At 3.40 this morning, I posted an idea that could be truly revolutionary. Given that there is twice as much debt as there is money to pay it off, there is an urgent need to generate the roughly $72 trillion that is lacking to get the world economy back on track.
But how should that money be distributed? My basic proposal is that this should be done by the World Bank, who would be authorised to generate $10,000 of debt free money for every one of the roughly 7 billion inhabitants of our planet.
Obviously, this is just a starting point. We then have to think hard about the best way to do the distribution. My first suggestion would be that this should be done under the control of the United Nations who would have to approve the transfer of funds to the different governments.
What sorts of expenditure should be eligable? Clearly, there is absolutely no way that you could permit the transfer of large amounts of money to despots so that they could buy arms or to finance corruption. There would need to be clear guidelines.
The first type of expenditure that should be easy to justify would be paying off debt. Given that the per capita government debt of the vast majority of the world's countries is well below $10,000, this would be simple. The governments would simply have to show proof that they have paid off debt to be immediately reimbursed. Alternatively, the World Bank could make the payments directly, thus eliminating any risk that the money doesn't get used in the right way.
This sort of action need not be inflationary, since when a government pays off a debt to a bank that created the loan out of thin air, paying off the debt just causes the "money" to disappear in a puff of smoke. Since global government debt exceeds $50 trillion, this means that this sort of action by the World Bank would simply lead to the debt level to drop with no decrease in the money supply.
Other cases where governments should be able to claim substantial amounts of World Bank money without much difficulty would be to fund any schemes that are ecologically sound and which would enhance the ability of the country to live decently. Thus, funds for developing agriculture, water production, renewable energy, sewage processing, transport infrastructure, education and health should be very easy to justify. Thus an African country that presented a well-documented project for any of these activities should be able to get direct, debt-free funding to finance it. With a budget of up to $10,000 per citizen, there is a huge amount that could be achieved this way.
Of course, not all countries have the luxury of having a reasonable government that can be trusted to use the money sensibly. I can think of quite a few dictators who could not be trusted to spend the funds in the interests of their citizens. In such cases, the World Bank debt-free money injections could be done via organisations such as the Red Cross (Red Crescent), Save the Children, UNICEF, Oxfam, Medecins sans Frontiers and so on. Imagine what could be done if those organisations could spend up to $10,000 per person in the most needy countries.
There would have to be very clear guidelines for all such funneling of funds. But it seems to me that it should not be impossible for the United Nations to come up with a set of rules for ensuring that the newly generated debt-free money is used wisely and in the best interests of the world's citizens.
Finally, I should note that in cases where there is no clear way for a particular third world country to use all the available funds sensibly, it should also be possible for that country to lend its surplus to the highly indebted countries like the UK, France, Germany and the US to help them avoid the billions in interest payments that they currently have to pay the banking sector. That way third world countries could be seen to be helping their first world neighbours.
Unless I'm very much mistaken, it seems to me that these propositions offer a simple, fair and reasonable way to get the world economy out of the quagmire of debt that it is currently in. And the immediate benefits to the world's population would be truly mind-blowing. We could fix problems like global warming and the lack of water, food, housing and education that blights vast numbers of people across the world. And it could all be done within a few years.
I may be a bit over the top sometimes. But, honestly, I can't see why this one can't be made to work.
Comments please!
No comments:
Post a Comment