[SHOwnsYou]

Hello! Novelty is incredible.

While economics is basically voodoo, it appears you've stumbled onto a fast track to derailing the country.

The federal reserve flipping $600 capital into $5400 of capital also creates $5400 of debt. Possibly more over time as interest weighs of the $5400. The way banks "flip" assets into higher amounts via fractional banking is by loaning it out. It doesn't just become 9x'd on their books magically. Someone has to take on the debt.

I'm not seeing how this is self-financing anything; it looks more like refinancing while causing gigantic inflation of the money supply by 9x. A $1 today is worth $0.10 after this. This is circular investment with leverage, backed by an increasingly unstable government.

Can you explain more on this actually works in practice? Where is any upside? Current debt goes away, but is replaced by 9x as much debt held by the federal reserve or swf?

[SDedu]

Thanks for your comment! I came from a model using millions various levels of income (or flipping) in a capital pool which is invested revenue generating assets like roads, bridges, AI build out which intern will off set the debt. The 9x is just a sample but I’m open to any suggestions!

[SHOwnsYou]

This is a redistribution scheme. It is a transfer of wealth to those who can take the risk to contract for the creation of the wealth generating assets. For example, a regular joe isn't going to start a construction company and win road creation contracts. The contracts would go to existing construction companies with proven histories of creating roads.

This is playing musical chairs with money while at the same time using leverage to do it. The poor get way poorer because what few dollars they do have will be worth less. The rich get way richer because there are more dollars to go into their coffers. The poor don't get many new dollars in their coffers because they have no extra money to play musical chairs with, so they never join the capital pool in proportion nor do they receive its investment dollars.

[SDedu]

Any suggestions on where to look to avoid using excessive leverage because several of the comments on this issue said this is leverage and I don’t want to compound the excessive amount of leverage in the economy all ready nor disadvantage the working class! Any tips would be appreciated!

[SHOwnsYou]

Hello,

There is no where to look. This is a fraudulent scheme. There is no way this works in any capacity when coupled with fractional reserve banking to increase the capital amount.

Th core of the idea that could maybe work is allow individual citizens to invest into a SWF and get some kind of priority as an early investor. This could allow some alignment of incentives.

But it's not real. A bigger problem emerges. Investors expect returns (especially if you offered favorable terms to jump start the fund), making it not really sovereign anymore. It comes under the whims of investors, which will all be proportionally high earners. Leaving the bottom earners poorer relatively.

Then you need to consider how it's managed, which investments are made, how are investment decisions made in terms of preferred vendors, vendor a vs vendor b. Becomes a nightmare logistically and really just becomes a target for corporate raiders via regulatory capture or even just kickbacks and hush money.

All of this just becomes redistribution with questionable chances for returns with high risks of fraud due to, among other items listed above, extreme moral hazard of the borrowers.

[SDedu]

Thanks! I’ll go to the lab and brush up on a lot of things but thanks for your input!