More thoughts on the Ultimate Debt Killing Weapon

Yesterday, I came up with a cunning plan to kill off debt by setting up a special bank that would make 1000 year loans at 0% interest to deserving cases to allow them to get out of the debt spiral. It would use the same insane system used by commercial banks to create money out of thin air. The only difference is that whereas commercial banks create money and make loans so that they can charge interest, this special bank would only create money with the aim to eliminate debt.

It would follow the same restrictions on money creation that apply to commercial banks. According to the Basel III guidelines, "Capital (Tier 1 Capital plus Tier 2 Capital) must be at least 8.0% of risk-weighted assets at all times". This essentially means that to create 1,000,000 euros or pounds of fresh money, you would have to have reserves of 86,957 euros (because 86,957 is 8% of 1,086,957). So, you just need to find 8.6957% of the amount needed to pay off the debt to allow the bank to create the money.

It's an idea that has incredible power. It could be used to help individuals in debt, but also public structures like local and city councils, libraries, universities, and even entire countries. It could be used to allow citizens to provide the funds needed to cancel the debts of third world countries. Indeed, anyone who is crippled with debt could be saved from the clutches of the blood-sucking vampire squids who currently control just about everything and who are directly responsible for untold misery.

Yesterday, I was thinking that you could set up individual public banks of this form for each area where debt cancellation is needed. But this could be problematic. Once it is clear that the whole aim of these new banks is to destroy the insane debt based economy that we live in, it is quite likely that it may become suddenly much harder to create these new banks - I'm well aware of the massive lobbying power of the financial sector who will fight to keep their system intact.

But I see a solution. In fact, we only need a single bank to play the debt destruction game. Preferably, this would be a newly created bank. But if necessary, it could be a previously existing bank. By using a bank that already exists, we could avoid the need to get authorisation from the banking authorities.

Whatever the method, the new bank could have special accounts for specific debt cancellation projects. Suppose that a city council finds itself massively in debt and owes 10 million euros to the banks. They find that they are unable to pay the interest charges because the ratings agency have just dropped their rating to junk status, and as a result, they can't get finance without accepting interest charges of 20% or more. To get out of the crisis, the council could open a special account at the bank which, when the level of deposits reaches the 8.6957% level, would be able to create the €10 million needed to pay off the entire debt. It would have the loan for 1000 years with 0% interest, and so could forget about the debt entirely.

Where would the 8.6957% come from? It would come from the citizens who live in the city, and who would normally have to finance the excessive interest charges via their local taxes. They would therefore save their money.  Importantly, when the citizens credit the bank account, they would effectively be signing an agreement that they would not be able to get their money back - it would stay in the bank indefinitely.

Interestingly, the bank could have an unlimited number of different accounts, each collecting donations for different debt cancellation projects. Citizens would chose the debt cancellation projects that they were particularly keen on supporting.

Actually, you could have an arrangement where the contributions were not actually locked in until the threshold value was reached. Thus, if you need 10 million to cancel the city councils debt, people could add money progressively and even withdraw the money until the threshold value has been reached. Once the 10 million has been created and handed over to the city council, the deposits would be locked in permanently. I can easily imagine the council organizing a campaign to find the money needed to activate the debt cancellation. It would work very much like collecting money for a charity.

You could also have open accounts for philanthropists who just simply want to allow their money to be used for good causes. In that case, a board of trustees, composed of people who were clearly immune to corruption, would decide where the money could be used most optimally. Those open accounts could be labelled for use in specific projects - getting individual people out of debt for example.

The more I think about it, the more I am convinced that this is THE solution to the debt problem. If there are any people reading this who own a bank, and would be happy to see their bank be the first one to start the scheme, please get in contact. Alternatively, if there are people who could help me get a new bank started, again please let me know.