invested Federal Deposit Insurance Premiums.

Government Agencies and departments should each be required to bank 24% of their annual allocation of funding into dividend reinvestment plans otherwise known as D.R.I.P.S. They should be required to have to reinvest 76% of the dividends earned on investments continuously to acquire additional dividend paying equities. Previsions should be made in the tax code to permit citizens and business to exempt from taxation 24% of their

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

income for the establishment of long term savings. This is especially needed by American families because 25% of American families lack both a checking and savings account. Capital gains on dividends and interest on savings should not be taxed because they are taxed when they are earned.

There needs to be a coherent relationship between monetary, tax, and fiscal policy to formulate sound economic policy. Instead of holding interest rates on bank deposits to near zero to force savers to invest in the stock market in their efforts to chase higher yields on their savings the Federal Reserve should raise interest rates back up to their historic norm between 5% and 6 % and sell government bonds and take the money generated from selling government bonds and turn around and reinvest that money in the global equity markets then take half the stock purchased and use it to endow the Social Security, Medicare and Medicaid Trust Funds with corporate dividend paying equities and take the 50% of equities purchased to establish an infrastructure investment bank. As stated earlier, 76% of dividends would be constantly reinvested to acquire additional dividend paying equities and 24% of the dividends earned on corporate equities purchased after selling government bonds would be used to pay down government debt on those same government bonds. Money collected to finance Social Security, Medicare, and Medicaid would also be invested in the global equity markets to acquire dividend paying corporate equities. Medicare and Medicaid resources will be combined into a single government health insurance program to be called E Pluribus Unum HealthCare. The separate social service delivery systems of the federal, states and local governments would be combined into a single social service delivery system jointly financed by each level of government and the work force and their offices would be downsized through attrition over a decade and a half and the savings in administrative costs would be poured into the global equity markets to properly fund Social Security, E Pluribus Unum, and the underfunded government employee healthcare and pension plans of the remaining government workers. Nobody would be laid off; everyone would be permitted to safely retire out of government service as fewer new hires would replace retiring government workers. The money supply would grow at a rate of 7.6% regular interest rates on bank deposits will be set at 76% of 7.6% or 5.776% the minimal interest rate on bank deposits would be set at no lower than 76% of 5.776% which would come to 4.38976% and the federal reserve would pay banks interest on money they are required to keep at the Federal Reserve bank which would be paid at 76% of 4.38976% or 3.3362176%. Banks would be permitted to substitute collateral such as Untied States Treasuries or State and Local Debt which will also become triple tax exempt as state and local governments clean up their balance sheets. The Federal Reserve under this plan would be required to invest 24% of their foreign currency reserves into the home stock exchanges from which they originate and be required to reinvest 76% of those same dividends into the same foreign market and repatriate 24% of the remaining dividends into the American stock markets. Government real estate will lease it air development rights to commercial real estate developers to erect on government land commercial office buildings that will reserve space in their structure for a government agency or department rent free. The building would be permitted to exceed the local zoning code’s height limitation by twice the square footage occupied by the government agency or department. The government agency or department would lease their air development rights for three times the agency or department’s annual operating budget. So that one third of the air development right lease revenue will cover the operating costs of the of the government agency or department and two thirds of the air development right lease revenue would be invested in the global equity markets with 76% of dividends constantly reinvested to acquire additional dividend paying equities and the remaining 24% of dividends would be added to other operating revenues of that same agency or department. For example, at the local level of government public schools, public libraries, public museums, and public performance arts venues could be financed with air development rights revenue so that the monies that now fund these institutions could be redirected towards paying down debt or better funding public parks. In the case of public schools, the real estate taxes that now fund public education could then be redirected to funding public infrastructure such as roads and highways, bridges and tunnels, and mass transportation’s tramways, ferries, buses and trains. So with real estate taxes added to the current revenue for these expenses the tolls collected by highway authorities and the fares collected by mass transportation agencies could instead be invested in the global equity markets and 76% of dividends earned would be constantly reinvested to acquire additional dividend paying equities and the remaining 24% of dividends would be added to other operational revenues of highway authorities and mass transit agencies so that fare, tolls and taxes can remain stable as compounding dividends would provide government sufficient operating revenue to meet expenses without having to raise taxes. All sales taxes especially those on real estate, energy and telecommunications will be phased out to make healthcare more affordable because if you eliminate these taxes the return on investment or ROI of the insurance industry which is responsible for financing 25% of all real estate developments in America will be higher (as it would be for all other businesses) with a higher ROI for the insurance industry the unit cost of insurance on every policy will fall as profits of the real estate industry will rise, along with the profits of every other industry in America. That is the meaning of E Pluribus Unum. Businesses will be given 7 income tax exemptions for the benefits they provide their employees, 6 would be for 15% each and the seventh would be for 10% and they would be as follows, 1) Healthcare Plan 2) Retirement Plan 3) Paid Sick Leave 4) Profit Sharing for all employees not just management 5) Flex Time Work Schedules allowing employees to set the hours they begin and end their shift and the number of days their work hours are spread over. 6) Post-secondary school educational enrichment for all employees’ not just top management. 7) For charitable contributions to nonprofit organization(s). This would have to be phased in gradually as we phase in the financing of government via the leasing of air development rights of government owned real estate and shrink the size of the federal state and local governments simultaneously as I describe in this letter. Providing these seven benefits to the companies own employees and the community the company serves would allow the company to not have to pay income taxes but they would still have to pay real estate taxes. Profit sharing in publicly traded businesses for not management personal could be done via fractional shares of stock not to be worth less than 1/5 of a full share of stock that management and investors earn. . It is a pet theory of mine if all publicly traded corporations distributed a small percentage of their profits as dividends, as little as 7.6%. The stock market as a whole would have a greater propensity to rise rather than fall if all other things remain equal. Because people buy stock as an investment in hopes that it will appreciate, and if stocks do not pay a dividend, when they do appreciate people are more likely to sell some of their stock to obtain a return on their investment. But if they were all along receiving dividends paid on

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

that same stock they would be more likely to hold the stock and use the dividends to purchase more shares of that particular stock or another stock creating more upward economic trajectory whereas when people sell stock to realize a return, their selling of their stock will tend to either slow the upward trajectory and possibly send that stock and the market falling.

Please read on.

Kevin Warsh Is the Shepard Family Distinguished Visiting Fellow in Economics 434 Galvez Mall Stanford University Stanford, CA 94305-6010

Pam Widrin 650-725-6728 [email protected] 650-723-1754 Dear Mr. Warsh: August 25, 2016

Responding to “Federal Reserve Needs New Thinking”

Yesterday I wrote to Alan S. Binder in response to his article of August 10, 2016 in the Wall Street Journal “Trump and Taxes: Don’t Look behind the Curtain.” The title of my response letter to him was, Behind the Curtain of the Wizard of Oz: Holistic Monetary, Tax and Fiscal Policy. Today August 25, 2016, I read your article in the Wall Street Journal and thought what I said to Alan S. Binder, yesterday is relevant to today’s article written by you so I thought I would send it to you as well. I have long believed if our nation is going to get its financial house in order we as a nation must conduct monetary, tax and fiscal policy in relation to one another and not as has been done since 1914 which was to conduct these three economic disciplines completely independent of one another. I believe sound economic policy can only be conducted if the three economic disciplines are seen as forming an equilateral triangle so that each corner of the triangle would be equally important in conducting sound economic policy. You cannot have sound monetary policy without sound tax and fiscal policy. And you cannot have sound fiscal policy without having sound monetary and Tax policy. Fiscal Policy

Tax Policy Monetary Policy

The reason employers cannot provide a defined benefit retirement plan is because of the Federal Reserve’s monetary policy. There should be a minimum interest rate below which interest rates on savings would never fall. There should be a fixed relationship on the interest paid on depositor’s savings and the interest charged by banks on loans so that both interest rates rise and fall in tandem with one another. Whatever banks charge on loans they should pay their depositors an interest rate that is 80% of the rate that banks charge customers for the use of bank funds because what are bank funds but in reality nothing more than substantially, the collective savings of depositors? I believe the growth of the money supply should substantially reflect the total return on investment in the American economy minus a currency stabilization factor. The total return on investment in the American economy is said to be equal to 10% of whatever is invested in a given calendar year. Because the Federal Reserve is always behind the curve of whatever is happening in the economy at any given moment, and because of their incomplete data you would want to have a currency stabilization factor that is 24% of the total return so that the money supply, would grow at 7.6% symbolic of 1776 the birth of our nation and Adam Smith’s The Wealth of Nations coincidentally published the very same year our country was founded, because you would not want for incomplete data to cause the money supply to rise too high accidentally. The interest rate paid on bank deposits should be 76% of 7.6% rate of growth of the money supply, which coincidentally is 5.776% with the last three digits following the decimal being the same as the last three digits in 1776, which rounded up would be 5.78% The minimum interest rate should never fall below 76% of 5.776% which would be 4.38976% or 4.39%. If the minimum interest rate on bank deposits never fell below 4.39% employers could provide their employees a minimum defined benefit plan that may actually provide their employees a higher return when the fund was stocked with financial instruments that provided at least a 4.39% return on investment but also provided higher yielding financial instruments. I also believe the Federal Reserve should pay banks for the money they ask banks to keep on hand at the Fed and that money should earn an interest rate of 76% of 4.38976% which would come to 3.3362176% or 3.34%. Banks should be able to substitute collateral for cash such as government bonds of the federal state and local that could be sold quickly to cover any loans that under preform by the banks. I believe the federal, state and local governments should be required to put aside in savings at least 24% of every government agency or department’s annual allocation in funding which the Federal Reserve would invest in the global equity markets buying all the stock exchanges in the world via exchange traded indexed funds. Having government agencies and departments have to save at least 24% of their annual allocation and have to

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

reinvest 76% of all dividends earned to acquire additional dividend paying equities would serve to keep inflation in check as well as the growth of debt. Paying depositors no less than 4.39% will also insure that depositor’s money does not become eroded by inflation which is part of the Federal Reserve’s responsibility in fighting inflation as it sits in the bank. Government spending should be kept to the same rate of growth as the minimum interest rate paid to depositors which would be 4.39% which would include use of 24% dividends earned in dividend reinvestment plans or drips all government agencies and departments would be required to invest their savings. Under this plan 24% of all foreign currency reserves would be invested in the home market of which the currency originated from with 76% of all dividends reinvested into the same foreign market while 24% of dividends earned would be reinvested into the American market which should lead to central banks the world over doing the same and reinvesting their American foreign currency reserves into the American market. Liquidity traps occur when the interest rate paid on bank deposits and the interest rate charged on bank loans move too far in the opposite directions discouraging bank depositors from saving their money in the bank reducing the amount of money available to banks to originate new loans which is what caused the banking crisis of the late 1980’s after Jimmy Carter in the I970’s decided to tax the interest earned on bank deposits along with capital gains in order to put towards retiring what then was only a $750 Billion debt. George F. Will critiqued that policy and predicted it would not raise sufficient revenue to address the national debt but would likely do more harm than good for the economy. Banks did away with passbook savings accounts in favor statement savings accounts and introduced minimum balance requirement accounts which perversely discouraged the lower middle class from saving and to this day 25% of American families lack a checking or savings account as a result. Those minimum balance accounts punished people for failing to save instead of rewarding people for saving by paying them higher interest on their savings. The way to address liquidity traps is not for the Federal Reserve to print money nor to drop helicopters of money into the banking system but for the interest rate on bank deposits and the interest rate on bank loans to move closer together. Liquidity traps can be seen as market signals to the banking system that interest rates have moved too far apart on bank deposits and bank loans. In the olden days before collateralized debt obligation bonds made up of sliced and diced bank loans, banks had a rule of thumb. To remain profitable they needed to have a depositor to borrower ratio as close to 100% as they could get meaning every depositor was also a borrower and to achieve the objective it was necessary for the interest rates paid on bank deposits to not be too far from the interest rate charged on bank loans because bank customers wanted to deposit their money in banks that paid the highest interest on deposits and wanted to borrow from banks that charged the lowest on loans. Keeping the interest rates relatively close to one another facilitated them capturing both depositors and borrowers in the same bank. Doing away with passbook savings accounts discouraged people from saving along with the punishing fees banks charged against accounts that failed to maintain a minimum balance and many families were forced to leave the banking system because they could not afford to have banks continuously charge them punishing bank fees for failing to maintain a minimum balance and because the powerful psychological effect of seeing your interest on your savings grow over months and years was lost to bank to depositors when passbook savings accounts were phased out. We need to stop taxing capital gains and the interest on bank deposits because both of those things were taxed at the time they were earned. The state and local governments should honor the tax exempt status of other state and local government’s debt obligation bonds on interest earned as a means of making state and local government bonds as desirable as United States Treasuries in their triple tax exempt status. If they did, banks would purchase more state and local government debt as they purchase United States Treasuries as collateral against outstanding loans on their books so they could loan out more money. Please read on.

Professor Alan S. Binder Woodrow Wilson School Of Public and International Affairs Princeton University Robertson Hall Princeton, NJ 08544-1013 Office: 105 Fisher Hall Phone: 609-258-3358 Email: [email protected] Dear Professor Binder: August 24, 2016

Behind the Curtain of the Wizard of Oz: Holistic Monetary, Tax and Fiscal Policy

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Is it not time that we bring Monetary, Tax and Fiscal Policy in line with one another and shouldn’t tax cuts coincide with spending cuts and economic restructuring of the national, state and local economies whenever Presidents, Governors or Mayors propose tax cuts? Responding to your critique of Donald Trump’s Tax Plan August 10, 2016 in The Wall Street Journal, “Trump and Taxes: Don’t Look behind the Curtin” Please do not be alarmed with the length of this proposal for reforming the American Economy. Can we truly have sound monetary policy when tax and fiscal policy are unsound? I am 55 years old and I have noticed a peculiar quirk of economics you may be aware of as well. Proposed tax increases often do not bring in as much revenue as imagined while proposed tax cuts often bring in more revenue than anticipated and when governments bring in more revenue than anticipated they rarely put the increased revenue towards paying down a larger share of the debt and usually instead use the increased revenue to finance new spending. Financial advisors of families recommend when setting up a family budget the family consider living on just 50% of their disposable income and put aside a fixed percentage of their take home pay as savings usually between 20% to 25% of disposable income and they also recommend families establish emergency reserves to covers to cover unanticipated expenses that may arise in their families budget which also tend to fall between 20% to 25% income or three to six months of pay held in savings in emergency funds in addition to money put aside for long term savings such as an individual retirement plan. Shouldn’t governments also be required to establish emergency reserves and savings for the future and not spend every dollar taken in revenue? Imagine if governments put 24% of every department or agency of government annual allocation into dividend reinvestment plans and constantly reinvested 76% of dividends earned in the global equity markets. From a monetary perspective the Federal Reserve is required to fight the twin evils of monetary policy which are inflation and deflation to maintain relatively stable currency valuations and as well conduct monetary policy in such a manner that high employment is promoted. Is it not true that rising taxes are the single greatest cause of inflation when you factor in the reality that all tax increases imposed on business are passed along to the customers of the business in the form of higher prices for goods and services and as well passed along to employees of the business in the form of slower rising wages and possibly cuts to benefits coupled with layoffs? Is it not also true in addition to rising taxes contribution towards rising inflation that rising debt also contributes to inflation at least when the debt to income or debt to GDP is relatively low below 50% but when debt to income closes on 100% of GDP that rising debt will tend to suppress economic growth and inflation and cause the Federal Reserve and other central banks to become worried about deflation and falling prices as Japan as struggled with now for two decades? If governments put aside at least 24% of revenue into dividend reinvestment plans and had to live on just 76% of their annual allocation that this would contribute to a dampening of inflationary pressures and also serve us well in dampening the growth of debt? If households, and business similarly put aside 24% of their income into dividend reinvestment plans we would have relatively high economic growth with low inflation because the taking on of excessive debt by an economy in the short term is inflationary when debt to income is less than 50% but in the long term can become deflationary when debt to income exceeds 75% or more of income. Currently the worlds’ total debt of all governments, all businesses and all households exceeds $224 Trillion while the total income of the world is little more than $75 trillion which means debt exceeds income by 300% and it is this factor that accounts for why the global economy has had trouble rising above 2% annually. With a world population of 7.4 Billion People how come all the nations of the world are following more or less the same flawed economic policies and have more debt than income? How could so many people think so much alike? In the western world we like to espouse the virtues of Capitalism as an economic system but despite our admiration of Capitalism not a single government in the western world is financed via Capitalism. Is that not odd? In economics we are taught that savings equal investment but monetary policy, tax and fiscal policy make no allocation for governments, businesses and households’ needs to save for the future. We tax interest on savings and the dividends earned on capital gains when both of those things were taxed at the time the money was earned. The total return on all investment in the American economy is said to be 10% so you would think you would set up an economic system that insured the savers would be able to put more aside in savings both as a percentage of income and in number of monetary units each succeeding year as interest on savings and dividends earned on investments compound so that the 10% total return on investment would continuously be a larger dollar figure but our tax polices imped that objective with a tax system that is called progressive but actually is regressive in function taxing people at higher rates the more they earn. The Mercatus Institute, at George Mason University, several years back did a study of the income tax system since its creation in 1913 and revealed that no matter how high the maximum tax rate was set at, the Federal Government never managed to bring in in revenue more than 20% of GDP in taxes. If no matter how high you set your maximum tax rate you only manage to bring in 20% of GDP in taxes that maybe the maximum tax rate should be no higher than 20% and the number of tax brackets should be fewer maybe just three. I would suggest 7.6% 17% and 20%.17% and 7.6% symbolic of 1776 the founding year of our nation, and 20% symbolic of 20/20 vision, just a thought. If we wish to raise the income of the people at the bottom of the economic latter and we wish to reduce income inequality why not provide employers 7 tax exemptions for the benefits they provide their employees and the larger community so that employers or businesses would pay no income taxes just property taxes, and we eliminate all sales taxes especially those on real estate, energy and telecommunications. We provide businesses 6 tax exemptions of 15% each for the following benefits provided by employees. 1) Healthcare Plan 2) Retirement Plan 3) Paid Sick Leave 4) Profit Sharing for all employees not just management 5) Flex Time Work Schedules allowing employees to set the hours they begin and end their shift and the number of days their work hours are spread over. 6) Post-secondary school educational enrichment for all employees not just top management.7) The seventh tax exemption would be for 10% for charitable contributions to nonprofit organization(s). This would have to be phased in gradually as we phase in the financing of government via the leasing of air development rights of government owned real estate and shrink the size of the federal state and local governments simultaneously as I describe in this letter. The idea behind targeted tax exemptions to reduce employers income taxes to zero is to leave the employer with more money in their pocket so as to allow employers to be better able to pay their workers higher wages. Wages of workers rise faster where income taxes on employers is lower. Fewer

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

numbers of taxes and fewer tax brackets should bring in more revenue to government as a result rapidly rising wages especially because I tap a new source of revenue to finance government’s operational costs which is to lease real estate air development rights on government real estate

Flex time work schedules would allow workers to choose their own work schedules the start and end time of their work days and the number of days their work hours are broken up over. I aim to lower taxes enough that workers could afford to work a 30 hour work week broken up over as few as three days or as many as six days. And I hope to boost hourly wages by 50% so as to make it possible to reduce hours worked by 25% allowing workers to come home earning 12.5% more in a typical work week while working fewer hours.

Flex time work schedules would spread out the start and end times of many workers and in so doing would reduce the wear and tear on roads

and highway infrastructure reducing pollution that contributes to global warming because rush hours both at the beginning of the day and at the end of the day would have fewer cars on the road spewing fumes into the air.

Non-management employees’ profit sharing could be in the form of fractional shares of stock worth not less than a fifth of a full share of stock,

that management and investors are compensated with, via stock grants as opposed to stock options to buy a stock below market value. I believe employees who are compensated in stock should be compensated with stock grants because their labor for the company purchases the stock just as their labor is compensated with wages for the hours they have worked. This is how you end income inequality.

I would phase out all sales taxes, including those on real estate, energy, and telecommunications. I would finance government largely through

air development rights lease revenue leasing government owned real estate to commercial real estate developers to erect on government land commercial office buildings that would reserve space in their structure for a government agency or department whose square footage in space they occupy in the commercial office building would not count towards the zoning codes’ height limitations and the real estate developer could be allowed to exceed the zoning code height limitation by twice the square footage a government agency of department occupies in a commercial building erected on government land, the government rents for free. Such agencies or departments would lease their land to commercial real estate developers for three times their annual operating budget and use one third of their air development rights lease revenue to finance their annual operating budget and invest the other two thirds of their air development rights lease revenue in the global equity markets to acquire dividend paying equities and to reinvest 76% of those dividends to acquire additional dividend paying corporate equities and the remaining 24% of dividends would be added to their other operating revenues of government agencies.

Land that government buildings are erected on generate no real estate taxes for local governments if government leases that land to commercial

real estate developers as I described above and takes space rent free in those buildings whose operational costs would be financed with the air development rights lease revenue all land now untaxed could be added to the tax rolls and expand the tax base without having to raise taxes on everyone else. If public schools are financed with air development rights lease revenue, the real estate taxes that now fund public education could instead be used to finance public infrastructure such as roads and highways, bridges and tunnels, and mass transportations’ tramways ferries, buses and trains so with those funds being added to existing funds for those expenses the money collected by highway authorities in tolls and the money collected by transit agencies in fares could instead be invested in the global equity markets to purchase dividend paying equities and 76% of those dividends earned could be reinvested to acquire additional dividend paying equities with 24% of dividends being added to other operational revenues so that fares, tolls, and taxes could be kept flat while compounding dividends would provide transit agencies and highway authorities with sufficient revenue to meet their operating expenses. Please read on.

Peggy Noonan The Wall Street Journal 1211 Avenue of the Americas New York, NY 10036

Corrections: [email protected]

Letters: [email protected]

Communications Ashley Huston Head of Corporate Communication [email protected]

CUSTOMER SERVICE Thom San Filippo Vice President, Customer Service [email protected] Dear Ms. Noonan: August 23, 2016

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

World in Crisis, and There is a Genius in Sight, With a Solution, He is Me, Thomas J. Kraus

I have spent the last 22 years attempting to communicate to people in both parties, a number of think tanks, a number of universities, people who work at the Federal Reserve, The international Monetary Fund, The United States Chamber of Commerce and on and on, a feasible means of retiring the national debt of America along with the debt of the state and local governments, and the debt of the world, without raising taxes nor decimating vital services with indiscriminate budget cuts, nor destroying the American and global economies in the process. Enclosed here is part of my economic plan for retiring the national debt within 20 years’ time without raising taxes but by completely restructuring the American economy so as to finance the cost of government through Capitalistic means instead of the current Socialist System that relies almost exclusively on taxation. I believe we must change the relationship between governments’ and their citizens, and the market from a parasitic relationship to symbiotic relationship by financing governments’ costs more so through investment in the global equity markets and less so through taxation so as to have dividends earned by governments investments in the global equity markets substantially replace taxes as the prime means of financing the costs of government so that low taxes and limited regulation will be as much in the economic interests of government as it is in the interests of workers, business and investors. I believe every agency of government should put at least 24% of their annual allocation in funding into savings in the form of dividend reinvestment plans otherwise known as drips and that 76% of dividends earned would be constantly reinvested to acquire additional dividend paying equities. I believe people who work for corporations should pay income taxes while corporations should be exempted from having to pay income taxes via the use of targeted tax exemptions for the benefits they provide their own employees and charitable donations to nonprofit organizations. They would be able to exempt 15% of their income from income taxes for each of the following benefits they provide their employees. 1) Health Insurance, 2) Retirement Plan, 3) Paid Sick Leave 4) Flex Time Work Schedules, 5) On the Job Post-Secondary Education for all workers, not just management. 6) Profit Sharing for all Workers not just management. 7) And the last tax exemption would be for 10% for charitable donations to nonprofit organizations. Flex time work schedules would allow workers to choose their own work schedules the start and end time of their work days and the number of days their work hours are broken up over. I aim to lower taxes enough that workers could afford to work a 30 hour work week broken up over as few as three days or as many as six days. And I hope to boost hourly wages by 50% so as to make it possible to reduce hours worked by 25% allowing workers to come home earning 12.5% more in a typical work week while working fewer hours.

Non-management employees’ profit sharing could be in the form of fractional shares of stock worth not less than a fifth of a full share of stock, that management and investors are compensated with, via stock grants as opposed to stock options to buy a stock below market value. I believe employees who are compensated in stock should be compensated with stock grants because their labor for the company purchases the stock just as their labor is compensated with wages for the hours they have worked. This is how you end income inequality.

I would phase out all sales taxes, including those on real estate, energy, and telecommunications. I would finance government largely through

air development rights lease revenue leasing government owned real estate to commercial real estate developers to erect on government land commercial office buildings that would reserve space in their structure for a government agency or department whose square footage in space they occupy in the commercial office building would not count towards the zoning codes’ height limitations and the real estate developer could be allowed to exceed the zoning code height limitation by twice the square footage a government agency of department occupies in a commercial building erected on government land, the government rents for free. Such agencies or departments would lease their land to commercial real estate developers for three times their annual operating budget and use one third of their air development rights lease revenue to finance their annual operating budget and invest the other two thirds of their air development rights lease revenue in the global equity markets to acquire dividend paying equities and to reinvest 76% of those dividends to acquire additional dividend paying corporate equities and the remaining 24% of dividends would be added to their other operating revenues of government agencies.

Land that government buildings are erected on generate no real estate taxes for local governments if government leases that land to commercial

real estate developers as I described above and takes space rent free in those buildings whose operational costs would be financed with the air development rights lease revenue all land now untaxed could be added to the tax rolls and expand the tax base without having to raise taxes on everyone else. If public schools are financed with air development rights lease revenue, the real estate taxes that now fund public education could instead be used to finance public infrastructure such as roads and highways, bridges and tunnels, and mass transportations’ tramways ferries, buses and trains so with those funds being added to existing funds for those expenses the money collected by highway authorities in tolls and the money collected by transit agencies in fares could instead be invested in the global equity markets to purchase dividend paying equities and 76% of those dividends earned could be reinvested to acquire additional dividend paying equities with 24% of dividends being added to other operational revenues so that fares, tolls, and taxes could be kept flat while compounding dividends would provide transit agencies and highway authorities with sufficient revenue to meet their operating expenses.

Please read on.

Trump Pence Campaign

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Trump Tower 725 5th Ave New York, NY 10022 For Press Information Contact: Amanda Miller [email protected] Phone: (646) 736-1779 Dear Presidential Nominee Trump; August 18, 2016

Making America Great Again With Winning Economics Creating a Single Government Healthcare Plan Called

E Pluribus Unum HealthCare

You and Your Campaign must attack the Obama Care, Medicare, and Medicaid and put forth a new single unified government healthcare plan that will combine the resources of Medicare and Medicaid into a single government healthcare plan that will be financed the same way as commercial health insurance via investment in the global equity markets. Once Medicare and Medicaid are combined into a single healthcare plan it would be called E Pluribus Unum Healthcare. There are 50 separate state social service delivery systems in the nation, 3007 local government social service delivery systems in the nation and the federal government’s own social service delivery system for a total of 3058 separate social service delivery systems at the governmental level. The state and local governments would have to repeal all forms of sales taxes, including those on real estate, energy and telecommunications. Because the existence of these taxes make healthcare more expensive than it ought to be. Eliminating these taxes while moving to a three tier income tax system as you propose and merging and consolidating the federal state and local governments separate social service delivery systems into a single social service distribution system financed jointly by the federal, state, and local governments as they already finance Medicaid would provide significant savings in administrative costs that could be used to improve the quality of healthcare provided by government health insurance while lowering the overall cost to the tax payers by having government insurance avail itself of the power of compounding dividends that commercial insurance have at their disposal as a result of being invested in the global equity markets. Staffing will be reduced by attrition as government employees retire fewer new government employees will be needed to replace retiring government workers. A single universal application for government social services would be used to apply for local, state and federal social services. All existing government workers would be permitted to safely reach retirement without fear of being laid off. Because it would do our economy no good to put millions of government workers on unemployment where the private sector would not be able to absorb them all fast enough and their existence among the already high number of unemployed would serve to drive down wages and the taxes government needs to collect to provide services and pay down debt. The same workers who apply citizens for local social services will also apply citizens for state and federal social services within the same city and state. You are the best candidate to sell my economic plan because of your having made your fortune in the real estate industry and my plan calls for utilizing real estate air development rights to finance a significant portion of governments’ operating costs so for example, at the local level of government air development rights of public schools systems real estate will fund public education instead of real estate taxes, air development rights of public libraries public museums, and public performance arts venues would also fund these institutions so the money now spent on these institutions could be spent on public parks which are underfunded. These institutions would lease their air development rights for three times their annual operating budget and use one third of the air development rights to cover their annual operating budget and invest the other two thirds of their air development rights revenue into the global equity markets and reinvest 76% of all dividends earned continuously and utilize 24% of dividends earned to supplement other operating revenues so over time a greater portion of government’s operating budget would be financed with dividends earned in the equity markets instead of taxes. Once public education is financed with air development rights, real estate taxes could be used to finance public infrastructure such as roads, highways, bridges and tunnels and mass transportation’s tramways, ferries, bus, trains, and light rail. When real estate taxes are combined with the existing revenue for these infrastructure priorities, the money collected in tolls by highway authorities and fares collected by mass transportation systems could then be invested in the global equity markets with again 76% of dividends being constantly reinvested in the global equity markets and 24% of dividends earned being added to the other operating revenues of highway authorities and mass transportation systems so that taxes, fares and tolls could remain stable long term as compounding dividends would provide sufficient revenue for these agencies to meet their operating costs.

Currently the land the under above institutions, especially public schools, are erected upon generate no local income taxes for the local governments. In the case of public schools, the land occupied by public schools consumes real estate taxes. Under such a proposal, more of the land in a city will generate real estate taxes for local governments plus air development rights lease revenue so it would be possible to transition to a single low real estate flat tax rate which will make it easier to erect more affordable housing and to attract new employers to create jobs in the local governments of the state of New York which has been losing population and jobs for over 60 years now. Every decade going back 60 years we have lost seats in congress and political power in Washington falling from being the most populous state in the union to now the fourth most populous state in the union, behind Florida, which has gained population from New Yorkers who have located there after retirement . The Cato Institute has determined that the state once known as the Empire State is the lest free highest taxed and highest regulated state in the Union which is why we are only the fourth most populous state in the union when we were the most populous state 60 years ago.

Mr. Trump, back in the 1990’s I personally dropped off at your office my proposal for keeping the Yankees in the Bronx, I suggested if we

could not keep them in the same neighborhood of the Bronx they spent most of their history by moving them across the street from their former stadium then they should consider moving them to the North East Bronx outside of Ferry Point Park and that Ferry Point Park be converted to a golf course and possibly we develop the water front as a marina where people could rent boats and make the area a nice tourist attraction.

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

The Yankees did move across the street from their old stadium and you did develop Ferry Point Park into a very respectable golf course. In

2012 I wrote you to encourage you to run for President in this election and to win it if you ran. You are now the Republican Nominee. Some people believe you do not want to be President but I hope they are wrong and you wish to be elected president because I believe the time has come for you and me to meet and for you to put me on your campaign staff as a paid aid to you. I want to go to Washington with you so I could have a front row seat on the fifty yard line of history as I watch you become America’s greatest President of the United States bar none, including the great Ronald Reagan. Without ever meeting, my ideas shared with you, and your influence and know how have already served New Yorkers well. These ideas below, which I worked on for 22 years of my life I offer to you freely as I have shared these ideas with others of the years some of which are included in this letter to you for you to read, We have a good track record together without ever meeting. Imagine what you and I will accomplish working alongside of each other. I give you three weeks to put me on your staff as a paid aid to you traveling with you everywhere you go so that I may learn from you and better serve you. But after September 8, 2016 I will share these ideas with Hillary Clinton and Gary Johnson, the Libertarian Candidate, maybe one of them will give me a paid position on their staff and a front row seat on the fifty yard line of history and go down in history as the greatest President of the United States of America. My own economic plan wants a three tier tax plan as yours does, but my three tax brackets are 7.6% 17% and 20%, 17% and 7.6% symbolic of 1776 the year our country was founded, and 20% symbolic of 20/20 vision. But to get to those three tax brackets all of what follows bellow must be implemented over the next 20 years. Please read on.

Chairman Carl Weisbrod New York City Planning Commission 120 Broadway 31st Floor New York, NY 10271 Tel. 212-720-3300 Fax 212-720-3488

[email protected]

Dear Chairman Weisbrod; August 17, 2016

How May New York State’s Local Governments Modernize Infrastructure While at the Same Time Create a Frame Work for Reducing Overall Debt?

Also, How May New York State and Its Local Governments Save Money in the Delivery of Social Services Over the Next

20 Years Helping to Reduce State and Local Government Worker’s Underfunded Healthcare and Retirement

Benefits Liabilities?

I am writing you to not oppose the state legislation recently passed in the legislature that grants the MTA Zoning Exemptions on Real Estate that they control because if all your local officials in New York State follow the enclosed economic plan for restoring our state to being the Empire State we will succeed in ending the 60 year decline in political representation in congress and we will be able to cut taxes yet bring in more revenue so we could properly fund the underfunded government employee pension and healthcare plans.

As you well know the national debt is $19.4 Trillion dollars, not including agency debt of the federal government which comes to another $8.24 Trillion and State governments collectively hold about $1.17 Trillion dollars while local governments hold $1.88 Trillion State and local governments have an estimated underfunded pension liability between $1 Trillion to $4 Trillion, according to the Urban Institute. Total debt of all levels of government is conservatively estimated to be between $31.69 and $34.69 Trillion All this debt can more easily be reduced if the federal, state and local governments were to get on the same page to reduce their collective debt via collective action merging and consolidating redundant separate federal, state and local government functions that could be joined financed by each level of government but administered at the local levels of government which

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

are closer to the American people. This based on a Catholic principle of subsidiarity which means that social and economic problems should be resolved as close to where they originate by the smallest most efficient entity or institution. Local governments could save money financing public education, public libraries, public museums and public performance arts venues via the leasing the air development rights of the real estate these institutions are located on to commercial real estate developers who wish to be allowed to exceed the local zoning code height limitations which local governments could agree to allow them to do by having these historically standalone institutions instead erected inside commercial office buildings built on government land allowing real estate developers to exceed the maximum height limitation by 3 times the square footage the government entity occupies in a commercial real estate development. These government entities could make sure they lease the land they own for three times their annual operating costs and use one third of their air rights development revenue to cover their annual operating budgets and use the remaining two thirds of air development rights lease revenue to invest in dividend paying equities and continuously reinvest 76% of all dividends earned to acquire additional dividend paying equities. The remaining 24% of dividends could then be added to other operational revenues so that over time dividends earned on investment in the global equities markets could come to replace taxes as the primary source of government revenue.

With these institutions financed with air development rights lease revenue the real estate taxes now collected by local governments to finance public education could then be redirected to financing public infrastructure for roads, highways, bridges and tunnels, and mass transportation’s tramways, ferries, bus and trains and light rail. With real estate taxes added to the currently inadequate funding for public infrastructure the money collected in tolls from highway authorities and the fares collected from transportation agencies could then be invested in the global equity markets in dividend paying equities with again 76% of dividends constantly reinvested to acquire additional dividend paying equities and 24% of dividends earned being used to supplement operation revenues of highway authorities or transportation agencies.

Currently the land the under above institutions, especially public schools, are erected upon generate no local income taxes for the local

governments. In the case of public schools, the land occupied by public schools consumes real estate taxes. Under such a proposal, more of the land in a city will generate real estate taxes for local governments plus air development rights lease revenue so it would be possible to transition to a single low real estate flat tax rate which will make it easier to erect more affordable housing and to attract new employers to create jobs in the local governments of the state of New York which has been losing population and jobs for over 60 years now. Every decade going back 60 years we have lost seats in congress and political power in Washington falling from being the most populous state in the union to now the fourth most populous state in the union, behind Florida, which has gained population from New Yorkers who have located there after retirement . The Cato Institute has determined that the state once known as the Empire State is the lest free highest taxed and highest regulated state in the Union which is why we are only the fourth most populous state in the union when we were the most populous state 60 years ago.

There are 50 separate state social service delivery systems in the nation, 3007 local government social service delivery systems in the nation

and the federal government’s own social service delivery system for a total of 3058 separate social service delivery systems at the governmental level. The federal, state and local governments could save money consolidating their separate social service delivery systems into a single social service distribution system jointly financed by all three levels of government as they all currently jointly finance Medicaid and all the resources that currently separately finance Medicare and Medicaid can be combined into one insurance program called E Pluribus Unum HealthCare to provide all current American citizens covered separately under Medicare or Medicaid a single Unified Government Healthcare System financed the same way as commercial insurance is financed via investment in the global equity markets. The problem with providing affordable healthcare to the American people is that if a single payer healthcare system makes sense at all it only make sense at the government level. If we eliminate all forms of sales taxes, energy taxes, and telecommunication taxes and transition to a low single real estate flat tax then it will be possible to provide every American Affordable Healthcare If we merge and consolidate federal, state and local social service offices we could reduce the combined size of the social service distribution system that process cash benefits over a decade and a half through attrition as fewer new government workers would be hired to replace retiring government workers and the same workers who process local social services could also process state and federal social services utilizing a universal application for financial assistance for Americans in need within the same city or state. The federal state and local governments could also save money locating their separate courtrooms within the same, but much taller government office building courthouses. The building could be divided into three separate legal jurisdictions the three levels of government could save money on the infrastructure costs associated with erecting courthouses. Instead of having to acquire land for three separate office buildings they could collectively have to acquire one office building whose costs would be split between the three levels of government. While they would each would be responsible for the costs of their own judges, prosecutors, law clerks, and legal secretaries they could share the costs of facilities management, court officers and stenographers. In 1898 five independent counties in lower New York State merged and consolidated to form a greater New York City combining the outer counties of Queens, Brooklyn, Staten Island and The Bronx with New York County, or Manhattan. They merged to obtain the economy of scale of having fewer redundant government positions eliminating 4 mayors, 4 Police commissioners, 4 fire commissioners, 4 Sanitation commissioners, 4 city councils, four school chancellors etc., etc., etc. The same idea is needed not only throughout the state of New York combining two or more smaller local governments into fewer but larger local governments, it may be necessary to combine two or more smaller states into large corporate entities shrinking the number of states while increasing the size of those states in population and geography. The federal, state and local governments could save money in environmental policy by merging and consolidating the separate federal, state and local environmental laws into a single environmental law that applies the same way from city to city, state to state, coast to coast. Local governments could investigate environmental complaints within their jurisdiction and turn over their investigatory information to the state prosecutor and the state prosecutor could compare data from other local governments within its jurisdiction to see if the same corporate polluters are causing environmental complaints in other local governments and if so, combine the complaints into one law suit saving the state and the accused money ligating the law suit so whoever loses the case would have more money left over to cover the cost of cleaning up the environmental damage. Cc Thomas M. Roach President of NYSCOM

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Peter Baynes, Executive Director NYSCOM Stephanie A, Miner, Mayor of Syracuse Robert T. Kennedy, Mayor of Freeport Please read on.

Executive Director Scott Pattison National Governors Association Hall of the States 444 N. Capitol St., Ste. 267 Washington, D.C. 20001-1512

Phone: (202) 624-5300 Fax: (202) 624-5313 Please read on.

Tom Cochran The CEO and Executive Director The United States Conference of Mayors 1620 Eye Street, Northwest-Washington, DC 20006 Phone: (202) 293-7330 Fax: (202) 293-2352 [email protected]

Please read on.

Chairman Thomas F. Prendergast Chief Executive Officer Metropolitan Transit Authority 347 Madison Anenue New York, NY 10017 Dear CEO Prendergast; July15, 2016

How May The MTA In Particular and Government at All Levels Navigate Through These Currently Economic Hard Times So That We Pay Down The Debt Of The Federal, States

and Local Governments and Avoid New York State’s MTA from Returning to The Economic Conditions Of The 1970’s and 1980’s that Caused the Agency to Put off Proper

Maintainace and UP Keep of the MTA? Three years go this November 20, 2016, I wrote to then MTA New York City Transit President Carmen Blanco with an idea to bring more revenue into your agency via the exploitation of real estate air development rights. That letter is immediately below this letter to you. It is my belief that real estate taxes should more appropriately be used to finance infrastructure costs for roads and highways and as well bridges and tunnels and mass transportation infrastructure’s trains, buses, ferries, and tramways. I further believe it makes more sense to finance public education via exploiting the air deelopment rights of real estate owned by public school systems to encourage commercial real estate developers to erect on public school land commercial office buildings that will reserve some space in their structure for public schools, rent free, that would be financed via the air development

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rights lease revenue so that real estate taxes could then be added to the revenue sources for infrastructure modernazation of roads, highways, bridges and tunnels, and mass transportation systems’ ferries,tramways, buses and trains. My objective is for our nation to be able to wipe out the debt of the federal, state and local governments over the next twenty years without having to resort to draconian tax increases nor draconian budget cuts decimating vital services the American people have to come to expect and desire from their government, by having the federal, states and local governments join together in the restructuring of the American economy in how governments finance and deliver services to the American people. My proposal calls for the gradual reduction of taxes by 50% over twenty years at every level of government by repacing 50% of tax revenue with revenue derived from dividends earned on investments made in the global equity markets, including real estate, by every level of government. In sharing these ideas with you, I hope you will help me communicate these ideas to other Transit Chiefs in Transit Agencies across the nation so that we can get America back on the right track lterally and figuratively over the next twenty years so we may retire American debt without creating economic hardship in the process. Enclosed is an article from the June 8, 2016 edition of The Wall Street Journal concerning MTA Zoning Exemptions which which the state legislature passed this year based on ideas I helped inspire in the consciousness of New York State political leaders as the letter below will demonstrate. I will reach out to the political leaders listed in the enclosed article to encourage them to allow your agency to obtain the zoning code exemptions the state legislature granted your agency without repeal of the zoning code exemptions so that your agency could afford to hold off on high and frequent increases in fares on your transit system and as well hold off on high and frequent increases in tolls on the bridges you control. The long term goal is to transition to public education being financed with air development rights of the real estate controlled by public school systems on which commercial office buldings would be erected as the public school systems lease that land to real estate developers to erect commercial office buildings upon school land that will provide local communities new state of the art public schools inside commercial office buildings at little or no costs to the tax payers to erect or finance the operation of once built because air rights lease revenue will cover the operating costs of the public schools. The same idea can be applied to Public Libraries, Public Museums, and Public Performance art venues all of which are built as statnd alone structures that occupy valueable untaxed real estate if placed on the tax rolls will bring in more revenue without having to raise taxes on existing tax payers so each of these government dependancies can become self sustaining independent of tax revenues. I suggest that these institutions lease these properties for a modest three times their annual operating budget and while utilizing one third of their air rights development lease revenue to cover operating expenses and invest the remaining two thirds of their air rights development lease revenue into the global equity markets to acquire dividend paying equties (only to provide a revenue stream independent of taxes without having to sell the equities.) and reinvest 76% of dividends earned to acquire additional dividend paying equities. The remaining 24% of dividends earned by these cultural and educational instituions could then be added to their then other existing operational revenues. As public schools, public libraries, public museums, and public performance art venues become self sustainingly financed with air development rights lease revenues and the dividends earned on investment in the global equity markets in dividend paying equities, the moneies that now finance these culturial and educational instituions could then be directed towards public infrastructure. These moneies include real estate taxes, and revenue from income taxes as well. With these additional funds added to the current funding sources for infrastructure for transportation purposes in roads, tunnels, bridges, and highways to be supported by investments in trains, buses, ferries, and tramways the funding of separate dedicated tracks for high speed commuter rail, and freight rail tracks can be undertaken which in many parts of the country currently travel on some of the same tracks slowing down the potential of current commuter trains because freight rail that uses the same track as commuter rail must traavel much slower considerably to avoid derailing because heavy freight cars cannot turn on the same narrow radius turn that lighter weight commuter rail cars only loaded with people and not weighed down with heavy equipment, produce, or sanitary waste, are able to safely turn on at higher speeds. Adding real estate taxes and taxes from income taxes that now fund culturial and educational instituions to the current funding sources for transportation infrastructure would allow Highway and Bridge and Tunnel Authorties and Mass Transit Agencies to invest their toll and fare revenues in the global equitties markets and reinvest the 76% of the dividends they earn on those investments and utilize 24% of the remaining dividends earned to supplement their other operating revenues so that taxes, fares, and tolls can remain stable as compounding dividends would allow the operational revenues of Highway, Bridge and Tunnel Authorties and Transit Agencies to keep pass with operational costs. When all the buildings government agencies do business from operating costs are significantly covered with air rights development lease revenue and whose land is added to the real estate tax rolls, the nation could then transition to a real estate flat tax system lowering both commercial and residential real estate taxes to one single low tax rate. Thank You Sincerely Thomas J. Kraus 599 Ralph Avenue Brooklyn, NY 112333 917-795-6610 [email protected] P.S. There is much more to my economic plan than you will see here. I could have probably given you an outline of this entire proposal in only seven pages without including only just some of the people in business, academia and politics I have already shared these ideas with before you but than you would not now have any idea of the kinds of people and trade associations I have been reaching out to in support of these ideas including all the past Presidents of the United States of America that are still alive and as well Donald Trump, Bernie Sanders, Hillary Clinton and Dr. Benjamin Carson. And a number of Think Tanks across the country on the left and on the right. Sincerely T. J. K.

Please read on.

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

. Carmen Blanco President MTA NYC Transit 2 Broadway New York, NY 10004 Real Estate Department Metropolitan Transportation Authority 347 Madison Avenue New York, NY 10017 Telephone: 1- 212- 878-7049 [email protected] Dear President Blanco: November 20, 2013

Getting America on the Right Track

Eliminating the Structural Deficits of the Local and State Governments of New York; a Brief Outline of a Long Term Action Plan

For Increasing Revenue to Pay for Government Services and Reducing Debt Without Having to Raise Taxes So That Government Employees Will Not

Have to Continuously Suffer Back To Back Years of 0% Pay Increases And Risk Having to Suffer Pension and Healthcare Benefit Cuts

The governments of the United States, such as our own cities and state, are burdened with structural deficits that cannot be eliminated via tax increases and they must cut spending, and cut taxes to attract more investment in job creation, while tapping new sources of nontax revenue to finance government’s operational costs. The national debt will not be eliminated until the Federal, State, and Local governments work together for comprehensive structural reform of the American economy and the delivery of government services. One reform the Local and State Governments of New York could implement to cut spending, cut taxes, pay down debt and generate additional revenue would be to up zone the real estate on which Public Schools, Public Libraries, Public Museums and Public Performance Arts Institutions now rest to allow for much taller buildings to be erected of 1000 feet in height or more. Than have the air rights above these government financed institutions leased to real estate developers to erect new Public Schools, Public Libraries, Public Museums and Public Performance Arts Institutions, not as stand- alone facilities but as part of much larger sky scrapper office buildings whose construction cost will not be borne by the tax payers and whose air rights revenue paid to the government institutions would finance their operational costs. In the case of Public Libraries, Public Museums, and Public Performance Arts Institutions now funded with government dollars once they are funded with air rights revenue in perpetuity the money now spent on them could be redirected to serving other government objectives such as beefing up government employee underfunded pension costs and underfunded healthcare benefit liabilities, pay down government debt, increase funding for police an fire protection, increase funding for education, and Medicaid and Medicare and a host of other government services without having to raise taxes. Having public education funded with air rights revenue would allow us to take the real estate taxes that now fund public education and instead use those revenues to fund infrastructure modernization of the MTA roads and highways, and bridges and tunnels, again, without having to raise taxes. If the real estate taxes combined with the taxes that now fund the MTA were to fully cover the operating costs and capital costs of the MTA independent of the fares and tolls collected from buses, subways, passenger rail and bridges and tunnels then the fares and tolls not being needed to meet the agency’s day to day operating costs could be invested in dividend paying corporate equities and 50% of the dividends earned on those investments would be used to continuously acquire more dividend paying corporate equities and the second 50% of dividends collected could be combined with the taxes of the MTA to supplement both the operational budget and as well the capital budget allowing the MTA to underwrite capital costs at lower rates of interest leaving more money to pay workers higher wages and better benefits. Most Importantly, such restructuring may allow us to roll back the fares and tolls of the MTA by 50% long term making our state more attractive to employers to come and create good paying jobs needed to raise the tax base to finance government workers’ salaries and benefits. If this idea is copied nationwide the savings in spending and the increase revenue from air rights and the investing of fares and tolls in the equity markets would allow us to pay down the national debt without draconian budget cuts nor draconian tax increases each of which would destroy the economy by creating even more unemployment which would make it more difficult to pay down government debt at every level of government. Such a plan will make it possible to finance high speed rail nationwide even while we pay down the national debt and the state and local government debt. There is much more to this plan but this is of particular interest to your own agency economic interests. Please share with the Chairman of the MTA. I would have sent it to him but your agency’s web site does not clearly indicate where I should write to communicate with him.

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Please read on.

Senior Fellow

Journal 52 Vanderbilt Avenue, New York, N.Y. 10017 Phone: (212) 599-7000 Fax: (212) 599-3494 [email protected] Dear Senior Fellow Gelinas: November 18, 2013

Long Term Means of Avoiding Risky Fare Games

Would you care to publish the letter below addressed to Mayor Elect Bill de Blasio in the City Journal? A version of this letter to you was just sent to the New York Post where I read your column that appeared there today. (The first 1 ½ pages.) Its subject matter in general concerns real estate development but specifically a new means to finance the cost of modernizing or constructing new cultural institutions and as well, to finance their operating expenses independent of taxes by leasing their air rights to real estate developers to erect on their property mixed use real estate developments that would incorporate the cultural institutions in the larger development and utilize the air rights revenue to cover the operational costs of the cultural institutions.

Over the weekend, I was thinking this idea could also be used to finance the cost of constructing new Public Schools at little or no cost

to the tax payers and possibly as well finance the Public Schools operational costs. Imagine if you will, The City of New York up zoned all the real estate in the city to allow for much taller buildings to be erected especially the land on which Public Schools, Public Libraries, Public Museums, and Public Performing Arts Institutions exist. If the land on which these public institutions was zoned for buildings 1000 feet high (or more) and the zoning code had a stipulation that if 50% of the square feet in height was occupied by nonprofit entities than those square feet would not count towards the maximum height allowance and the developer would be permitted to exceed the maximum height by another 1000 feet. Than The Department of Education Leased all the Air Rights Above Public Schools to real estate developers to erect office buildings that would incorporate the public schools in their structure. Because the Public schools own the air rights they would not have to pay rent to the real estate developers for the space they occupy and they would collect the air rights revenue from the real estate developer to finance the operational costs of the public school system.

The real estate taxes now collected instead of being spent on public education could then be spent on mass transportation, roads,

highways, bridges and tunnels that could keep the subway fare and the tolls on bridges and tunnels stable long term. If the entire Public school system could be financed with air rights revenue, and the real estate taxes now collected for public education was able to fully cover the cost of both the MTA’s Subway and Passenger rail systems and bridge and tunnels roads and highways independent of the existing fares and tolls then the MTA instead of using fares and tolls to meet their day to day operational expenses could use that revenue to buy corporate dividend paying equities and utilize 50% of the dividends paid off of the corporate equities to finance the obtainment of additional dividend paying equities and the remaining 50% of dividends to supplement the taxes to finance the MTA’s capital and operational budget which would allow fares and tolls to remain stable long term and (as well taxes) and make our City and State more competitive with other States and their cities in job creation especially if this idea allowed the MTA to generate enough revenue that they could not only maintain the current fares and tolls long term but allow the agency to cut current fares and tolls by 50% long term. Of course we must restructure the city’s economy over at least a decade or two to fully accomplish this objective because it would take time to replace all the Public Institutions to accomplish these objectives. This Idea Might

Make It Possible to Finance the Replacement of the Tappan Zee Bridge by allowing the state and city to both cut spending and in addition to

generating more revenue without raising taxes. Inspiration for this idea came from an Office Building on Park Avenue between 32St and 33nd Street which houses the Norman Thomas

High School. The school takes up about 10 floors of the office building and has its own entrance on 32nd Street while the main entrance of the office building is on Park Avenue and there are commercial businesses on the ground floor of the Office Building surrounding the High School. Another inspiration was the fact that the air rights from the Chrysler Building have since the buildings opening have financed the free college education of students of the Cooper Union University. Please read on.

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

Bill de Blasio New York City Public Advocate 1 Centre Street, 15th Floor New York, NY 10007 (212) 669-7200 Dear Mayor Elect de Blasio November 8, 2013

Increasing Funding for Public Libraries, Public Museums, And other Cultural Affairs, Affordable Housing, Public Parks

And Many Other City Objectives without Having to Raise Taxes

Let us get your New Administration off to a good start. The worst time to raise taxes is during a recession or a recovery from an economic downturn because you risk creating a double dip recession. Before you consider raising taxes you need to recognize you have valuable resources at your disposal you can exploit for revenue to fund city objectives. Government at all levels must cut costs, cut taxes, and generate new revenue sources independent of taxes while preserving essential services if the nation is to be able to pay down the national debt because the national debt is not a Federal Government Problem to be resolved but an American problem to be resolved. If you lease the air rights above Public Libraries, Public Museums, and Public Cultural Performance Space Institutions such as Lincoln Center and Carnegie Hall to Real Estate Developers to erect new cultural institutions on the same sites that are not stand alone propositions but are part of mixed use cultural/commercial/and residential real estate the air rights revenue collected by the cultural institutions from the real estate developers would fund the operational costs of the cultural institutions in perpetuity regardless of the state of city finances. Such mixed use developments would include 20% Affordable Housing. The city could also provide incentives to build more Affordable Housing by changing zoning laws so as to exempt from the maximum height the square footage of Cultural Institutions and the Affordable Housing Portions of mixed use cultural/commercial/and residential real estate. If the combined square footage of Cultural Space and 20% Affordable housing component of a mixed use Cultural/Commercial/ and residential real estate development do not exceed 50% of the current zoning codes maximum height the real estate developers should be permitted to erect a building that exceeds the current zoning code maximum height by twice as much. To make clear, if the current code allows for a building that is 1000 feet high and the combined square footage of Cultural Space and Affordable Housing in height do not exceed 500 square feet than the real estate developer should be allowed to erect a building that exceeds the 1000-foot limit by another 1000 feet. By mixing Cultural/ Commercial/and 20% Affordable Housing with 80% market rate residential housing we will insure that the real estate developments will earn sufficient profits so that the Affordable Housing Component will not become run down crime infested dwellings shortly after the affordable housing is built as happens when you build Affordable Housing by itself in standalone institutions where the rents collected are not sufficient to do proper maintenance on the facilities and to fund security. Including cultural institutions in mixed use developments that include Affordable Housing we could bring the Arts and Humanities to the common citizen who otherwise might not be able to afford to participate in the Arts and Humanities. Once these cultural institutions are financed with air rights revenue the money now spent on them could be spent on other objectives such as Police and Fire Protection, City Parks, and Public Education without having to raise taxes. As new Affordable Housing is built above these cultural institutions city residents now living in City Public Housing Developments could be moved into the new Affordable Housing Dwellings and the city could then sell its Housing Developments to Private Sector Real Estate Developers to either refurbish or tear down and replace with new residential housing where 20% of housing units would have to be Affordable Housing. As the city gets out of Running Affordable Housing Dwellings and city housing projects land is returned to the real estate tax base the city would collect more in real estate taxes without having to raise tax rates on real estate so the city could afford to provide needier families with rent vouchers and provide more real estate developers tax abatements for building Affordable Housing. Ultimately, the objective would be for every residential real estate development to provide 20% Affordable Housing. What makes housing so expensive in our city is the segregation of Luxury Housing from Market Rate Housing and Market Rate Housing from Affordable Housing. If we included Luxury Housing, Market Rate Housing and Affordable Housing within the same real estate developments with commercial real estate everybody’s housing costs would be more affordable and the Real Estate Industry would earn greater profits with or without tax incentives. Like you, I am opposed to micro apartments of less than 400 square feet and believe Affordable Housing Units within buildings that include Luxury, Market Rate and Affordable Housing in the same building should be no smaller than 500 square feet. For such buildings to be erected affordably for developers the Market Rate apartments would have to make up 50% to 60% of the habitable square footage and the Luxury and Affordable Housing components would have to each make up 20% to 25% of the square footage of habitable space, space excluding stair cases, elevators and hallways leading to apartments. While the total square footage of the luxury and affordable housing components of a real estate development would be the same the Luxury apartments would be fewer and each would take up more space while the affordable housing units would be greater in number but each would take up less space.

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For Example, in a building with 300,000 square feet of habitable space, the Market Rate Apartments could make up 150,000 Feet of space with each apartment occupying 1000 square feet for a 150 apartments. The Luxury Apartments could make up 75,000 square feet of space with each apartment occupying 3000 square feet of space for 25 apartments and the Affordable Housing Apartments could be occupying another 75,000 square feet total with each apartment occupying 500 square feet for another 150 apartments. I believe you would be wise to appoint Mr. George McDonald your Deputy Mayor in charge of the Department of Homeless Services and privatize the city shelters and have all shelters in the city follow the model of the Doe Funds program of helping the homeless by first connecting them to jobs as Mr. Mc Donald Doe Fund does. I believe you would also be wise to hire Mr. Joseph Lhota your Deputy Mayor in charge of New York City Housing Authority and the city’s Housing Preservation Program and privatize NYCHA. By privatizing city shelters and NYCHA you could put more police officers on the street by having the housing police and the police for the department of homeless services retrained and placed in the city subway system to improve security underground. Appointing your rivals for the Mayoralty as Deputy Mayors will demonstrate that you are a true progressive. Privatizing the city shelters and NYCHA will allow the city to actually better serve the homeless and low income individuals and families who cannot afford Market Rate Housing because more Affordable Housing could be built and more rent vouchers can be issued if the city did not both operate Housing Developments and subsidize private sector affordable housing and more services could be brought to the homeless if the city did not both operate its own shelters and supervise and inspect privately run shelters. Getting homeless people into jobs will save the city tons of money in entitlement programs. Cutting costs in this manner is utilizing a laser scalpel instead of a meat cleaver to trim the budget so as to cauterize the wounds as we cut to eliminate unnecessary bleeding on the body politic of the city. Sincerely Thomas J. Kraus 347-414-0958 tjk,[email protected]

John H. Cochrane Professor of Economics The University of Chicago Booth School of Business 5807 S Woodlawn Avenue Chicago IL 60637 Phone: 773.702.3059 Cell: 773.919.3257 Email: [email protected] Webpage: http://faculty.chicagobooth.edu/john.cochrane/ Office location: Harper Center 459 (South-East side) Dear Professor Cochrane: June 9, 2016

Is Not America’s Slow Growth Tailspin a Function of Enormous Global Debt Planet Wide?

The total debt worldwide exceeds $224 Trillion which is inclusive of government debt, business debt and household debt while the total income of the planet is little more than $75 Trillion dollars. (Figures are two years old) Which means debt exceeds income by 300%. Shouldn’t any Free Trade Agreement have provisions in government policy to tackle paying down Government Debt worldwide, and facilitate the reduction of Business Debt and Household Debt? If you are pressed for time, please read just pages1-3 and the first 6 lines of page 4 quickly, and you may read the rest of the letter in your leisure when you have more time. On Page 12 is a letter to Stanley Fischer, Vice Chairman of the Federal Reserve, dated September 18, 2015. I had originally intended to send you a letter around the same time last year but have got caught up in other matters and issues and neglected to reach out to you. I intend to reach out to Paul Volcker former Chairman of the Federal Reserve, sometime within the next week or so. Thank you sincerely. Thomas Kraus. In your Wall Street Article of July 2, 2014 which was updated from June 8, 2014 “The Failure of Macroeconomics you state, “Where Macroeconomists differ, sharply is on the cause of the post-recession slump and which policies might cure it. Broadly speaking, is the slump a lack of demand which monetary or fiscal stimulus can address or one of structural sand in the gears stimulus won’t fix”? To answer your above question Macroeconomists must come to the recognition the global slowdown in economic growth is not an either/or problem but a both/and problem. Going back to the 1990’s many millions of Americans have been downsized into lower paying jobs or have managed to find a way on to Social Security Disability and simply lack the money to increase spending. Employers do not wish to hire a great number of workers nor

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raise wages until there is greater demand but working Americans are not going to increase spending until their wages rise so there is an economic catch 22 holding back the economy. Employers need tax cuts to hire more workers and to pay higher wages. It is a problem that calls for prolonged stimulus, raising interest rates on bank deposits and on government debt while cutting taxes and spending of governments worldwide. It also calls for increased saving by government, business and households. At low rates of interest, you might entice more people to desire to borrow more money from banks but at such low rates of interest many credit seekers are looked at as greater financial risks, so banks do not lend to them. At near zero percent interest banks cannot afford to sell government bonds because no commission is paid on the sale of debt so average Joes who might have bought savings bonds at higher interest rates do not buy government debt so that the only parties buying government debt is the other governments and institutional investors and the Federal Reserve through monetary easing or printing new money. If American money was not the reserve currency of the world we would be experiencing runaway inflation. I am interested in reading your proposals for Equity Financed Banking and a Run Free Financial System of May 16, 2016 and your proposal for A New Structure for Federal Debt of January 2015 (Formerly titled U.S. Federal Debt in the 21st Century. I have already requested those articles in PDF form be emailed to me. I have long proposed that monetary policy, tax policy and fiscal policy all need to be reformed so that they form an Equilateral Triangle so the three economic disciplines would be conducted jointly in relationship to one another and not independently from one another as has been done since the creation of the Federal Reserve. I believe every level of government, every department and agency should establish Sovereign Wealth Dividend Reinvestment Plans putting 24% of every revenue dollar into Sovereign Wealth Dividend Reinvestment Plans and be required to constantly reinvest 76% of dividends to acquire additional dividend paying equities and add the remaining 24% of dividends to governments other operational funds so over time a greater share of government’s operational funds would come from compounding dividends from investments in the global equity markets and not taxes. I similarly believe federal, state and local tax policies should make provision for tax paying citizens and business being permitted to exempt 24% of income from federal, state and local income taxes while phasing taxes on capital gains and interest on bank deposits, sales taxes of all kinds, including those on real estate, energy and telecommunications. This plan also calls for governments exploiting the value of their real estate air development rights to generate additional operational revenues without raising taxes. By leasing the air development rights of real estate they own to real estate developers to erect on government land commercial real estate developments that would reserve space in their structure for a government agency or department rent free whose operational costs would be covered by the revenue collected from the air development rights lease revenue. All a government agency or department need do is lease the property for a modest three times their annual operating revenue and use one third of air rights lease revenue to cover the operational costs of the agency and department while investing the other two thirds of air development rights in the global equity markets and reinvest 76% of dividends in global equity markets and add the remaining 24% of dividends earned to the other operational funds derived from air rights leases. If all public schools (or Public Libraries, Public Museums, or Public Performance Art Venues) which now are erected as standalone buildings that generate no real estate taxes for local governments and instead eat up real estate taxes were placed inside commercial real estate office buildings and were financed with air development rights revenue, we could transition to a lower flat real estate tax system and instead of utilizing real estate taxes to finance public education we could utilize real estate taxes to supplement the monies now going to inadequately finance public infrastructure for roads, highways, bridges and tunnels and mass transportation’s buses ferries, tramways trolley cars and trains. With real estate taxes added to these underfunded infrastructure projects, the money now collected in tolls and fares by highway authorities and transit agencies could then be invested in the global equity markets with 76% of dividends being constantly reinvested to acquire additional dividend paying equities and the remaining 24% of dividends being added to the other operational funds of highway authorities and transit agencies so as dividends compound fares, tolls, and taxes can remain stable or even be cut while providing those agencies sufficient revenues to operate effectively. Note the above suggestion demonstrates how to cut government spending over both the short term and long term without decimating vital government services or having to eliminate or reduce entitlement benefits. It is what some would call austerity done right or intelligently. Governments cannot be sustainably financed unless they are financed through Capitalistic Means and they cannot eliminate debt nor keep inflation at bay long term unless governments run continuous surpluses. I believe an Autopsy for Keynesian Economics might be premature because I believe Keynesian Philosophy is laying on the economic operating table in that state of being between life and death when a patient’s heart has stopped and the patient sees a bright light and hears a voice telling her that her time on Earth is not finished and she must go back to finish her assigned work on Earth or to complete the purpose for why she was born. If governments run continuous surpluses during prosperous times than the deficit spending needed during economic downturns could easily be engaged in without having to run up debt by having the deficit spending done with the reserves that were established for that purpose with the establishment of Sovereign Wealth Funds. Having government agencies and departments split their annual allocation of funding into two parts spending only 76% to cover their annual operating budget and banking 24% of their annual allocation in a Sovereign Wealth Fund Dividend Reinvestment Plans would unite Fiscal Policy and Monetary and not to forget to mention tax policy. If we truly want to contain inflation we must raise the savings rate of the country discouraging governments, business and households from spending every last dime today failing to save and invest enough for tomorrow. Government taxing and spending is a major contributing factor to rising inflation. Contrary to what many Macroeconomists believe, there is not a glut of savings 45% of Americans if faced with an emergency that required them to come up with $400 quickly many would be very pressed to be able to do so. If you added another $100 you might discover more than 50% of Americans would have difficulty coming up with the money. Financial planners recommend a budgeting strategy for families where 50% of disposable income go for rent/housing costs, food, clothing, transportation, and entertainment, 25% go for health insurance and retirement plans, and 25% go for savings spending reserves for emergencies. With the high tax burden Americans face there is not enough disposable income for healthcare, retirement plans and emergency savings, especially if you earn less than $50,000 a year. If you eliminate all forms of sales taxes, especially those on real estate, energy and telecommunications all businesses would earn a higher return on investment which would allow them to pay higher wages and possibly provide better benefits to their employees whose higher wages earned would offset the taxes that were eliminated so governments would in fact collect more tax revenue as they eliminate the number of varied taxes and lower tax rates and reduce tax the number of tax brackets. You might be aware that George Mason University did a study several years ago of the income tax system since its creation in 1913 the same year as the Federal Reserve. They discovered that no matter how high the maximum tax rate of the country the federal government has never managed to bring in more than 20% of GDP in the form of taxes. Which leads me to ask, does it make any sense to have tax rates higher than 20% if the government will not bring in more than 20% of GDP in tax revenue?

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The insurance industry of America, by itself, is responsible for developing 25% of all real estate that is developed in America. If we eliminated all forms of sales taxes, taxes on energy and telecommunications and transitioned towards a flat real estate tax the resulting return on investment into real estate market and the other equity markets in the United States and globally by the insurance industry would make it possible that health insurance plans and retirement plans could be priced more affordably for all Americans especially as worker’s wages would rise as these taxes are eliminated and the costs for housing, food, clothing, transportation, and entertainment would fall which would facilitate Americans being able to put away more in emergency reserves. If employers were to put more aside in emergency reserves they would be better able to get through economic downturns without having to lay off workers. If fewer workers are laid off during each economic downturn wages would not fall as much and neither would taxes collected by government so there would be a greater probability that the federal government could retire the national debt within the next 20 years without tax increases if we only restructure the economy and create a new federalism devolving more power from the federal government not to the states but to the local governments. We must have the courage to consider all possibilities for the federal, states and local governments to cut expenses while preserving entitlement spending but financing entitlements as commercial insurance is financed through investment in the nation’s equity markets as part of the nation’s monetary policy. We should consider merging smaller state and local governments into fewer but larger corporate entities as New York City did in 1898 with the merger and consolidation of five independent local governments to create Greater New York City and the four outer boroughs of Queens, Brooklyn, Staten Island and The Bronx. There are 3058 separate social service distribution systems at the federal, state and local level of government nationwide that could be merged and consolidated into single social service distribution system jointly financed by each level of government as they already jointly finance Medicaid. Medicare and Medicaid resources should be combined into a single government health insurance program that covers the well to do elderly and the poor young. Having two separate federally financed health insurance programs covering two different classes of people I would think is a violation of the United States Constitution calling for equal treatment under the law. We could create one stop shopping for income maintenance providing federal, state and local social services where the same workers who process local social services could also process state and federal social services within the same city. Staffing could be reduced through attrition as government workers retire and fewer new workers would be needed to replace them so over a decade and a half 40% of the combined total social service bureaucracy could be eliminated as a single application for social services with the appropriate boxes checked off could be utilized for any and all social services. Addressing the national debt not as a Federal Government Problem but as an American Government Problem meaning all levels of American Government is the best way to cut waste and inefficiency without cutting vital services, because there is a lot of overlap and redundancy that can be eliminated without hurting vital services. The federal state and local governments could similarly achieve similar savings by locating their separate court rooms in the same office buildings creating single office buildings with three separate legal jurisdictions who could share maintenance personnel, stenographers, and court officers while maintaining their separate judges, prosecutors, law clerk and legal secretaries. Instead of separately having to acquire collectively three pieces of real estate to erect three small court house office buildings in every county of a state they could collectively acquire just one parcel of real estate to erect a much taller office building in every county of a state. Combining resources like this government could do something meaningful to address global warming while saving money on infrastructure costs. Often federal, state and local government courthouse office buildings are within walking distance of one another in the same counties. For whatever reason they have historically located their separate courthouses near one another in the same counties it would make even more sense for their separate courtrooms to be located within the same office buildings. Don’t you agree? The three levels of government could work more closely in addressing environmental protection with local governments investigating environmental complaints in their territories and turning the evidence they accumulate over to a state prosecutor who would check the state’s data base to see if similar complaints from subsidiaries of the same company have been brought in other local jurisdictions and combine any all law suits into a single law suit saving both government and the accused parties time and money prosecuting the legal disputes. Whoever loses and has to pay for the cost of cleaning up the environmental problems whether government or a private entity, the money saved prosecuting the case could be used to clean up the environmental problems. Companies and individuals responsible for environmental problems who proactively clean up their own environmental problems before a law suit is brought and provide injured parties compensatory damages should be sparred having to provide punitive damages on top of their compensatory damages. The environmental laws of our nation should be streamlined and consolidated into a much smaller legal code that applies the same way from city to city and state to state coast to coast.

Gordon Moore’s Law Governing the Production of Computer Memory Chips and Its Application to Monetary Policy and the Unit Cost of Minting a Nation’s Currency

Some in the field of economics have noted the cost of minting certain units of currency whether metal coins such as the penny or paper dollar bills are costing more than the face value of the unit of currency and have suggested we transition to an economy devoid of all hard currency as a result. I would like to suggest if the computer industry could continuously produce more memory at lower costs per memory unit, than the central banks of the world should be able to continuously manufacture more hard currency money at lower cost per unit of currency relative to the expansion of the hard currency money supply and their failure to be able to do so is a reflection of the fact that monetary policy has never been practiced correctly. We are currently holding interest rates near zero or Permazero, as James Bullard states in this month’s Cato Journal, to create a wealth effect where investors who invest using borrowed money or on margin could do so relatively inexpensively as interest rates are very low supposedly to increase the inflows into the nation’s equity markets while also supposedly lowering the Federal Reserve’s costs servicing the national debt. Such policies completely ignore the moral hazard low interest rates on a nation’s debt incur as a result of legislatures primarily, and the executive branch of government as well, feeling less impetus to contain spending, and as a result will tend to spend more quickly at lower rates of interest erasing any potential savings lower interest on the national debt may have held only theoretically. Although the stock market has grown since the economic crisis, it has not served to increase the workforce participation rate even though the unemployment rate has fallen because discouraged workers have given up seeking on the books employment and the census department and labor department count as unemployed only those who continue to look for work. Also, lowering interest rates on the national debt has historically drove commodity prices higher which usually resulted in lower employment as the factors of the costs of employment rose rapidly while demand for goods and services constricted causing the government to bring in less tax revenue to pay down

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debt which itself contributes to expansion of debt because there is less money available to service the debt. Economic downturns usually result in a decline in taxes taken in as revenue while social service spending rises adding more to the debt. I believe the monetary policies of the Federal Reserve are in total conflict with the United States’ Treasury Fiduciary responsibility as the Stewart of the Social Security Trust Fund to earn the highest return on Social Security Assets. Outside of national governments’ Social Security Systems and other entitlement programs, all other investment pools of money and insurance funds of all kinds strive to earn the highest returns on their financial endowments by stocking them with the highest yielding financial instruments. But our Social Security Trust Fund and the Social Security Trust Funds of most other nations are stocked with the lowest yielding form of debt instruments. Because our Social Security Trust Fund is “invested” only United States Treasuries and not commodities, equities, and commercial paper nor the government bonds of state and local governments the system lacks the benefits compounding dividends and interest would provide the system which is what accounts for the fact the Social Security Trust Fund in the past on more than one occasion had to supplement Social Security Payroll taxes with money from the general fund. The energy crisis of the 1970’s was a direct result of America getting off of the Gold standard which had similar effects on commodity prices as lowering the interest on government debt. Please rea on.

Paul H. Kupiec, Resident Scholar The American Enterprise Institute 1150 Seventeenth Street, NW Washington, DC 20036

Main telephone: 202.862.5800 Main fax: 202.862.7177

How May We Counteract the Cost of Low Interest Rates These Past Seven Years In An Effort to Retire

The National Debt Within 20 Years and Allow Americans to be Able to Retire Comfortably?

Dear Mr. Kupiec; May 26, 2016 Let me begin with a few questions questions. As you allude to in your column in the Wall Street Journal, May 23, 2016, “The High Cost of Ultralow Interest Rates” without directly stating the case, The Federal Reserve’s Monetary Policy accounts for why private sector pension plans cannot provide a defined benefit and have had to move towards defined contribution plans as government pension plans will have to do eventually unless we reform government economic policy and how it effects Tax policy, Fiscal Policy and of course and how it effects Monetary Policy. Thank you.Given the adverse effects of Monetary Policy on retirement savings both in private pension plans and the Social Security Security Trust Fund shouldn’t the Social Security Trust Fund be invested in Equities instead of Federal Government Bonds. Is it not true that financial planners would advise against having any pension fund invested exclusively in only one kind of financial instrument and wouldn’t most financial planners be weary of any institution whose pension plan is invested exclusively in it own equities or debt obligation bonds? So why is the Social Security Trust only invested in Federal Government Bonds? Isn’t the Social Security Trust Fund only a legalized version of a Ponzi Scheme? How can the U.S. Treasury pay interest on it own bonds to itself? If we are to continue to back the Social Security Trust Fund with only government bonds would it not make more sense to have the Social Secuity Trust Fund backed by state and local government bonds once they clean up their balance sheets and honor each other’s bonds tax exempt status to make state and local bonds triple tax exempt as the Federal Government Bonds now are? The idea here would create an environment of competition between the state and local bonds to do away with creative accounting one shots used to maintain balanced budgets that in the long term imperil the the under funded pension and health care plans of state and local governments. This plan will also expand the maket for state and local bonds after they become triple tax exempt so that banks could hold a basket of state and local government bonds as collateral against loans they wish to issue so that they could free up capital for lending. Having banks loans secured with state and local government bonds serving as collateral will reduce the risk of the federal government having to bail out banks that are too big to fail. Wouldn’t it be a good idea for bond rating agencies of the federal state and local governments to apply pressure to all levels of government to work together to merge and consolidate redundant resources so that we can provide the same level of government services while reducing the operating budgets of the federal state and local governments? For example, We have one federal social service delivery system, 50 state social service delivery systems and 3007 local government delivery systems. In many cases these separate social service delivery systems of each level of government are within blocks of one another. Wouldn’t it make more sense to reduce excess redundancy by merging these separate systems into a single system that is jointly financed by each level of government as they already jointly finance medicaid? Staffing could be reduced through attrition by 30% to 40% over a decade of the total collective social service

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delivery system bureacracy while creating single stop shopping for social services utilizing a universal application for social services where the appropriate boxes could be checked up for the serves being sought from the appropriate level of government.. Another place they could consolidate services to save money is by buiding federal state and local government courtrooms within the same office buildings.Creating court office room buildings with three legal jurisdictions in one building. While each court system would still have their own legal secretaries, law clercks, judges and prosecutors, they could share maintenance personel, stenographers (court reporters) and court officers. Additionally, the federal state and local governments could work together more closely on environmental policy. Explained deeper in this letter. Outside of government entitlements is it not true that all other investment pools of money including private sector insurance of all kinds, hedge funds and private sector pension plans, strive to endowe their funds with the highest yielding financial instruments in order to obtain the maximum return on investment? Is it not also true that the managers of any investment pool have a fiduciary responsibility to obtain the maximum yield on their investment pool? If the answer is yes to this question, aren’t the Federal Reserve and The United States Treasury in violation of the spirit and letter of the law that established the Social Security Trust Funds by stocking them with the lowest yieding financial instruments? Is there not a conflict of interest between the Federal Reserves Monetary Policy and the aims and Objectives of The Social Security Trust Fund’s Feduciary Responsiablity to Earn The Highest Return for Retirees and The Feds Aims at Keeping Interest on the debt at low as Possible to contain the costs of servicing the national debt and isn’t this a valid reason to transition to financing of Social Security with Equities and state and local government bonds instead of Federal Government Debt Obligation Bonds. Is it not true, it Is impossible to earn the highest yield on the Social Security Trust Fand at the same exact time have the Federal Reserve contain the financing of the National Debt?

Is It Not True That The Current Economic Crisis and All The Economic Crisises Of The 20th the Early 21St

Century Are Not Due to a Failure of Capitalism But Truly a Failure of Economic Stewardship?

If We Are a Capitalistic Economy How Come The Operational Costs of Government are Not Financed Via Capitalism?

Is It Not True That The Best Means of Eliminating Deficits is to Run Continuous Surpluses and Wouldn’t It Be A Good Idea For Government To Establish Soverign Wealth Funds Dividend Reinvestment Plans In Every Agency and Department of Government at the Federal, States and

Local Levels of Government?

What if Every Budget Line in Every Department and Agency’s Annual Allocation was Split into Two Parts with 76% Covering The Annual Operating Budget and The Remaining 24% Going Into a Soverign Wealth Fund Dividend Reinvestment Plan and 76% of Dividends Earned Were Constantly Reinvested to Acquire Additional Dividended Paying Equities and The Remaining 24% of Dividends Earned Were Used to

Supplement Other Operational Funds?

Wouldn’t We Over Time be Able to Replace a Significant Portion of Tax Revenues With The Compounding Dividends Earned on Investment in the Global Equity Markets And Raise the Standard of Living Worldwide With The Profitablity of Every Business in the World That Is Pubicly

Traded on The Global Equity Markets And Isn’t This The Best Means of Promoting Free Trade Globally?

The Total Outstanding Debt of the Entire Planet, Government, Business,

and households is in excess of $224 Trillion While the World Domestic Product is a little more than $75 Trillion, Which MeansTotal Debt Exceds Total Income by more 300% It is this Huge Debt at Every Level of the Global Econonomy That is Holding Back Economic Growth Worldwide and Accounts for the 2% Growth the Global Economy Has Endured the Last Seven Years. Shouldn’t Trade and Foreign Policy

Focus Policy of the Nations of the World on Paying Down the Debt of the World?

America Will Remain the Leader of the Free World if two Things Continue to Occure Which Would Be the Continued Expansion of Democratic Forms of Government and The Incomes of the Other Nations of the World Continue to Rise to Meet the level of incomes In The United States of America. If American Wages Continue to Fall Closer to The Rest of The World Than Our Influence Will Decline As American Wages Decline

Which is Why America Should Push for the Establishment of an International Minimum Wage Coupled With a Flater Low Tax Regime Globally Allowing Nations to Tax Only Profits of Multi National Corporations That Were Earned Within Their Borders.

Fighting Terrorism Would Become Easier and Cheaper For America After The Establishment of an International Minimum Wage Because

Those Countries That Currently Harbor Terrorists and Pretend to be Our Allies Will Have Greater Economic Incentives to No Longer Harbor Terriorists and to Report Terrorist Activities To America

We Should Transition at the Local Levels of Government to Singular Flat Real Estate Taxes Eliminating Distincions

Between Commercial and Residential Real Estate Taxes and Have All Real Estate Taxed at The Same low Rate Real Estate Taxes Should Instead of Funding Public Education Should Fund Infrastructure Modernazation and Maintenance

While Public Education, Public Libraries, Public Museums and Public Performance Arts Venues Would Be Financed Via The Leasing of Their Air Development Rights Explained Deeper in the Letter.

We Should Phase Out All Forms of Sales Taxes Including Those On Real Estate, Energy, and Telecommunications So That With These Tax

Savings A Modern Internet and Electrical Power Grid Could be Bilt That Ccould Withstand an Electro Magnetic Pulse From A Nuclear Defice Discharged in The Upper Atmosphere of Our Nation by A Rogue Terroristic Organization..

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We Need Radical Tax Reform Top to Bottom At Every

Level of Government Coupled With Structurial Reform of the Economy and How Government Delivers Services.

The Business Community Needs to Be Educated Into Realising It is in Their Economic Interest as Much as It Is In The Economic Interest of Government for There to be True Full Employment Because This Economy is Proof of the Diminishing Returns of Constant Cost Cutting of

Wages of Working People. When Wages Fall Purchasing Power of Consumers Also Falls. And When That Happens They Spend Less Causing Business to Sell Less, Unless They Lower Their Prices Which Than Leads To Deflation. 70 percent of the economy is driven

by workers spending their pay checks, so smaller checks lead to less spending. Fewer jobs also lead to less spending and less spending by consumers will negatively impact business

profits and government tax revenues.

Do you Have Any Idea Why Productivty Has Fallen? I Have a Theory, When we Eliminated Telephone Operators and Secretaries in the 1990s and replaced them with voice mail recordings people had to listen to all their message and then had to contact the people who left messages. Without Secretaries to answer the phones and take messages nobody answers the phone anymore so it takes longer to address any business

problem. Computers and the internet cause people to waste as much time as they help people to save so in the end there is no saving in productivity especially if you reduce the size of the work force.

Here is Another Theory of Mine, As Computers Replace More Workers, Computer Companies will End Up Selling

Fewer Computers to Corporate America Because with Fewer Employees Companies will Need to Buy Fewer Computers.

Nicole Gelinas Searle Freedom Trust Fellow And Contributing Editor of The City Journal 52 Vanderbilt Avenue New York, NY 10017 Phone: (212) 599-7000 Fax: (212) 599-3494 Dear Ms. Gelinas: March 15, 2016

How to Delay or Neutralize Senator Schumer’s Proposal to Classify Municipal Bonds as Easy to Sell Investments for Banks to Use as Security When Banks Need to Raise Money Quickly So the Federal Government Does Not Get Stuck Holding the Bag and Having to

Bail Out Banks That Take Risky Financial Bets That do not Pan Out

If Congress is to modify banking regulations to permit state and local government bonds to be used as collateral by banks to be able to raise money quickly those bonds also would need to have triple tax exempt status which means state and local governments would have to honor the tax exempt status of other local and state governments across the nation which in turn would require those other state and local governments to reciprocate which will have the positive benefit of requiring state and local governments to have to clean up their balance sheets and pay down their debts, especially the debts of Government Authorities such as Bridge and Tunnel Authorities, Mass Transportation Agencies, Economic Development Agencies and their cousin Industrial Development agencies and so on an so forth.

Congress should require the state and local governments to retire a ¼ or more of their debt over a 10-year period before their bonds could be

classified by Congress/Federal Reserve as Easy to Sell Investments which they would be if they paid down a significant amount of their debt over a 10-year period and if they were triple tax exempt which would increase the pool of investors who would be interested in purchasing them. It is both the lack of triple tax exemption and the enormous debt some states and local governments carry due to “Creative Accounting” that make Municipal Bonds less attractive investments. If the state and local governments are required to honor each other’s tax exempt status on government bonds and the federal government was required to honor the tax exempt status of state and local governments bonds positive pressure as a result of market competition would serve for each level of government and city and state governments competing with each other to act as a check against the overzealous reckless use of debt to finance obligations and would create an environment where politicians would look for long term solutions for shrinking and retiring government debt instead of the traditional one shot short term solutions customarily used by state and local to maintain balanced budgets.

A clearer link must be made between smaller government and lower taxes on one hand and lower interest being needed to be paid on

government bonds so that when governments raise taxes and take on more debt their bond rating would fall more quickly and when governments consolidate services in an intelligent manner to reduce debt but to also improve the efficiency at which government delivers services to the American people than bond ratings should rise and the interest rates on government debt would fall.

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We have failed the last forty years to take any serious steps to retiring federal and state and local government debt because politicians lacking business sense fear the consequences of what would happen to them if they eliminate services the American people approve of such as Social Security, Medicare, Unemployment Insurance, Workmen’s Compensation etc. etc. and so on. We have too much redundancy in the delivery of government services which we can reduce without eliminating vital services nor reducing entitlement benefits if we only restructure the means by which services are delivered to the American people.

Three Areas Where the Federal State and Local Governments Could Save Money in the Delivery of Government Services Are in providing Social Services, Adjudicating Legal Disputes, and in the Enforcement of Environmental Policy,

If They Worked Together Jointly.

Currently each level of government has its own social service delivery system so that there is one federal system for delivering social services, 50 state systems for delivering social service and over 3000 local government social service delivery systems while in every county the federal state and local government’s social service offices are often within blocks of one another. Merging and consolidating the separate social service delivery systems in every county into single social service delivery system where citizens could access federal, state and local social service from the same office within their own neighborhood and the same “government worker” processed federal, state and local governments applications for social services utilizing a universal application for social services where individuals would check off the appropriate boxes that apply we would be able to shrink the combined size of the social service delivery systems by 30%-40% over a decade and a half or less and put the administrative savings towards shoring up the healthcare and pension underfunded obligations without having to raise taxes.

Going forward, in the near future, federal state and local governments could locate their separate courtrooms within the same office building and save money on infrastructure costs in the construction of office buildings to house the federal state and local government court rooms in each county. While they would still have their own judges, prosecutors, law clerks and legal secretaries they could share maintenance personnel, court officers and court reporters (stenographers). Environmental law can be streamlined removing overlapping and redundant federal, state and local environmental laws to create a single environmental law that applies the same way from city to city and state to state where local governments would investigate environmental complaints in their territories and turn over the evidence to state prosecutors to adjudicate after checking to see there are not similar complaints from subsidiaries of the same corporation in other counties or cities and if there are, prosecute them as part of a single law suit saving government and the accused litigation costs whose savings and be used to clean up the environmental damage depending on whoever loses the law suit and will have to pay to clean up the environmental damage. Local, State and Federal governments would create their own environmental maps showing environmental damage and the lesser government will turnover their findings to the next highest level of government to create a unified map showing environmental damage, leading to national environmental damage maps be created from data collected nationwide.

How Local Governments Could Play a Leading Role in Retiring Their Own Debts and the Debt of their State Governments and the National Government As

Greater Autonomy Would be transferred from the State and Federal Governments To Local Governments Creating a New Federalism

The local governments can lead the way in the streamlining of government with an emphasis placed primarily on obtaining greater efficiency in delivering vital services to the American citizen and not eliminating vital services or cutting entitlements. If done correctly, streamlining government will allow us to keep and strengthen entitlement services while cutting the cost of providing those services to the American citizen and the same would be true in delivering government services at all levels of government shrinking government through attrition gradually instead of rapidly through massive layoffs, which will allow the private sector economy enough time to absorb more employees as the level of government shrinks without creating huge pools of unemployed citizens in the process which would create deflationary pressure reducing wage growth and therefore income taxes collected by government. Local governments will have the means of providing more educational and cultural funding for institutions such as public primary and secondary schools, public libraries, public museums, public performance art venues and even municipal universities by exploiting the air rights of the land where these institutions would be located so as to have these institutions lease their land and to commercial real estate developers to erect primarily commercial office buildings who will provide space to these institutions at little or no cost to the American Tax payers, which would allow us to cut taxes while increasing funding for these institutions by having air development rights revenue replace a sizeable portion of tax revenue. These institutions need only lease their land to real estate developers for three times their annual operating budgets and use one third of their air development rights revenue to finance their annual operating budget while investing the remaining two thirds of air development rights revenue into the global equity markets and continuously reinvest 76% of all dividends to acquire additional dividend paying equities and utilize the remaining 24% of compounding dividends to supplement other government operational revenues or to pay down debt. Having all these government institutions lease their land to commercial real developers will allow their land to return to the real estate tax rolls while these institutions will obtain new facilities constructed at no cost to the tax payers. Having public education financed with air development rights revenue instead of real estate taxes would allow us to accomplish two vital objectives at the same time, which would be to transition to a flat real estate tax rate equal to the lowest residential real estate tax level and eliminating the commercial real estate tax. The second objective of this reform would be to have real estate taxes fund infrastructure instead of public education, so that real estate tax dollars would be added to current funding for roads, highways, bridges and tunnels, and mass transportation’s, ferries, tramways, and buses and trains. With real estate taxes added to current funding for these infrastructure priorities will allow Highway Authorities and Mass Transportation agencies to use tolls and fares to invest in the global equity markets constantly reinvesting 76% of dividends to acquire additional divided paying equities to fund their sovereign wealth funds and utilize the remaining 24%

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of compounding dividends to fund infrastructure investment banks. So that over time fares, tolls and taxes can remain stable while funding for infrastructure would continue to grow allowing for the phase out of energy taxes, telecommunication taxes, and real estate sale taxes and all other sales taxes. Eliminating these taxes will allow wages to grow more rapidly and also allow government to collect more in income taxes. All real estate should be taxed at the same way which will facilitate the building of more affordable housing and eliminating income inequality within public housing redefining affordable housing, to housing that costs no more than 20% of income instead of the current 30% income currently. With these reforms all entitlements could be financed in the same manner as commercial insurance through investment in the global equity markets. Having government entitlements financed through investment in the global equity markets would have the benefit of lowering the cost of commercial insurance of all kinds while stimulating private sector employment. Entitlements would include Social Security, Medicare, and Medicaid which should be combined into a single health insurance program, also included would be workmen’s compensation and unemployment insurance, food stamps, federal deposit insurance on bank deposits, insurance and money held in cash accounts of brokerages and federal flood insurance which should be renamed Catastrophic Weather and Natural Disaster Relief Insurance which would cover all forms of extreme weather conditions and Earth Quakes and Forest Fires stemming drought conditions. The best means of dealing with the future prospect of the Federal Government Having to bail out institutions in the financial services field is for Federal Deposit Insurance be financed and operated as commercial insurance and have all financial services companies, commercial and savings banks, hedge funds, stock and bond brokerages and insurance and reinsurance companies be required to buy federal deposit insurance and have the Federal Deposit Insurance Corporation invest the collective FDIC premiums into the global equity markets and reinvest 76% of all compounded dividends to acquire additional dividend paying equities and when a financial services company needs to be bailed out it would be with the FDIC compounded premiums dividends that financial service companies paid to the FDIC. The Federal Reserve should act as a Re-insurer of the Insurance Industry Including Re Insurance companies as a means of diversifying risk and increasing an upside return on investment and as well to insure that the bailing out of financial service companies is done with money from the financial services industry not requiring higher taxes on the rest of the American economy.

The main problem with the federal government is it likes to create new social programs and call them insurance but they in the end become Ponzi Scheme slush funds which are insurance in name only because they lack the benefit of compounding dividends or interest and their so called dedicated revenues are simply added to the government’s general funds account and significant percentages of so called dedicated taxes get spent on things unrelated to the issue a so called dedicated tax was created to fund. If Social Security, Medicare, Medicaid, SSI, SSD, Workmen’s Compensation, Unemployment Insurance, Federal Flood Insurance and Federal Deposit Insurance were established as legitimate insurance funds backed by the compounding dividends derived from investment in dividend paying equities in their own dedicated sovereign wealth funds the accruing dividends combined with tax revenue/premiums would make these programs financially sound long term and instead of running deficits we could be running surpluses. If we financed these programs honestly as insurance programs beginning with their first year’s proper capitalization by selling government bonds to create the initial investment pool in dividend paying equities instead of financing them as PAY AS YOU GO SYSTEMS GOVERNMENT ENTITLEMENTS, INSTEAD OF CREATING ECONOMIC DRAG ON THE NATION’S ECONOMY THEY INSTEAD WOULD STIMULATE THE ECONOMY AND SUPPORT PRIVATE SECTOR EMPLOYMENT WHICH WOULD PROVIDE THE TAX REVENUE WITH WHICH THE NATIONAL DEBT WOULD BE PAID OFF.

Financing these programs honestly as insurance would allow us to do away with all forms of sales taxes, especially those on real estate, energy,

and telecommunications ‘and move toward flatter income taxes and flatter real estate taxes. We call the graduated income tax progressive but in reality it is very regressive and is the driving force behind income inequality. To reduce income inequality, we must streamline the nation’s tax code and use it to incentivize employers into providing profit sharing to all employees in the corporation or non-incorporated businesses, not just top management. Corporations can create fractional shares of stocks to partially compensate lower ranked non-management personnel that would be equal to 1/5 of a share of a corporation’s main stock.

Commercial insurance would become less expensive as the result of the elimination of all forms of sales taxes, especially those on real estate, telecommunications and energy. Because 25% of all real estate developed in America is developed by the real estate industry. Eliminating these taxes would increase the return on investment in all segments of the economy especially the real estate industry and the insurance industry making it possible for the unit cost of insurance to fall significantly. As a significant share of government revenue comes from returns on investment in the global equity markets and less from taxes healthcare costs and college education costs would grow more gradually not greatly exceeding the general rate of inflation, which will facilitate more of the lowest income individuals and families being able to purchase health insurance and send their children to college. Especially as falling taxes would support higher wage and benefit growth as corporations and business would once again have to compete aggressively to hire new employees. Transitioning to a flat real estate tax system and a flatter income tax system will allow jobs that moved off shore to return home especially as part of a global trade and tax deal we, create an international minimum wage which would be the median of the world’s ten highest minimum wages and created a global frame work for a flatter income tax system with regional taxing only income of corporations earned domestically and not profits earned abroad. Having institutions such as public primary and secondary schools, public libraries, public museums and public performance art venues financed with air development revenues demonstrates austerity done correctly so even while taxes and spending of tax payer’s money are cut the above institutions would end up with more revenue while more revenue or income will remain in the pockets of businesses and tax payers.

Creating Sound Economic Policy by Uniting the Separate Economic Disciplines of Tax, Fiscal and Monetary Policy in a Coherent Frame Work

As we transition to this new economic model for financing government the budgetary process for all government agencies and departments at the federal, state and local levels of government would include providing an annual allocation for every department and agency that would require76% of the annual allocation be used to cover annual operating expenses and 24% of the annual allocation to be invested in the global equity markets to establish sovereign wealth funds which would be contractually obligated to reinvest 76% of all dividends earned to acquire additional dividend paying equities and would allow departments and agencies to tap just 24% of compounding dividends to supplement other spending priorities. This proposal will create an environment where Keynesian economic principles would become fully coherent with sound economic policy, so that any necessary short term economic

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stimulus requiring deficit spending during economic downturns would be done with surpluses set aside for that purpose during times of prosperity and economic growth which is the reason for government to establish sovereign wealth funds so that new additional borrowing will not be needed during economic downturns so that we do not continuously add to the national debt nor the debt of the state and local governments. Having federal, state and local governments to have to put 24% of revenue into Sovereign Wealth Dividends Reinvestment Plans would be done to have government mirror or model sound financial management to the business community and for American households to follow and to create an economic policy that would serve to insure each level of the economy puts aside at minimum 24% of income or revenue in the form of savings keeping in mind that savings equal investment when savings are placed into interest bearing accounts or dividend earning investments. If every sector of the economy put aside a minimum of 24% of income or revenue during prosperous times consistently there would be fewer economic downturns and the economic downturns there would be would in turn be shorter in duration, especially if all segments of the economy tapped their reserves set aside during prosperous times to maintain stable spending priorities during economic downturns. From the perspective of business this would mean not immediately laying off workers so that the economy could reset itself without to work through layoffs. From the perspective of American households this would mean when layoffs do come, there would be fewer people being laid off and those who are laid off would have significant reserves on hand when combined with unemployment insurance which would provide the unemployed a basic income to finance their new job search and/or job retraining. This would require for business and households to be able to shelter 24% of income or revenue in tax exempt accounts and neither deposits in banks nor dividends earned on investments in equities could be taxed and the death tax would be eliminated so the estates of the deceased would not have to pay taxes on the money they established in wills for the use of beneficiaries because estates paid taxes on those monies at the time they were earned while beneficiaries need only pay the same tax they would have paid on their other income sources.

Reforming Monetary Policy

The total return on investment in the American economy in a given calendar year is equal to 10% of whatever is invested in the economy during that calendar year. With that in mind, the monetary policy of the nation would require the growth of the money supply in a particular calendar year reflect the total return on investment from the previous year minus 24%, so a total return on investment equal to 10% would result in an increase in the size of the monetary base in circulation, with 24% of the money growth being put into the markets by the Federal Reserve Bank increasing the money in circulation by 7.6% of the total return on investment. This would be to account for the fact the Federal Reserve never has a complete picture of what is occurring at any point in time in the economy and you would not want to accidentally over inflate the growth of the money supply in order to keep inflationary pressures under control. Monetary policy needs to establish a fixed relationship between the interest rate paid on bank deposits and the interest rate charged on bank loans. Therefore, in keeping with the current principles this proposal has already recommended, the minimal interest paid on bank deposits of all kinds (checking & savings) shall be equal to 76% of the interest paid on bank loans. To illustrate, if banks are charging 1% on a loan they should be paying .76% on bank deposits. The minimal interest paid on bank deposits would be equal to 76% of the 7.6% growth in the nation’s money supply which would mean banks paying a minimum interest of 5.776% which happens to be 76% of 7.6%. Central Banks should also invest 24% of all foreign currency reserves they have in the nation’s stock exchanges from the countries which they originated and reinvest 76% of the dividends from those investments again into the stock markets where the stocks are held while repatriating 24% of the dividends to the Central Banks’ economies’ stock exchanges. Having Central Banks invest directly in the global equity markets will allow governments to allow citizens and business to keep a greater share of their income they earn, while taxes and spending are cut along with debt while revenue taken in by government grows as a result of compounding dividends substantially replacing tax revenues. Capitalistic economies must have their governments financed by the same capitalistic principles as business in order to be called true Capitalistic Economies. The western nations of the world have so much debt because their economies suffer from economic cognitive dissonance where the private sector economy is run on capitalism and the government economy is run on socialism. The reason behind this suggestion is an old rule of hand in the banking sector that for banks to operate profitably they needed to have a deposit to loan ratio as close to as 100% as they could obtain which necessitated that banks had to be competitive on both the interest they charged on loans and the interest they paid on deposits. Because depositors place their money in banks that pay the highest interest rates and borrowers obtain loans from banks they can borrow money at the lowest interest rate and for banks to capture the same depositors as borrowers it was necessary for the interest rates paid on bank deposits and the interest rates charged on bank loans not to be very far apart and for their relationship to one another be fixed so they move together when the Federal Reserve changes interest rates. Liquidity traps occur when the interest rate paid on bank deposits and the interest rate charged on bank loans are allowed to spread too widely apart, more than 24%, which discourages bank depositors from adding to their savings in a bank which cause bank reserves to grow more slowly and cause banks to issue loans at much slower pace before they have to create collateralized debt obligations to sell to investors to recapitalize lendable funds and can cause banks to use less transparent accounting principles in the creation of collateralized debt obligations which contribute to CDO’s becoming in effect Ponzi schemes because investors might not be given an honest appraisal of the underlining financial worth of CDO’s after banks slice and dice pools of bank loans, and commercial paper, and government bonds into new financial portfolios. In the old days’ banks lendable funds came primarily from the sale of the bank’s own stock, bank deposits, and the sale of bank loans. If the Federal Reserve is going to require banks to keep a certain amount of cash on hand on at the Federal Reserve Bank, the Federal Reserve should pay interest on those monies and I suggest those monies be paid at 4.38976% which is 76% of 5.776% paid to bank depositors by banks. Today’s bankers wrongly believe the greater the spread between the interest paid on bank deposits and the interest charged on bank loans the more profitably they will operate but they fail to calculate the lost opportunity costs resulting from lower interest being paid on bank deposits contributes to fewer individuals and families establishing bank accounts and current depositors not increasing the their rate of saving so that banks cash reserves end up growing more slowly resulting in banks being able to originate fewer loans and therefore suffer slower growing profits. When banks do not strive to be competitive both in the interest they pay on bank deposits and the interest they charge on loans by offering the highest interest on bank deposits and charging lower interest on bank loans necessitating in the interest rate spread between bank deposits and bank loans being very narrow not exceeding 24%, they will have fewer depositors who are also borrowers and therefore narrow the potential profits they could possibly earn before they have to resort to selling bank loans as collateralized debt obligations. Because they pay significantly lower interest on deposits as they charge on loans their borrowers do not save as much so there is a greater probability of borrowers defaulting on loans so the banks when they package collateralized debt

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obligations the greater financial risk investors are exposed to means such investors will demand lower purchase price on the CDOs they purchase reducing the profits banks can earn selling CDOs to recapitalize their ability to originate new loans. Another thing banks do to hurt their ability to earn greater profits is to set minimum balance requirements and charge punishing fees against accounts that fail to maintain a minimum balance. If the management of banks were smarter they would repeal minimum balance requirements and do away with punishing bank fees charged to accounts that fail to maintain a minimum balance and simply raise the interest paid on bank deposits while closing the gap between the interest charged on loans and the interest paid on bank deposits. But that will probably require that the federal, state and local governments repeal taxes on bank deposits interest earned and capital gains appreciation on equities’ dividends. Minimum balance requirements created either in the late 1970’s or early 1980’s in response to banks having to report the interest earned on bank deposits to every level of government and to every client’s 1099 withholding forms so clients could pay taxes on the interest they earned which increased the accounting costs of banks resulting in them attempting to recover the increased cost of operation by setting minimum balance requirements and creating punishing bank fees on accounts that fail to comply with the minimum balance requirement which in the 1980’s forced millions of bank depositors out of the banking system which caused the banking crisis of the late 1980’s. In 2005 the Federal Reserve Bank of Chicago reported 25% of American families lack a savings or checking account and are forced to transact their financial affairs in Check Cashing Establishments spending more than 600 a year on check cashing services. The money left on the table by the banking industry because 25% of American Families in 2005 lacked a checking or savings account I estimate to be about 11 billion dollars in 2005 dollars which I arrived at by multiplying 25% of American Families by $600 based on the census bureau estimate of the number families in America in 2005. Another consequence of taxing bank deposits was that banks did away with pass book savings accounts in favor of statement savings accounts which reduced the psychological incentive to save as people could see their savings grow over months and years instead of the just immediate weeks prior to the closing date on their statement savings account report they receive monthly. In the 1970’s George F. Will of the Washington Post wrote an excellent column critiquing Jimmy Carter’s than proposal to tax the interest on bank deposits as a means to raise money to pay down the national debt which at that time still was under a Trillion Dollars. He predicted in the long run his taxes would have no positive discernable benefit in reducing the size of the national debt and would likely do the economy grave harm in the long run.

TO BAD THAT ARTICLE COULD NOT BE OBTAINED AND REPUBLISSHED SOMEWHERE, SUCH AS, THE CITY JOURNAL, SO THAT WE COULD RECOGNIZE THE DAMAGE DONE TO OUR ECONOMY AS A RESULT OF TAXING BANK DEPOSITS WHICH ENDED UP FORCING MILLIONS OF BANK DEPOSITORS IN THE LOWER MIDDLE CLASS TO LEAVE THE BANKING SECTOR NEVER TO RETURN.BEFORE THE PASSAGE OF THAT TAX AMERICA WAS STILL THE GREATEST LENDER NATION, BUT TODAY WE ARE THE GREATEST DEBTOR NATION. When the Us Treasury issues government bonds or Treasury Bills the Federal Reserve should sell them at a minimum of 5.776% and use the money raised selling government debt to buy equities or commercial paper (corporate bonds) and use half of equities to establish infrastructure investment banks and use the remaining 50% of proceeds from the sale of government bonds to back Social Security, Medicare, Medicaid and all other entitlements outlined above with equities and commercial paper just as commercial insurance companies do. This would be in addition to the monies collected for support of entitlement programs also being invested in dividend paying equities and commercial paper which when purchased would throw off more revenue to support these entitlements besides what the government contributes to the support of entitlements from the taxes it collects. The Standard and Poor’s Index owes most of its growth, more than 50% to the reinvestment of dividends paid out on Blue Chip Stocks rather than stock appreciation, government entitlements should expect similar growth if they are invested in primarily dividend paying equities. The collective reinvestment of compounding dividends on equities over the term of maturity of government bonds would be used to pay off the interest on government bonds when they reach maturity. I recommend entitlements programs of the federal government be invested exclusively in dividend paying equities, commercial paper, and government bonds of governments outside of the federal government because the federal government cannot pay interest to itself on its own bonds. Social Security, Medicare and Medicaid primarily and all other entitlement programs would now be more financially sound if their financial administrators had kept this principle in mind when they were established instead of allowing these entitlement programs to evolve into legal Ponzi Schemes endorsed by government. We need for economic academics to come out against allowing Central Banks to push interest rates on government debt to near zero percent or even use negative interest rates as foolish means of attempting to stimulate the economy because you cannot stimulate the economy by reducing the return on investment in financial instruments such as government bonds or even commercial paper. The economy of the world is stalled because the collective debt of all the nations of the world greatly exceeds the global domestic product by more than 300%. Paying down the debt as I describe here would be austerity done intelligently because even as these policies would cut spending and taxes they would also generate more revenue for government by replacing a significant percentage of government tax revenue with compounding dividends on equities, and revenue derived from leasing the air development rights of government real estate. At extremely low interest rates multibillion dollar banks or multitrillion dollar banks are not interested in lending to small businesses, which is why the economy of the western nations and Japan have not taken off. No matter how you look at the policy of Central Banks foolishly attempting to save money servicing the national debt by keeping interest rates on government debt artificially low as a means of slowing the growth of government debt principle is merely a waste of valuable time in federal government getting its financial house in order. An honest appraisal, I believe, would demonstrate such efforts only create moral hazard and actually in practice have the opposite effect as intended. For example, when interest rates are kept artificially low on government debt legislators do not feel the urgency to contain government spending and fail to attempt to whittle down the government debt and tend to spend more at lower rates of interest on debt than they would at higher rates of interest. Secondly, keeping interest rates on debt artificially low, tends to cause investors to drive up the values on commodities in search of higher yield such as oil and other fossil fuels which raise the cost of energy in general, and as well precious metals are also pushed higher ,which increase the cost of doing business making things governments purchase more expensive so whatever government saves on interest charges is offset by increased costs of principle on government debt, as government purchased consumables and professional services become more expensive. Thirdly, if interest rates are too low it discourages banks from lending to small businesses and because more than 70% of the work force is

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employed by small businesses with 20 people or less, if small businesses have trouble raising their capital requirements it will tend to cause a negative economic ripple effecting employment throughout the economy resulting in government collecting less revenue in taxes that could be used to pay down debt which means with less being paid to retire debt, the principle on the debt will end up growing faster.

Empowering Financial Watchdogs; Local and State Government Comptrollers, and the Federal Reserve to Check the Spending of Governments’ Chief Executive Officers, Mayor’s

Governors and Presidents and Federal, State and Local Governments’ Legislatures

The greatest problem with attempting to retire government debt I believe stems from the fact the government executives, i.e. Mayors. Governors and Presidents have less control over spending than do corporate executives, so there is no single authority held accountable for containing rising debt. At the state and local levels of government comptrollers should have greater say in containing spending and should probably be given special veto powers over certain spending priorities related to specialized government authorities such as Highway Authorities, Transit Agencies, Economic Development Agencies, and Industrial Development Agencies, and the State Dormitory Authority that the executive branch and legislative branch have agreed to. In England, the Central Bank not only has oversight authority in managing monetary policy they also have authority in shaping tax and fiscal policy which the Federal Reserve should also have. I would like to caution though, while the Federal Reserve should have greater authority in shaping fiscal policy it should only be concerned with aggregate spending as a whole and not focused on individual line items in the budget. The federal, state and local governments must begin practicing what is known as zero based budgeting where without a significant increase in the size of the tax base or revenue stream, new spending on individual line items could not be increased without consolidating and shrinking spending on other line items by the same dollar amount elsewhere in the budget plan. If individual agencies and departments of government leased the air rights to land they acquired to commercial real estate developers to erect commercial office buildings that would reserve space in their structure for the agency or department that owns the land, their financing of their agency or departments operating budget through air development rights revenue instead of taxes would be a perfect example of applied zero based budgeting. It is the kind of thinking that is needed to get governments’ financial house in order worldwide, sparing the tax payers worldwide the gloom and doom of government conventional thinking that underlines why we have not been successful in retiring a significant portion of government debt and is why worldwide total debt of government, business and households exceeds 300% of income. It is what accounts for the less than 2% growth we endured these past eight years, from Bush to Obama.

In shrinking the debt of the federal, state and local governments, everything ought to be on the table including local governments taking the

lead in cutting their operating budgets by considering the merger of two or more local governments into a single much larger corporate entities as happened in 1898 with the merger of 5 independent county governments in lower New York State to form a greater New York City bringing Manhattan, The Bronx, Queens Brooklyn and Staten Island under the same Police, Fire and Sanitation Commissioners, and the Public schools under the same chancellor and the entire city under the same Chief Executive officer, Mayor and the same Legislature. While we are talking of merging and consolidating two or more smaller local governments into fewer but much larger local governments we might consider applying the same logic at the state level merging and consolidating two or more state governments into fewer but much larger Regional Governments. If that is rejected as too radical another approach might be to merge and consolidate two or more different states Economic Development Agencies, Industrial Development Agencies (What is the Difference?) and Highway Authorities, or Transportation Agencies. For example, New York and New Jersey should encourage the Port Authority of New York and New Jersey and New York City’s MTA to strike a grand bargain where the MTA takes over the operation of New Jersey Transit and the Path Rail Road so with one metro card you could travel on the Path and New York City’s Transit System and New Jersey Transit’s commuter trains and the MTA’s commuter trains. The idea here being the MTA would take control of both Fright Rail and Passenger Rail Transportation between the two states and The Port Authority will focus on Air Ports and Bridges and Tunnels between the two states.

Reforming Federal State and Local Government Taxes

Each level of government should offer each employed person a 24% exemption on income taxes to help emphasis savings for families and individuals and at the same time eliminate taxes on bank deposits, capital gains, and estate taxes all of which were taxed at the time they were earned. While estate taxes should be eliminated taxes on beneficiaries of estates wills should be taxed at the same level as ordinary income from wages and salary.

In giving every individual employed person a 24% exemption from federal state and local income taxes including federal payroll taxes the per child tax deduction would be eliminated the tax code should apply as much as possible the same way to married and single people consistent with the Constitution’s equal protection clause, and an Individual’s entire income from wages and salary should be subject to Social Security withholding taxes with self-employed people having to pay only half the Social Security Withholding tax because being self-employed they are their own boss and one of their own employees. Allowing self -employed people to only have to pay half of the social security withholding for their own Social Security contribution means they will have more money to invest in wages and salary of their employees which would mean government collects more income taxes in the form of wages reducing income inequality especially as a self- employed individual’s entire income would become subject to social security withholdings having them pay only the employee half of the contribution would be fair and equitable to all concerned. Eliminating the estate tax while subjecting all individual’s entire income to the Social Security tax will make Social Security more financially sound especially as Social Security taxes will be invested in the global equity markets along with 24% of all government revenue being invested in Sovereign Wealth Funds Dividend Re-Investment Plans (Apart from what is taken in taxes to support entitlement spending which also would be invested in the global equity markets in Dividend Re-Investment Plans Sovereign Wealth Funds) as commercial insurances are invested. Every business likewise would be given a 24% income tax exemption at the federal state and local tax system to encourage them to invest in their own company and the larger economy. The total return on investment in the American Economy is equal to 10% of whatever is invested in given calendar year, so you would want tax policy, fiscal policy and monetary policy to be conducted in such a way that each year more money would be invested in the economy than the previous year by every participant in the economy putting more away in savings every year with a fixed percentage of income going to savings and a fixed percentage of dividends earned interest being reinvested or a fixed percentage of interest on bank deposits being left

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Thomas J. Kraus, Executive Director, Global Destiny Creative Concepts, P.O. Box 24802, Brooklyn, NY 11202-4802, [email protected], (917) 795-6610

in the account to compound. The cure for running continuous deficits that will suppress economic growth is to run continuous surpluses that will raise economic growth because savings equal investment but only if savings are put into interest baring accounts that pay an interest rate that is higher than the rate of inflation. If savings are kept in cookie jars, cigar boxes, under the mattress or in wall safes where the savings do not circulate in the economy because they are not lent out to anyone then they become static and decline in value as a result of standing still in the economy. It is for this reason Central Banks should never impose near zero or even negative interest rates, especially when factoring low interest rates on savings against inflation. Higher interest rates on money contribute to a higher velocity of money circulating in the economy. When interest rates on money are higher people tend to both save more and paradoxically spend more because higher compounding of each dollar gives people more money to spend especially if they save 76% of their compounding interest or dividends and allow it to continue to compound and be reinvested.

The Need for Government Fiscal, Tax And Monetary Policy to Emphasis Savings

Having Government Budgeting Prioritizes Saving for the Future by Requiring Government Agencies and Departments to be required to live on 76% of their annual budget allocation and have to bank 24% of their annual allocation into Sovereign Wealth Funds just as American families should bank their income and for all levels of government to provide business and households a 24% tax exemption would have the twin benefits of containing the growth of inflation and as well the growth of debt in the economy while at the same time promoting higher truer economic growth not as a result of inflation but as a result of greater output in goods in services with more businesses being established creating more jobs driving up wages as a result of greater investment in the economy and greater demand for labor. If government gave a 24% tax exemption at every level of government workers could have the 24% income go into an IRA prior to taxes being withheld from their pay check and they would not miss the money because they would not see it. As mentioned earlier, according to an economist report from 2012, total debt in the world, factoring government, business, and households exceeds 300% of World Gross Domestic Product. Their figures were $224 Trillion in debt against a World Domestic Product of only $75 Trillion with debt exceeding income by 313%. When business, households and government rely too much on credit for major purchases, instead of saving for those purchases it adds both debt and inflated growth to the economy to the economy and money spent on servicing debt by business and government leaves less for these institutions to invest in wages and salary and benefits for their employees. More money spent by households servicing debt leaves less for saving for the future.

Financial advisors to individuals, families and business advise their clients when making out a budget they begin with savings establishing how much savings they will put aside every payroll period as a fixed percentage of their income by paying themselves first before making any other payments to outsiders. Most families cannot save the proper amount because government takes too much in taxes. If government taxed less as a result of both spending less and as well replacing significant portion of government tax revenue with more stable revenue sources such as air development rights lease revenue on government real estate than the money families were able to save tax free would appreciate faster reducing citizens’ dependence on government social programs for income maintenance. Private sector insurers for example could provide employees their own unemployment insurance to supplement what they get from the government from withholdings from their pay by government for that purpose. My goal is not to reduce benefits paid in entitlements but to increase how much more individuals can do for themselves apart from government which would be to their benefit and as well all levels of governments benefit. This idea is based on Catholic Theological principle known as Subsidiarity which calls for economic and social problems being solved by institutions as close to the where a problem originated as possible that can most efficiently address the economic or social problem. Taxing employers and employees less so that that employers can pay higher wages and employees can save more for their own future is more efficient than for a greater share of business and taxpayers incomes going to sustain the government bureaucracy debt which at this writing exceeds $19 Trillion against an American Gross Domestic Product of only $18 Trillion dollars. Sincerely

Thomas J. Kraus 599 Ralph Avenue Brooklyn, NY 11233-5113 917-795-6610 [email protected] P.s. It is a pet theory of mine if all publicly traded corporations distributed a small percentage of their profits as dividends, as little as 7.6%. The stock market as a whole would have a greater propensity to rise rather than fall if all other things remain equal. Because people buy stock as an investment in hopes that it will appreciate, and if stocks do not pay a dividend, when they do appreciate people are more likely to sell some of their stock to obtain a return on their investment. But if they were all along receiving dividends paid on that same stock they would be more likely to hold the stock and use the dividends to purchase more shares of that particular stock or another stock creating more upward economic trajectory whereas when people sell stock to realize a return, their selling of their stock will tend to either slow the upward trajectory and possibly send that stock and the market falling.

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