Forging America: My Campaign Manager is Roosevelt

Chapter 338 - 164: Alchemist 3

Leo’s brow furrowed. "Are you saying that there are no US Dollars in our closed loop, but the Federal Government wants to take US Dollars out of it?"

"Exactly," Arthur said with a nod. "And if our Industry Alliance Trust acts as the intermediary for these transactions, under federal law, the trust itself could be defined as a barter exchange. We would be required to file Form 1099-B with the National Taxation Bureau, listing the total value of assets each member received through these vouchers."

"If we don’t file, that’s collective tax evasion. The FBI and the National Taxation Bureau would freeze the trust account and arrest all of us the very next day. But if we do file, how are the companies holding nothing but vouchers supposed to pay their federal corporate income tax?"

"That’s why the vouchers are only part of the solution," Arthur said. "When the city government pays its bills, it can’t use only vouchers. We have to pay at least 60% in US Dollars."

"Why 60%?" Leo asked.

Arthur explained, "It touches upon a critical issue for people’s livelihoods."

"It’s fine for the vouchers to circulate endlessly between businesses and the government. But how are the companies handling these projects supposed to pay their workers?"

"Workers can’t eat vouchers, and they don’t pay commercial taxes. They need US Dollars to buy bread at the supermarket, pay their rent, and cover their kids’ tuition."

"If the city government only issues these vouchers to businesses, where are they supposed to get the cash to pay their workers? If they can’t make payroll, your revitalization plan will be swamped by a wave of strikes overnight."

"Ultimately," Arthur continued, answering his own rhetorical question, "to keep this system running, the city government still has to provide cash."

"So our strategy is to use a minimal amount of US Dollar cash to drive a massive circulation of vouchers."

"To achieve this, we came up with three methods."

Arthur held up three fingers.

"First, a hybrid payment system."

"When the government settles payments for projects with factories in cities like Erie and Scranton, we won’t pay entirely in vouchers. We’ll use a ratio of 60% US Dollar cash and 40% credit vouchers."

Arthur quickly wrote a few formulas on the whiteboard.

"Based on our projections, a typical manufacturing company’s essential cash expenditures—which include worker salaries, federal taxes paid to the National Taxation Bureau, and raw materials purchased from outside the area that can’t be bought with vouchers—make up about 60% of its total costs."

"That 60% cash payment is specifically designed to cover these costs that require US Dollars."

"The remaining 40%, which would have originally gone toward corporate profits, depreciation, and local procurement, will be paid entirely with vouchers."

"Just like that, the government’s need for cash drops by 40%. With the money we have on hand, we could have only built one park before. Now, we can build two."

"But what if that’s not enough?" Leo pressed. "What if a company’s cash flow is tight and that 60% isn’t enough to make payroll?"

"That’s the second line of defense."

Arthur pointed to the "Pennsylvania Industry Alliance Trust" in the center of the flowchart.

"The lender of last resort mechanism."

"The Saint Claude Family’s capital pool will open a discount window for the trust."

"If a road construction company gets to the end of the month and finds it doesn’t have enough cash for payroll, it can bring its leftover credit vouchers to the trust."

"The trust will purchase these vouchers, but at a discount. For instance, if a company turns in vouchers with a face value of one million, the trust gives it 950,000 USD in cash."

"Exchanging at a discount will sting, so companies will do everything they can to spend the vouchers within the alliance. They’ll only come to us for a cash exchange as a last resort, when they absolutely have to make payroll to stay afloat."

"This guarantees workers always get paid, while also ensuring the vouchers remain locked in circulation."

"But why?" Leo asked. "Why would the Saint Claude Family be willing to serve as this discount window?"

Arthur answered, "Because it’s a profitable venture."

"When those factory owners have to come to us for US Dollars to pay their federal taxes, we’ll buy their vouchers at 95% of face value. That means for every 95 cents we pay out, we receive a credit voucher worth one US Dollar."

"Then, the Saint Claude Family has its own office buildings, hotels, and logistics centers in various cities, all of which owe property taxes and commercial surtaxes to the municipal government."

"We’ll take the vouchers we just acquired and turn them right back over to the city’s tax bureau at their full one-dollar face value to offset our own tax liabilities."

"In one hand, out the other. Without doing a thing, we’ve made a 5% risk-free arbitrage return. In today’s low-interest-rate market, that’s practically free money."

Leo nodded.

’A binding of interests. Only by ensuring the Saint Claude Family profits would this so-called "discount window" remain permanently open.’

Arthur paused, a flicker of madness in his eyes.

"In fact, if you’re bold enough, we can move on to the third step."

"What?"

"Payroll vouchers," Arthur said.

"We could lobby major local supermarket chains in Pittsburgh, like Giant Eagle, or even the small neighborhood shops, to join the alliance."

"We’ll tell these businesses that if they accept the vouchers, we can reduce their water fees and property taxes."

"Then, when companies issue payroll, the pay stub could show: 2,000 US Dollars in cash, plus 500 ’Revitalization Vouchers.’"

"Workers could then take these vouchers to the supermarket for discounted groceries or to the gas station to fill up their tanks. The supermarkets collect the vouchers and turn them back in to the government to offset their taxes."