Solving the 2009-2010 economy problem using Nano science and free IPO equity PDF Print E-mail
Written by Prof. Paul Douglas Katchings   
Tuesday, 04 August 2009
Solving the 2009-2010 economy problem using Nano science and free IPO equity

The process of Nano Science is the building of a structure atom by atom. That is taking something apart and then reassembling the parts to obtain novel results.

This means that we can also take the secrets of free negative credit apart and replace it with positive free equity, which is the opposite of credit, and build a better free equity driven demand economy.

In a chemistry analogy the replacement of the mirror image of negative credit with positive equity is called chirality.

We have an economic problem inherited from the past requiring us to reverse the negative impact of free credit. None of us living today created this cumulative economic problem. We need to understand some corporate ‘pieces’ to solve this economic problem instantly.

This problem is not insurmountable. Like any problem we need to take it apart and reassemble it. To solve any problem we need to find its opposite.

The opposite is the condition that we want.

The economic problems that we have today come from free credit. So what is the opposite of free credit? Free equity.

We know all about free credit. It creates debt, interest, and it must be paid back.

What we do not know about is free equity, the reason why we continue to use free credit.

Free Equity creates automatic savings, and it need not be paid back.

So lets now learn more about the two vehicles that make free equity and free credit possible, which is the corporation.

There are only two models to economics and two recipients in the 21st century.

The two models are the positive corporate model and negative banking model.

a.    The purpose of the positive corporate model is to make money by producing things which produces equity, and
b.    The purpose of the negative banking model is make money by selling credit, which produces more credit, debt, and interest

The two 21st-century recipients are

a.    The labor units producing the value causing free equity
b.    The stock markets capturing the value cause by the labor units
The foundation and tool of stock markets is this formula of x=(a*b)/c where X is stock price, A is revenue, B is earnings as a percentage of revenue, and C is rate of return.

These are the fundamental ‘pieces’ of the 21ST century capitalistic economic model, very concise and simple.

The Corporate and Banking Models

The 20th century problem started with not being able to separate the corporate model from the banking model because all banks are corporations but not all corporations are banks in the classical sense of the word banking.

Both the generic corporation and the banking corporation have stock or shares.

To be sure a corporation is a bank in that its shares are freely converted to cash. And many corporations with lots of cash do lend money in order to protect its share value.

•    But the cash of the generic corporation obtained is from the customers buying things from the corporation.

•    The cash that the bank corporation obtains is from the customers depositing their money with a corporation specifically called a bank with a special charter to take in government insured deposits and then sell credit in the form of currency creating debt with interest attached to the debt where the debt continues to grow.

It is the fractional reserve banking system that creates free credit to be sold as debt producing the revenue for the bank corporation in the form of interest.

It is the customers purchasing ‘things’ goods and services produced by the generic corporation that gives the revenue for the generic corporation

The interest is the revenue for the Bank Corporation and then earnings for the bank producing the stock price for this special type of corporation.

The cash received from the generic, or the general corporation’s customers coming from the products and services are the revenue for the corporation and then earnings producing a stock price.

To understand the generic corporate model means understanding the three base components of the corporation, which are:

1.    Capital
2.    Equity
3.    Cash

To understand the banking model (a special type of corporation) means understanding the three base components of banking:

1.    Credit
2.    Debt
3.    Interest

Until we can understand the base meaning of a corporation and separate the functions of a special type of corporation called a bank by law then we can begin to solve this economic problem using free equity the opposite of free credit.

Look closely to see that the generic corporation model has three base components, but the bank corporate model has six. The generic corporation is underutilized by NOT giving free equity and the banking corporation model has confused capitalism by its over utilized use of free credit, which creates debt and never ending interest.

In other words and as will be explained more as we continue, free credit is infinity in concept and free equity is finite. Somehow the infinity of free credit has been placed on the backs of the labor units while the finiteness of free equity is retained as a secret for the few.

The Solution

Anytime new and legitimate solutions comes, and I have seen this over and over and over, the naive and intellectually challenged experts comes out immediately to discredit before reading the math proof behind the new announcement just to protect their flawed views which is a desire to maintain the status quo.

This is the reason for including and discussing the multiple value creation formula listed above and below.

The opposite of free credit is not debt. Debt and Interest are the negative consequences of free credit enforced by man-made laws.

The opposite of free credit is free equity equally a man made construct by formula. Free credit produces instant capital for someone else, free equity produces instant capital-savings for oneself.

Once we have a free equity model driving positive demand then the free credit model currently driving demand will cease to have its negative impact on Americans and the world.

In reality both the concepts of free credit and free equity are secrets in that the total concepts of both have never been adequately explored. Economic literature has not pinpointed how and why the concept of capital is commingle with negative credit, and its consequent debt and interest giving capitalism a bad name while obscuring the reality of free corporate equity.

Free Equity

I am assuming that all of the readers understand something about stocks, shares, or equities which uses this formula of x=(a*b)/c which is X as stock price A as revenue, B as earnings as a percentage of revenue, and C rate of return.

In mathematic we use ‘lemma’s’ to arrive at a logical conclusion by asking questions.

1.    How does a public company make money, by selling goods and services to customers?
2.    If a public company does not have customers will it have revenue?

So ‘A’ in the above formula means customers but we call this ‘A’ revenue. So basically both revenue and customers for a public company are the same energy concepts.

Generally before a company becomes publicly traded the venture capitalist, investment bankers, and the few lucky investors that are able to get in on the IPO at the bell of the first day of trading provide the revenue or the energy to make the company grow.

Yes many times companies wait until they have customers and positive earnings before becoming publicly traded. Many times they do not. This is not the point of these questions.

3.    So essentially what the VC is doing is BETTING that they can get customers for this new venture to satisfy the ‘A’ variable before and after their exit strategy?

4.    So my questions here are, do the eventual customers provide more money-revenue than is provided by the VC, investment bank, and the lucky few insiders for a new public company?

5.    And if so how much do they provide for their 70% ownership?

6.    For example a company obtains say $5 million in VC, and when this company goes IPO it sells $100 million to the public, and over the next ten years receives $1 billion is sales, is this $1 billion ten times more than the $105 million received from VC and the initial public offerings?

We are still discussing the ‘A’ variable in the formula.

We can conclude that the objective of the public company and the VC is for the eventual customers revenue to exceed the capital provided by the VC and the proceeds from the IPO.

So the ‘A’ variable in the formula depends on the customers however the public company obtains them.

7.    If the ‘A’ variable depends on the customers then why not make ‘A’ a constant?

8.    Why not make ‘A’ predictable?

9.    Why not make the customers permanent for the public company?

10.    What do we need the VC, investment banker, and the few insider investors of the IPO for?

11.    Can we find a more novel way to distribute this 70% that they obtained free?

To make the ‘A’ customers variable permanent means that we must determine how much of the revenue of a public company is directly attributed to each customers, and then determine how much of this customer provided revenue is directly contained in the value of each of the public company’s shares.

The innovation is called Product Equity Value© the Black Swan of economics, free IPO equity!

What Product Equity Value© does is measure the amount of equity value in a public company’s stock price that is directly attributed to a single individual’s purchase and then giving this value in the form of free shares to the customers who created the value ushering in a new paradigm in consumption driven by free equity instead of free credit its opposite.

In a nutshell what we know now is that when 46% to 69% of the equity of new public corporations are given free to a precise number of customers (2 shares to 14 million) simultaneous to the products or services purchases then the price of the free shares are always greater by 3, 5, 11, 20, and over 40 times the price of the product or services caused by guaranteed customer revenue.


X stock price (A revenue $14 million times B .63 earnings divided by 61 million shares divided by C .03 rate of return) is $4.82 times 2 free shares is $9.64 a 9.64 to 1 PEV© ratio.

Effectively what this means and as astonishing as this Black Swan is that because of Product Equity Value© this free equity ownership is the same as if 14 million consumers has their own individual ‘Nano’ IPO with 4.35 shares registered keeping 2 shares, purchasing a $1 product or service causing the 2 shares to be worth $9.64 in this $1 example.

Simply reverse this multiple individual process and a single new IPO gives 46% to 69% of its shares (2 each) after registration, and after $1 cash purchase free to 14 million preassembled customers, 364 times.

What this rebuilding means is that the 2 free shares given in each IPO are always worth 3, 5, 11, 20 and over 40 times by managing the formula to obtain the optimal results. Multiple values obtained directly by guaranteed customers purchasing in unison causing revenue, earnings, and stock price to be predictive.

Yes this means a ‘new consumption function’ where ‘consumption is a function of Product Equity Value©’ where customer purchases from IPO’s turn into instant savings.

Micro Credits replace with Free Equity

12.    Why do we need ‘micro credits’ which are slow and cumbersome?

13.    Why not have individual ladies in villages in India, Africa, Bangladesh, Indonesia or anywhere purchase a Cell Phone, and use the excess value to purchase a Solar Lantern for $65 and then use their Product Equity Value© to purchase a Buffalo for cash?

Yes this means the beginning of no more credit; debt, interest, unemployment, and the very powerful replacement for microfinance merely by pre selected consumers shopping from special IPO companies that they own 46% to 69% in exchange for their guaranteed cash purchases causing their savings and capital to increase by 3, 5, 11, 20, and over 40 times the cash purchases.

Here are some examples of what *364 new startups funded with $1 million (wrapped around existing brands) will bring to their 14 million customer-owners daily:

•    Buy a $1,100 green laptop computer and get $5,700 in instant equity free
•    Buy a $100 green cell phone and get $1,038 in instant equity free
•    Buy a $1,200 year supply of healthy food and get $5,500 in instant equity free
•    Buy a Flat Panel HDTV for $400 and get $2,076 in instant equity free
•    Buy a global medical insurance for  $3,300 and get $17,064 in instant equity free
•    Buy a $65 ‘solar-lantern’ and get $337 in instant equity free
•    Buy a $100 new 16 films contract annually and get $1,147.53 in instant equity free

Paul Katchings
Business Engineer-Inventor
Last Updated ( Wednesday, 05 August 2009 )
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