A solution for France's debt crisis

France has just been downgraded to AA status by Standard and Poors and François Hollande is now France's most unpopular president ever according to a BVA poll. The French government has been trying to avoid cutting back on Public spending, attempting to fix the public debt crisis by increases in taxation. But clearly this is not working - and the French public are getting increasingly desperate.

But, as I hope you realise, any attempt to fix the debt crisis by austerity CANNOT WORK. There is 2.5 times more debt in the Eurozone than money to pay off the debt. The belief that you can pay off this debt by borrowing more money from the commercial banks is clearly ridiculous. Even a 10 year old can understand that.

We need to try something radically different.

Here's my proposal, which mixes a number of ideas that I have been working on for the last couple of years.

1. The French government should introduce a parallel money system that could be called an N-Euro for National Euro.

2. It would open an N-Euro account for every French Citizen, and every French business. It would be a purely electronic system, with no N-Euro notes and coins, and could use publicly available software systems such as Cyclos.

3. The critical point is that citizens and businesses would have the option of using N-Euros to pay tax bills. It is this ability to pay taxes that would instantaneously give the N-Euros real value.

4. Citizens and business being paid money by the state (public sector workers, pensioners, companies doing work for the government...) would be able to choose to receive a proportion of their payments in N-Euros, rather than conventional Euros.  The proportion of the payments in N-Euros would be decided by the person receiving the funds, and it would be entirely optional. Thus, if someone only wanted Euros, they would fix the ratio at 0% N-Euros to 100% standard Euros. But it would be clear to everyone that accepting N-Euros means that the French government would not need to borrow money from the markets, and it would not need to pay interest. Thus, many people would probably be happy to accept debt-free N-Euros rather than conventional Euros.

5. There would be no direct way to convert N-Euros into Euros. However, someone who had an excess of N-Euros on their account would be able to sell them to another person who had a tax bill to pay. Thus, if I had a "Taxe d'habitation" bill of €1000 to pay, I would be able to buy 1000 N-euros from someone who had a surplus, and use that to pay my tax bill.

These are fairly simple propositions, but I sincerely believe that they could fix France's financial crisis (and indeed, the problems of any government currently forced to accept the austerity "solution" proposed by ex-Goldman Sachs employees like Mario Draghi and Mark Carney who currently run the central banks).  The fact is that the government could inject virtually unlimited quantities of N-Euros into the economy. The amount would be simply limited by the degree to which the French population and businesses would be prepared to accept N-Euros instead of Euros. But logically, individuals and businesses that knew how much tax they would be paying in the future, should be perfectly happy to recieve debt-free N-Euros for at least that sum.

And for every N-Euro that the government can use as a substitute for conventional Euros, the borrowing requirement of the government would be directly reduced by the same amount.

Remember that the Euros that the government currently uses are borrowed from commercial banks, who charge us all interest for renting our money. The N-Euro proposal would end this insanity.

Also note that since the only place that N-Euros can exist is on a government run electronic money system there is no possibility of removing the N-Euros from the system by hoarding them. You can't take N-Euros out of your account and stick them under the mattress. And foreign speculators would not be able to take control of the system either.

François Hollande - are you listening? You said that your true adversary was the world of finance*. That statement was absolutely true. But, so far, you have done virtually nothing to remove their power. It's time to do something.

And as soon as you mention the idea of introducing the idea of a debt-free, interest-free N-Euro system, the squeals of protest from the markets and the banks will be loud. They will not appreciate the possibility that a government could find a way to avoid renting the money system from commercial bankers. It would mark the end of a centuries old scam that has brought misery to millions.  But it will be the proof that you have found the weak link in the system.  Go for it....

*"Je vais vous dire qui est mon adversaire... mon véritable adversaire. Il n'a pas de nom, pas de visage, pas de parti. Il ne présentera jamais sa candidature. Il ne sera donc pas élu. Et pourtant, il gouverne. Cet adversaire, c'est le monde du finance".

*"I will tell you who is my enemy ... my real enemy. He has no name, no face, no party. He will never be a candidate. He will thus never be elected, and yet he governs. This enemy is the world of finance. "