The FAZ is the physical structure in which there’re economic exchanges through the FAZ Money and in which is facilitated the wealth creation through free loans to individuals and companies, then redistributed to all FAZ participants through the basic income.
Negative rate bonds as currency. In the FAZ, the FAZ Money is issued in the form of negative rate bonds. The money supply is made up of different monetary instruments and the paper money is only one of them, another one is the bond. The proposal is to issue negative rate bonds expressed into the currency existing in a country (euro, dollar, yen, etc. ..), that will circulate into the FAZ.
Legally speaking, in the latin law, to the corporations is granted the right to issue bonds up to a maximum of twice the share capital, legal reserve and reserves resulting from the approved budget.
In the current financial system there have been several negative rate bonds issuances, convertible bonds generally have a fixed date with a warrant negative in anticipation of a strong increase of the shares to be converted. One of these loans was issued long time ago from the bottom of Warren Buffett and signed by more than a billion dollars in a few hours, another issue of bonds with negative rate was carried out in 2001 by the Société Générale in yen on the expectation of deflation in Japan that would reduced the prices of goods to a greater extent the negative rate applied.
So, a company can legally issue negative rate bonds.
Organization. The FAZ consists of two subjects, one that issues the money in the form of negative rate bonds and another that accepts and redistributes them respectively as investment credits and life credits.
1. The FAZ Company is the entity which issues the negative rate bonds. It could be the Public Limited Company (PLC). It can be promoted by public or private sector.
2. The FAZ Association. The Association is the entity which accepts and redistributes the negative rate bonds. It consists of individuals, companies and associations. Receives investments’ funds, which distributes to natural and legal persons, and receives the basic income, which distributes to all members of the Association. Inside it there is the FAZ Scientific Committee that conducts research and development.
Ownership. A FAZ can be of two kinds:
The Public FAZ, which is promoted by public entities (municipalities, provinces, regions). The FAZ Company (issuing entity) is a public company controlled by the promoter Public Entity, that – through the negative rate bonds issuance – facilitates local development, funds new public services and provides basic income to the citizens of the area in which insists the public entity, without increasing their debt. The FAZ Association (acceptance and redistribution entity) is a private association. The relationship between the Company and the Association is governed by a contract. The Public FAZ is carried out by the Public Entity by means of a public company which already exists and then it will enter into an agreement with the Association.
The Private FAZ, which is promoted by associated private companies. The FAZ Company (issuing entity) is a syndacate company, formed by promoter companies, that – through the negative rate bonds issuance – can increase their business, funds associated companies and provides basic income to the citizens of the area in which insists the syndacate company, without increasing their debt. The FAZ Association (acceptance and redistribution entity) is a private association. The relationship between the company and the Association is governed by a contract. The Private FAZ is performed by private companies through a consortium company – to be established by the member companies through the transfer of unredeemable credits (but not formally written off) to form the shares’ capital – which will enter into an agreement with the FAZ Association.
Negative rate bonds issuance. The FAZ Company make a first issuance for Investment Credit will be underwritten by the Association who will dispense shares to the associated companies and individuals to fund economic projects proposed by those, a second issuance for Life Credit will be underwritten by the Association, who will dispense shares to associated individuals as universal and unconditional basic income.
The bonds will be issued to fund works, production of goods and services, and the rate will be determined by the company managers, upon the proposal of the Association Scientific Committee, taking into account the obsolescence average level of the goods and services produced, so that the life of the created money will be equal to the assets’ life created through investments. Bonds will be issued subsequently taking account of the consistency of production favoured by past emissions, otherwise they will have no justification.
Automatic mechanisms for the money issuance and transparency in the accounts’ management will be fundamental FAZ principles, so that no one can have the power of decision in creation of money for investment. The goal is to avoid the possibility that arises a power on currency management. After the emission for investments, there will be an issuance to support demand through provision of basic income to all FAZ members.
The circulation of negative rate bonds facilitates the creation and development of an economic circuit in which partners can find a market for their goods, as well as aiding the recovery of general well-being through the provision of basic income that stimulates demand.
At the end of the loan, if it is chosen to issue bond in the form of convertible bonds, is distributed by the issuer among the bonds’ holders a company’s share of a value equal to the rate of increase of wealth made from that investment, distribution which results in an individual credit capacity increase.
The negative rate bonds may be issued in two ways: (1) Materialized issuance. The issuance of bonds takes place in this way: on paper, in bearer form, with a fixed coupon, at par, with a negative rate of 5% annually, during twenty-year. The bonds are printed in paper form with free graphics, in units of 1, 5, 10, 50 units (i.e. Euros), and report the information required by law. (2) dematerialized issuance. The issuance of bonds takes place in this way: in electronic form, in bearer form, with a fixed coupon, at par, with a negative rate of 5% annually, during twenty-year. The electronic bonds are entered into a electronic bonds’ custody at a bank.
Accession clauses. The relationship between the FAZ members are governed by the Statute of the Association, by the Statute of the Company and by the contract between the Company and the Association. As the contracts are regulated by the law, can be foreseen in case of breach of contract (i.e. a member that get out the FAZ without authorization) financial penalties.
The basic clauses are:
1) to accept, for the exchange of their goods, services and / or activities, to practice a reduction of the price in national currency (i.e. euro) of at least 50% and accept for the rest the negative rate bonds. Obviously, a firm may decide to allocate a part of their production activities within the association and to handle the rest in the national currency (i.e. Euros) as it is commonly done. The important thing is that the price is reduced by at least 50%, as well as the remuneration of the members’ activities will be reduced by 50% and the rest will be paid with the new money. This means that the Association will also become the occasion for meetings between labor supply and demand at conditions that will be supposedly better than the current ones.
2) to do not engage in price increases within the Faz and pricing its products in negative rate bonds;
3) to use for the transactions in negative rate bonds the electronic exchange system operated by the Association;
4) to accept that the bonds are burdened by a negative rate whose measurement is determined periodically by the Assembly of the Association within the range indicated by the Scientific Committee;
5) to accept that the company will emit and distribute negative rate bonds as Life Credit to all members according to criteria set by the Scientific Committee, which are generally commensurate with the total wealth of society (the so-called Social Capital);
6) to comply with the general operating rules and the decisions of the Association.
Tax issues. For the fiscal aspects of the operation, the issuances can be considered as discounts of the list price of the goods and there is a precedent in this direction with decisions of the (italian) Tax Agency on the proper handling of receipts and invoices. Even the acceptance of a negative rate bond, which at the end will be near zero, can be considered as a discount on the total price, just because you take something in return, from the point of view of capital, is zero or close to it. In this respect, one can imagine that the Association is a structure in which it is practiced solidarity among the members who apply substantial discounts between them.
Implementation costs. The costs for the FAZ creation are dependent on the amplitude of the circuit and the complexity of exchange that you want to implement. In general, however, the cost to be taken into account are: Administrative: Company and Association incorporation; printing costs for the issuance of paper bonds or holding securities custody for electronic issued bonds; Technological: personalization and program management account maintenance and construction and maintenance of the website and the server; Marketing: preparation and printing of publicity materials initiative and promotion activities; Management control. To make the management control it must be operating a research center that monitors economic activities within the circuit and carries out the analysis and measurements necessary to propose the decisions of its competence.