An Equitable Solution for All Economic Stakeholders

Finding an equitable solution for all shareholders in addressing the inflationary poverty trap requires defining stakeholders broadly across the entire economy. This includes capital owners who live off assets and investments, labor who depend on wages, the state responsible for stability and public goods, and future generations who will inherit the economic system we create.

An equitable solution must rebalance the system to work for all these groups rather than being skewed heavily toward capital owners alone.

A Multi-Pronged Framework for Equitable Solutions

This comprehensive approach involves synergistic reforms addressing the root causes of the economic imbalance.

Recalibrating the Monetary and Financial System

This approach addresses the core mechanics of money creation and compound interest through inclusive capital-building initiatives such as Baby Bonds or seed capital endowments that provide government-funded trust accounts for every child, progressively funded with more support for lower-income families. Expanding employee ownership through tax incentives for Employee Stock Ownership Plans and worker cooperatives ensures workers benefit directly from corporate growth and capital compounding.

Taming predatory debt involves actively reducing the negative effects of compound interest on the poor through caps on interest rates with strict usury laws and APR limits for all consumer lending, alongside creating public banking options through non-profit banking infrastructure like postal banking to provide low-fee services and small-dollar loans.

Reforming Fiscal Policy Through Taxation and Spending

This strategy uses government power to counteract systemic inequality with progressive wealth and capital taxes that shift the burden from labor to large capital concentrations through modest annual wealth taxes on ultra-high net worth individuals and higher marginal rates on capital gains. Strategic public investment directs tax revenue toward universal social goods like healthcare and education to reduce living costs, alongside modern infrastructure investments in public transit and green energy that create jobs and boost long-term economic efficiency.

Empowering Labor and Ensuring Fair Distribution

This ensures economic growth is widely shared by reinforcing labor bargaining power through policies supporting unionization, collective bargaining, and minimum wages tracking productivity growth. Pre-competition and anti-monopoly enforcement through vigorous antitrust laws prevents monopolistic corporations from suppressing wages and raising prices.

Ensuring Long-Term Stability and Sustainability

This addresses future generations' interests through modernized central bank mandates that expand beyond price stability and employment to explicitly include financial stability and inclusive growth. Sovereign wealth funds for public investment funded by resource or carbon taxes can distribute returns as universal basic dividends or fund public goods, giving every citizen a direct stake in national wealth.

How This Framework Serves All Stakeholders Equitably

For Capital Owners

While potentially paying slightly higher taxes, capital owners gain a more stable, resilient, and sustainable economic system. Extreme inequality leads to social unrest, political instability, and depressed consumer demand that harm long-term business and investment prospects. A prosperous middle class serves as their most valuable customer base.

For Labor and Wage Earners

Workers gain rising real wages, security from predatory debt, a capital stake in the economy, and a robust social safety net. This enables participation in wealth creation rather than being perpetual victims of inflation.

For the State and Public Institutions

Government benefits from a broader tax base, reduced social spending on poverty-related issues, and greater political legitimacy. A less divided society proves fundamentally easier to govern effectively.

For Future Generations

They inherit a more balanced economic system less prone to crises, with a healthier environment from green investments, and greater opportunities for individual prosperity and economic participation.

Conclusion: Toward a Balanced Economic System

The most equitable solution transforms the system from one that primarily protects existing capital to one that dynamically cultivates broad-based human capital and shared prosperity. The goal is not to eliminate the fiat and compound interest system, which provides necessary flexibility and growth potential, but to build guardrails and inclusive mechanisms within it. This ensures the power of capital compounding serves society as a whole rather than becoming an economic trap for the majority.