Summary of "Yamada Model"

Because I think it's useful to summarize the context of "Yamada Model" till now, I'll write it down.

Bubble is caused by peoples’ expectation that the price of certain asset(real estate) will rise in future, with pouring high-powered money to the asset side of economic entities’ balance-sheet. So, to solve this problem, such asset bubble on economic entities’ balance-sheet must be gotten rid of, by the new system as below.
Though it may be seen contradictory, high-powered money enables to work this new system.

1. Every economic entities’(including banks) assets that caused the bubble(real estate or CDO et al) on balance sheet should be evaluated on mark to market basis by the authorization of a third party(maybe on calculated basis by law firm, on assuming the bankruptcy filed), which brings about some insolvent(i.e. debt section surpasses asset section on balance sheet) economic entities..
2. FRB decide to write off a certain amount of the loans to the banks, which amount distributed to each bank according to the amount of each banks’ insolvency, calculated on 1.
3. Every bank that gets profit from written off should next legally enforced to, by using the profit from written off as original fund, write off its loans to its each debtor, in proportion to the amount of insolvency of each debtor. If the bank is unable to use all the written off profit it earned, the remainder is taxed all and absorbed by tax authority.
4. Other economic entity that gets profit from the written off by the bank should next legally enforced to, by using the profit from the written off as original fund, write off its loan(or trade claim) to its each debtor, in proportion to the amount of insolvency of each debtor. If the economic entity is unable to use all profit it earned, the remainder is taxed all and absorbed by tax authority. These processes are to be repeated operationally(multiplier effect).
5. In consequence, the bubble portion of the targeted asset is extracted from the economy, and is transformed to tax.
6. The tax claims is finally assigned to FRB. It’s up to FRB how they dispose of their above claims, considering the situation of economy, of each bank and of each economic entity. As a option FRB should examine the possibility of the bank’s and the economic entity’s turnaround, together with the other creditors, remaining desirable debt to the bank and the economic entity(empirically it's ten to fifteen times annual earnings before interest, taxes, depreciation and amortization, known as EBITDA), and writing off the rest debt, with taking into account the value of disposable collateral(that do not accrue earnings), of guarantor and of consolidated basis.
7. Every write off must be supervised and traceable by centralized function of the system. So every write off must be executed through this function. Every write off may be done through this function, which exist on internet for access.
8. For cross-border. For each non-residential economic entity, the amount of write off should also be calculated in the same way as 4. , on the only cause from specific asset depreciation in the resident country. Economic entity that will be written off should next write off in the same booked currency. In case profit of the written off exists on the non-residential economic entities, it's taxed and absorbed by the foreign(=non-residential) government and handed over to the sovereign(=residential) government of the currency, based on treaty.
9. FRB should carefully watch the rate of the number of insolvent economic entities to the number of all economic entities in the US, when deciding the amount of the loans(trade claim) written off on 2.
10. To keep FRB’s balance sheet sound, it must be permitted for FRB to generate profit by printing dollars in order to cover write-offs loss. These printed greenbacks is stored to the safe forever(I come to know the journalization if FRB’s profit is generated by their printing dollars is quite irregular). This may be extraordinary bookkeeping nowadays, but it should be permitted, under extraordinary situation.11. In case price inflation expectation exists(not now), the system enables FRB to on one hand raise benchmark rate to cope with inflation expectation, on the other hand restructuring the balance sheets of economic entities.