Federal Reserve Bank
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by Korbin King
Hello America,
My name is Korbin King and I am your president. I am not a financial expert, nor am I a political leader. In the simplest terms, I am a struggling business man that wants the United States of America to thrive in our new world of Erepublik. It is clear that we need a plan, and we need it now. This is what I propose:
Effective immediately, I will begin issuing loans to existing and prospective General Managers for the sole purpose of creating new companies. These loans will be drawn from the financial resources of our nation's treasury. The first stages of this venture will be directly controlled by myself and will be referred to as the "Federal Reserve Bank". As I take on advisors to assist me in managing this bank, control will be shifted from solitary presidential control to an appointed group of board members. These members will work as a group to make the necessary financial decisions related to day to day banking activities. It is important to note two things: First, I do not want dictatorial power over this bank. I am only taking control in the beginning so that loans can be issued as soon as possible. Second, I named it Federal Reserve Bank because the name tends to generate feelings of government control that I would prefer we avoid at all cost. Unfortunately, I see no other way to get the economy rolling. My hope is that at some point private GM's will be profitable enough to start their own banks and we can abolish the Fed. Chances are good that by the time this is possible I will no longer be in office so I'll just do my best to advise the future administration.
Loans will be issued to those most likely to succeed in managing a company. Qualifications will include:
1) A significant downpayment - This doesn't necessarily mean that the downpayment needs to be a large one. I just think it's reasonable to assume that if a person has managed to hold onto and/or generate some amount of wealth up to this point in the game, they are likely to do well in running a future company. Savings indicates restraint and income indicates success. This would also indicate the borrower's ability to repay the loan which is critical in the success of this plan.
2) Three character references - These references should include one existing business owner, one member of congress and one potential employee. I know this seems like red tape, but we need some additional obstacles to the approval process. I've had many people ask me to loan them gold to start a company or purchase export licenses, but I have no basis to determine their success other than their sales pitch. Of course a good sales pitch may be all you need to convince me, but the added references will demonstrate that the applicant has some influence in the community.
3) Repayment agreement - The borrower must agree to the terms set forth by me. This agreement must be honored until the loan has been repaid in full regardless of the current administration. My point here is that the applicant will be in debt to the taxpayers, not the administration. Even if you despise the people running the country you must honor the debt that you have incurred. Failure to repay the loan will result in the borrower being labeled as a poor credit risk by the Federal Reserve Bank and this information will be readily available to any private bank so that they can protect their assets.
To apply for a loan, submit the following to me in a message:
- The amount you wish to borrow in gold
- The amount of your downpayment in USD
- Your list of three references as explained above
- Your planned weekly repayment in gold. (minimum of 1 Gold per week)
The best qualified applicants will receive the loans. I am not sure how much gold will be made available for loans. I need to seek advice on this as we will also have gold available for purchase as well. I think making half of the treasury's gold available for loans and half available for purchase may work out well, but this may change if I am convinced otherwise. Loans will be limited to 50 Gold for each qualified candidate. This should be enough capital to start a company although longer term companies such as Hospitals may need to seek out further financial support from private citizens. I think success of a Hospitals company will need to rely on many donations during the production process.
More information will be provided as this plan takes shape and chances are good that changes will need to be made as people point out things that I have overlooked. The approval process will probably take a minimum of three days so that players have time to log on and review the opportunity as well as submit the application and notify references. Please let me know what you think. I look forward to reviewing applications and helping our future GM's create jobs and generate wealth.
- Korbin
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Comments
fantastic idea! I was doing the same for Italy, but without such a structure and without repayment. I will borrow it for my country
President carloarturo
Sounds like a very interesting idea. However, how do you actually make use of national funds? I haven't seen the option to make donations from the national budget...
I also don't understand how national funds come into this either.
National funds are had from taxes -- such as Income Tax, Import Tax, Sales Tax, etc.
All of the taxes collected from those methods are then transferred to the United States Vault (Treasury). The President (and I assume Congress), can then use that money to execute any plans, e.g. a Federal Reserve.
Solid plan. It will work as long as we have good company loaners.
Aristobrat, those taxes are collected in national currency by the state. That's clear. Now, how does the president dispose of those funds? I am president and don't see any options to donate money or to transfer funds to anyone.
Great idea, and I hope we can replicate it in Russia once we actually get a gov't organized! One drawback, however, is that there is no real way to foreclose upon those who default on their loans. It seems to me that a bad reputation and being blackballed from future loans is not enough of an incentive to repay the loan, and this means there is a high likelihood the bank will issue bad loans.
I still hope that the admins will create a banking module that will include some way to enforce repayment (like auto-withdraws set-up at the time of the loan to be taken from the companies accounts every five days, for example) or some significant penalty for defaulting (like having the ability to bar the company from the domestic market and from exporting goods until the loan is repaid; or being able to foreclose and take over the company after 3 missed payments, etc.)
Also, I noticed that you made no mention of interest. Do you charge interest on the amount, and if so what is the percentage rate?
great idea we are going to try and do the same in France!
Excellent idea (I kind of wish I'd read all this after responding to that interview. Now people might think I'm ripping you off 😛).
Cheers.
It is true that there is no standard way to distribute treasury resources by clicking on a button. My plan is to first receive any downpayment from the borrower (this may be zero dollars if the money just isn't available). Then comes the risky part. I will choose a time that is only known by me to sell the gold to myself at a very low rate in order to transfer the gold out of the treasury. Then I will simply donate it to the borrower. Of course now that the developers have gone and added donation taxes my plan is going to be more complicated. If I calculate taxes wrong or somehow the system rounds the taxed amounts in a way that isn't expected I may end up with less gold that we need. I don't know why they decided to do that but it was a bad idea.
As for borrowers defaulting on loans, of course this is possible but hopefully the application process will help weed out some of the bad eggs. Investing is about risk. Unfortunately the current conditions and modules force us to take more risks than we would like. But we must do something.
If I don't receive any applications I would like to loan the gold to myself and open both a Gift and a Weapons company. I can have another person mediate my repayment. If anyone has an issue with this speak up. I simply want to get this moving, and if I'm the only person that will apply for a loan then I will do it. i know it seems shady but we need jobs.
so is that then the only way to get money out of a government? by offering to exchange the currency at a discounted rate??
ah, that gives me an idea. Korbin I think I've got a way to make the 'government procurements' idea I've been thinking about finally work. I'll need to post the idea to explain it to the admins first probably though
@Kaleb It's the only method that I have come up with so far. The double and triple taxation is going to kill us though so I may need to find another method.
have a look at this Korbin: http://www.erepublik.com/article-2576.html
add me as a friend and message me your email address - I'd like to discuss more ideas with you about how to make this work!
I'm pretty sure the admin is going to drop the gold donation tax its stupid on the other hand the local currency tax might make sense (a lot of people paying bonuses with it to employees).
@ juan Even if an employer pays bonuses with the donation system the money is still being taxed because the employer must withdraw it from the company. When he/she does that the money is taxed at the income tax rate.
I found it odd when I first got here that there was no banks