The government can borrow money at negative interest rates. People are literally paying the U.S. government to take their money. It may have a large budget deficit, but the government has no shortage of cash.
> The government can borrow money at negative interest rates.
The feds are borrowing at less than the rate of inflation, but they're not borrowing at negative rates.
Note that current interest rates don't accurately reflect the interest cost of borrowing because those loans will be rolled over a couple of times. Do you really think that the low interest rates will continue?
More to the point, said borrowing has to be repaid. If the expected/likely additional tax revenue from this program is less than the amount spent, it's a bad deal.
That's not true at all. SBA and SCORE offices help entrepreneurs all over the US get outside funding. Silicon Valley may have the largest numbers, but it doesn't mean the rest of the country isn't investing...
I think it is a salient point that one of the reasons these "voluntary transactions" are not happening in the rest of the country is because the government has already stepped in.
I would be an angel investor, if the SEC would let me. It is silly that I could blow $20k on a bad stock investment, but can't put it into a tiny startup.
The regulatory burden and the prohibition on "non accredited investors" quells a lot of support the entreprenurial community could use.
Interestingly, you sometimes read stories about immigrants who came to the USA, built small businesses, and then helped later immigrants with investments and loans... resulting in thriving communities (the korean grocer community in LA is an example I heard about.) They wouldn't have been able to do this if they had been following SEC rules!
One of the cool thing about this job bill is crowdfunding might be now legal. It could be cool to be allow to put under 100 bucks to fund a startup idea. You could spread that 20k around.
I didn't say they were illegal, I said there was a regulatory burden and prohibition:
"If, however, not all of the investors are accredited, founders will need to provide a lot more disclosure to the investors, including a full-blown private placement memorandum, risk factors and financial statements. Also, note that all non-accredited investors in a Rule 506 offering must be sophisticated, which means that the company must reasonably believe that non-accredited investors (either alone or together with their investment representatives) have sufficient financial and business knowledge to allow them to evaluate the risks and merits of an investment."
Its prohibited to take investments from non-accreddited investors in the straightforward manner you can from accredited investors, and if you do, you have a greater burden, and additional risk to bear.
