Appendix IX: Stock acquisition mortgage loans

Pages Contents
350-362In this paper, to enhance the earning capacity of poor and middle-class people (who in recent years have suffered a substantial decline in their share of national income), we propose a new loan which facilitates acquisition of financial capital with the future earnings of financial capital acquired and we discuss some possible strengths and weaknesses of such an approach. According to our analysis, there is an undeveloped market for the broader distribution of future capital income in which the price (cost) paid for acquisition of securities to realise such future capital income plays a crucial role. More specifically, we show that increasingly elastic demand for future capital income raises consumption (and therefore production) for the entire economy and, under certain conditions, for both high and low income earners. Additionally, we describe suggestions proposed by past researchers regarding how such loans may be instituted in countries with well-functioning financial markets and monetary systems, at acquisition costs lower than average historical returns in security markets.
1. Introduction
2. The representative consumer
3. Income from financial capital
4. Two classes of consumers
5. The plausibility of acquisition of financial capital with the future earnings of financial capital
6. Summary and conclusions

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