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Jubilee Shares and the American Monetary Act

Steve Keen is always first with economic ideas and first with new communication technology. Here is a his account of the American Monetary Act conference and includes links to various presentations. He talks mainly of the need to dampen speculation in company shares and proposes a ‘Jubilee share’ – a great idea.

  1. To redefine shares so that, if purchased from a company directly, they last forever (as all shares do now), but once these shares are sold by the original owner, they last another 50 years before they expire; and
  2. To limit the debt that can be secured against a property to ten times the annual rental of that property.

The objective in both cases is to make unproductive debt  much less attractive to borrowers.

His ideas to prevent asset price inflation in property is weak in comparison.

If we instead based the level of debt on the income-generating capacity of the property being purchased, rather than on the income of the buyer, then we would forge a link between asset prices and incomes that is currently easily punctured by rising debt. It would still be possible–indeed necessary–to buy a property for more than ten times its annual rental. But then the excess of the price over the loan would be genuinely the savings of the buyer, and an increase in the price of a house would mean a fall in leverage, rather than an increase in leverage as now. There would be a negative feedback loop between house prices and leverage. That hopefully would stop house price bubbles developing in the first place, and take dwellings out of the realm of speculation back into the realm of housing, where they belong.

Could it be Steve Keen has never been introduced to the concept of land Value Taxation as a solution to property  inflation. It does what he demands – the desire for the debt drug is destroyed by the fact that the unproductive increase in the land value is captured by the tax thus preventing the price increase – debt increase feedback loop.

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