15 Jul 2012

10 different solutions to the problem of government debt!

Hopefully, if you have been following the story so far, you will know that one of the biggest problems we currently face is that fact that all our governments are massively in debt to commercial banks. And those debts mean that we have been handing over literally trillions of euros and dollars in interest charges for decades. Indeed, the whole rigged system goes back centuries.

There are more and more people who have realised that we have been robbed blind by a system that has been rigged to favour an elite few. We now live in a plutocracy - a world in which essentially all power is in the hands of the wealthy. We think that we live in a democracy - that we vote our rulers  into power. But the real rulers are not elected. They control our governments and the media.  By forcing governments into debt, they have the power to impose their will. If governments don't do what the plutocrats want, the markets will make them pay. This situation must end. But how?

Looking back over my blogs over the last year, I realize that I have made no less that 10 different  proposals for getting us out of this mess. I thought it might be rather amusing just to make a list. This list also shows clearly how much my own ideas have evolved in the last year as I have assimilated a wealth of ideas from others by reading and discussing.

July 26th 2011 : Getting countries out of debt

This was the first time I argued that a Financial Transaction Tax would provide a good way of getting countries out of debt by tapping into the colossal amounts of money that is being moved around the economy every day.

August 10th 2011 : Solving the debt crisis in 5 years with an automatically varying FTT

Here I argued that a low level Financial Transaction Tax could easily be used to pay off all government debt in the space of a few years.  For example, in the USA, where government debt is currenly $15.7 trillion but where visible financial transactions are currently running at around $3000 trillion a year, a tax of 0.1% could pay off the entire national debt in just five years. In France, where visible transactions are running at around €300 trillion, a 0.1% FTT would also pay off the entire national debt in around five years. The interesting point is that François Hollande is clearly committed to introducing an FTT before the end of the year. So, this could be an easy solution that really could happen real soon now!

September 26th 2011 : A New Way to solve the Debt Problem! 

By september last year, I had become acutely aware of the fact that money was created out of thin air by commercial banks - thanks largely to the Positive Money website that I discovered in May 2011. After thinking about this, I came up with the proposal that maybe governments could say that they would only pay back loans if the banks that made the loans could prove that they actually had the money that they lent. After all, why should we pay back a loan made by someone who was not actually able to make the loan in the first place. I still think that since the vast majority of the public still imagine that the banks who lend governments money had the money to lend, it would be pretty clear that the public was being deceived into paying interest charges that cannot be justified.

November 11th 2011 : A solution to the Greek debt crisis

In this post, I raised that possibility that the European Central Bank could lend the Greek government the money needed to pay off its entire national debt. I used the debt figures for 2010 - namely €329 billion - although of course that has now gone even higher. My proposal is that the Greeks could repay the ECB using a variable rate FTT mechanism that guarantees that the amount of money needed to repay the loan can be produced.  Even if the ECB charged Greece the same interest rates it offers commercial banks (it was 1.25% at the time, but this has now dropped), I estimated that an FTT of 0.08% would be enough to repay the entire sum including the interest in 10 years. 

November 20th 2011 : (Yet another) solution to the debt problem

In this proposal, I suggested that governments could impose the same 2-3% levy on payments made on payments made in foreign currency using a credit card that the banks apply to the rest of us. I used the numbers provided by the BIS to work out what the total volume of foreign exchange was for each of the 23 countries in its annual report. Overall, the number reached €1,264 trillion, which, assuming the same 2% charge applied by the banks would generate €25.3 trillion - enough to pay off the entire EU government debt and the entire US government debt in a single year.  I was sufficiently lucid to realize that the banks might back off and decide that maybe they were being unreasonable in charging a 2% fee for multiplying two numbers together, so maybe this might not work. 

January 5th 2012 : EUREKA!

This was the day when I realized that, despite the best efforts of the bankers to rig the Lisbon treaty so that governments were obliged to borrow all their money from commercial banks with interest, paragraph 2 of article 123 of the treaty specifically allows central banks to lend to "publicly-owned credit institutions". This meant that it was perfectly legal for the ECB and the Bank of England (for example) to generate fresh money, lend it to bodies such as the "Caisse des Dépots" in France, or the Royal Bank of Scotland in the UK, who could then lend the money on to governments who could use the money to pay off the entire national debt. It's the idea that I explained in my Youtube video "Solving the Debt Crisis" which has proved to be my most popular presentation so far (882 views and 23 likes as of today). 

May 22nd 2012 : EUREKA! The ultimate debt killing weapon

I had yet another Eureka moment when I realized that even if Mario Draghi and the other Goldman Sachs associated bankers who control the central banks refused to play game, citizens could get round them by using the commercial banks own insane fractional reserve banking system to generate enough money to get their governments out of debt.  The idea, which I presented in another Youtube video on "Debt Annihilation", involves using a special bank that would take contributions from citizens, and use the fractional reserve banking trick to multiply the amount of money up to a level sufficient to pay off the national debt.  One particularly amusing aspect of this is my suggestion that the bank should loan the money to the government with a requirement to repay the loan "after 1000 years with interest of 0.0%".  As far as I am aware, there is nothing to stop a bank arranging whatever loan terms it wants. I posted a whole series of entries on my blog to show how this trick could be used to solve the problem of government debt in Greece,  France, the UK, Ireland, Italy, Spain, Portugal and the USA. At the time, I was using the Basel III proposal that limited money creation to about 11.5 times a bank's reserves. But I have since realized that if the initial money is injected into the bank in the form of capital, the multiplication factor can be as much as 33:1. I should stress that I think that fractional reserve banking should be banned - it is clearly insane, and is morally the same thing as producing counterfeit money. But, I'm okay to allow citizens to use the banks own insane system so that they can be hoist by their own petard. 

June 12th  2012 : Debt free money creation by governments - and controlling the money supply

It took me some time, but I finally cottoned on to the fact that governments don't need to borrow money at all - they can just print it debt-free and spend it into the economy for projects that are in the interest of the overwhelming majority of the public. It's an idea that is being pushed by an increasing number of people, including Ellen Brown, James Robertson, Bill Still, and the Positive Money group. My own personal contributions to the debate are the proposals that public money creation should only be allowed if supported by (say) at least 90% of the population, and that any excess money in the economy could be mopped up using an automatically varying Financial Transaction Tax - ideas that I have put in my most recent Youtube presentation on "Some Radical Proposals for Monetary Reform".  While public money creation could be used for anything that was in the public interest, one of the highest priorities should clearly be to pay off the entire national debt so that the banks would no longer be able to claim the interest charges. 

June 16th 2012 : How to eliminate all UK government debt in 5 easy stages

I really like this one. In this scheme, I again suggest that we use the insane fractional reserve banking mechanism to generate a ridiculous amount of money that can be lent to the government to pay off the entire national debt. I was particularly proud of the the idea that we could use taxhavens to keep the entire scam invisible until it is too late for the bankers to stop it. Very naughty, but potentially devastating. 

July 13th 2012 : Is Quantitative Easing the solution?

In my latest proposal, I note that when central banks such as the Bank of England indulges in Quantitative Easing, they buy up government gilts on which the treasury has to pay interest. The scheme is supposed to give banks extra cash for lending (which they don't do - it's pushing a piece of string). But it also removes the interest payment requirement. Just do £1200 billion of QE, and the UK government would be able to save £48 billion a year in interest. Likewise, Mario Draghi at the ECB has been merrily buying up government bonds. But he never buys too many - otherwise the governments would be off the debt hook. Just force the ECB to buy up all the Eurozone government debt bonds (currently €8.2 trillion), and the 17 eurozone governments would save €286 billion in interest payments every year.


So, there you have it. 10 different suggestions - all of which provide ways by which governments could get out of debt. We are spoilt for choice. And there may well be plenty of other ideas out there (let me know, and I'll happily provide links here). What is clear is that the time for change is now. Every day, every month and every year that goes by means that the amount of money that has been unfairly taken from the public by the banking system's incredible scam will increase. It is time that we said no more.

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