17 Apr 2017

Moi president..... introduce the N-Euro

In less than a week from now it will be the first round of the French Presidential Elections (23th April 2017), with the final run-off between the two highest scoring candidates two weeks later (7th May).

We are spoilt for choice, with no less than 11 candidates covering the full gamut of options from two Anticapitalist candidates (Nathalie Arthaud and Philippe Poutou) to the extreme right wing Front National (Marine Lepen). According to the latest polls, only four candidates have any real hope of making the second round : Lepen (currently credited with around 22-23% the vote), François Fillon (18.5-21%),  Emmanuel Macron (22-24,4%) and Jean-Luc Melenchon (18-20%).

One of my favorite candidates, the Parti Socialiste's candidate Benoit Hamon, who was proposing the idea of an unconditional basic income (Revenue Universal d'Existence, or RUE in French) seems to be pretty much out of the running, with between 7 and 9.5% of the vote, according to recent polls.

Yesterday, I  went to listen to Jean-Luc Melenchon yesterday in Toulouse where he spoke to an open air rally in front of some 70,000 people according to the organisers! - 40,000 according to the police.  Melenchon is really impressive. He can talk for 2 hours on end with almost no need to refer to notes, and his speeches are really entertaining. I'm seriously tempted to vote for him, but although he has some pretty radical ideas in his program, there are a number of points where his program is simply not radical enough.

So here, to give Melenchon and the other candidates some additional ideas, I would like to propose some of my own ideas for a truly radical reform of the system. They are nearly all ideas that I have put forward previously on my blog and via Youtube presentations, but I thought it worthwhile to give them another airing at the critical moment.

My first proposition is that  we have to  end the current insane system in which essentially all the money that we use every day is money that has been created out of thin air by commercial banks as interest bearing debt.

I would love to simply wave a magic wand and make it illegal for a bank to lend money that it doesn't have. But I am perfectly aware that the banking lobbies have so much power that no politician would ever be able to do that.

But I propose a simple way to get around that. We can let commercial banks continue their current system of lending non-existent "money" to gullible citizens, companies and governments and paying those banks interest. However, if I was president (moi président, as François Hollande said) my government would set up a parallel, debt-free, parallel system called the N-Euro - an idea that I originally proposed back in 2012. Every French citizen and every French company would be given an electronic N-Euro account that they could use to make payments to other citizens and companies. There would be no charges for running the system.

Where would the N-Euros come from? Simple. Whenever a citizen or a company receives a payment from the French goverment, they would be able to choose between payments in conventional Euros on a conventional bank account and a payment in N-Euros on their N-Euro account. Thus, all public sector workers (including myself - I am a Research Director with the CNRS) could be paid in a mixture of the two types of currencies.

You might say, why would anyone want to be paid in N-Euros when they have the option of getting "real" Euros? Well, the key is that the government would make it clear that they would accept N-Euros for the payment of taxes at parity with conventional Euros. That means that one N-Euro is worth exactly one standard Euro - by definition. And even if have no taxes to pay, I could use my N-Euros to pay someone else who does have taxes to pay.

Obviously, there are some cases where having some "real" Euros is actually a necessity. For example, if you are on vacation in Greece, you would be lucky to find a restaurant or hotel that would be interested in your N-Euros (at least to start with). At that point you would have to get our your trusty Euro Visa or Mastercard - or draw out some conventional Euros from a cash dispenser. But in France, where essentially everyone has to pay taxes at sometime or other, one N-Euro really will be worth one conventional Euro. I doubt you would any problems finding a shop or restaurant that would take an N-euro payment - especially as the N-Euro payments could be made at no cost. Why would a merchant prefer to be paid in conventional Euros using someone's Visa or Mastercard if they have to hand over 3-4% of the sum to the credit card company as a "merchant fee".

My prediction is that, within a few months, many civil servants, pensioners and others receiving payments from the state will be perfectly happy to sign a document to say that they would like 50% or more of their money paid in N-Euros.

Just imagine what that would mean for the my government. In 2017, the French government will have to find over €427 billion to cover its costs. Since its income from taxation and other sources is insufficient to cover this, it is currently running a budget deficit of nearly €75 billion. It covers that gap by borrowing "money" from the commercial banking system. Those commercial banks are happy to oblige - they create the "money" out of thin air needed to buy government bonds, and happily claim the interest.  That's why the French government now "owes" over €2200 billion.

But let's suppose that instead of borrowing "money" from the commercial banks to pay those civil servents, pensions and benefits, it simply paid them using its own home produced and debt free N-Euros. Imagine that the average citizen was happy to take 50% of their payments in N-Euros. Given that a subsantial proportion of French government expenditure goes in such payments, the amount needed per year could be virtually halved.

Obviously, since people would now be able to pay some of their taxes in N-Euros, this would mean that the tax income in "real" Euros would drop and you might think that this could be problematic. But since the government would have saved hundreds of billions in expenditure, it will be able to cope. Indeed, even in the case where the money injected by the government into the economy in the form of N-Euros simply returns later in the form of tax, that money will have been circulating within the economy for months in the meantime. The need to borrow on the financial markets would be reduced and, with a bit of luck, that terrifying €2200 billion figure for gross public sector debt would start to drop. It is not inconceivable that within a decade or so, the entire national debt could have been wiped out.

Why is such a plan so radical? It's simply because there have been very few cases in the history of humanity where a government has actually succeeded in creating its own money. Abraham Lincoln was one of the few to have attempted such a thing when he simply printed €450 million greenbacks to pay for the Civil War. Those greenbacks were worth $1 each, simply because you could pay your taxes with them. That is really all that is needed for a publicly created money to have value.

But let me point out one other amazing consequence of such a shift from commercial banks producing the money supply as interest bearing debt to a state generating currency with no debt. Currently, the economic system needs growth. Why? Because you need roughly 2% inflation to be able to pay off the interest every year. Switch the system to one where the N-Euros are created debt-free, and you no longer require either inflation or growth in the economy to keep the system afloat. We could move to an ecological responsible world in which there would no longer be a need to exploit our limited natural resources simply to feed the financial monster to whom we are all slaves.

Fixing the fundamental nature of the system is thus a key to fixing everything. And that is why, if I were president, my number one measure would be to introduce a parallel debt free currency - the N-Euro. For more information about the N-Euro idea, check out the Info page here or the N-Euro Cyclos site here, or a You-tube video dating from 2012 that you can find here.

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