On Wealth and Money,
the Nation and the World
*
Second Part:
Money Creation, Debt, Sovereign Money
*
* * *
*
Money creation
out of credit-loans and debt
To all our reader friends
who have had the patience and courage to read us so far,
and especially to those who will no doubt already know a great deal
about the system of money creation, about money-debt and all its excesses,
for indeed the writings and documentaries succeed one another
and rival in relevance and complementarity,*
I would ask for a little more courage and patience,
if I were to bore them with what they already know.
* Among them,
in addition to all the works mentioned here,
for those who don’t like to read,
Money as Debt,
A 2006 animated documentary film
by Canadian artist and filmmaker Paul Grignon
about the monetary systems practised through modern banking.
The film presents Grignon’s view of the process of money creation
by banks and its historical background,
and warns of his belief in its subsequent unsustainability.
Subsequent Money as Debt videos include Money as Debt II Promises Unleashed (2009)
and Money as Debt III: Evolution Beyond Money (2011).
They present a clear explanation of how the system works.
https://en.wikipedia.org/wiki/Money_as_Debt
And although we wish to focus on solutions rather than problems,
we will try to recall the main lines of discord and irrationality.
*
Money creation:
Credit and Fractional reserves
When they grant you a credit loan,
banks create, under the fractional reserve system,
scriptural, digital money, which not only does not exist initially,
but also multiplies exponentially.
In fact,
when the Central Bank creates money to lend to the big private banks,
at the request of the big private banks,*
the latter can lend up to 10 times the amount they have received**
(more or less, depending on the jurisdiction).
*Sovereign Money, An introduction
Ben Dyson, Graham Hodgson, Franck van Lerven
https://positivemoney.org/our-proposals/sovereign-money-introduction/
**A detailed list by country is available on Wikipedia.
https://en.wikipedia.org/wiki/Reserve_requirement
If, for example, a bank has 10 euros in its deposits,
it can lend 100 euros.
The person who borrows will buy what he or she wants
and the person who gets the extra 100 euros
will then deposit it in an account in the same or another bank,
and the reserves of bank 2 will then contain 100 euros.
In turn,
the bank will be able to lend 1000 euros,
and this process will be repeated
as long as each individual bank remains solvent and does not fail.
This is the theory.
The reality is worse
because, contrary to popular belief, banks do not even need reserves of central bank money
to create new money when they grant credit.
Alan Holmes, then Vice President of the Federal Reserve Bank of New York, said in 1969:
“In the real world, banks extend credit,
creating deposits in the process,
and look for the reserves later.”
Quote found in the book
‘Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,’
by Andrew Jackson & Ben Dyson of Positive Money,*
where the whole process of money creation is clearly explained from page 75 to 80
“2.8 Money creation across the whole banking system”
and where it is demonstrated that the
theory of the credit multiplier effect is wrong
since it presumes that banks must own the money they lend.
*https://positivemoney.org/modernising-money/
For those who, because of the magnitude of the thing,
would find it difficult to question their beliefs on the monetary matter,
here is what can be found on the official website of the Bank of England:
“Therefore,
if you borrow £100 from the bank, and it credits your account with the amount,
‘new money’ has been created. It didn’t exist until it was credited to your account.”
* https://www.bankofengland.co.uk/knowledgebank/how-is-money-created
We also add a link to a study by the same Bank of England
which describes the process unequivocally:
Money Creation in the Modern Economy
By Michael McLeay, Amar Radia and Ryland Thomas
of the Bank’s Monetary Analysis Directorate.
So banks create money out of nothing.
Above all,
if money is created out of the credit loans
that banks lend their customers,
then it is by nature impossible to get rid of either private or public debts.
Indeed,
since money is created from the granting of credit loans and therefore debts,
if all debts were paid off,
then there would simply be no money left in the system.
There would be no more economy.
It is as simple as that.
Furthermore,
we have sketched out a word about it, but we will say it again,
money is not correlated to real wealth or even to the cash in circulation.
It is not calculated on the basis
of serious, responsible, wise and rigorous, precise and scientific indices,
but according to the amount of credit and speculation.
Thus,
the risk of systemic default is not only high,
it’s built into the system, sooner or later doomed to collapse.
If you are reading these lines and have not yet done so,
then you must see the very enlightening documentaries
and especially those mentioned along these pages.
It is also possible to search for “money creation, youtube”
on Qwant or Ecosia,
and you will find plenty of them.
But let’s get back to our point.
If large private banks can lend ten times more than what they have in reserve,
then inevitably the exponential problem of the second lender arises,
a mathematical phenomenon very well described
in the third part of the documentary Money as Debt*:
* https://www.youtube.com/user/PaulLWGrignon/videos
https://www.youtube.com/watch?v=3P7izAUe3ZM
The money given to me by credit
with which I pay the person or business will inexorably end up in a bank
which can then create money from this new deposit,
according to the calculations we have just described.
Consider the phenomenon,
it is mathematical, inevitable and inexorable:
the debt problem can only be exponential.
This is very damaging and worrying.
At a personal level as well as a collective level.
Imagine that the company in which you work or is located next door
has the power to create money.
Imagine if you had the power to do that.
You have the word bank
written on the wall of your business, home or office.
So you will have the right to give me a credit of 1,000 euros,
with only 100 euros.
And even if you don’t have those 100 euros,
the simple signature of your debtor on the promise of repayment
is enough for the central bank you depend on to give you those 100 euros.
You give your 100 euros of ‘central’ money
and enter the remaining 900 euros
into your borrower’s computerized account.
When you have been reimbursed the 900 euros,
you will destroy the 900 euros
but will have recovered your initial 100 euros + the interest rates
you negotiated with your borrowing client
so as to reach as high a return as possible
within the limits imposed both by the balance of power
that exists between you and your client,
i.e. your need to lend and his need to borrow,
and the laws of the market, i.e. competition, in this case banking.
Our example is only 1,000 euros of credit.
You only need 100 euros in deposits.
So 900 euros do not exist.
Now imagine I ask you for a loan of 1,000,000 euros.
You only need 10% in your reserve requirement, or 100,000 euros.
This means that 900,000 euros do not exist.
Extend this to billions of loans
needed by billions of entities, human beings, states and companies
and you get the picture of the house of cards.
Now imagine that a central bank
headed by a former colleague, totally tied to your own interests,
who alone is empowered to create the original monetary deposits
prints an almost unlimited amount of initial money,
– called quantitative easing -,
totally disconnected from the needs of the real economy
or even and above all the real wealth of humanity,
that you are among the few who can benefit from it,
that you could repeat the process described above almost ad infinitum
and on the scale of our totally deregulated planet,
and that you could impose interests as you wished
within the limits imposed only by this previously mentioned balance of power
intrinsically linked to the law of the market,
what would you do then?
In this world of ultra-competitiveness,
how would you feel then?
You’d be master of the world.
The power to create money is held
with little or no rules or compensation
by large private banks,
whose sole objective is to maximise their profits.
It may sound unbelievable, far-fetched,
but it is a reality.
Go and see the books and documentaries referenced here*.
You’ll be stunned.
*Among which,
The Future of Money, 2001
by Mr Bernard Lietaer,
former head of the Central Bank of Belgium,
who participated in setting up the European common currency ECU,
the ancestor of the Euro, now a single currency.
Rethinking Money, 2013
Ms Jacqui Dunne avec Bernard Lietaer
https://en.wikipedia.org/wiki/Bernard_Lietaer
https://en.wikipedia.org/wiki/Money_creation#Money_creation_by_commercial_banks
Thus,
since the money supply is created out of thin air with debt,
then how can we imagine being able to repay the debt
without causing a brutal deflation of the money supply
and consequently an unprecedented crisis?
The squaring of the circle is total
and the trap without any way out.
Because of the way the monetary system works,
banks have to create credit and therefore debt
so that there is money in our economies,
and at the same time, they keep squawking on and on
about how we have to tighten our belts to repay the debt.
The nonsense is at its height.
There is no way out of this prison.
Unless we change the laws
that have made our world an open prison,
we’re not going to make it.
*
No people, no nation, no humanity, no world,
can be sovereign and free
if they do not have the power to create their own currency.
Only the ignorant, the sold out, the slaves, the corrupt,
the members of the clique that calls itself elite,
can deny this evidence.
Everyone else shall see and know.
*
Prohibition for states to create their own currency.
Nowadays,
Central Banks are legally prohibited from lending directly to the States.
Only to large private banks.
This is the law of money, of the monetary system, of finance today.
No wonder then
that some banking giants are richer than nations
and that the peoples are ever poorer, more drained and wretched.
For the nation state must necessarily go through these banks to borrow money,
money that is paid back with debt interest.
Interest that sucks in amounts of money that,
since they do not exist anywhere in the system,
not only exacerbate competition and the race for short-term productivity,
but also necessarily create losers
as in a game of musical chairs
where there are never enough chairs for everyone.
This comparison to a game is relevant only to illustrate
the functioning of the absurd and suicidal process
of the banks’ takeover of human beings, the earth and humanity.
It is in no way to convey the idea of the magnitude
of the terrible effects that this entails.
How could an entity, company, person, state,
repay their debts
when a not insignificant part of the debt does not exist anywhere?
Under such circumstances,
how is it possible to avoid, sooner or later, domino defaults?
Turning the world into a systemic casino
is to the highest degree the symptom of a system adrift
where we are all doomed to lose,
even those who still believe they are winners
simply because the numbers on their bank accounts
systematically, but artificially,
keep swelling to the detriment of the whole of reality.
Life isn’t a game, let alone a casino.
A game is a game.
Life is life.
And the mechanisms are escalating:
Speculation, tax evasion, debt, disconnection of money from the real world,
mismanagement of money and the economy, poverty and inequality
are getting worse and worse.
The tyranny of single currencies
based on credit and the banks’ goodwill
is counterproductive and destructive
and must give way to a new architecture
where the parts support the whole,
and vice versa.
Indeed,
when each part supports all the others,
when the whole supports each part,
then something comes to life.
When currencies support each other,
when currencies are distinct and common,
organized in a coherent whole,
more than an equilibrium,
it is a dynamic that is created.
The reorganization of the international monetary system
into a coherent and non-exclusive whole
made up of sovereign currencies not only connected to the real economy,
but also common and parallel,
from the whole to the parts and from the parts to the whole,
would certainly not be difficult to achieve,
but it is essential to do so because conversely,
it will be hard not to.
*
Masters of the world
Just remember:
When dealing with your business,
when you go to the bank to apply for credit,
then 90% of the money that’s given to you or refused to you
just doesn’t exist in its accounts.
When it grants you this credit,
the bank writes you an IOU contract
and then orders the money from the Central Bank,
which provides it directly by running the banknote machine
simply by having you sign at the bottom of the IOU contract.
As we have just said,
only 10% is needed in central bank money
to lend you a hundredfold, plus interest.
It’s like lending you 10 euros,
and that you owe me 100!
Plus interest…
You don’t just owe me ten times what I lend you,
you owe me interest on top of that.
You can imagine the harmful and disastrous consequences
of such a systemic configuration on a global scale.
As when you mix fire with certain chemical elements,
it is logical, automatic, systematic,
consequences occur,
as harmful as they are exponential, dazzling and irreversible.
Hence the urgency to bring them to a halt as soon as possible.
Whatever the reasons behind it,
this systemic construction serves only the richest.
Whatever veneers are applied to them,
whatever words and speeches are spoken,
such is the unique purpose of their laws and ideologies.
I mean, it’s written in black and white.
It is written in the statutes of the banks themselves:
Profit maximization by all possible means.
Whatever their ideological, statistical or mathematical justifications,
such a system is destructive of life as well as of the economy.
Aren’t their lies and systemic scams, murderous for the species
enough to convince you
that we have no choice but to subjugate them
in order to survive?
What’s more,
today private banks no longer even have anything to request from central banks.
Since the crisis of 2008,
Central Banks have been showering banks with money.
This is known as Quantitative Easing (QE).
What a name for a vulgar scam of such immense dimensions.
So the banks are encouraged to take all the money they want
and distribute it wherever they want.
And what they want, we know it.
It’s to be even richer.
We’ve already said where they’re investing it:
financial products, speculation, industries considered safe,
therefore oil, real estate, finance, arms…
all of which not only contribute to the inertia
but also to the exponential aggravation
of all the destructive impacts
on society and the planet.
The world belongs to the banks and finance.
That’s very clear.
Whoever your scapegoat is,
there’s no reason for you to doubt it.
This system can’t work.
It just can’t.
What good would it do?
They’re already loaded, rolling in it.
We could laugh about it
so huge, blatant and historically unprecedented this scam is.
But the looting is immense
and the consequences are too harmful and disastrous
for too many people and living creatures.
According to estimates recognized by the economist community,
80 to 98% of this money is only used for speculation…
Insanity is at the heart of the system.
Not to mention the phenomenon of hyperinflation
in the spheres of those who possess the vast majority of the world’s wealth.
From a purely legal point of view,
this phenomenon is fraudulent;
from a moral and metaphysical point of view,
it is inefficient and dubious;
from a purely economic point of view,
this hyperinflation is extremely serious and dangerous.
Nobody talks about it, or just as a curiosity.
Millions of euros spent on a rich man’s night out…
But their mega wealth
is a symptom of a serious, deep and very dangerous disease:
greed, a systemic scourge
that is spreading its toxic and contaminating metastases all over the world.
They own the vast majority of the money,
hyperinflation is there, blatant, visible to the eyes of the whole world,
and none of their economists who claim to be so expert in their field
make any mention of it.
It is a very serious matter of irresponsibility and childishness
at the highest levels of the world hierarchy.
The next banking shock will be cataclysmic on a global scale.
The next financial crisis will probably be the last.
It may well be the natural end of financial capitalism.
We must therefore wake up and take back what has been taken from us:
The power to create money.
Freedom.
The humanness that lies within each and every one of us
all over the world.
Then this will be our very last chance
to save the world and humanity.
The certainty is absolute, the verdict is indisputable:
If we do not take back the power of monetary creation and management
from private bankers,
it will certainly happen.
It is just a matter of time.
And time is running out.
It is therefore better for us to avoid the downfall of the system,
which is looming direly ahead.
We must therefore regain the power to create money as quickly as possible
in order to avoid the great quake that will brutalize the world.
This is the number one step towards change.
Without it, no change is possible.
That’s obvious. Obvious.
Again, the certainty is absolute.
We can do it.
We must appeal to all wills.
Drastic reform of finance and the banking world,
which is leading us straight to the most awful nightmare in history
is a salutary duty for all of humanity.
Of course,
we also know that behind these banks and so-called finance
are men and women like you and me.
Men and women who have been trapped in the system,
some of whom indulge in the worst excesses of a structural greed
that has become the supreme, and therefore predetermining value
of everything that happens on Earth.
Men and women like you and me
who can change if they are willing to open their eyes
to the inevitable collapse of their collective madness.
Men and women who could easily change their behaviour
if we changed the rules of the system.
If we make it our global priority to put an end to this system
that is leading the world into global hell,
if we reform the international banking system,
then we still have a chance.
It doesn’t even take two seconds to think about it.
You just have to see it.
Have the vision, the revelation,
and go from there.
The vision is what the Earth is giving you.
Close your eyes and see the earth for a few seconds and go from there.
Earth is our ultimate perspective.
Our absolute reference point.
For a human being,
nothing is more absolute than the Earth.
Whoever you are, or whoever you think you are,
because you live on Earth and the Earth gave birth to you,
then you are, we are, children of the Earth.
To deny it
is at best to assert one’s ignorance, one’s conditioning,
at worst to confess to lying;
in any case,
it’s living in neurotic illusion
and leaving the door open to the worst excesses.
All available wills are therefore required.
Unite the world and you will save the world.
Unite the world and we will be saved.
The good news is that this message
is finally starting to be heard by more and more people all over the world.
At last.
Never in the history of humankind
have banks had so much money.
And yet,
it seems that they have never been so fragile,
like giants with feet of clay that will fall on our heads
and turn our beautiful planet into a total hell, a nameless nightmare.
Finance, and the world of money,
have a cursed and evil hold over humanity and the entire world
in that they are damaging and destroying the entire living world.
How, under such conditions, to build another world?
String theory,
developed from the discoveries of quantum physics
makes us envision an infinitely multidimensional ‘multiverse’,
where all futures, all possibilities are embodied in so many parallel universes,
which gives you a rather wonderful, mind-blowing, and fascinating feeling.
Physical, philosophical, metaphysical,
social, economic, cultural, historical, religious or what have you,
I really see no reason why a world
in which the banks have all the power over the world
to more or less directly destroy it
would make it impossible to have a world where it would be good to live,
as soon as banks would no longer have these powers of money creation and control.
In other words,
I see no reason why the fact that the world is rotten
should preclude the fact that the world can be better.
On the contrary,
I would even say that it states it.
A disease or a problem can ruin your life,
but as soon as you get rid of that problem or disease,
you live again.
We can afford to ruin the world
simply because the world gave us life.
Once it is uninhabitable through our own fault,
we will no longer be able to destroy anything at all
because we will no longer exist.
Gone or weakened to the extreme…
There’s still time.
Today, the message is getting through.
Spread the word.
*
Credit interest rates: Usury.
When they grant a loan,
banks, the masters of the market,
want to be paid back, reimbursed with money
that they initially only possess up to a maximum of 10%,
sometimes a little more, often less,* with interest of course.
* https://www.investopedia.com/articles/investing/022416/why-banks-dont-need-your-money-make-loans.asp
https://en.wikipedia.org/wiki/Reserve_requirement#cite_note-18
At the first suspicious sign,
at the slightest suspicion, at the slightest risk of default,
the poor, families, businesses, peoples, nations,
are charged the highest possible interest rates* on their credit or loan.
* Even if interest rates are ‘advertised’ and made attractive at the outset,
facts show us that they are almost systematically increased
if a monthly payment is not made.
You can imagine the injustice of such a system.
No regime, no empire has ever held as much power over the world
as banks do today.
By raising interest rates,
they not only increase the total amount of debt,
they also extend it over time,
and make corporations, individuals, companies, organizations, peoples and nations
prisoners of a debt that cannot be redeemed
but must always be repaid.
A debt that is perpetuated over time, now and forever,
because the money needed to pay the interest on the debt
is nowhere to be found.
So the only solution left is either to get it from someone else
who then will not be able to pay back his or her own debt,
or to borrow again and again, ad infinitum…
We, the peoples,
have become slaves to perpetual debt,
slaves in perpetuity to finance just because it is written into the system,
a system that the oligarchy has chosen for itself, and only for itself.
Especially since they have the means and billions to speculate
against a country’s debt, its currency, its industries or its vital staples…
Anyway, let’s not stray from the subject.
The whole art of the rentier
lies in finding the balance that allows their income to last forever:
1 the highest possible interest rate to maximize profits,
2 but still low enough to avoid defaults,
which is always a lack of revenue and therefore profit.
The debt, of a country or of the world, can never be repaid,
because it’s part of the world system.
I insist:
Never the debt, of a country or of the world, will be paid back,
because it’s part of the world system.
Read it again if you don’t understand.
States cannot borrow directly from the central bank at zero interest,
because money creation in the hands of private banks,
interest rates and financial speculation
prevents us from doing so.
And our debts strangle us, suffocate us,
stifle freedom, law, justice and democracy.
We, the peoples of the world,
are at the mercy of the financial markets,
whose avowed aim is neither the common good
nor the preservation of the biosphere,
nor peace, nor well-being, nor even the survival of human beings on Earth,
but the maximization of profits and personal enrichment.
It’s written into the bylaws of their organizations.
We must put an end to submission and slavery through debt.
We must put an end to debt.
To take back the power to create money,
to regulate the banks, to subjugate them,
to give meaning to humanity and to human beings
is an absolute necessity.
The nation constantly needs to refinance itself,
it is inevitable.
The goal, the raison d’être of money and money sciences
is to make money as free-flowing as possible within society
in order to promote the well-being and dignity of as many of us as possible
and not to divert all the money, all the wealth of the world
to the sole benefit of the tyrannical oligarchy
of the hyper-selfish hyper-rich.
It is possible to submit the financial markets.
It is they themselves, the financiers and their buddies,
who tell us all the time that another world is impossible.
They tell us that their system is the only possible choice,
when it is the one we can no longer afford to perpetuate.
It is as if Hitler told you loud and clear
that defeating him is impossible
and that it is not even worth trying.
Hitler fell like all the others.
All the despots, all the tyrants, all the unrighteous have passed, have fallen,
they may have spread suffering, they may have spread injustice,
but they have all gone to the grave.
It will be the same for banks.
The concern is that today, at this stage of evolution,
rather than giving up their privileges, greed and narcissism,
they could take us with them to the point of no return,
to the point of self-extermination.
*
The crazy and infinite race
to pay back private interest rates at maximum yield.
There was a post on the net,
in Spanish, that a protester had displayed on his back
that said something like:
“Health care: privatized.
Justice: privatized
Logistics infrastructures: privatized
Education: privatized
Government: privatized
Money: privatized
The debt: aw, no, that one, it’s public. »
The fact that States are subject to interest rates set by the markets
because the former cannot borrow directly from their Central Bank
increases the addictive need for profitability, productivity and growth,
which in the very short term are deceptively necessary
and in the short, medium and long term
fundamentally and dangerously counterproductive.
When a state borrows 5 billion euros at 1% interest rate, which is very low,
the state will have to repay 50 million in interest on top of the 5 billion.
If these interest rates rise to 10% because,
whether it is justified or purely ideological and irrational,
the financial markets, often driven by herd behavior and crowd psychology phenomena,
lose confidence in this state,
then the state will have to repay an additional 500 million euros.
We are only talking about states here,
but let us include local and regional authorities,
hospitals, universities, small, medium and large companies,
households, families, people all over the world,
and you will get an idea not only of the immensity of the global debt
but also of the power of banks and financial institutions of all kinds.
The CADTM and other organisations
have very clearly demonstrated that it is the interest on the debt
that is strangling the countries and populations in the ‘developing’ countries
and today in Europe and in the so-called ‘developed’ countries*.
*’Comité pour l’Annulation de la Dette du Tiers-Monde’,
rebaptisé ‘Comité pour l’Annulation des Dettes Illégitimes’.
Committee for the Cancellation of Third World Debt,
renamed the Committee for the Cancellation of Illegitimate Debts.
The debt itself, i.e. the principal, without interest,
is usually repaid several times by the Nation-States as a result.
Consequently,
what binds States and populations to this system
that strangles us and strangles the world
is also the enormous interest rates
that constantly force us to borrow again and again
with new interest rates that in turn force us to borrow again and again
in order to pay it back, indefinitely, forever and ever.
*
Sacrificed on the altar of money and profit.
The example of France
These observations are a blatant and crazy reality:
In the current state of affairs and the imbalance of power
between peoples and rulers, between the poor and the rich,
between debtors and creditors, between the humble and the powerful,
not only will the debts of the entire world
never be substantially reduced to a sustainable level,
but they will increase considerably, inexorably, exponentially.
Because money does not originate from anything real or rational
apart from its own growth,
due to fractional reserves, borrowing on the financial markets
and the interest rates that are imposed,
then not only are we all increasingly indebted, increasingly chained to debt,
but we are also, as the economists say, making strong market distortions,
and we are increasingly exacerbating the pernicious effects of our primordial drift.
In France,
the State’s debt* is as follows,
in billions of euros per year from 2006 to 2016 :
Year | A. ** | B. ** | C. *** | D. (A+C) | E. (Difference between repayments and new borrowings) |
2006 | 89.9 | 86.15 | 39 | 128.9 | 42.75 |
2007 | 79.6 | 118.51 | 39.5 | 119.1 | 0.59 |
2008 | 112.8 | 191.7 | 44.5 | 157.3 | -34.4 |
2009 | 125 | 259 | 37.6 | 162.6 | -96.4 |
2010 | 110 | 192 | 40.5 | 150.5 | -41.5 |
2011 | 120 | 201 | 46.3 | 166.3 | -34.7 |
2012 | 123 | 200 | 46.3 | 169.3 | -30.7 |
2013 | 136 | 205 | 44.9 | 180.9 | -24.1 |
2014 | 134 | 212 | 43.2 | 177.2 | -34.8 |
2015 | 150 | 221 | 44.3 | 194.3 | -26.7 |
2016 | 153 | 216 | 44.4 | 197.4 | -18.6 |
Total | 1333.3 | 2102.36 | 470.5 | 1803.8 | -298.56 |
*
This is the government’s debt alone, not the public debt,
which includes the debt of various central government agencies (ODAC),
local government and social security funds.
(see Insee http://www.insee.fr/fr/methodes/default.asp?page=definitions/administrations-publiques.htm
[archive] « Administrations-publiques »]
https://fr.wikipedia.org/wiki/Service_de_la_dette
**
https://fr.wikipedia.org/wiki/Dette_publique_de_la_France
Dette publique de la France
« Bonne » ou « mauvaise » dette ?
***
https://www.journaldunet.com/economie/magazine/1041648-charge-de-la-dette/
to compare with
https://fr.wikipedia.org/wiki/Service_de_la_dette
The data is reliable. From the most to the least official, go to the websites.
And even if it is very difficult to find very precise data, here is the order of magnitude.
Go to the websites. And you will see that the order of magnitude is widely respected.
The numbers may not be accurate to the nearest billion.
But when it comes to thousands of billions, what is one billion?
That’s a lot for you. It’s a lot for us. It’s astronomical for most of us.
But to the system, it’s very little.
The order of magnitude is the one presented here. There’s no denying that.
Thus,
on average over these ten years,
we have an interest percentage on the debt of 26.08%.
470.5 / 1803.8 x 100 = 26.08
470.5 out of 1803.8
is 26.08%.
In order to have a simplified but clearer view of the situation
and of the enormity of logic,
let’s return to our little tale from the start:
Let’s imagine that in year one of civilization,
we initially borrowed only 100 euros,
and that these 100 euros need to be returned in one year
with 26% interest increments,
meaning 26 euros for a total of 126 euros.
On January 1st,
the State distributes the 100 euros to citizens
to live, produce and trade.
At the end of the year,
the State collects the taxes to reimburse.
But it will have to find the 26 euros of additional interest.
which, since they do not exist anywhere,
will have to be borrowed in the second year.
Imagine if there had been two percent growth,
the State could have collected 102 euros in taxes.
To simplify our calculations,
we will not take any growth into account.
This being said, when you see the next table,
you will understand the incompressible need
for unbridled growth in such a system.
Thus,
the following year,
the State will have to borrow 126 euros
to repay the deficit of 26 euros in interest
and start again with 100 euros
which we will be able to use in year 2,
just as we did in the previous year.
Money that we can only find on the financial markets
since, under current law, the state cannot create money.
This would do the following year after year:
A. need for money, year after year (B+C-1) | B. no other choice than on financial markets |
26% (B x 0.26) | C. on the basis of the last borrowing | |
1 | 100 | 100 x 0.26 = | 26 | |
2 | 100 + 26 = | 126 | 126 x 0.26 = | 32.76 |
3 | 32.7 + 126 = | 158.76 | x 0.26 | 41.2776 |
4 | 158.76 + 41.2776 = | 200.037 | x 0.26 | 52 |
5 | etc. (B+C-1 year) | 252.05 | x 0.26 | 65.53 |
6 | … | 317.58 | x 0.26 | 82.57 |
7 | 400.15 | x 0.26 | 104.04 | |
8 | 504.19 | x 0.26 | 131.09 | |
9 | 635.28 | x 0.26 | 165.17 | |
10 | 800.45 | x 0.26 | 208.12 | |
In just 10 years, from the 100 euros we needed at the beginning, we now need 800.45. | ||||
20 | 8,073.1 | x 0.26 | 2,099 | |
In 20 years, we need 8,073 | ||||
30 | 81,422.76 | x 0.26 | 21,169.92 | |
in 30 years 81,422 | ||||
45 | 2,607,978.37 | x 0.26 | 678,074.37 | |
In 45 years, more than 2 million, 2,607,978 euros exactly. 2 Million 607 and bananas from 100 euros 45 years ago. | ||||
60 | 83,533,785.34 | x 0.26 | 21,718,784.19 | |
In 60 years, 85 million. It’s mind-boggling. It’s hard to believe. 85 million from only 100 euros. | ||||
81 | 10,706,403,561 | x 0.26 | 2,783,664,926 | |
In 81 years, it’s 10 billion and 706 million. The growth of the deficit is exponential. We are approaching the current levels. The first trillion is fast approaching. | ||||
101 | 1,08907E+12 | x 0.26 | 2,83157E+11 | |
In the year 101, we reach the first trillion. It’s going faster and faster. It’s exponential. (The E+12 means there are 12 digits after the first one. We’ve reached the first trillion euros) | ||||
You find that hard to believe?
So do we.
There’s no doubt about it, though.
We’ve checked several times.
The calculations and the logic itself.
After 200 years,
according to the same calculation,
there are 21 zeros after the first number.
Exactly,
that is 9,413,230,000,000,000,000
from 100 euros 200 years earlier.
It’s an abyss, it’s a black hole, with no bottom and no limits.
And a very good example of exponential growth.
That says it all.
The problem is that this is people’s money.
Money of the world.
It is the money
that the world and all the peoples of the world could use
to finance the common good, the common will, and the common salvation
of all peoples, of all human beings, of all nations, of all the world.
The verdict is clear:
If we broke the cursed chains of debt,
we would be rich.
Inevitably.
We would be rich.
The world would be rich.
We cannot begin to imagine the loss of income, the loss of opportunities.
It would be like imagining the life you would have had
if you didn’t have the life you have today.
You can’t imagine it,
but you can have a small idea, an order of magnitude.
Let us now look at what the state of France’s finances would be
over the same period, from 2006 to 2016,
if it had not had to pay interest every year.
Government debt* without interest (in billions of euros) | |||||
Year | A. Repaid loans (A+C of the first chart)*. | B. New borrowings | C. Interest repayment | D. Total repayment (principal + interest) (A+C) | E. Balance: Difference between repayments and new borrowings (A-B) |
2006 | 128.9 | 47.15 | 0 | 0 | 81.75 |
2007 | 119.1 | 79.01 | 0 | 0 | 40.09 |
2008 | 157.3 | 147.2 | 0 | 0 | 10.1 |
2009 | 162.6 | 221.4 | 0 | 0 | -58.8 |
2010 | 150.5 | 151.5 | 0 | 0 | -1 |
2011 | 166.3 | 154.7 | 0 | 0 | 11.6 |
2012 | 169.3 | 153.7 | 0 | 0 | 15.6 |
2013 | 180.9 | 160.1 | 0 | 0 | 20.8 |
2014 | 177.2 | 168.8 | 0 | 0 | 8.4 |
2015 | 194.3 | 176.7 | 0 | 0 | 17.6 |
2016 | 197.4 | 171.6 | 0 | 0 | 25.8 |
Total | 1,803.8 | 1,631.86 | 0 | 0 | 171.94 |
*Since interest on the debt would not have to be paid,
the government could have repaid the principal of the debt with the money available.
We therefore added the debt service (the principal) to the interest on the debt
from the data in the first chart,
the one which reflects the contemporary reality
at the very beginning of this article.
The French State would have a credit balance
of nearly 172 billion in profits after 10 years.
17 billion a year on average that would fall from the sky.
Finally,
if the state not only no longer had to pay interest
but in addition had freed itself
from the obligation to borrow on financial markets
as would be possible under the rules and principles of a sovereign currency,
then the result would be as follows:
Government debt* without interest (in billions of euros) | |||||
Year | A. | B. | C. | D. (A+C) | E. (Difference between repayments and new borrowings) |
2006 | 128.9 | 0 | 0 | 0 | 128.9 |
2007 | 119.1 | 0 | 0 | 0 | 119.1 |
2008 | 157.3 | 0 | 0 | 0 | 157.3 |
2009 | 162.6 | 0 | 0 | 0 | 162.6 |
2010 | 150.5 | 0 | 0 | 0 | 150.5 |
2011 | 166.3 | 0 | 0 | 0 | 166.3 |
2012 | 169.3 | 0 | 0 | 0 | 169.3 |
2013 | 180.9 | 0 | 0 | 0 | 180.9 |
2014 | 177.2 | 0 | 0 | 0 | 177.2 |
2015 | 194.3 | 0 | 0 | 0 | 194.3 |
2016 | 197.4 | 0 | 0 | 0 | 197.4 |
Total | 1,803.8 | 0 | 0 | 0 | 1,803.8 |
There is no new borrowing, no interest.
For when the nation-state has regained the power of monetary creation,
everything that the state borrows from itself at 0% interest rate,
it can keep or destroy according to what Democracy sees fit to do
depending on the macroeconomic conjuncture.
From 2006 to 2016, France repaid over 1.8 trillion euros.
And yet its debt keeps increasing.
It’s an infernal trap.
A prison you can’t get out of.
A black hole that exponentially sucks in all.
Don’t ask what the problem is anymore.
That is the system’s nuclear core.
Let’s neutralize it.
Before it causes a new financial, monetary, economic and geopolitical
Chernobyl.
*
Denuclearize money
If only we had the power to create our own sovereign currency,
we would be rich.
So rich.
Rich not only with money.
Especially rich in opportunities.
Rich with the hope of meeting all the titanic challenges that face us.
Rich to build a new world, a new humanity
in harmony with itself, with life, with the earth.
This logic makes your head spin:
The more the system gets carried away
– by debt and inflation, or deflation,
by usurious interest rates and speculation,
by exploitation, greed, mad growth, threats and competition –
the greater the value given to money,
the more the system becomes disconnected
from present and future social, economic, geopolitical, diplomatic,
energy, ecological and human desirable realities,
the faster we are thrown into the mad race for growth,
greed, injustice, competition and pollution,
the more civilization is doomed to collapse, sooner or later,
with all the more force and clash
as it will collapse at a later date.
The price we will sooner or later have to pay
represents what we should consider our true debt,
eminently real and existential,
owed to no creditor, to no public or private bank,
but to the Earth, to its resources, to its children, to life, to ourselves.
The destruction of nature has a price
that the Earth will sooner or later make us pay
with nothing less than our lives, our despair, our blood and our tears…
Our selfish, systemic, suicidal insanity will do the rest.
This system is built on a foundation that rests on nothing.
Having no rational basis,
this system does not encourage us to create wealth
but to create money, which is completely different.
The distinction is crucial.
Money creates the illusion of wealth.
Wealth is real,
and money is supposed to represent, as finely as possible,
the reality of that wealth.
Since money is disconnected
from the multiple, interdimensional, relative and subtle reality of values and wealth,
then we are largely, inevitably going in the wrong direction,
from every perspective and every point of view.
The saddest thing is that the sum of our real wealth is gigantic,
if not infinite…
In the perspective of time and intertemporality,
the sum of our real wealth is exponential
and bears within itself the potential of the eternal,
in death and nothingness or in life and infinity.
*
Perpetual debt
Thus,
interests on debts are our perpetual chain,
making nations slaves to the world of money.
No wonder,
once we have understood this,
we have understood that no politician can do anything about it,
and no government can do anything about corruption
or the blind, sleepwalking march into the abyss of their own nation.
Since private investors necessarily want the highest possible profitability,
to an outrageous point,
then the race for money, productivity and growth
cannot stop accelerating exponentially,
and thus leading us straight to disaster.
Consequently,
a double movement is taking place:
Not only is the system getting out of control,
but the exponential increase in inequalities
associated with the impoverishment and fragility
of all the social redistribution systems of all the welfare states in the world
is leading to an increasing inertia of the system,
an inertia that is becoming more and more paralyzing for humanity
in terms of adaptability to an environment
which is being more and more radically and dangerously transformed
by this very same system.
Systemic dynamics to be compared with a wise society
based on the general interest and social harmony,
which, as soon as there are no more interest rates on debt,
as soon as socio-economic balances, even relative and imperfect ones, are implemented,
as soon as financial and monetary resources circulate,
as soon as the economy, industry and trade function
and as soon as the basic needs of the population are met,
can be satisfied with moderate profitability.
This is, needless to say, only possible
when the use of money, credit and interest rates
are guided by general interest.
*
The slavery mechanics
It is simple, both excessive and outrageous:
the poorer a person, or a people, is,
the higher the interest rates tend to be.
In other words,
the more a person, or a nation, needs money,
the more expensive that money is,
the more sacrificial it is to pay it back.
The poorer and more indebted a large number of people are in a given area,
the more a nation is at the mercy of its creditors,
the more the dynamic of easy profits
whose gains are commensurate with the risk taken increases,
a dynamic which increases all the more as chronic market instability
inspires fear, error of judgement and ill-advised decisions,
selfishness, greed and all their consequences
which in turn reinforce the ultra-negative dynamic
of profiteering, commodification, expropriation, total domination
and enslavement of everything that can be exploited and turned into profit.
That dynamic in and of itself is tragic.
You don’t need numbers to know that.
Slavery, impoverishment and destruction are tragedies.
Beyond cultures, nations and religions,
the world of money, the great money machine,
is destroying the world.
What’s at stake now is a humanicide.
*
Securitization,
slavery, predation, destabilization.
Because debts have reached unprecedented astronomical levels,
because inequalities are extreme
and because we are witnessing a frenzied international tax evasion,
a mass transfer of world capital to tax havens,
for more and more families, organisations, territories, peoples, states,
money is lacking.
We therefore have to borrow money more and more often,
for longer and longer periods of time, get into debt
and thus be drawn into the infernal spiral of indebtedness,
submission and servitude to this biased system,
to those who have the money.
Perhaps the worst thing is that these debts can be ‘securitised’*,
debts on which one can take out insurance,
which one can speculate for or against.
*“Securitization is
the process of taking an illiquid asset or group of assets and,
through financial engineering, transforming it (or them) into a security.
The derisive phrase “securitization food chain,”
popularized by the film “Inside Job” about the 2007-2008 financial crisis,
describes the process by which groups of such illiquid assets (usually debts)
are packaged, bought, securitized and sold to investors.
A typical example of securitization is a mortgage-backed security (MBS),
a type of asset-backed security that is secured by a collection of mortgages.
First issued in 1968, this tactic led to innovations like collateralized mortgage obligations (CMOs),
…”
https://www.investopedia.com/ask/answers/07/securitization.asp
It is as if you gave me money in exchange for a piece of paper
that promises you future annuities
through the monthly repayments of my client(s)’s debt
and that would allow me to get a good, fresh, all-new bundle of money
in one fell swoop
without any effort other than to convince you to buy.
Financiers protect themselves in this way by writing a simple letter,
on which they write a simple promise that gives them access,
as if by magic, just because it is written,
to fresh money.
Consider that all the banks and the entire financial establishment
exchange a lot of money,
for colossal sums all the time, at the nanosecond,
in the great incessant game of debt and interest,
financial products, speculation, securitization.
Apparently,
speculation on so-called derivatives represents at its lowest level
20 times the world’s GDP*.
* http://www.washingtongoldexchange.com/2014/economic-bubbles-cannot-go-on-forever/
http://www.dailyfinance.com/2010/06/09/risk-quadrillion-derivatives-market-gdp/
According to these two articles,
estimates of credit on derivatives are $1,000 trillion or more:
$1,000,000,000,000,000,000,000 +.
Not only does the big game make the system unintelligible,
and nobody, not even the greatest experts understand it anymore,
but the world and humanity are vulnerable
to the greatest excesses, the greatest insanities.
If we no longer understand anything,
we no longer control anything, we no longer measure anything.
Nevertheless,
what is certain is that the creation of money
through fractional reserves and the maximization of profits
through credit and interest on credit
force debtors to find money that doesn’t exist,
that can’t exist because it was never created,
a process that very logically exacerbates the scarcity of money for the masses,
over-competition and the mad rush for growth.
Today, all the peoples and countries of the world
find themselves in the same situation:
trapped in a vicious circle of total destruction
at the mercy of the markets and investor-creditors.
Greece,
on this day of our Lord, July the 22nd, 2015,
ceases to exist as a sovereign nation.
The State is now 100% controlled by bank creditors.
In order to repay its debt,
which is otherwise unsustainable and unrepayable,
Greece is for sale, plain and simple.
Those who have money buy up all the Greek assets:
its islands, its monuments, its land, its public enterprises…
Everything is given to those who have enough money to do so
to buy Greece.
The Greek people have clearly become slaves to their debt,
to creditors, to markets
which pollute everything, which rot everything
and which make us their cattle, their slaves.
Debt is our prison ball
and interest rates are the chains that bind us to it,
now and forever if we go on never daring challenge its legitimacy,
and let it go on and on and on.
Unfortunately,
from the perspective of the systemic logic of financial capitalism,
all economic actors owe money to someone, and someone owes them money.
All economic actors,
all neo-liberal-inspired capitalist companies and institutions,
most of us are debtors and creditors at the same time.
This situation can very easily turn us into rapacious creditors
and often does
because the urgency of regular repayment to our own creditors
forces us to put pressure on those who owe us money.
All of us jailers of each other,
All captors of ourselves.
Like water and oil,
freedom is incompatible with tyranny.
Necessarily,
submission is the antinomy of liberation.
Reversal of values,
schizophrenic irony that would be laughable
if that weren’t so extreme, so cruel.
From the market’s point of view,
it’s not the value of what’s real that matters,
but the value of money itself.
Neurotic hallucination,
believing that money has an intrinsic value for itself
is a compulsive illusion whose grip on the world is dangerous and evil.
The usurpation of the power of money creation,
the fractional reserve system, the use of high interest rates,
the systemic swelling of debts has negative effects
beyond any measure
that we can no longer ignore:
In the default scenario,
the domino logic has the effect of weakening the financial economy
and hitting people all over the world,
thus dragging us, the whole world, into chaos
and now more than ever,
imminent peril.
The violent upheavals of recent times*
are the best proof of the slow collapse of this increasingly absurd system.
* Years without a financial crisis in the world are few and far between.
https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets
*
Necrosis of the economy
When money and wealth are taken away,
the economy is no longer irrigated.
Even if the credit system can, for a time, make up
for the resulting inequality and poverty,
one day inevitably, as inequality continues to grow,
citizens no longer have enough income and capital to pay back,
let alone borrow,
then a crisis like the one in 2007-2008 breaks out
and the economy grinds to a halt.
This is the credit crunch phenomenon.
The political response to the 2008 crisis
rests mainly and almost exclusively on the creation
of discount central bank money (Quantitative Easing)
in an attempt to restart credit.
Not only does that not work, we said it,
but also, because the money’s being squandered by people
whose only motivation is greed and maximized profit,
because the indecency of inequality is still not properly addressed,
or tax havens banned,
then money is still siphoned off
through the same pre-crisis mechanism,
with multiplied strength.
« With each failure,
the banks have benefitted from some new guarantee or concession
designed to patch up the system and get back to business as usual,
be it deposit insurance after the crisis of the 1930s,
the lender of the last resort function after the Overend Gurney in 1866,
bailouts in 2008 or Quantitative Easing in 2009.
Each crisis thus strengthens the remaining banks
and protects them from their previous excesses,
setting the stage for even bigger crises in the future. »*
*Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,
By Andrew Jackson & Ben Dyson from Positive Money,
https://positivemoney.org/modernising-money/
This creates a bottomless abyss, an insatiable vortex, with eternal hunger,
a dynamic of chronic depression that feeds on itself over and over again,
constantly reinforcing the same causes,
which always produce the same consequences
ever more devastating each time the house of cards collapses.
This ultra-financial system is a monster
whose belly is an abyss and whose voracity is endless,
which must be stopped at all costs.
*
Money’s function
Because it was created only to reduce the value of a thing or product
to a recordable unit and to facilitate trade,
money has no value in itself.
Let us be very clear:
This is a starting postulate
without which nothing is understandable.
In the sense that in a well-governed, well-managed society,
economic and monetary stability are consequences parallel to it,
the function of money as a store of value at best is a secondary issue,
at worst, an instrument of power.
Indeed,
in a system where money would circulate effortlessly
among all members of society
without anyone being left behind,
then the need to hoard would greatly diminish.
Conversely,
the fact that money has now become a product in and of itself,
on which one can make an inordinate profit,
as if it were a commodity in itself,
something vitally, biologically or spiritually useful and fundamental
that fact deflects the economic and social role
for which money was created,
and consequently renders it ineffective.
Worse,
it makes it counterproductive, domineering and destructive.
Money has become an instrument of oppression
in that it completely reverses the balance of power,
which is now totally unbalanced,
and makes us precarious and vulnerable.
Whether we like it or not,
and whatever appearances and illusions we may have of reality,
whether we are rich or not, powerful or not,
we cannot contribute to making all members of society slaves to money
and not be slaves to money ourselves.
We’re all its slaves.
All of us.
Under the current system,
whether we’ve got plenty of it, not knowing what to do with it,
or that we have very little, if any,
we all are, every man, every woman, every child,
slaves to money.
Whether we know it or not.
For humankind,
the present and future consequences of this state of affairs
are crucial, gigantic, essential, life-threatening.
*
Debt money,
Enslaving money, destructive money.
With the fractional reserve system
and the power to create money through credit,
large banks have a natural incentive to use credit to create money
that allows them to enrich themselves and those they choose to favour.
Guided only by financial yield alone,
by greed as a dogma and a system,
their choices are therefore arbitrary and unreasonable,
with repercussions that are now known to be cataclysmic.
Moreover,
because interest rates force growth,
they force uncontrolled inflation of the money supply,
the creation of new money
that will never be destroyed when credit is repaid,
and which will inexorably move upwards
into the stratospheres of the world hierarchy….
Exactly when a tornado or a black hole is generated,
the system necessarily creates a vacuum, a depression, a draught
and therefore a systemic imbalance,
which constantly and inexorably sucks money towards itself.
Because according to the rules of international finance,
as soon as a credit is granted, scriptural money appears as if by magic,
the financial system,
the only one authorized to create, distribute credits,
and issue derivatives, resales of credits pooled together,
or insurance against default or price variations,
generally in an opaque and ultra-risky way
(reasons for the financial crisis of 2007-08)
manages to arbitrarily inflate the money supply
according to what seems good for itself and only itself.
Money supply
which is substantially distributed through the world’s richest
and most powerful networks
to disappear into tax havens.
Our system, our development model,
is not only based on hot air,
but also feeds it.
At best, it generates the ephemeral, the illusory and the superficial,
at worst, the suicidal, the cataclysmic and the apocalyptic.
Better to defuse the tornado while there is still time.
Because interest rates push all borrowers around the world
to find money that doesn’t exist anywhere,
the financial system creates a global systemic debt
that is increasingly impossible to repay,
and thus, in all spheres and dimensions of society, except the highest,
competition is multiplied innumerable times
by an astronomical deficit of money.
The system thus creates a minority of mega-wealthy
and a majority of poor people.
The system generates poverty and submission.
It aggravates the enslavement of all the peoples and nations of the world
through debt on a very large scale.
International finance thus ensures the domination of the rich and powerful
over the peoples and nations of the world,
making the whole of humanity their obedient slave,
whether by force or persuasion,
which in the end amounts to the same thing,
to work for them, or to die in despair and poverty.
It is precisely because the Great International Financial War is raging,
it is precisely because money is lacking and poverty is striking the world,
that banks deemed safer from 2008 to 2019
to widely exchange it among themselves,
and to stop lending to the people.
So banks have the power to create money out of nothing
except credit and all kinds of credit derivatives
and to give it, as far as they can, to themselves.
Whoever has the power to create money necessarily gets rich.
Giving this power back to the sovereign and popular nation
would therefore be tantamount to enriching the nation.
Moreover,
banks and markets consider and will always consider it juicier to invest,
as far as possible, in values that they alone consider safe.
They therefore finance
finance and big well-established companies within the oligarchic status quo:
oil, arms, armies, lobbies, pesticides, GMOs,
the control and manipulation industries, the futile and useless,
in short, everything that would require drastic moderation as soon as possible.
Finance creates a systemic vicious circle
that leads us straight to a chaotic world,
a world from which no one can escape,
not even the rich and the financiers.
World from which no one can escape,
for no one can escape from this world.
Unless, of course,
one chooses to self-destruct, to kill each other and, or to commit suicide.
Even leaving aside the whole moral aspect
of the enslavement of humanity and the destruction of humanity,
the verdict is irrevocable.
As powerful and tyrannical as it is unstable and fragile,
this ‘out-of-touch-with-reality’, schizophrenic, absurd and perverse international system
is doomed to fail.
Indeed,
if the money supply, the money of the whole world is created by debt,
then, inevitably, if all the debts were to be repaid,
like a balloon being emptied, in a kind of very rapid systemic deflation,
the banking system would collapse in one fell swoop.*
*The Future of Money,
Bernard Lietaer, Century London, 2001
Inevitably their accounts would inevitably go down considerably.
Pop!
There goes the bursting ‘bubble’….
That’s what happened in 2008.
This is what will happen again, inevitably.
Unless we save them from themselves…
and cure them of their own greedy, predatory madness.
It is therefore absolutely impossible to repay the debt.
Since debt is written into the system of money creation,
debts cannot be repaid.
*
The world’s debt will never be repaid.
Never ever!
Worse, it is doomed to increase.
A few figures on a global scale
will give you an idea of the significant order of magnitude.
If the world’s GDP were about $70 trillion in 2012,
it was $85 trillion in 2018.
You can see the growth.
And we are being forced to be poorer and poorer.
If the world’s debt was over $57 trillion in 2012,
In 2019, it was over $72 trillion.
Between $85 trillion in global GDP
and $72 trillion in global sovereign debt,
then all the people of the world would have to go without income for 10 months
in order to pay off all the public debts
to the financial markets and the banking system.
This, of course, is absolutely impossible.
If, in addition,
it is estimated that there are between 21 and 37 trillion dollars
hidden in tax havens*,
and that the wealth belongs mainly to the richest people in the world,
then, if the world’s debt were to be repaid,
then inequalities would increase in a completely unsustainable way.
* https://data.worldbank.org/indicator/NY.GDP.MKTP.CD
**https://financialsecrecyindex.com/en/
If money is created through the granting of credit, and therefore debt,
then if all debts were to be repaid,
there would be no money left in the system,
and the world economy would collapse.
That’s very clear.
Especially since it is often the creditors themselves
who have the biggest debts.
It is the private banks themselves that have the largest debts.
That is why if the banks collapsed,
the entire world economy would collapse with them.
So, in order not to have another cataclysmic shock yet
similar to or even worse than the systemic earthquake of 2008,
we must act to prevent them from collapsing once again.
*
O rage, O despair.
If through the interplay of exchange rates, speculative attacks,
through the processes of its creation, its valuation,
its overvaluation or undervaluation, debt and interest rates,
a monetary policy can bring down a whole country
and have immense consequences for its entire population and for the world
by making the international system vulnerable and fragile,
the success of a territory’s economic policy certainly
depends on much more than its currency alone,
but even if it depends on much more than its currency alone,
an intelligent and calibrated monetary policy
is absolutely crucial, essential, indispensable and fundamental.
In a context of private money creation
and the economic polarization of society
between the very rich and the very poor,
in a context of volatility in the values
of currencies and commodities in relation to each other,
in a context where official reference points are erroneous and/or incomplete,
in any case imperfect
where creditors have the power and right to claim money for life
and thus establish a life-long rentier system,
simply because through the interplay of supply and demand,
they can and know how to calculate their interest rate
in order to target the window in which the debtor, country or person,
will have sufficient resources to be able to repay,
but will probably never be rich enough to overcome interest rates,
we are all slaves to money,
ready to do anything to get some.
Since, within this oligopolistic system,
the value of everything is unstable,
instability becomes the rule.
When instability is total,
selfishness is exacerbated, and instability as well…
Injustice is blatant.
Money must be put at the service of the public interest
and not at the service of the interest of a few.
Taking back from the markets the powers of monetary creation and management,
asserting the legitimate power of the sovereign people
to decide their own fate, which is to live,
is not only relevant from a moral and humane point of view,
it is also a new monetary, economic and financial perspective.
*
Money is a title deed.
The power to create money is the power to own the world.
Money is a title deed, a more or less deferred title deed.
Indeed,
it allows you to acquire a good or a service at any time,
as long as the economy of course remains functional.
Whoever has money is therefore the at least potential owner
of a whole series of goods or services.
Consequently,
by privatizing the creation of money
which has been entrusted to large private banks
which create money by credit,
everywhere (or almost everywhere) in the world,
then inevitably everything (or almost everything) on earth,
then inevitably everyone (or almost everyone) is destined to be owned
by banks and markets.
Since, in addition to this, the banks charge interest on credit,
since the search for financial yield on the markets is the rule,
then absolutely everything on this Earth is destined
not only to belong to the banks and markets,
but on top of that the diktat of growth
is absolutely inevitable, inescapable and intranscendable,
according to the rules of current money creation.
Hence the obligation of all economic actors,
all human beings, men, women, organizations, companies,
to sell, sell, sell, sell, something, anything, whatever it is,
ever more, more and more
in order to make money
and return it to those who lent it to us in the first place.
Thus,
the requirement for ever-increasing productivity, output, profitability, sales,
and thus consumption, waste and pollution
is an intrinsic systemic problem that is absolutely insoluble.
It is indeed inherent in the privatization of money through credit
and the interest on that credit.
Hence the curse of unsustainable growth.
This undeniably mathematical logic,
however, is well hidden by all the deceptive complexities
they brainwash us with.
A well-managed economy
is one that gives its members everything they need to live,
and that relies on the ingenuity, inventiveness and creativity of its members
to improve the well-being and welfare of all
without excess but with decency, without imbalance but with harmony,
without waste but with respect for Earth, Human and Life.
I repeat, money is a title deed.
Privatize it and watch the world sink into inequality and tyranny.
Therefore,
possessing the power to create money
is not only possessing the world and humanity,
but also, when it is abdicated to private interests,
it is, as a nation or as a world, condemning itself
to destroy and pollute in excess
by creating anything in any way just to satisfy the requirements of profitability
demanded by the financial caste in power
that imposes itself as a diktat
worse than all the dictatorships and tyrannies
that the world and humanity have never known
since History is History.
There is no other way out of such a system
than the recapture by the sovereign people, by the enlightened nation,
of the power to create money.
*
Private debt
It is all the more crucial and urgent to control the markets with an iron fist
because since the creation of capitalism,
not only have private debts been at least as serious as public debts,
but also because financial crises have never been caused by national public debts,
but by private debts.*
What are private debts if not the markets themselves?
In a world where money is created by making loans and therefore debts,
markets are hyper-indebted.
1929, 2008,
and all the ones that have taken place before,
in-between and no doubt in the near future,
have been caused by defaults, impossibility to repay, on private debts!
As private debt explodes, banks fail and the domino effect is set in motion.
No one can repay anyone anymore.*
* https://en.wikipedia.org/wiki/Great_Recession
http://www.globalresearch.ca/private-debt-kills-the-economy/5303842
http://money.cnn.com/2017/02/16/pf/americans-more-debt-in-2016/
http://www.tradingeconomics.com/united-states/private-debt-to-gdp
http://www.nakedcapitalism.com/2016/09/the-private-debt-crisis.html
Thus,
putting money back into the system
without going through the private banks,
thereby avoiding real estate and financial speculation,
means allowing all people, all human-sized companies, all sectors combined,
to pay off their private debts
and thus protect us from a new financial crash with incalculable and terrible effects.
Some 10 years after the 2008 crisis,
look at the state of our world.
It is, for the most part, its result.
Inequality and the scarcity of money in the real economy
and widespread impoverishment are such that, unfortunately,
economic actors often have no choice but to go into debt.
Businesses, mainly small and medium-sized enterprises, and economies
no longer develop so much through credit,
they are suffocated by it.
*
** **
*
A tale
*
Getting out of the dead-end
There is an urgent need to free ourselves from the chains
imposed by the monopolies of national and exclusive currencies
in the hands of large private banks and oligarchs by creating a global architecture
of free, sovereign and complementary currencies
from global to local and from local to global
via the continental, national or even regional levels,
according to rational and democratic rules,
notably those developed by the Positive Money movement
with Ben Dyson and Andrew Jackson*,
by Bernard Lietaer**, by Stéphane Laborde***,
by Jaromir Benes and Michael Kumhof****
and by Nathanael Faibis*****, to name but a few.
*Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,
By Andrew Jackson & Ben Dyson from Positive Money,
**The Future of Money,
Bernard Lietaer, Century London, 2001
***Théorie Relative de la Monnaie
Version 2.718,
Stéphane Laborde
**** “Chicago Plan“,
advocated by economics Nobel Prize winner Maurice Allais
and revisited by two IMF economists, Jaromir Benes and Michael Kumhof.
https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
***** https://fr.scribd.com/document/66367429/MONNAIE
It’s quite possible.
That’s the priority.
Let investors, markets and bankers rest assured:
Saving the planet and humanity
also means saving the banks from themselves.
A transition such as the one envisaged here,
resulting from the convergence of proposals
coming from some of today’s most expert, experienced and visionary minds
are designed to avoid causing seismic shocks across the markets.
Instead,
they seek to resolve the major problems of debt and chronic instability
inherent in the system of fractional reserve and private money creation
not to harm or punish them,
but to save them, to save life and humanity.
The aim is to correct the markets.
To save the markets from themselves.
To liberate the world and humankind.
*
A tale,
a return to the origins.
In the face of the evidence
that has been hidden from us since money has been around,
so to speak, since the dawn of time,
we must, at this point, state the obvious.
To do this,
new points of reference, new benchmarks are needed.
Let us imagine a society
in which our primary and primordial needs
are satisfied and that we are self-sufficient:
Four needs are absolutely essential and primordial
without which other basic needs
such as education, knowledge, justice and fulfilment
would be harder to get:
Food, shelter, clothing, health…
In this imaginary society,
let us imagine that we are 8.
Let us imagine
that each one of us provides for all that everyone needs.
Let us imagine
that we are harmonious and self-sufficient,
each one providing to the others what we all need.
Let’s imagine that two of us provide our habitat needs,
two more food requirements,
two in clothing and finally two in hygiene, health and environment.
Let’s imagine that our society works.
Let’s imagine that we are in harmony
because we have found harmony.
Because we have at our disposal simple but real raw materials
that ensure our survival and make us content,
because we have been able to adapt to our natural conditions,
and finally because, despite our specializations,
we are sufficiently educated in the primary and essential specialties
to be autonomous and survive,
let us imagine that our society functions.
If with wisdom and justice
we measure the quality and value
of what we bring to each other, of our collaboration,
then our society will inevitably be harmonious.
And if we’re four couples,
then kids will come.
And the future will be.
In our children’s smiles and joy of life,
in the memories and wonder of their parents,
it will already be there.
As much as the present makes the future,
the future makes the present.
If we measure with wisdom and awareness our wealth and good fortune,
then our micro-society will be just and perennial.
If we choose to use money
for the sole and unique purpose of facilitating and fluidifying our exchanges,
accounting for our wealth and harmonizing our exchanges in the interest of all
as accurately and scientifically as possible,
then money will serve justice and prosperity, well-being and harmony.
We are convinced that the purpose of money
is to measure and facilitate exchanges,
to serve and nurture justice and prosperity, harmony and humanity,
and not to create predation, poverty, personal enrichment,
injustice and inequality, violence, chaos and destruction.
For more justice and humanism,
for the greatest hope and deliverance,
in our little community,
we are convinced that money must be managed
with moderation, balance, wisdom and awareness.
We know in our small community
that money must be managed with the greatest intransigence,
with the greatest wisdom in the greatest clairvoyance, the greatest intelligence.
Because nothing prevents our exchanges and our natural development,
because we have enough to house, feed, clothe and stay healthy,
wealth is created, relative and moderate, but real and durable.
There is harmony, relative but real.
Harmony prevails.
Our Earth is a Garden of Eden.
Our lives are beautiful.
*
A tale.
A turning point, a tragedy.
Let us now imagine
that the rules for creating, measuring and managing money
become the exclusive prerogatives of a single person or entity
independent of our small community,
a kind of bank whose interests wouldn’t be aligned with ours
except by chance.
Let us imagine.
Let us imagine it is decided that the money that we use
is now created and managed by this single external entity,
the only one entitled to do so.
What would prevent this entity from becoming selfish
to the point of serving only its own interests?
If it owed its wealth to the mere creation and management of money,
then what would prevent it from depleting money so as to increase its value?
And from selling credit?
And thus from sucking in, seizing all the wealth as is the case in today’s world,
whose system is devouring everything,
men, women, children, the living and the entire Earth?
Indeed,
deliberately making money scarce
would at least for a while upset our small community,
which until then had been successfully able to remain sustainable.
With a sudden change in the money supply,
the equilibrium that the prices of goods and services used to have
relative to each other
would be upset.
In order to regain a rapid equilibrium in our exchanges with each other,
the eight of us would have to agree on the readjustment of prices to the new situation,
to the smaller quantity of money in our small community,
through a common perception of the value of things.
Should we fail to do this,
then the only solution left to us to make up the money deficit
would be to resort to credit and thus to shackle ourselves to it.
Hence the critical importance of a money supply
that is fair and proportionate to values and trade.
At 8 or 8,000,
not to fall into the trap, not to get caught in the downward spiral
would be relatively easy.
At 7.5 billion,
it’s a whole different story.
But let us stay focused on our little community.
So let us imagine
that money has become scarcer
and there is not enough of it for everyone.
If for some reason we did not get along,
then the prices could not adjust with each other,
some prices would be too high and some too low.
Since there would not be enough money for everyone,
it is inevitable that if prices did not readjust proportionally to each other
to return to the original relative equilibrium,
then some would be hurt and others make a profit.
If one decided to raise their prices to make up the shortfall
and the others didn’t,
then money would come short for the others.
Already at this point,
we would see a rise in inequality.
Only a sense of justice and universal interest
equally shared among the eight of us
would ensure that our society regains its original balance
and avoid getting dragged into the vortex of credit and cursed debt.
Indeed,
we would have to borrow our money every year
and always pay back a little more, due to the interest.
Since this external ‘banking’ entity
would be the only one empowered to create money under the new legislation,
it would be able to impose its own rules.
Let’s imagine that we need 10,000 over a year to ensure our exchanges.
So, under the new legislation, we have to borrow 10,000.
From now on,
the money that this entity ‘lends’ to us
must be ‘paid’ at the rate of 1% of the amount borrowed.
With interest,
instead of paying back 10,000,
we pay back 10,100.
So how to pay back?
Because of the monopoly of this entity alone,
which has the power to create our instrument
used to measure value and as a means of exchange, money,
these additional 100 obviously do not exist.
So the following year we have to borrow 10,100
in order to provide for the repayment of the additional 100
which do not exist anywhere.
The following year
we will have to reimburse 10,201.
We re-borrow 10,201 at the beginning of the year
and therefore repay 10,303 at the end of the year.
We demonstrated this process a little bit above.
1% of an amount that increases
is a percentage that increases exponentially.
So how long will it take for our common debt to equal 100% of our GDP?
And/or for the financial entity to be as rich
as our entire small community put together
at only 1% interest rate
according to our ultra-simplified example of ultra-low interest?
In 69 years,
the financial entity generates an annual income
equivalent to the wealth of our entire small community combined:
Indeed, still needing 10,000 to live each year,
In year 68 we repaid 19,868.944, and in the 69th year 20,067.633.
The debt, by its nature, is exponential in terms of interest.
In fact,
having to repay in the year 10,100 of interest and in the 69th year 10,067.633
which have never been created
necessarily condemns us to eternal servitude
towards this external financial entity
whose interests at best align with ours only by chance and luck,
and at worst, are downright contrary.
The world’s accumulated debt on March 26, 2017
is more than $69.5 trillion,*
$69,656,005,606,513
and is increasing every second.
* http://www.nationaldebtclocks.org/
No people, no nation can be free and sovereign
without the power to create money.
No people, no nation, no world
can invest where it is deemed good, just and reasonable to do so
if this power to invest is left to ‘entities’
whose only concern is not only the maximization of profits,
but whose only framework is the law of the market left to itself,
i.e. the law of the strongest and the greediest.
Today,
we know that it is a question of survival of the species
to invest in renewable energies
and all the most environmentally friendly modes of production possible
and yet we are not doing so.
No people, no nation, no world
can invest where it is good for it to do so
if it does not have the power to create money.
No people, no nation, no world, no humanity
can have control over its own destiny
if it is not sovereign.
*
A tale, continued,
another future.
Let us now imagine
that the powers of money creation and management
are vested in our small community,
which is the only one empowered to manage money.
Once the rules of inflationary and deflationary prudence
and the democratic safeguards are well established,
what would prevent our mini nation, on day 1, let us say January 1,
from creating the money that would be necessary for its economy to function normally?
All the money.
Indeed,
in order for our economy to function,
the community, the people, the nation, the state, the nation-state,
must have at its disposal throughout the calendar year 100% of its budget
which it has deemed desirable to spend
so that its wealth can be both optimized and exchanged
with the greatest possible concern for justice, balance and precision,
with the greatest possible respect for human beings, living things,
the environment, the present, the future, and itself.
Moreover,
if on December 31 of the year 0, in our community, there is no money,
no banking and financial system, no fractional reserve system,
no system of credit or interest on credit,
then if we were to choose to invent money,
it would not only be most legitimate, but also perfectly fair and consistent
that this money be entirely created by and for our community itself.
Thus,
if our reference point was GDP,
in the best-case scenario, an improved GDP as described earlier
(i.e., GPI: Genuine Progress Indicator),
then our community would have no choice but to create on January 1st of Year 1
an amount equal to 100% of the GDP/GPI.
Indeed,
if GDP/GPI is the measure of all monetary transactions,
both public and private in a given economic zone,
then for the economy to function normally and for trade to be possible,
it is not only legitimate but also indispensable
for the money supply of an economic zone, in our example the nation,
to be equal to at least 100% of GDP/GPI,
or even a little greater in order to cover additional wealth creation,
what is commonly referred to as growth,
during the given period, in our example the year.
Thus,
if one accepts that the sovereign nation,
whatever its size, culture or location on the planet,
is the only legitimate entity to create money,
then it goes without saying that on the first of January,
the nation, or the state, call it what you will,
will be in deficit at 100% of its GDP/GPI.
Because if it were not,
then its economy would not be able to function,
many businesses would go bankrupt
and many people would find themselves destitute,
financially strangled by a simple lack of liquidity, by a simple lack of money.
Of all economic things,
we must remember that money is certainly, undeniably
the most arbitrary, intangible and man-made thing there is.
So it’s the easiest thing to create.
Consequently,
if the nation, or the state,
is the only legitimate entity to create the money
that is both indispensable to the economy
and, in contrast to everything else, to all men and women,
to all infrastructures, all organizations, the political regime or the environment,
money is the most intangible, arbitrary and artificial thing in the world
in terms of the representation of values,
then the Nation is in no way similar to the family, the individual or the business.
Indeed,
a family, individual or business that is indebted to 100% of its income
has a big cash flow problem.
Conversely,
a nation that is not indebted to at least 100% of its income
just can’t work because then there wouldn’t be enough money in the economy
for it to function normally.
That’s clear not only in the context of our little fiction,
but also and especially in today’s global reality.
*
A tale, continued:
healthy finances.
How in our tale do we find balance every December the 31st?
Firstly,
since money creation is the responsibility of the nation,
with the nation borrowing from its ‘central bank’ at zero interest,
we have no interest on the debt.
Secondly, two things are possible:
either we are self-sufficient and have no foreign trade,
therefore no external deficit, or we are not self-sufficient
but assuming that the import-export ratio is in equilibrium*,
foreign trade would have no impact on the total money supply.
*As soon as the nation regains control of its currency,
then it regains the power to invest again in its strategic industries.
It therefore naturally and rapidly tends not only to depend less on the outside world
and therefore to import less, but also, because it is reindustrializing itself,
thanks to lower costs (it no longer has to pay interest on its debt),
and better quality innovations,
then it becomes competitive again with the rest of the world,
and can thus increase its chances of exporting.
Thus,
the nation, with its democratically controlled ‘central bank’,
and with the prudential safeguards to which we shall return later,
will need to create more money
only in accordance with the needs of the economy,
that is to say, the exchanges which the members of our community mutually need
so that they can meet everybody’s needs.
In other words,
since money circulates within our small economic area
in such a way that everyone gets what he or she needs to live,
there is no need to add anything to this functional money supply.
Apart from the currency that would cover the trade
caused by any growth in that economy…
Furthermore,
in case our community wishes to protect its members from hazards,
i.e. illness or environmental-climatic contingencies,
each one would have to agree to offer the community
a part of the fruits of his or her work
that the community would store in one way or another
in order to face future hard blows.
It would therefore be necessary for each of us to work a little more for free
in order to protect ourselves as much as possible against future hazards
so as to finance social protection.
This free participation of everyone for the good of all
in case of a hard blow has a name:
it’s taxation, of course.
In our small, wisely run original community,
taxes have at least two functions:
First,
the destruction of currency:
There’s too much money in society and prices are rising rapidly.
That’s inflation.
The danger of inflation or even hyperinflation is the rapid rise in prices.
Since not all prices can rise at the same speed and ratio at the same time,
then imbalances are created which result in chain bankruptcy, poverty and instability.
The systemic danger that such a situation represents
therefore justifies the destruction of the excess money supply.
When the state is the creator of the money,
then it can recall the currency back to itself
through taxation in order to destroy it.
It goes without saying that controls should take place.
Second,
since absolute equality is on the one hand impossible,
and since on the other most of us will at some point be unable
to provide for our own needs
because of illness, old age or some kind of disability,
then taxation has a redistributive function of money throughout society
that is all the more important the more a society is unstable and unequal.
Of course,
this immensely broad subject would require further development.
We will simply add that it is in an unstable and unequal society
that the need for redistribution of wealth through taxation is the greatest.
That goes without saying.
In a wise, free and sovereign society,
wealth redistribution remains and will no doubt remain indispensable at all times,
but precisely because it will be closer to earthly and human nature,
because it will be more stable, fair and equal,
it will be lower.
Indeed,
in a society where injustice, instability and inequality are chronic
because they are at the heart of the system,
bankruptcies, unemployment, poverty and disasters are legion
and the need for redistribution through taxation is necessarily immense.
In a society healed of its chronic and systemic imbalances
where the distribution of wealth is from the outset
as close as possible to the general interest and relative balances,
then the need for redistribution through taxation will have drastically decreased.
This goes without saying.
From a vicious circle, a money hoarding machine,
we would move on to a virtuous circle, its exact opposite,
the benefits of which remain unquantifiable and invaluable to this day.
*
What people, what nation can declare itself sovereign
when it does not have the power to create its own money?
Especially when this inherently and by definition sovereign capacity
is, as it is today, in the hands of the big private banks
whose one and only obsession is the maximization of their profits,
no matter what the consequences …
Whether the species lives or dies,
the answer to our question makes all the difference.
*
Why it is necessary for an entity guided by reason to create money.
We have already said this,
but at this stage of our long, even lengthy reflection,
it is necessary to remind readers who might think that all this is just utopia
involving some risk of hyperinflation:
Already today,
the European Central Bank,
following in the footsteps of the American Central Bank and the Central Bank of England,
is engaged in ‘Quantitative Easing’,
mild terms given to the institutional money machine
which creates billions of euros, pounds and dollars
to go directly into the banks’ pockets,
in the hope that these banks will once again finance the real economy
via loans and all that goes with them.
Besides that,
we’ve said it and we’ll say it again,
the control of the money supply in the economy is easy, child’s play.
Like driving a car
where we know it’s very dangerous to do 150 miles per hour
on a small country road at night in fog and ice,
it’s enough to be aware of the hyperinflationary danger
so as not to play the fool.
Also, we all know now, alas, that thanks to quantitative easing,
these banks only finance themselves and speculation
for at least 80% of this new windfall.*
*The Future of Money,
Bernard Lietaer, Century London, 2001
Rethinking Money,
Mr Bernard Lietaer et Ms Jacqui Dunne,
Bernett-Koehler Publishers, Inc, 2013,
Freshly created money which, moreover, after much unproductive speculation,
will be able to ‘protect’ itself from the general interest
in the many tax havens of this world.
On the other hand,
without going through the banks,
within a system with guarantees and safeguards
the non-compliance thereof would be punishable under criminal law,
a nation that has regained sovereign power
to create and manage its own money
could directly finance the industries
whose development is urgently needed.
We are obviously thinking of renewable energies in particular.
But not only that:
Democracy, education, health, safety,
in short, all those things that give the state
its raison d’être, its legitimacy and its mission.
This is the raison d’être of what we call Sovereign Money.
Finally,
to those who would think that such policies would scare off the markets,
the answer couldn’t be clearer:
Either we do nothing to correct the markets,
we submit ourselves and wait for the great cataclysm
that will manifest itself in the form of a new financial crisis,
contamination of our atmosphere, our land and our rivers,
the outright destruction of our planet,
at worst all of this at once.
Or we realize that the markets are like children
to whom it is crucial to set clear and healthy limits.
When markets implode, and collapse,
we will all bleed.
Take my word for it.
It’s just a matter of protecting ourselves from deregulated markets,
from their apocalyptic wanderings and criminal mistakes,
but also protecting them from themselves.
For indeed,
when the survival of humankind itself is in jeopardy,
to manage the markets with an iron fist
is the only way to save the markets from their own excesses.
*
Credit, loans and generosity:
A new systemic vision.
Credit in itself is not a bad thing, on the contrary,
it’s an expression of solidarity and financial generosity towards others.
Have you ever lent or given a small amount of money to a loved one in need?
When they return it to you,
do you ask them for interest?
In this sense,
the primary purpose of credit is just wonderful.
What is terrible, terribly unjust and ultimately humanicidal
is the interest and public debt.
By seizing the power of monetary creation,
the threat of debt and the interest rates that make debt perpetual,
banks seize political power, enslave it, desecrate it and defile it.
Moreover,
they debase a natural characteristic of human beings:
Generosity.
By controlling the creation of money,
they control credit, debt, interest
and the repayment of all that money.
They alone can,
according to current law, almost everywhere in the world,
create money and lend it to states
by making them pay it through interest rates,
we repeat, set according to the law of supply and demand
and their perception of the risk of not being repaid.
The interest rates are therefore set
by no rules, no calculations, no measures based on reason,
but based on the desire to have the highest possible return on investment.
I remind you that, by contrast,
central banks lend ‘central’ money to private banks with interest
based on inflation within an inflationary range
deemed healthy by that central bank.
Since 2015,
the central bank’s interest rate to European private banks is 0%,
therefore free of charge.*
This does not prevent these same private banks or the markets
from lending to Greece, for example,
up to 9.1% at the end of 2016*.
* https://data.oecd.org/fr/interest/taux-d-interet-a-long-terme.htm
Please, do not just look at the graphs,
but look at the tables for more details.
It is true that the most developed countries of the European Union and the OECD
borrow at low to very low rates.
However,
there are three main reasons for this:
Due to Quantitative Easing policies,
due to low world growth and due to political instability.
Hence the preference of the markets to invest in historically safe countries
whose economies may be experiencing low growth
but which are robust and therefore able to repay their loans.
This being said,
the rates in some countries can be very high and crippling
to conduct independent and sovereign,
national and solidarity-based economic policies.
https://data.oecd.org/fr/interest/taux-d-interet-a-long-terme.htm
http://www.tradingeconomics.com/bonds
Above all,
even if these are exceptional economic circumstances,
precisely because they are exceptional, they are doomed not to last.
Indeed,
absolutely nothing and no one can protect us
from an abrupt and rapid rise in interest rates on the bond markets.
Financial markets dominate everything
or almost everything national and international institution.
However unstable and irrational they may be,
they rule the world.
The only way out of the Great Depression
is for nations and the world to create and supervise money and credit.
The only way to manage the monetary thing
is for money to be fair and legitimate.
It’s not a choice.
It’s our only solution.
Money creation by the nation is our salvation.
For if the nation takes back the power of money creation,
then it can create its money, and lend it, in absolute terms, at 0%.
Under such conditions,
there is no chance that interest rates will rise.
Then it can lend it to itself,
it can lend it to everybody, on one condition:
balance.
And that’s the difference:
When the issuing authority lends the money at 0%,
(in line with inflation or deflation)
then the very notion of credit changes and makes sense.
Credit becomes once again the expression of the natural generosity of human beings.
Unlike private banks,
which get wealthier through the granting of credit,
it is not return on credit in the form of interest that interests the nation,
but the well-being of its people.
The real wealth of the nation is the well-being of its people,
without exception.
For that is what it is for.
The nation, and by extension all of humanity.
Think about it.
Think about it.
We beg you in the most sincere and humane way.
If this supreme monetary authority is an emanation of the nation,
that is to say of all its members without exception,
then it can lend to whomever it wishes,
simply because it exists,
on the sole condition that the person or organization
is in a position to repay in all likelihood and probability.
Above all,
it can lend to governments, to public services, to whomever it pleases at 0%.
You have to understand what money is.
First of all,
we must realize that money is an intangible, arbitrary and artificial thing
which we can do whatever we want with
as long as that will is guided by wisdom, consciousness and humanity.
It only depends on
what we have and what we are here and now,
and what we can do with it.
Tomorrow and for the ages to come.
Perhaps forever.
Who knows?
Being aware of our wealth is the condition for wealth.
Now and in the future.
Valuing money by the real, to this day immense wealth of our species
and conversely, wisely valuing wealth by money
would open a treasure trove on Earth.
If you were not entirely convinced,
be convinced that this is our one and last chance.
As long as this principle of trust in the borrower’s ability to repay is respected,
then there is no need to fear any monetary or financial plague,
inflation, deflation, crash or recession.
Trust is the daughter of justice,
justice is the mother of all trust.
Confidence in life and in ourselves
is the only possible collective response
to all our interpersonal and intimate relational irrationalities,
from self to others and from self to self.
Create a central banking system subject to strict democratic rules
based on justice, wisdom, equality, respect, humanism, freedom and harmony,
and the general relationship to credit is completely reversed,
the relationship to credit and therefore the relationship to debt.
Having the Central Bank of the sovereign nation
be able to create money at 0%
reveals the reason for monetary lending:
A form of natural expression of human solidarity;
the metaphysical expression of a human species
that makes its members lend each other what they have in excess.
The question is,
knowing that only balance can save us from the great cataclysm,
is it possible to charge for generosity?
The answer is no.
That would obviously be a contradiction in terms.
Taking advantage of other people
above and beyond what justice and fair retribution would require for everyone
would necessarily mean giving up generosity.
Thus,
the central bank’s loan to the nation,
in order to fulfil its role and maintain its raison d’être,
must be free of charge.
*
Monetary trinity
The new system is based on three entities,
all three interconnected and autonomous at the same time,
integrated into a system of countervailing powers that balance each other:
1. The democratic government
that decides where to invest newly created money.
2. A central bank
that administers the money.
3. An independent monetary committee
that decides on how much money to create.
As soon as the central bank takes back the power of monetary creation
and management from private banks,
it can once again lend to the nation states at 0%.
The central bank continues to lend money to the banks.
But this loan is a debt for the private bank,
not the State, the People, or the Nation, as is the case today
when private banks and markets lend money to states.
By correcting the rates of inflation or deflation
either by monetary destruction in the first case, and creation in the second,
by adjusting the interest on the inflation rate,
then there is no risk of a major drift.
And the whole systemic phenomenon is reversed.
Life changes, for the better, for everyone, almost instantaneously.
What is money, if not a means of exchange?
To understand that money is nothing in and of itself
is to understand everything.
It means understanding that we, the peoples of the world,
can reclaim it and use it wisely
and try to save not only our country but also, and surely, our world.
It is understanding that money exists only
because it represents something.
That something is the sum of our exchanges
necessary for the harmony of the whole.
Money is only arbitrary
and yet its symbolic charge, the value given to it
is immense, excessive, absolute and absolutist
to the point of becoming an enslaving and cursed diktat.
Not having any
means falling into poverty and possibly dying.
Humanity suffers every day
from the consequences of badly managed money all over the world,
but it knows almost nothing about it,
and has no awareness, because of this ignorance,
that this well-kept secret possesses,
as much as a dark and destructive side,
a gigantic, immense, life-saving liberating potential.
If money is purely arbitrary, artificial and subjective,
then there is no natural law that states that money
should be an instrument of domination, impoverishment, exploitation,
enslavement, perdition and destruction
on a planetary scale.
Quite the contrary.
To realize that money is by nature and by definition arbitrary, artificial and subjective,
is to realize that money and the economy can and must be managed
with wisdom, justice and harmony, with conscience, hope and humanity.
It means realizing that money is free by nature and by definition.
Realizing that money and the economy
are manageable in wisdom, justice, balance and harmony.
It is understanding that,
since we collectively need exchanges to sustain each other,
and since the value of what we exchange is real,
it is not only legitimate but also indispensable
to create all the money necessary to cover our real exchanges.
It means understanding
that the only legitimate entity to create money is the nation,
and that this money is,
as long as the lines drawn here are complied with,
by nature and by definition,
free.
The understanding and redefinition of money,
the overhaul of the monetary system, the taming of finance
reverses the whole trend.
Properly managed,
money can help us live together for millennia.
Badly managed,
our days are numbered.
*
* * *
* * * * *
** **
*
Sovereign Money.
Money creation is a power.
*
Abraham Lincoln,
16th President of the United States:
“The government should create, issue, and circulate all the currency and credits
needed to satisfy the spending power of the government
and the buying power of consumers.
By adoption of these principles,
the taxpayers will be saved immense sums of interest.
Money will cease to be master and become the servant of humanity.”
Thomas Jefferson,
3rd President of the United States:
“… The modern theory of the perpetuation of debt
has drenched the earth with blood,
and crushed its inhabitants under burdens ever accumulating.”
William Lyon Mackenzie King,
former Prime Minister of Canada:
“Once a nation parts with the control of its currency and credit,
it matters not who makes the nations laws.
Usury, once in control, will wreck any nation.
Until the control of the issue of currency and credit
is restored to government and recognized as its most sacred responsibility,
all talk of the sovereignty of parliament and of democracy is idle and futile.”
Graham F. Towers,
Former governor of the bank of Canada, 1934-54 :
“Each and every time a bank makes a loan,
new bank credit is created — new deposits —
brand new money.”
John Kenneth Galbraith,
economist (J.F.Kennedy’s advisor) :
“The process by which money is created is so simple
that the mind is repelled.”
Irving Fischer,
economist and author :
“Thus, our national circulating medium
is now at the mercy of loan transactions of banks,
which lend, not money,
but promises to supply money
they do not possess.”
Reginald McKenna,
ancien président du conseil d’administration, Midlands Bank of England :
“I am afraid the ordinary citizen will not like
to be told that the banks can and do create money.
And they who control the credit of the nation
direct the policy of Governments
and hold in the hollow of their hand the destiny of the people.”
John Adams,
founding father of the American Constitution :
“All the perplexities, confusion and distresses in America
arise not from defects in the constitution or confederation,
nor from want of honor or virtue,
as much from downright ignorance
of the nature of coin, credit, and circulation”
Mayer Anselm Rothschild,
banker :
“Give me control of a nation’s money
and I care not who makes the laws.”
Josiah Stamp,
Former director oof the Bank of England, 1928-1941
(considered to be the second largest fortune in Britain at the time) :
“The modern banking system manufactures money out of nothing.
The process is perhaps the most astounding piece of sleight of hand
that was ever invented.
Banking was conceived in inequity and born in sin.
Bankers own the earth.
Take it away from them but leave them the power to create money,
and, with a flick of a pen, they will create enough money to buy it back again.
Take this great power away from them
and all great fortunes like mine will disappear,
for then this would be a better and happier world to live in.
But, if you want to continue to be the slaves of bankers
and pay the cost of your own slavery,
then let bankers continue to create money and control credit.”
*
Economic power
It is said that there are three branches of power:
executive, legislature and judiciary.
Four with the media,
whose independence is crucial for freedom of information and expression.*
* The media are an opposing check, a counter-power,
and must remain so.
The mission of the media and journalists
is to freely question power.
This mission is crucial.
Freedom of the media from power
is a reflection of a free people, a proud and dignified nation.
Since the super-rich oligarchic class
has taken over a large part of the press and media,
then the freedoms of expression, information and conscience are being undermined.
Thus, despite the integrity of many journalists,
the sacred mission of this fourth estate is too often lost.
Hence the importance of free and independent media on the Internet.
We are also told, quite rightly,
that these different branches of power
must have a certain degree of autonomy towards each other,
so that a system of “checks and balances”,
as it is called in the United States, can be applied,
and a certain balance emerges between these powers
so that no one of them concentrates all the powers
in order to avoid the establishment of totalitarian or tyrannical regimes.
The big concern in this vision of politics
is that a primordial and decisive branch of power is absent,
struck off the list:
The power of money!
Not only this neglect has enormous, profound repercussions,
but also and above all they grow stronger and stronger over space and time.
Monetary power is irrefutably a fifth branch of power
that no sovereign nation can do without surrendering its sovereignty.
Abdicating is surrendering.
Surrendering one’s freedom is submitting to slavery.
Surrendering one’s money is surrendering sovereignty.
No democracy can be sovereign, no people can be free
without being the depositary of the power to create money.
*
On the legitimacy of the sovereign people and sovereign democracy.
Whoever has the power to create money also has the power to decide.
They who create money have the power to invest it
in whatever they want.
At least in this respect,
the prerogative, the power, to create money
is crucial.
The reasons are fundamental.
If the State, if the people, are the lender of last resort,
then it is legitimate, just and moral for the power to create money
to be vested in the people who pay, the people who save.
This is more than fundamental.
It is primordial, crucial.
No democracy, no society can be free and sovereign
without this power.
No hope, no salvation could be reborn
unless this power is given back to humanity, to all the peoples of the world,
to the human and the divine that resides in the human.
Emanation of the people,
a Democracy by and for the people
is the only legitimate and sovereign way to embody the Law
not only in political and social matters
but also in matters of monetary and financial creation, distribution and supervision.
Better than all other known political regimes,
better than economic anarchy and the law of markets,
better than all dogmatisms, better than all despotisms and tyrannies,
Sovereignty and Liberty are just and legitimate to rule.
Divinely inspired,
born from universal Justice and Truth,
Sovereignty and Liberty
are in truth one and the same thing:
From the intimate to the universal,
they alone can embody reason, justice, harmony and humanism
throughout the world.
Since it is the emanation of the will of all,
Sovereign Democracy is the expression of the will of each and everyone.
This is obvious.
Just because we don’t see something doesn’t mean it doesn’t exist.
A harmonious order does exist.
It is written in the genes of humankind,
in the genes of the Earth herself.
To the rule of wild and greedy, stupid and demented neo-capitalism
that is sowing the greatest misfortune, the greatest distress,
the greatest systemic catastrophe of all times throughout the world,
there is an alternative, there is a harmony
still invisible to the naked eye
which will not materialize until we see it.
As soon as we see it,
harmony will come into the world.
Let us open our eyes to a reality of divine inspiration.
It alone will open the gates to Heaven.
By nature and by definition,
heaven is harmony.
By nature and by definition,
neither paradise nor harmony
can be compatible with predation, violence, chaos and destruction.
If tyranny, all types of fascism or police regimes
based on fear and repression are the worst systems,
if slavery and barbarism are the greatest misfortune
that can befall a society, a child, a man or a woman,
then only genuine, universal and sovereign Democracy
can open the Gates of Heaven to us.
Behold.
See the Earth, see her, see her and you will see, we will see
the sun rise.
All of us together.
All of us at the same time.
Just because night exists somewhere
doesn’t mean that day doesn’t exist anywhere.
Until all the suns in the universe go out,
light will shine in the universe.
Infinity shines by itself.
Its light is eternal.
It cannot be otherwise.
Because the well-being of the greatest number is inseparable from Freedom,
because slave tyranny is the opposite, the antithesis of Freedom,
tyranny is incompatible with light, well-being and heaven.
If we want to survive,
we must reveal the light of Universal Harmony.
Only It can save us.
No power belongs to the people or the nation
that does not have the power to create money.
Solving the monetary question
is solving one of the most fundamental problems of economic policy.
This is true for everyone, without exception.
Today,
this system is destroying the whole world.
Today,
no being, no living organism, is exempt from it.
That’s true for everyone.
Both for the torturers as well as their victims.
It is true for society as a whole,
humanity, the whole planet, life and the living.
They must be stopped.
We’ve got to stop messing around.
*
Power and legitimacy of elected officials.
Power and legitimacy of the unelected mega-rich.
A system in which monetary creation
and the management of economic and financial resources
are entrusted to the private sector alone
is a system that gives banks and major private economic and financial players
the power to manage the common welfare, everyone’s welfare
in a totally anarchic and uncontrolled manner,
which is by nature a contradiction, an oxymoron, a paradox
that is at once illegitimate, inefficient and counterproductive.
Even if they have not been elected, even if they are not legitimate,
even if they have not been invested with any legitimacy,
the super-rich and powerful do not feel bound by any duty
either to answer to the nations or to the world,
or to answer for the fate or the dangers
that this economic management poses
to peoples and to humanity.
Is it because the super-rich,
all those who have taken over the markets,
have not been elected
that they feel no duty to account for the consequences
of their greedy, childish and stupid, yet very serious actions?
It’s not a conspiracy theory.
Who to this day does not know that Goldman Sachs,
the most powerful bank in the world,
has infiltrated the organs of power both in Europe and the United States?
And yet no one has elected
a consortium of multimillionaires, or even billionaires,
to rule the world.
What is the authority of a politician, or a government
which has abdicated or sold off its democratic constitutional powers,
once it has given up being the keeper of the common good
and is no longer answerable to the nation, to humanity, to history or to the world?
Once a political power system has abandoned the destiny of citizens, of humans
to sell it to an ultra-rich and ultra-powerful oligarchy,
who does it serve?
Besides himself and his masters?
What is the legitimacy of a power
once the people it is meant to represent, enlighten and serve
is no longer sovereign?
Why do the wealthiest of the markets
often prefer to remain in the shadows,
in secrecy, anonymity, and often deceit,
if not to better pull the strings,
with millions of euros or dollars,
behind the political-media scene,
where the role of the politician gets more and more limited
to a kind of public relations damage control communication
who draw light and all public attention to themselves
to better distract us from what is going on in the lobbies and corridors,
a kind of HR director in charge of making people
accept the harsh laws of money and oligarchy,
and to submit them to them?
At the political as well as at the economic level,
the real places of power are behind the scenes
and they do everything not to show them to us,
so that we can never see them selling the nation to the highest bidder.
To remain in the shadows, inaccessible for as long as possible
to as many human beings as possible,
that is their goal.
In order to rip someone off,
that person must not be aware of the traps
that are being set and the attacks that are being prepared.
That someone has always been, and still is today,
the entire people who is being swindled.
Because no one has elected the markets that govern us,
neo-liberal capitalism has vested the banks and markets
with a power that is immeasurably immense,
fundamentally illegitimate and undemocratic,
deeply dishonest, unjust, not only inefficient,
but also destructive in the extreme.
In a blind faith in the law of the market,
we have entrusted markets with crucial and immense powers
whose repercussions are felt in every home,
throughout the world, space and time.
Financial power today is such
that it has gigantic, even cataclysmic, consequences on the real world.
By definition,
markets have no other concern or purpose than money.
Inevitably, they are blind,
and the general interest is the least of their concerns.
Day after day,
we see all the aberrations, all the excesses, the abuses
and the terrible dangers of this system
and yet we continue to believe in the absurd,
we continue to believe
that the private interests of the richest and most powerful
could one day serve the general interest in justice and harmony.
Since injustices, inequalities, imbalances
necessarily lead to disorder, war, disaster and conflict,
this is and will forever be impossible.
The tyranny of money and freedom
are and will never be compatible.
The law of the market alone
cannot regulate the economy, finance, society or the quality of life.
To govern, we need a vision,
we need to know where we are, we need to know where we’re going.
We need to know where we want to go.
The legitimacy of a democratic regime,
guarantor of the common good,
does not need to be proven.
It goes without saying.
If the interventionism of the State or of the governance
guaranteeing the sovereignty
of the democratic and legitimate people in economic affairs
seems to you to be a heresy,
then look even more carefully, think about it,
because you see nothing at all.
You see so little
that you do not even know that you know nothing.
And you don’t know that you don’t know that you don’t know anything.
The abyss of ignorance is more than immense,
it is infinite.
And yet,
to whom ignorance reveals itself
is also revealed infinity.
It doesn’t matter to be ignorant.
Knowing it is already meeting the infinite.
It is a revelation of striking evidence.
In the face of totalitarian dogma,
universal wisdom rises and reveals itself.
To resigned pragmatism, it reveals enlightened realism;
To chaos and war, hope and harmony;
To greed, generosity;
To brutality and monstrosity, compassionate strength;
To bloodthirsty tyranny, solidarity-based democracy;
To an impossible future, the gates of heaven;
To deadlock and death, rebirth and life.
Behold.
*
No one is above the law.
This is not an arbitrary, abusive or moralistic statement.
It is a fact.
No one escapes the law of causes and consequences
that spread and multiply through space and time,
reverberating ad infinitum, or almost ad infinitum.
The higher stage of human evolution
will be realized, will be reached and will be very real,
when we all have understood
that we are important for the whole
as much as the whole is important for us.
We and the big picture are one.
Humanity is in me as much as I am humanity.
Humanity is me,
inside and out.
I am the past, the present and the future
of humans, over space and time,
and yet, at the same time,
I am nothing,
infinitesimal in comparison with the eternal and infinite,
so little in comparison with nearly 8 billion human beings.
Harmony is a goal.
But it is also a path.
He or she who sees the destination can see the path.
Those who do not see the target
have an infinitesimal, almost nil chance of hitting it,
let alone hitting it right on the bull’s eye.
Just see.
See and you shall know.
See and we will prevail.
Seeing is an act of resistance,
an act of bravery and humanity, of greatness and humility, of wisdom and intelligence.
Because the future of the world depends on your vision,
seeing is an act of resistance by essence, by nature and by definition.
In the sense that it precedes all decisions and actions,
in the sense that from it proceeds all that is and is accomplished,
seeing is perhaps the greatest act of resistance you can make.
*
* * *
*
Setting-up sovereign money.
Sovereign money, also known as positive money*,
explains in detail why and how such easy solutions can be implemented
from a pure economic and monetary point of view.
Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,
By Andrew Jackson & Ben Dyson from Positive Money,
by Joseph Huber
Here are some excerpts from the paper entitled
“Sovereign Money, paving the way for a sustainable recovery.”*
* https://positivemoney.org/wp-content/uploads/2013/11/Sovereign-Money-Final-Web.pdf
“…there is a way out of this ‘Catch-22’ situation:
the government can increase private sector incomes
and spending without increasing public debt.
It can do this by creating money and using it to finance an increase
in spending, a reduction in taxes or a “citizens’ dividend”.
We term this policy ‘Sovereign Money Creation’ (SMC).
It is fundamentally different from Quantitative Easing (QE),
which involved the central bank buying part of the government’s debt
after it was issued (and so didn’t directly affect government spending at all).
QE injected its newly created spending power into the financial markets,
relying on indirect effects to boost spending in the real economy.
In contrast, SMC actually increases government spending
beyond what it would otherwise be,
and so gets newly created money directly into the real economy.
The increase in spending will increase private sector incomes,
economic output and employment.
Most importantly, SMC would allow the private sector
to reduce its debt-to-income ratio.
Therefore, Sovereign Money Creation, if implemented in the near future,
would make the current economic recovery sustainable.
[…]
Conclusion
“Depression occurs only if the amount of money spent is insufficient.
Inflation occurs only if the amount of money spent is excessive.
The government … by virtue of its power to create or destroy money by fiat*
and its power to take money away from people by taxation,
is in a position to keep the rate of spending in the economy
at the level required to fill its two great responsibilities,
the prevention of depression, and the maintenance of the value of money.
* « What Is Fiat Money?
Fiat money is government-issued currency that is not backed by a physical commodity,
such as gold or silver, but rather by the government that issued it.
The value of fiat money is derived from the relationship between supply and demand
and the stability of the issuing government,
rather than the worth of a commodity backing it as is the case for commodity money.
Most modern paper currencies are fiat currencies,
including the U.S. dollar, the euro, and other major global currencies.»
https://www.investopedia.com/terms/f/fiatmoney.asp
Up till now governments have shirked these responsibilities,
seeking refuge in an alibi of helplessness…
“Nearly all states have nearly all the time permitted depressions
to begin, to grow, and to establish themselves without calling into play
their power to create the money demand
which would have made the depression impossible.” Abba Lerner (1947)*
*Lerner, A. P. (1947). Money as a Creature of the State.
The American Economic Review, 37(2), 312-317.
The 2007-08 financial crisis showed how dangerous
lending booms can be for an economy’s health,
particularly when the lending finances the purchase of unproductive assets
(such as property and financial assets).
While the government’s policy actions in the wake of the financial crisis
may have prevented a debt-deflation and a depression,
they did not lead to a recovery, at least initially.
A sustainable recovery requires a lower private sector debt-to-income ratio.
Yet since the crisis government policies have encouraged
further private sector borrowing for unproductive purposes.
Meanwhile, the government is attempting to reduce its own debt,
seemingly oblivious to the fact that the UK economy is currently suffering
from a crisis of private debt, not public debt.
At the time of writing public debt in the UK is at 74% of GDP,
whereas (non-financial) private sector debt is at 190% of GDP.
The interest rates being paid on public debts are also far less onerous
than those being paid on private debts.
By focusing on reducing its smaller and less onerous debts,
the government reduces private sector incomes
and so makes a reduction in the private sector’s debt-to-income ratio
harder to achieve. As a result, the government is making a future crisis
and recession more – rather than less – likely.
Yet it needn’t be this way. This paper outlined how the government
could finance a fiscal expansion through ‘Sovereign Money Creation’.
This expansion could take the form of an increase in spending,
a reduction in taxes, or a citizen’s dividend.
Such steps would lead to an increase in private sector income,
which would allow households and businesses to reduce their debt burden
to a more sustainable level.
Amongst other things it would increase GDP, employment,
and bank liquidity, as well as making the economy more resilient
to future shocks.
While the creation of money to fund a fiscal expansion
has been described as a ‘taboo’, it should be noted that in the UK,
until 2000 it was standard practice to finance
a part of the government deficit with money creation.
Furthermore, the question must be asked as to why it is acceptable for banks
to create money for speculative purposes,
but not acceptable for the government to create money
when it is so clearly in the interest of both the public and the wider economy
for them to do so.
Martin Wolf, chief economics commentator at the Financial Times,
expressed this contradiction clearly when he stated:
“It is impossible to justify the conventional view
that fiat money should operate almost exclusively
via today’s system of private borrowing and lending.
Why should state-created currency be predominantly employed
to back the money created by banks as a byproduct of often irresponsible lending?
Why is it good to support the leveraging of private property,
but not the supply of public infrastructure?
I fail to see any moral force to the idea that fiat money
should only promote private, not public, spending.” Martin Wolf (2013)*
* Wolf, M. (2013). The case for helicopter money.
Financial Times. 12th February 2013.
Of course, there are concerns that the power to create money
could be overused. However, the governance structure outlined in this paper
ensures that there is clear separation between monetary and fiscal policy.
Consequently, there would be far greater control over the use of SMC
than there currently is over the creation of money by the banking sector.
The current economic recovery is built on the same foundations
that led to the financial crisis: rising private sector debt.
The real risk is therefore not that Sovereign Money Creation will be abused,
but rather that it won’t be considered in the first place.”
Not subject to interest,
this money would be debt-free.
« When economic indicators suggest that aggregate demand
is below a certain threshold, the BoE [the Bank of England] would take the decision
to stimulate the economy with a specific amount of money created
via OMF/SMC [OMF, Overt-Monetary-Finance, by Adair Turner,
https://en.wikipedia.org/wiki/Adair_Turner,_Baron_Turner_of_Ecchinswell].
The treasury would then issue that quantity
of specially created ‘perpetual zero-coupon bonds’.
These bonds would be unconventional in that
they would not bear interest and would have no maturity date. »*
*A Guide to Public Money Creation,
outlining the Alternatives to Quantitative Easing,
Franck Van Lerven,
Positive Money
http://positivemoney.org/publications/guide-public-money-creation/
“They would not bear interest”,
obviously.
“The effect on the national debt of SMC:
A debt can be defined as obligation owed by one party to a second party.
The key term here is ‘obligation’: does the issue of zero-coupon consols
create an obligation on behalf of the government,
and does the issue of base money create an obligation
on behalf of the central bank?
First, the zero coupon consols used in SMC do not involve coupon payments
nor do they ever need to be redeemed (repaid by government).
Consequently, SMC does not create any current or future financial obligations
on the part of the government.
Second, these consols are sold to the central bank,
which is another government agency.
Hence, even if one was to consider them debts,
they would be a debt that the government owed
to the publicly owned central bank, and therefore to itself.
Likewise the money created via SMC does not create any obligation
on behalf of the central bank. Base money, as Buiter (2003)* argues,
“does not have to be redeemed by the government – ever.
It is the final means of settlement of government obligations
vis-à-vis the private sector. It does not represent a claim on the issuer
for anything other than the same amount of itself.”
If one turns up at the central bank with base money
(cash or central bank reserves), the central bank is not obliged
to exchange the base money for anything other than more base money.
Furthermore: “Additional base money can be created
at zero incremental cost by the government.”
For these reasons, the creation of base money through SMC
does not create any obligations on behalf of the central bank.
*Buiter, W. H. (2003).
Helicopter money: irredeemable fiat money and the liquidity trap (No. w10163).
National Bureau of Economic Research.
Therefore, given that neither the consols nor the issue of new base money
creates an obligation on behalf of the government or central bank,
these consols cannot be considered debts of the issuer.
Thus the securities issued to facilitate SMC should not be counted
in any calculations of the national debt
(although it should of course be included in a separate register,
as the debt incurred in the bank bailouts is).”*
* https://positivemoney.org/wp-content/uploads/2013/11/Sovereign-Money-Final-Web.pdf
*
Conversion to a sovereign money system:
the impact on sovereign debt.
”The ‘Conversion Liability’ Feature in a Sovereign Money System
If we transition to a full SMS, where the only source of money creation
is SMC, there is a second method of debt reduction,
even more significant in size, which comes about as money ceases to exist
as liabilities of commercial banks.
In an SMS, when loans are repaid, money or purchasing power is no longer destroyed.”*
*Escaping Growth Dependency,
Positive Money
https://positivemoney.org/publications/escaping-growth-dependency/
The difference is enormous,
gigantic, immeasurable, unquantifiable, unimaginable.
Since nowadays money creation is based on credit, and therefore debt,
since in our current system money is only created when credit is granted,
since money creation is based on debt and interest on debt,
then repaying the debt is impossible without causing a gigantic crisis,
because then without debt money would simply disappear.
I would like to remind you that countries such as Germany, France or the United Kingdom
pay about $60 billion a year just to pay off the interest on the debt.
It’s not even the debt, it’s only interest.
The world cannot and will never be able to pay back its debt.
Only the sovereign money system can solve the debt problem.
In the very medium term,
the global debt problem can be solved.
We refer you to the tables and analyses in the section entitled
“Sacrificed on the altar of money and profit. the example of France” above
which show very clearly the enormity of the process
and by extension the evidence of the measures to be taken.
Because by nature and by definition, by raison d’être and by destination,
in the sense that it is created without creating debt,
sovereign money is free of debt,
sovereign money is free of debt interest.
By moving to sovereign money,
we would save interest on debt.
$60 billion a year, it’s about 50 billion euros.
We would be rich.
Add to that the benefits of the seigniorage,
and we would be very rich:
“If SMC or a form of CBDC was added to central banks’ toolkits,
then seigniorage – profit from creating money – would increase
for the government. MacFarlane and al. (2016)* calculate
that private banks benefit from an approximate £23bn annual subsidy
for this privilege.
They calculate that if the Bank of England issued
30% of the money in circulation,
this subsidy to commercial banks would drop to under £16bn
and seigniorage from the central bank would increase to £10bn per year.”**
*Macfarlane, L, Ryan-Collins, J, Bjerg, O, Nielsen, R, and McCann, D. (2016).
Making Money out of Money.
London, New Economics Foundation
**Escaping Growth Dependency,
Positive Money
https://positivemoney.org/publications/escaping-growth-dependency/
That speaks for itself.
*
Moving to a sovereign money system.
Once the state has a sovereign money system,
two scenarios are possible:
First,
we pay down the principal and interest on the debt:
Since the new sovereign currency is debt-free,
then we can, in the very early years, significantly reduce the debt.
Since credits to states do not seem likely to exceed 50 years,
then in 50 years maximum, the world will be debt-free.
Of course,
as soon as the currency becomes sovereign, the currency is free of debt,
so of course we won’t have to wait 50 years
to see the benefits of a sovereign currency. *
*Jaromir Benes et Michael Kumhof.
Two IMF economists
“Chicago Plan”, p.7, IMF working papers, 2012
https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
Once again, go look at the charts.
We remind you that in ten years, from 2006 to 2016,
France refunded some 1,800 billion euros of debt!
In ten years.
This is our one and last chance.
Moreover,
since only the nation is legitimate to create money
and since the nation has no just and legitimate reason
to take on the burden of paying interest on money creation,
then interest on money creation is by its very nature illegitimate.
It would therefore be fair and legitimate to repay debts,
but not to pay interest on the debt.
Since in a sovereign money system
there is no valid reason for the nation
to impose on itself an exorbitant cost
for what is rightfully its inalienable, natural and sacred right:
the creation of money,
then we should consider that any sovereign debt
be relieved of interest on the debt.
This would amount to billions a year.
Just imagine.
This is our second possible scenario.
We could pay down the principal of the debt
but dispense with the interest.
Given the urgency of the situation,
and the extent to which the financial markets
have taken advantage of the situation for decades,
if not centuries,
it would seem only fair and appropriate
not to pay interest on a debt that was initially illegitimate,
in order to free the living forces of nations and the world.
We could put all our forces at the service of life and humanity.
Just imagine.
When the currency is sovereign,
the people is sovereign.
When the people is sovereign,
the currency is sovereign.
It cannot be otherwise.
*
Conversion to a Sovereign Money System :
the impact on private debt.
We have just talked about public debt.
Here is what the Sovereign Money is planning with respect to private debt:
“The effect of this is that, over around 20 years,
repayments equivalent to around half of private sector debt
– around £50 billion per year (Jackson & Dyson, 2013)* –
would be recycled back into the economy as additional spending,
through the government, which comes with no additional private sector debt.
Part of this additional spending can be used to pay down
existing household debt, enabling a significant level of debt reduction overall.
Again, this debt reduction would not be possible
within the current monetary system,
because loan repayments would withdraw spending power from the economy,
and this spending power could typically only get back into the economy
if someone else borrows so that banks can re-create the money
that was destroyed in loan repayments.
In contrast, in a sovereign money system,
the conversion liability allows a significant portion of debt repayments
to be recycled and used to pay off even further debt.”**
*Jackson, A. and Dyson, B. (2013)
Modernising Money:
how our monetary system is broken, and how we fix it.
London, Positive Money.
https://positivemoney.org/modernising-money/
** Escaping Growth Dependency,
Positive Money
https://positivemoney.org/publications/escaping-growth-dependency/
*
Transition
of the banking system :
« 5. TRANSITION
There are two broad choices for the transition to a sovereign money system:
either a gradual approach, or an immediate switch.
In the gradual approach, the central bank would start to use direct money creation
as a monetary policy tool, as described in chapter 4,
but this money would exist alongside (and be interchangeable with) bank deposits.
In the immediate transition approach,
the entire stock of bank demand deposits (and some short-term time deposits)
would be converted into central bank money overnight.
Managed well, it should be possible to implement either approach
without significant disruption to the banking system or the wider economy.
5.1 Gradual transition
In the first, gradual approach, the central bank would start to use
direct money creation as a monetary policy tool to increase aggregate demand.
It would transfer this newly created money to the government
for spending into the economy or making grants to citizens,
as described in Chapter 5. However, banks would still be permitted
to operate as they currently do, creating money in the process of making loans.
There are two possible ways of implementing this gradual transition.
In the first, money, as used by the public,
would continue to consist of demand deposits
that would need to be guaranteed via deposit insurance.
When the central bank created new money, it would do so by creating
new central bank reserves, which would be matched
by the simultaneous creation of new bank deposits
(which are held by the bank customer).
This process is similar to that of Quantitative Easing,
except that the newly created deposits would be received
by a wide range of households and firms rather than financial market investors.
In the second approach, the central bank would allow
members of the public and non-financial firms to hold electronic central bank money,
or “Central Bank Digital Currency” (CBDC).
The possibility of allowing non-banks to hold electronic central bank money
is discussed in detail in our paper
Digital Cash: Why Central Banks Should Start Issuing Electronic Money.
It is also the focus of a significant research project
at the Bank of England (Barrdear & Kumhof, 2016),
which also considers the use of blockchain, i.e. distributed ledger, technology.
In this digital cash approach,
the central bank would use direct money creation as described above,
but citizens would be able to choose between
holding the money they receive in the form of bank deposits
or central bank digital cash. Initially, digital cash and bank deposits
would be interchangeable, but as the transition progressed,
measures could be taken to make it less attractive to change
from digital cash back to bank deposits.
This could have the effect of forcing banks to convert
their short-term demand deposit funding into longer-term time deposit funding,
shifting to a safer business model
and in effect approaching the true intermediary model of a bank
in a full sovereign money system.
Over time, regulations such as capital and liquidity requirements
and lending criteria (e.g. maximum loan-to-value ratios for mortgages)
could be tightened to restrict how much money banks could create,
with the central bank taking an increasingly larger role in money creation.
Whilst this hybrid arrangement was in place,
this would constitute a partial sovereign money system.
Eventually, a conversion date would be agreed at which banks
would be required to switch over to a full sovereign money system
(via the process outlined below), and banks would therefore lose
their ability to create money.
This partial sovereign money system is likely to be more politically feasible
as a stepping stone towards a full sovereign money system,
as it does not require immediate changes to the way that banks work
and provides a way for the reforms to be phased in over time.
If the current policy debates around ideas such as ‘helicopter money’
(direct payments of newly created money from the central bank to citizens)
or ‘Quantitative Easing for People’ lead to central banks
implementing these measures, this will also be a move
to a partial sovereign money system, even if it not explicitly recognised as such.
The following list shows which advantages would still be gained
by introducing a partial sovereign money system,
and which benefits could only be gained by making the switch
to a full sovereign money system.
Advantages of a partial sovereign money system in a recession
• If used to increase government spending, reduce taxes
or provide a Citizen’s Dividend, the creation of sovereign money
by the central bank would be likely to stimulate GDP more effectively
than Quantitative Easing. It would also be likely to be more effective
than reducing interest rates, which relies on the existence of borrowers
who are willing to invest or spend on GDP related transactions.
• By providing a source of money that doesn’t have to be borrowed
into the economy (and therefore doesn’t increase private debt),
sovereign money creation could make it possible to maintain
aggregate demand whilst the public simultaneously deleverages
(i.e. pays down debts). This would make a debt-deflation scenario less likely.
• Sovereign money could be created counter-cyclically to balance out
the swings in money creation by banks.
Advantages of a partial sovereign money system in a growing economy
• The creation of sovereign money would provide an alternative
to bank-issued money, and would therefore allow aggregate demand
to grow without requiring a corresponding rise in private
(household and corporate) debt.
(Rising private debt is problematic
because it increases the likelihood of financial crisis.)
• Sovereign money could be directed into areas of the economy
that directly contribute to GDP and employment,
whereas a majority of bank-issued money is directed into property or asset markets.
Advantages in general
• A partial sovereign money system would still run
on the dual money system of central bank reserves and bank deposits.
Consequently, the creation of sovereign money in a hybrid system
would lead to an increase in the central bank reserves held
by commercial banks, increasing the liquidity of the banking system
as a whole. (This could however cause problems if it became excessive
and excess liquidity within banks led them to start
a dangerous search for yield’ and risky investments.)
• The lobbying power of banks would be reduced:
with an alternative source of money creation,
banks would be less able to argue against regulation
on the basis that it would harm their ability to provide credit
and therefore harm the economy.
Disadvantages of not switching to a full sovereign money system
• If most money continues to exist as bank deposits,
deposit insurance on bank deposits would still be necessary.
Consequently, risk and reward are not aligned and risk-taking
will still be excessive. The taxpayer and government
would still be ‘on the hook’ for bank failures.
• Because most money would still exist as bank deposits,
banks would continue to receive the effective seigniorage
on creating this money and would therefore still be subsidised
(giving them an unfair advantage over the rest of the financial sector).
• The payments system would still run on bank deposits
backed by risky assets, and would therefore not be protected
against the failure of banks.
Consequently, many banks would still be ‘too big to fail’.
• It would still be necessary to try to control money creation by banks
through the use of base rates and regulation,
even though these tools have been mostly ineffective to date.
• A partial sovereign money system would not prevent money creation
by banks being used to finance speculative bubbles
in property or financial markets.
• Ultimately, a switch to a partial sovereign money system
would deliver only some of the benefits,
but would leave some very large problems in place.
Switching to a full sovereign money system
would deliver all the benefits listed above,
and would also address a much wider range of problems,
and would therefore have much greater advantages.
[…]
5.2 Rapid transition
Switching immediately from the current system
to a full sovereign money system would involve transferring the power
to create money from banks to the central bank overnight.
This could be done without changing the size of bank,
firm or household balance sheets or net wealth,
without affecting the level of money in the wider economy
and without causing a damaging contraction
in the amount of credit available.
There are three key elements of the overnight transition
to a full sovereign money system
• The demand deposits of banks
would be converted into state-issued sovereign money.
• Bank customers’ current/checking accounts
would be converted into Transaction Accounts.
• Bank customers’ savings and time deposit accounts
would be converted into Investment Accounts.
In the overnight switchover, all bank-issued demand deposits
would be converted into state-issued sovereign electronic money
(i.e. central bank digital currency) held (indirectly) in accounts
at the central bank. Instead of having a liability to their customers,
each bank would then have an equivalent liability to the central bank
(and therefore there would be no overall impact on the size or nature
of any commercial bank’s balance sheet).
The economy would be operating on a sovereign money system
immediately following the switchover.
However, it would take a longer period of transition
for the economy as a whole to deleverage and unwind the large debts
that have been created by the current monetary system
over a considerable period of time.
[…]
Converting demand deposits into sovereign money overnight
Demand deposits would be converted into sovereign money overnight
by the following process:
1. At the point of the switchover, the payment system
would be temporarily frozen and every bank would inform the central bank
of its total demand/sight deposit liabilities
and individual demand deposit accounts.
2. For each individual demand deposit account,
the central bank would create a corresponding Transaction Account
with the same balance, following the process described below.
3. The central bank would enter into a legal agreement
to take on the bank’s existing liability to those of its customers
who held demand deposits, so that those customers became the holders
of sovereign money in Transaction Accounts instead of demand deposits.
4. Each bank would then acquire a liability to the central bank
exactly equal to the amount of demand deposit liabilities it had
prior to the conversion. This ‘Conversion Liability’ is discussed below.
In effect, the central bank would have ‘extinguished’
the banks’ demand liabilities to their customers
by creating new state-issued sovereign money
and transferring ownership of that sovereign money to the relevant customers.
If at the time of the transition,
central banks had already introduced ‘digital cash’
– an electronic equivalent to cash –
in parallel to bank deposits, then the process above would
simply be applied to all remaining bank deposit accounts,
in effect converting them into Digital Cash Accounts
(which are equivalent to Transaction Accounts.) »*
*Sovereign Money, An introduction
Ben Dyson, Graham Hodgson, Franck van Lerven
https://positivemoney.org/our-proposals/sovereign-money-introduction/
Things seem very clear.
It does not even need comment.
Things speak for themselves.
While a partial transition seems the most politically correct one,
the rapid transition seems the most appropriate one
both in terms of efficiency and speed
if we take into account the social, economic, climatic and ecological emergencies.
This is all the more so because in the case of gradual transition,
we would then end up with two money-creating entities:
The state and the banks.
This would make things confusing at best,
complicated at worst, if not downright confrontational.
*
Conversion of bank accounts
The authors then describe in more detail
the translation of the current monetary and banking system
into a sovereign money system:
“Converting bank accounts at the central bank into sovereign money
Banks, the government, foreign central banks,
and certain other financial institutions all hold accounts at the central bank.
These accounts would be ‘converted’ into sovereign money accounts
(although in practice this is simply a re-labelling of accounts
that already exist at the central bank).
• The Treasury’s or Finance Ministry’s account at the central bank,
which may be labelled “Public deposits at central bank” or “Consolidated fund”,
would be re-labelled the Central Government Account.
These accounts would be liabilities of the central bank
and assets of the government.
• Banks’ reserve or settlement accounts
– their deposits at the central bank –
would be re-labelled as Operational Accounts.
The account balances would remain exactly the same.
These accounts would be liabilities of the central bank
(and would remain assets of the bank).
• Any other accounts held at the central bank,
such as those held by key financial institutions or foreign central banks,
would be converted into Transaction Accounts for those institutions.
Creation of Investable Funds Accounts for each bank
A new, Investable Funds Account would be created
for each bank or lending institution with an initial balance of zero.
(Any deposits that the bank already held at the central bank
would then appear in that bank’s Operational Account, as described above.)
Converting savings accounts & time deposits into Investment Accounts
Simultaneously to the process above, each bank would convert
its fixed-term and fixed-notice savings accounts into Investment Accounts.
These Investment Accounts would still be recorded
on the balance sheet of each bank as liabilities of the bank to the customer.
Customers of banks would then have either:
• a balance in their Transaction Account,
representing central bank digital cash,
which could be used to make payments on demand, and/or
• a claim on a bank, via their Investment Account,
which has a maturity date or notice period
and which would still be a liability of the bank,
to be repaid to the customer in the future.
Each bank would no longer have any demand deposits at all,
and the only accounts held on its balance sheet
would be Investment Accounts, with fixed term and/or fixed notice periods,
or other medium- or long-term risk-bearing liabilities.”*
*Sovereign Money, An introduction
Ben Dyson, Graham Hodgson, Franck van Lerven
https://positivemoney.org/our-proposals/sovereign-money-introduction/
It would be a revolution.
It would be the banks that would have a liability to the citizens of the entire nation.
And not the other way around, as is currently the case,
when it is the Nation, and therefore all its citizens,
who have a liability towards the banks
and by extension the financial markets
in the form of a debt that is impossible to repay in this current system
that is leading us, that is leading humanity to its downfall.
The financial markets would be indebted to the citizens of the world,
and not the other way around.
Dear friends,
we don’t want to bother you with technical details.
But if these interest you,
then you’ll be able to realize that in them reside
the feasibility of the unhoped-for.
When a miracle happens,
Hope is fulfilled.
When Hope is fulfilled,
a miracle is being performed.
Sovereign Money is the priority solution
to the number one problem of all humanity.
*
Conversion to a sovereign money system:
In a nutshell.
“Addressing the factors that lead to the creation of excessive
levels of private and public debt
The creation of excessive private debt in the current monetary system
is possible because of many misaligned incentives
that enable banks to profit from creating higher levels of private debt
but not suffer the consequences of excessive lending
that results in financial instability.
Withdrawing Banks’ Ability to Create Money
Banks’ unique ability to create credit leads to financial instability,
which ultimately leads to bank bailouts.
By restricting bank lending to their ability to attract savings,
the ability for banks to blow up asset bubbles will be greatly reduced.
[…]
Bank lending, as with all other lending,
would involve merely the transfer of existing money
and would no longer result in the creation of new money, as at present.
[…]
Removal of Government Subsidies
A sovereign money system seeks to make the payment system
totally protected from bank failures.
Under a SMS the central bank would provide the public
with a way of holding state-issued (sovereign money) cash in electronic form;
the accounts and payment services could be provided by private sector companies,
but the money itself would be safely stored at the Bank of England.
The business of lending and providing credit is separated
from the business of providing a payment system.
This would be achieved by separating investment (savings) accounts
from transaction (current or payment) accounts.
Instead of having current accounts with money
that is composed of uncertain promises to pay issued by banks,
such accounts would hold risk-free central bank money – sovereign money.
Under this system, if the customer’s bank were to fail,
the money in the transaction account would still be safe
and the customer could still access it and spend it.
Customers that made their money available for lending
in an investment account would need to wait
while the bank was liquidated to get their investment back.
The ability of the rest of the economy to continue functioning
would no longer be dependent on the health
of a small number of extremely highly leveraged institutions,
which are prone to engaging in the extremely risky herd-like behaviour
that has historically resulted in their failures.
Letting banks fail will allow regulation to be simplified
and deposit insurance to be removed.
It would reduce the amount of additional government expenditure
required to perform bailouts,
reducing the government’s aggregate public debt level
from what it otherwise would be.
Moral hazard would also be substantially reduced,
as the knowledge of potential failure
and insolvency should encourage banks to take much less risk,
leading to more cautious lending activity
and less potential for asset price bubbles.”*
*Escaping Growth Dependency,
Positive Money
https://positivemoney.org/publications/escaping-growth-dependency/
*
Impacts on the private banking sector
It goes without saying
that the sovereign Monetary Creation fits perfectly
into the system as it is at present,
if the current monetary areas are willing to open their eyes
to the only solution offered to us,
at least initially, to save civilization.
Indeed, banks, markets and economies
would benefit greatly:
“The effect on the banking sector:
For banks, the increase in economic activity and private sector incomes,
and the decrease in the private sectors’ leverage,
increases the likelihood of bank loans being repaid.
This has the effect of increasing bank profitability
and allowing leverage to be reduced and capital to be rebuilt,
making the banking system safer and more resilient.
Healthier balance sheets and higher profits in both the bank
and non-bank private sectors increase the willingness of banks
to fund investment, from both a regulatory and prudential perspective.”*
*Op cit.
https://positivemoney.org/wp-content/uploads/2013/11/Sovereign-Money-Final-Web.pdf
We can therefore only strongly advise you to read the essay referenced here,
as well as to watch the videos
of the sovereign or positive money conferences on the Internet,
which will give you all the technical details
of which we have only given you a brief overview here.
So, there would be no point in refuting
what is written here without doing so,
because the answers are in their writings and/or videos.
*
The separation of commercial and investment banks:
A measure that has proven its worth.
Even if the Central Bank will have a central role
and will again be able to fulfil its mission of regulating the banking system
because it will keep the accounts of the banking system,
private banks will not be nationalized as long as they behave
in accordance with the terms imposed by the Law,
knowing that nothing is excluded.
It is indeed a question of ensuring both their security and our sustainability.
First of all,
in order for money to be put back
into the service of the real, ecological and human economy,
justice dictates that banks must not be able to invest in risky projects
without informing the people depositing the money
of what is being done with their savings
and the companies in which their money is invested.
This culture of secrecy of banks vis-à-vis their own customers
raises serious ethical questions,
as well as a number of very serious systemic issues
both at the financial and economic levels,
but also at social and ecological levels.
In a sovereign money system,
not only do deposit accounts become the property of the customers
and not of the bank as is the case today,
but also these deposit accounts
are effectively separated from investment accounts,
which are transparent investment accounts
and much more secure than they are today.
This is a version of the Glass-Steagall Act,
under which commercial banks
– which citizens deposit their money in but without wanting to invest it –
are separated from investment banks and thus protected.
The Glass-Steagall Act,
set up in the wake of the great financial crisis of 1929,
lasted in the United States from 1933 to 1991.
By clearly and strictly separating
commercial banking and investment banking,
throughout this period,
this Act ensured irrefutable and effective protection
against crashes and financial crises,
with a relative but real stability in the banking world:
“Separating commercial and investment banking
The Glass–Steagall separation of commercial and investment banking
was in four sections of the 1933 Banking Act (sections 16, 20, 21, and 32).
The Banking Act of 1935 clarified the 1933 legislation
and resolved inconsistencies in it.
Together, they prevented commercial Federal Reserve member banks from:
– dealing in non-governmental securities for customers
– investing in non-investment grade securities for themselves
– underwriting or distributing non-governmental securities
– affiliating (or sharing employees) with companies involved in such activities
– Conversely, Glass–Steagall prevented securities firms and investment banks
from taking deposits.
The law gave banks one year after the law was passed on June 16, 1933
to decide whether they would be a commercial bank
or an investment bank…”*
For a revisited vision better adapted to the 21st century, see also
http://elizabethwarren.com/blog/glass-steagall
by American Democratic Senator Elizabeth Warren.
Nevertheless, and naturally,
no one can be forced not to invest.
Within the framework of a Sovereign Money,
investments will be managed by private financial institutions
but placed in accounts at the Central Bank
under the simple name of investment accounts.*
Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,
By Andrew Jackson & Ben Dyson from Positive Money,
If investing in a project is beneficial to society as a whole,
then it is legitimate that this investment should be remunerated
to the extent of its participation and its intrinsic value
in terms of the real and universal benefits of carrying out this project.
The sovereign currency makes a clear distinction
between deposit/transaction (operational) accounts
and investment accounts,
which it places in a separate account within the Central Bank.
I leave it to you to make up your own mind with this short excerpt,
which I hope will make you want to read more about it:
« Chapter 6: Preventing banks from creating money.
6.4 Accounts at the Bank of England
Under the present-day system,
all large banks have an account at the Bank of England
in which they keep ‘central bank reserves’.
Banks use these reserves to make payments to other banks.
After the reform, each bank will instead manage three distinct accounts
at the Bank of England. These accounts will hold electronic money
that had been created exclusively by the Bank of England.
The three accounts are:
The Operational Account:
This is an account where the bank can hold funds for its own purposes:
retained profits, new capital from shareholders,
money to pay staff wages etc. In short, it is a bank’s ‘own money’
acquired in the process of running of the bank.
The money in this account is owned by the bank
and the account is an asset of the bank.
The Investment pool:
This account represents the lending side of the bank’s activities.
It is the account that the bank will use to receive investments
from customers, make loans to borrowers,
receive loan repayments from borrowers and make payments back
to Investment Account holders. The money in this account
is both owned by and is an asset of the commercial bank.
The Customer Funds Account:
This is the account in which the bank’s customers’
Transaction Account funds are held.
The money in this account is not owned by the bank
nor is the account an asset of the bank.
The bank merely administers this account.
When someone at another bank makes a payment
to a Transaction Account holder,
the balance of the Customer Funds Account will increase.
When a Transaction Account holder makes a payment to someone
who uses a different bank, the balance of this account will decrease. »*
*Modernising Money,
How our monetary system is broken, and how it can be fixed,
Andrew Jackson & Ben Dyson,
Positive Money, 2012
In conclusion, a loan is an expression of generosity.
It is legitimate that this generosity be rewarded.
This being said,
Generosity must also be able to be expressed in other ways,
in every possible way.
Indeed,
the monetary-financial loan is only one of the many ways
in which generosity is manifested and expressed.
In truth,
non-accountable, free and natural generosity
is expressed and manifested in many other and free ways.
When human beings know how to draw from their own nature
the generosity that it shelters,
then we, Humanity,
will know that we are on the path of wisdom
and exponential efficiency
to infinity.
Speculation must stop being a system.
It is an absolute certainty.
The one and only way to do this
is for the Central Bank to be an emanation of the nation,
to free itself from banks
and for money creation to be restored to Democracy.
Everyone,
companies, banks and individuals,
will have an account at the Central Bank.
Keeping a centralized account at the Central Bank
also means neutralizing ‘shadow banking’:
the occult power of the banks
to make values, money, resources, wealth appear and disappear,
to speculate and hide operations and information
and thus to distort all values, all representations of wealth
and to destroy the world by excess of immense, sad and catastrophic
greed, arrogance, ignorance and childishness.
In a rational system of creating and managing money,
money becomes a public good again.
If monetary liquidity is to the economy what water is to the body,
then money must irrigate the whole social body
in the awareness that certain parts of the body
sometimes need a little more hydration,
which is perfectly legitimate
as long as irrigation is provided wherever it is needed.
The one and only way to find justice
in the monetary, financial and banking system
is for the power to create and manage monetary matters
to be returned to the nation.
The functions of the Central Bank cannot be privatized,
because its role is a condition for the sovereignty of the nation,
for the freedom of humans and the liberation of humankind.
The banking system
will become much more humble,
much less voracious, dangerous and destructive,
much more stable, harmonious and beneficial.
There will still be work for money managers, accountants and bankers.
Indeed,
we cannot afford not to manage well.
The only thing is,
money must become a means again
and cease to be the end, the only objective, the only necessity.
The only means, the only way to control the system
is to regain control of money.
This new power has a name:
Sovereign Money.
*
Rather than speculating with it,
hiding it in tax havens, in Switzerland or in the Cayman Islands,
without any regard for what it funds or the consequences of its use,
creating money,
investing it directly, distributing it, making it circulate
as freely as rivers and streams flow down mountains
to fertilize valleys and continents
would be irrigating the economy
and giving humanity the chance
to take its destiny back into its own hands.
*
Interest rates on bank loans and investments
The more or less official reason we are given
for interest on credit, and debt
is inflation.
And this is a legitimate reason.
Indeed,
if you lend me 100 dollars that I have to pay back in 10 years’ time,
if the annual rate of inflation over those 10 years is 1%,
you would get a 10% reduction in overall purchasing power
compared to when you lent it to me.
It’s like I give you back 90 instead of 100 dollars.
Very well, then.
Moreover,
with more specific regard to investments,
it goes without saying that banks are entitled to make a minimum profit
from the money they lend
if only to be able to continue to operate and invest in projects
without which the national economy would be in danger of collapsing
and be less effective in the face of the present and future challenges.
Despite the systemic problem of usurious interest rates
whose adverse consequences have been described above,
the Sovereign Money system provides safeguards
against an unsustainable expansion of the money supply.
First of all,
it is the Nation via the Monetary Committee that creates money
which can therefore readjust the money supply
according to the needs of the economy.
Second, and more importantly,
since the central bank has a money supply
that is granted to the economy without interest rates,
then the interest rates charged by private banks will necessarily be low.
We are currently experiencing this in the year 2019.
Central banks lend money to private banks at rates close to or even at zero percent.
So banks are lending at very low rates.*
* https://www.nytimes.com/2020/07/16/business/mortgage-rates-below-3-percent.html
Moreover,
in an economy where the money supply is aligned
with the needs of the real economy,
where money is no longer in short supply,
not only would the supply of credit be large,
but it would also be used to finance the real economy.
Add to this the competition between banks
and the law of supply and demand, finally tamed,
would work in the right direction, pulling interest rates down.*
* https://positivemoney.org/publications/enough-credit-sovereign-money-system/
In the very unlikely event that rates would become usurious,
then the legislator could impose a cap.
It seems highly unlikely, however,
that in such a financial and monetary macroeconomic context,
where the balance of power between the public authorities
and the financial system has been reversed
that the banks could, unlike today, continue to abuse their power.
Finally,
it should be pointed out that the sovereign currency is a full currency,
also known as 100% Money.
This means that not only the fractional reserve system is abolished,
meaning that the banks have all the money they lend and invest,
and not 10 or even less than 10% in their vaults,
but also that this money is not destroyed when it is repaid.
As we have said,
not only does this fractional reserve feature of the current system
make it impossible to repay all debts
without the risk of an unprecedented monetary deflation
and therefore a major economic crisis,
but it also makes the system ultra-unstable because it is based on debt.
This has the consequence of raising the risk of cumulative defaults,
as was the case in 2007-2008
and thus the rapid deflation of the money supply,
the chronic lack of credit and liquidity
and the risk of collapse of the entire system
with all the human misery that necessarily goes with it.
Thus,
by stabilizing and putting the financial-economic-banking system
back to the service of life and human beings,
sovereign money would strengthen the capacity of banks to lend money.
*
Putting a pilot back on the plane
With an abolished fractional reserve system
and a National Central Bank issuing legal tender, interest-free money,
then we could quantify the money supply much more easily.
As has been said,
there is no question of prohibiting or abolishing banks’ investment activities.
But they will be subject to strict, wise and democratic rules.
They will have, like any other person or entity,
an account at the Central Bank.
Not only would the risks of crises and crashes quickly disappear,
but this is the only way to curb hyperinflation in the economy of the rich:
by defining new rules
based not only on social justice, with more sharing and solidarity,
but also on economic justice with a more liquid currency
and therefore a better irrigated economy
which would therefore be more fertile
for both the nation and the population as a whole.
More than a monetary reform,
sovereign money is a popular, legitimate, healthy and sovereign takeover.
Everything fits together because everything is linked,
and vice versa.
All it would take is a law.
An official signature of Parliament.
Opening our eyes
to this possibility is not only making it possible,
it is realizing it.
*
* * *
*
Monetary Governance
Let’s face it:
It would be dangerous, unfounded and therefore illegitimate
for the government alone to hold the power to create money
without taking into consideration the many incentives,
especially before elections, to print money for the wrong reasons.
As in the past,
the temptation to abuse their power
would be enormous to try to get re-elected.
As in the past,
the resulting corruption and inflation
could have disastrous repercussions at all levels.
Indeed,
this is the main argument by which private banks have managed
to deprive democracies of their sacred right.
That is why a monetary committee
independent of the other organs of power
must be founded, and sound rules established.
Let the authors of Sovereign Money speak again:
“Governance and risks with Sovereign Money Creation:
Of course, the danger with using money creation as a policy tool
is that it could be abused, resulting in excessive inflation.
Therefore, it is important that politicians are not given direct control
over money creation.
Under SMC the decision over how much new money to create
would be taken, as it is now, by the Monetary Policy Committee (MPC)
at the Bank of England in line with their democratically mandated targets.
Likewise, the process should be designed so that the central bank
is not able to gain influence over fiscal policy.
In practice this means that the MPC and the Bank of England
should have no say over how the new money should be used
(this is a decision to be taken solely by the government)
whilst the government should have no say over how much money is created
(which is a decision for the MPC).”*
*Op.cit
https://positivemoney.org/wp-content/uploads/2013/11/Sovereign-Money-Final-Web.pdf
*
The monetary administration trinity.
Three branches are therefore necessary:
1. The Monetary Committee
decides on the money supply to be created or withdrawn.
2. The democratic parliament
decides where to invest the newly created money.
3. The central bank
administers the money.
*
Any governance is political.
Because everything that participates in decision-making is political,
this part is linked to the political part of our writing.
That goes without saying.
And yet,
in these troubled times when stupidity and lying
seem to be winning the game,
these truths must be spoken out, proclaimed, repeated,
to high heaven and all over the earth,
in all lands and all places where humanity lives.
To bring humanity out of its misery,
we must therefore say it again and again:
Everywhere in politics, balance must prevail
so that balance and harmony prevail
everywhere else.
Thus,
everywhere in politics, we are invited to multiply checks and balances.
The more counter-powers and power checks are multiple
and arranged according to wise, just and sound rules,
the more balance is possible.
It is only when the political system is cured of the poison of corruption
that the general interest is revealed.
It is only when the political system is cured of the poison of corruption
that taking the necessary decisions
for the good of the nation, of humanity and of the world
becomes possible once again.
That is why introducing a dose
of popular and universal random representation into all organs of power
is a blessing that will deliver us from ourselves.
This applies to the legislative and judicial powers
as much as to the executive and monetary powers.
As soon as the institutions of the monetary branch of power
are independent and yet connected
by sound, simple, fair, wise and balanced rules
to the institutions of the other branches of power,
– the executive, the legislative and the judiciary –
which are themselves dependent on and free of each other,
then there is no risk of implementing the great monetary reform.
This interdependence is key.
A key that enables us to avoid abuse of power
as much as it enables us to avoid paralysis
because it is part of a coherent whole
that sets the framework for the general interest
and the desirable destination.
The great monetary reform
is key to the system.
That’s why there’s no point in turning everything upside down.
It is first and foremost a question of introducing citizens
into all the organs of power, whatever they may be.
Universal random selection is a revolution
in and of itself.
The great monetary reform is a revolution
in and of itself.
There is no need to overturn everything.
No need to break everything.
No need to burn everything.
No need to wreck everything.
Wisdom knows how to deal with any situation.
By definition,
wisdom is universal.
By definition,
the Universal is multiple.
By definition,
the Universal is one and multiple at the same time.
Each and every one different on the surface of the Earth,
and yet all bathed in the same light, all born from the same sun.
*
The People’s Guardians of Monetary Institutions
As we have said,
it is not necessary, at least initially, to change everything
with regard to the system of appointing the heads
of the various monetary governance bodies.
First and foremost,
it is a matter of introducing safeguards
in the persons of the popular representatives
through random selection and transparency enshrined in law.
How can corruption be fought from within,
especially when one has a hand in the nation’s monetary creation processes?
O how much we know how tempting it can be
to give oneself a few extra bucks for personal gain,
especially when the sums of money involved are gigantic.
Out of ten billion,
what’s $100,000 or $500,000?
When an organization or institution is corrupt,
then everyone working within it has an interest
in keeping that corruption secret,
if only to avoid losing their job and livelihood.
If you have experienced wrongdoing within your own company, organization, institution or nation,
you will no doubt know how difficult it is to fight from within
when the interests of the innocent
are in fact mixed with those of the corrupt.
If you raise the alarm,
then two consequences are immediate:
One,
you are undermining public confidence in your organization
which exposes it to great risks
regarding its reliability, viability and durability.
Second,
you almost certainly, almost instantaneously get banned from it.
Since by definition a whistleblower is almost certain to lose everything,
and therefore requires courage and devotion
to the cause of justice and the common good
that is uncommon and immensely commendable,
it is not surprising that they are not commonplace.
The solution which is therefore self-evident is to bring in
through random selection
external elements that could make it possible to guarantee
the transparency and incorruptibility of any institution,
all the more so if that institution participates in the process of monetary creation.
Besides,
if it remains possible to bribe a single person,
even one from outside the organization,
it becomes much more unlikely to bribe two,
especially when their mandate is both limited in time and non-renewable.
This is why it seems best to assign two popular representatives
(and two substitutes in case of incapacity of one or the other, or both,
to carry out their function)
whose primary responsibility is to ensure
that the organization functions in compliance with the law,
otherwise it would be their duty to report it to Parliament and the Nation.
Certainly,
it would be highly probable that these two citizens would be unfamiliar
with the somewhat complex and technical issues of money creation.
In this sense,
they would not be able to take part in the committee’s decisions,
but they would still have a very important role:
The mission of being the People’s Guardians of the Institutions.
Without being entitled to vote,
their only power and their only duty would be to participate in all debates
and to report all forms of wrongdoing to Parliament and the Nation.
In order to ensure the placement of trustworthy persons,
these citizens would first be drawn by lot from the entire population registered on the electoral rolls
and would then be elected or confirmed by Parliament.
Unless they are foolish,
a person who has nothing to gain and nothing to lose in a given situation
will always choose the path of wisdom, justice and the general interest.
Only those whose survival and/or status
depends on the outcome of a given situation choose something else,
not necessarily with the intention of committing a crime,
but simply out of fear of losing everything.
Like all other people nominated by random selection,
there would be periods of training prior to their missions.
In order to ensure both their highest probity
and ability to understand the various mechanisms at work in money creation,
we could imagine various stages of selection
between the drawing of lots and confirmation/election by Parliament,
such as examinations following their training.
We shall see in the following book
how the nation’s citizens should at long last be integrated
to their nation’s political process.
In the same way,
they must be integrated into the management of the sovereign nation’s currency.
Thus,
they must be included, as is their natural right,
in the three organs of monetary governance, i.e.:
1. the democratic parliament
that decides where to invest newly created money;
2. the monetary committee
that decides on the money supply to create or withdraw;
3. the central bank
that administers money.
*
Parliament
We describe in the chapter dedicated to politics
everything that pertains to it.
We discuss at length the necessary balance of power,
embodied in particular by the two parliamentary houses,
each composed of three main groups:
In the first one,
citizens, experts and volunteers.
In the second one,
citizens, statesmen and women, and volunteers.
The section on politics
is intrinsically, organically linked
to the economic and monetary structure of the whole edifice.
Its goal is the wisdom, freedom, justice, well-being and efficiency
of the nation, the sovereign people, and all citizens.
Everything that pertains to Parliament,
the central political organ,
is described in it.
*
Central bank
Its role is to create or destroy money
according to the terms decided by the Sovereign Monetary Committee
and to manage money within the territory
according to the wishes defined by Parliament,
all guided by well-defined principles of precaution
such as those described here.
With regard to the appointment and mandate
of the members of the central bank’s governing body,
once again, there is no point in revolutionizing everything
as long as we incorporate into the equation
the counterbalances of the citizens
acting within it on the one hand
and the Sovereign Monetary Committee and Parliament on the other.
This trinity makes the equation work like magic.
The Central Bank, The Sovereign Money Creation Committee, and Parliament.
Thus,
as is already the case at present for the European Central Bank,
the members of the governing bodies are appointed by Parliament.
For more security, for more certainty,
we appoint by random selection
and vote of the parliament two citizens,
guardians of anti-corruption,
who do not vote
but whose power and duty is to participate in all debates
and report all forms of embezzlement to Parliament and the Nation.
This simple remedy to the poison of corruption
would undeniably have the power to clean up
and revitalize the central bank
and give meaning and life back
to the entire monetary, financial and economic system.
All the more and all the better
as the Sovereign Monetary Committee will be built on the same foundations.
In the name of the law,
in the name of justice,
its power would be, as it should, immense and legitimate.
An accomplished power is invincible.
Think about it.
*
Governance of the Sovereign Monetary Committee
Unlike the other components of this monetary trinity,
the Committee will have to be set up from scratch.
But this does not imply anything difficult or complicated.
This Committee will only decide on the quantity of money supply
necessary for the smooth running of the economy
according to the objectives considered most desirable by the Nation
and the monetary reality presented by the Central Bank,
which, as its name indicates, centralizes all the accounts of the Nation and beyond.
So, it doesn’t require a large infrastructure.
Above all, it requires harmony and collaboration.
Like the proton, the neutron and the electron,
both distinct and different,
these three bodies must work together.
Working together,
both independently and in collaboration with the Central Bank and Parliament,
the Monetary Committee does not need to work with any major administration
that does not already exist.
It is the only one we have to create.
The Central Bank and other bodies
collecting data and statistics on the economy and the currency
already possess all the required data*
for the fulfilment of the task
assigned to the Sovereign Monetary Committee.
*This notion of data on which we have already reflected
in the first parts on the notions of wealth and wealth measurement,
however, requires a little more analysis, which we shall return to a little later.
The designers of the New Sovereign Money include six members,
two internal members and four external members
appointed according to the methods described in the referenced document*
and sitting on the Committee in charge of Sovereign Money Creation,
whose supreme and constitutional purpose is to control the money supply
according to the figures given by the Central Bank
and the terms deemed best by the nation.
* https://issuu.com/positivemoney/docs/bank-of-england-creation-of-currency-bill-smaller/4
It’s simple, it’s clear, it’s straightforward.
The head of the executive could appoint the members
to be confirmed by a vote in Parliament,
meeting for the solemn occasion in Plenary Assembly.
For the same reasons as for the Central Bank,
at least two citizens (as well as two substitutes)
must join the Monetary Creation Committee
which would bring its members to eight,
if we take the recommendations of the Sovereign Money system as a reference.
For the same reasons as for the Central Bank,
they will have no power in the final decisions,
due to the lack of accounting, economic and monetary expertise.
However,
it will be their duty to attend all meetings
and to participate in the drafting of all the Committee’s
weekly, monthly, quarterly and yearly public reports to Parliament.
They will also have a duty to warn the nation of any wrongdoing.
Thus,
such a balance guarantees the incorruptibility of the system.
And even if sooner or later everything is doomed to die,
such a system is infinitely superior to the current system.
*
The law is timeless
When justice is the law,
the law is eternal.
It is always relevant, everywhere and at all times.
It is crystal clear.
When certain pillars are placed,
then the whole building holds together.
We can adorn it infinitely and for eternity.
But we can’t change its foundation.
When the limits are set by humanistic and universal justice,
harmony reigns and prevails.
The Law is eternal.
*
A concrete example:
Financing Salvation
The demand for an ecological transition is not only real,
it is indispensable.
We have the technology
which is improving at a mighty fast pace,
we have the human resources, the know-how,
we still have the natural resources, the food,
the men, women and intelligence to do so.
We have everything we need to do it,
except the required money,
money, the most intangible, arbitrary and artificial thing on Earth.
Since we have no choice,
let’s get on with it.
Let’s create the money we need
to both implement the solutions that alone can save us
and create all the jobs to do so and go with it.
Let us create all this wealth that we could all benefit from,
while we still have the resources to do so.
Inflationary risks only exist
when we create money for something other than real wealth.
Take a moment to become aware of this eternal truth.
More than a request, it’s a prayer.
Please consider this:
Inflationary risks only exist
when you create money for something other than real wealth.
When one creates money for one’s personal wealth,
then the money supply disconnects from reality,
the money supply divorces from what is real.
From this divorce inflation is born.
That is why dictatorships, and dictators in the first place,
have an unfortunate tendency to monopolize the creation of money
and the money that goes with it,
thus creating inflation.
Real wealth is neglected,
while monetary, financial wealth is increased.
This decoupling creates a chronic imbalance
between real wealth and the perception of real wealth through money.
If it is not restored in time,
this imbalance always results in a kind of natural correction,
a kind of cataclysm, which, by destroying and destructuring the imbalance,
very often in no time at all, forces a return to reality,
synonymous for the economy with crisis
and for the population with poverty,
simply because we have not understood anything about macro-economics.
Conversely,
there is no danger or risk in taking the path of wisdom.
On the contrary,
wisdom is light.
With monetary sovereignty,
we regain the power we need to go towards the light.
From truth comes light.
More than a prayer,
it is a matter of course, it is a revelation, it is a marvel.
Beautiful as a sun, beautiful as an ocean of light,
beautiful as an ocean of meaning and magnificence,
shining right here, right in front of all of us,
see the light, the only one there is.
Electricity has revolutionized our human condition.
We could never imagine going back
and knowingly decide to do without it.
In the sense that it is the only one
that can give back to humans the power
to do the only thing that can save them
from both climatic and ecological
as well as economic, financial, political and military cataclysms,
sovereign money is a technology that will save humanity.
Let us therefore imagine that financing a rapid ecological transition
requires funding of 20 billion per year.
Let me remind you in passing
that the repayment of interest on the debt alone
costs a State like France some 50 billion euros a year.
But let’s leave those aside for the sake of our example.
So let’s imagine that financing a rapid ecological transition
requires funding of 20 billion per year.
If we were to create that $20 billion out of thin air,
then these would be injected directly into the real economy.
They would probably create hundreds of thousands of direct jobs,
or even more if we consider all the jobs indirectly connected to this new economy.*
This $20 billion a year
would not only create countless and nowadays unexpectedly high-paying jobs,
but would also free the nation from dependence on fossil fuels
and help us deal with the climate crises.
Such a scenario is a win-win scenario.
The inflationary risk on the other hand is a minor risk
that we have shown to be so
under the conditions in which we will operate.
Above all,
when we are aware of a risk,
then consciousness dictates
that we should take the necessary prudential measures
so as not to make mistakes.
And even if an ‘exogenous’ inflation were to occur,
‘exogenous’ in the sense that it would occur because of external elements
such as a shortage, a war, a health crisis, climate disasters
or all of these at the same time,
we would still be spared having to pay back the interest on the debt,
which, I repeat, amounts to tens of billions of euros per year.
Thus,
it would only marginally affect our ability
to take over the economic and ecological steering of the nation
by investing in what is deemed good by the nation
and its sovereign population.
We have, I hope, sufficiently demonstrated at this stage
that inflation is no longer a risk
in a sovereign money system such as the one described here.
And even so,
would you not take the slight risk of inflation,
which is once again easily controllable,
and save yourself not only from dependence
on polluting energies, foreign powers and banks,
but also, and above all, save yourself
from the looming apocalypse?
The Covid-19 virus has thrown millions and millions of people out of work.
There is no better time to implement the necessary solutions.
With all the children of the world of today and tomorrow,
let’s get on with it.*
*For a monetary, banking and financial system
at the service of ecology and the fight against CO2 emissions and the climate disaster,
we invite you to read the lines of the excellent report by the Positive Money movement,
“A Green Bank of England”, whose specific features are aimed more specifically at the United Kingdom,
but which also, inevitably, have a universal scope.
Here are some short excerpts of particular interest to us,
including in particular point number 3 below,
which describes in other words what we have just suggested:
« 1. Green corporate bond purchases:
[…]
The MPC could prioritise purchasing of these assets in any QE interventions
over the coming years by screening bonds with ESG (environmental,
sustainable and governance) criteria prior to making purchases.
Preferential treatment for green bonds would simply reflect industry best practice in
terms of sustainable investment, and some central banks (including the
Swiss, Norwegian, and Dutch) already apply a form of ESG criteria to some investments.
The Bank should no longer buy bonds issued by fossil fuel companies.
[…]
2. Green sovereign bond purchases
[…]
3. Green overt monetary finance (OMF):
The central bank would buy zero-interest bearing,
perpetual bonds from HM Treasury to finance
government deficit spending on green projects.
Such a policy would best be used in a recession,
where the stimulus from money finance is more certain
than the impact of debt-financed deficit spending.
This would reconcile support for prices with
decarbonisation – and might well be necessary as the climate crisis sharpens.
The OMF transmission mechanism would be more direct than QE
since the financial sector no longer plays the role of intermediary.»
A Green Bank of England
Central Banking for a Low-Carbon Economy,
Rob Macquarie, 2018
https://positivemoney.org/greenbankofengland/
It goes without saying that the state of the world
demands that we make the right decisions as quickly as possible.
*
A handful of microcosmic examples
Even if this writing focuses primarily on the macrocosm rather than the microcosm,
even if it focuses on causes rather than consequences,
even if it focuses on substantive measures rather than specific measures,
a few words on these are important to us.
They are far from complete.
*
Renewable energies
Nowadays, we want to do everything big, huge.
There are, however, scales
proportionate to human dimensions
which impose themselves as a matter of course.
To encourage the development and use of devices
to capture and emit renewable energies on a human scale
would be a real and fertile source of wealth.
If every household was equipped with its own small renewable energy kit,
the need for large wind farms would be reduced accordingly.
We could even go so far as to imagine production sites
equipped in the same way for the same purpose, with the same end in view:
To be, energetically speaking, as independent as possible.
These two measures would work in favour of ecology
while at the same time working in favour of the economy.
Local jobs would be encouraged.
Thanks to economies of scale, costs would be affordable.
Imagine the market.
The livelier and more dynamic, coherent and reasoned
a local economy on a human scale is,
the more it works for the good of all,
the less it works for greed.
Moreover,
it is well known that households or production sites
already equipped with renewable energy
sometimes produce more energy than they consume.
In these situations,
the household emits its surplus energy into the national grid
by selling it to an institutional operator.
Thus,
if some households run out of energy,
others may be able to supply it to them.
Reconciling ecology and economy is possible.
Without it, nothing can be done.
Without it, nothing can change.
To reconcile ecology with the economy is all the more realistic and possible
since it is the only thing that is possible.
The solutions are self-evident.
Today the economy and ecology are contradictory, opposed.
Reconciling ecology and economy would create a miracle.
Such a miracle exists.
The miracle is possible.
The miracle is our only possible Destiny.
*
Clean-up mission.
The planet is polluted to the point of exhaustion.
So, cleaning up necessarily has an intrinsic value
that is as real as it is priceless.
Saving life proceeds from the miraculous and the infinite.
In every country in the world,
there are people who are inactive, without a job.
Why can’t there be some kind of remuneration provided by the state
in return for the service rendered to the common good and the general interest
which could be calculated and instituted?
According to a fair calculation
that could encourage the confluence of the general interest
and the interest of individuals?
If in the new system,
wealth were measured by the protection of the environment
as much as the well-being of individuals,
we could then rightly finance the cleaning up of pollution,
especially plastic pollution.
The manpower exists.
Thus,
since the labour force added to the power of the collective will
committed to a common project
to get out of the impasse in which we find ourselves
would be a source of great wealth,
it is urgent and legitimate
not only to invest in the benefits of the ecological transition,
but also to mobilize, educate and train the population,
especially the army of the unemployed
who, in exchange for their remuneration,
would be employed to participate actively
in the protection of the environment,
in the clean-up and restoration of ecosystems and ecological sites,
and in the energy transition.
Those who would give their time to associations, to charities,
who would engage in public organizations dedicated to the energy transition
in a system where the public will have regained power over the economy,
those would see their allowances increased.
Thus,
the ecological bonus for the ‘inactive’,
beneficiaries of national solidarity,
seems to be an excellent option.
The benefits would be twofold:
People receiving a welfare allowance
by helping to reduce pollution and society’s environmental impact
would work for the well-being of all
and earn a little extra money.
Everyone participating in the program
would also gain something for themselves that can never be counted:
connection and meaning.
It’s a win-win proposition.
Win-win as they say.
Eventually,
that will create jobs.
Employment contracts could no doubt then be signed
with companies or public authorities.
It is obvious
because the virtuous circle would be set in motion.
The initial cost of such a project would be minimal,
because in any case, in the most civilized developed countries,
the unemployed are usually already paid.
Because not only can we all become jobless,
but also and above all because widespread poverty
leads to violence, chaos, horror and war,
because misery is not only ethically
but also systemically disastrous and deplorable,
financial support for the victims
of the neo-liberal financialized system and unbridled capitalism
is more than legitimate,
it is essential for peace, stability and the efficiency of the system.
This being said,
even though this right is natural and legitimate,
it is just as natural and legitimate
to ask for a contribution from those who benefit from it.
Without a common will, without a common effort,
the ecological transition is impossible.
It is the path to wealth.
The only one that exists.
If pollution kills,
becoming a player in the clean-up of pollution
is an accomplishment with regard to living things,
the greatest mission of all time:
Saving lives.
Saving the world.
*
Planting is reaping.
The excessive concentration of CO2 in the atmosphere
is the main cause of global warming.
Planting trees, plants and flowers,
respecting and allowing all forms of vegetation to live
means extracting CO2 from the atmosphere,
it means responding to the greatest crisis,
the greatest challenge in the history of humankind.
Trees, plants, flowers, grass, all plant species
are our greatest allies in this apocalyptic battle.
Furthermore,
the regeneration of soils and soil microbial life
through pesticide and herbicide free agriculture
could not only secure our food supply in the future,
but also completely reverse the trend
of CO2 concentration in the atmosphere
by sequestering it in the organic matter
normally contained in a soil
cultivated with care and respect
for its nature and natural biodiversity.*
Another of our natural allies is water.
The oceans and marine life also extract CO2 from the atmosphere.
In this titanic battle whose outcome
may decide on the extinction or survival of humans,
nature is our most formidable, loyal and faithful ally.
Being aware of it,
taking care of it, respecting it, letting it live and cultivating it
is undeniably and irrefutably the best way to save humanity.
*
Housing:
a shared disgrace.
There is nothing simpler than building houses.
Humans have been building houses since the earliest times of the Sapiens.
How is it then that nowadays
some humans have no shelter to protect themselves
from weather conditions, cold and damp, sun and furnace,
snow and rain, danger and insecurity?
Because once again,
according to the law of supply and demand,
if there were too much supply of housing
then the profitability of the market would decline?
That is of course, and very sadly, the primary reason right now.
*
* * *
*
Money supply
Of course,
not everything must become a pretext for money creation.
In other words,
it is not a question of creating money
in such a way that we all become rich in total denial of reality.
We cannot afford to be careless with regard to the money supply.
Through hyperinflation or the bursting of the speculative-financial bubble,
a financial-monetary correction is always severe.
In order for us to know where we are heading,
we need to have a measure of wealth
that is closer to reality than the one we are currently using.
Indices such as the GPI, the Genuine Progress Index,
inflation, and the Ecological Footprint,
as described at the beginning of this chapter on the economy
are absolutely essential to both
avoid excesses, know where we’re going
and move towards a civilization that respects living things.
More than absolutely necessary,
it’s vital, it’s crucial.
We have said it before:
A country’s money supply must at least equal its GDP/GPI
plus the expected return on investment,
due in particular to public investment over the coming period,
as long as that present and future money supply
is in line with other indices
such as inflation and the ecological footprint.
It can therefore considerably vary
depending on the nation’s potential, needs and sound decisions
as well as the macroeconomic situation.
We remind you that the purpose of a Sovereign Money system
is to keep the economy well irrigated
so that money will enable all citizens and economic actors
to produce, exchange, serve and be served,
to help each other, to care for each other,
to educate each other, to better themselves
and simply live.
Thus,
in times of crisis, when money is scarce,
it is important to irrigate the nation with money
in order to always aim at this optimal state of relative and universal prosperity
in harmony with nature and life.
When money becomes debt-free,
then the nation has much more scope for action than ever before.
At least three essential parameters
therefore seem to have to be taken into account
in order to ensure the flexibility needed to determine an optimal money supply
and to be able to adapt to all types of particular situations
that may be encountered throughout the world:
Inflation,
the state of the economy in its broadest sense as defined by the GPI
and the ecological footprint.
Without being discouraging, quite the contrary,
these three indices can help us in a rational way to measure
what can and should be achieved for the common good
and thus finance it.
In the new world,
what saves us is valuable.
In the present capitalist world, that which destroys us has value.
Everything that saves us is considered heretical, null and void.
Reconciling economy and ecology is a feat,
a miracle that is only possible with a sovereign currency.
According to Andrew Jackson & Ben Dyson,
inflation is a determining factor, crucial in estimating the money supply
to calculate the necessary level of additional money
and if necessary, its destruction :
« How the Money Creation Committee would work
Each month, the Money Creation committee would meet
and decide whether to increase, decrease, or hold constant
the level of money in the economy.
During their monthly meetings the MCC would decide upon two figures:
1. The amount of new money needed in order to maintain
aggregate demand in line with the inflation target
(similar to the setting of interest rates today), and;
2. The amount of new lending needed in order to avoid a credit crunch
in the real economy and therefore a fall in output and employment. »
Modernising Money:
Why Our Monetary System is Broken, and How We Fix It,
By Andrew Jackson & Ben Dyson from Positive Money
To these two measures should be added two new indices:
The Genuine Progress Indicator
combined with the inflation indices mentioned above
would allow us to calculate the money supply
and the ecological footprint to decide what to invest in:
the environment.
As we discussed at the beginning of this section,
if an action has a positive impact or impacts
on society and the world in general,
then it is a new wealth brought to society and the world.
Consequently,
as long as we comply with the three main measurement criteria
defined by the monetary, economic, social and ecological sciences, i.e.:
1. that the money supply
does not exceed a certain level of inflation deemed non-risky
(today this limit is set at 2%),
2. that, as an improved GDP index,
the GPI measures as accurately as humanly possible
the virtuous growth of the social economy in a broad sense
(and thus the transition to a more just and environmentally friendly society)
while respecting and even protecting the environment,
the individual, society, the nation and the world,
3. that the carbon footprint is decreasing,
then not only do we have the power to create the money
needed to achieve what we can no longer wait to accomplish,
but also because we can no longer wait to do it,
it is our duty.
If action is necessary
to contribute to saving the citizens, the nation, humanity,
then the lack of money must not, cannot be an obstacle.
As we have said over and over again,
if the ecological transition and everything that needs to be done
to save humanity from self-destruction requires a titanic task,
there is nothing easier than creating money.
For money is indeed a totally artificial, human-made number
that is virtually stored in a computer
and always benefits the same people and always has the same effects:
the impoverishment of the majority and destruction,
the destruction of the social bond,
the destruction of the bond between nations,
the destruction of the planet and all living things.
Unlike money created by a private banking system
based on extreme profit and ultra-cupidity,
sovereign money has as its sole purpose and objective
the general interest, the common welfare,
the common destiny of the nation and of humanity.
Contrary to ‘private’ money
created according to the arbitrary and ultra-greedy, ultra-unbalanced
goodwill of these private banks
whose private interest never corresponds to the general interest except by chance,
sovereign money is a conscientiousness, a coherent and responsible vision
established according to rigorous, wise, democratic and enlightened
rules of governance and calculations.
At the moment, as we know,
newly created money is mainly used to hoard wealth and to speculate,
so it is used for everything except for what is needed to save humanity.
So,
if at this point in time we are creating money
to finance something other than the real economy,
then there is no doubt about it:
More than legitimate to create money to finance real wealth
that could save the world,
we have an absolute duty to do so.
Again,
we refer you to these masterpieces, cited here and in the bibliography,
on the why and how of sovereign money creation.
In order to achieve
an economically desirable and environmentally sustainable rate of growth,
Sovereign Money is first and foremost an economic tool
that would allow us to get back on track.
To rationalize reality so as to control it
is within our reach.
To save the Earth and the human species is priceless.
The sovereign currency is aptly named.
Sovereign money makes the nation sovereign.
Sovereign money makes humankind sovereign.
Sovereign money is a liberation.
It is the key that can allow us to open the doors
of the only possible heaven.
Sovereign Money is universal.
Thus,
compensating for all the incompleteness
of the calculations at the level of nations,
the magnitude of the universal
must be included in the terms of the equation.
If the constituent elements of matter
can be compared to the monetary bodies of the nation,
the world can be compared to the cosmos, to the universe.
Thus,
of Universal Harmony, the planet is the conductor,
the nations, the musicians.
Thus,
instead of controlling or subduing them,
restoring equilibrium,
working in concert with all the planetary sovereign currencies,
stabilizing them, harmonizing them
would be both the ultimate objective
and the raison d’être of a universal sovereign currency.
Universal harmony
is the conductor we need to guide us all towards the light.
*
Europe
Built on radical neo-liberal, ultra-capitalist ideological bases,
Europe gives the market the upper hand in economic terms
and, in monetary terms, devolves all the powers, or almost all the privileges of power
to both finance and the markets.*
* All this is enshrined in its founding treaties,
which must therefore be changed.
Politically,
it is almost non-existent.
Democracy in Europe is therefore imperfect to say the least.
For example,
it has not succeeded in bringing together the essential elements
that are necessary, or rather indispensable
for the achievement of its monetary union and all its benefits.
Indeed,
the monetary optimum that the economic experts talk about
cannot be achieved if there is no alignment in terms of labour laws, tax laws and environmental laws
in addition to economic, monetary, commercial, banking and financial laws.*
* https://www.investopedia.com/terms/o/optimal-currency-area.asp
In other words,
there is not sufficient coherence in the European system
for its monetary union to be optimal, effective and efficient.
Such coherence could only be delivered
by a more democratic political union* that would be able to decide
on a harmonisation of labour laws**, taxation and the environment,
for the common benefit of peoples and countries,
and not only of finance, multinationals and the rich elite,
all in conjunction with the recasting of the Euro as a sovereign currency.
*On this subject,
we invite you to read the Positive Money books on Europe
and to be inspired by what is written here.
**In particular and above all those relating to the minimum wage,
the aim of which would be to move it upwards.
This is the only project that can breathe new life and power
into the European Union.
This is all the more desirable
because achieving Europe would mean creating a new world,
a new beneficial and positive force, a real force capable of weighing in
on the global geopolitical balance.
A united and accomplished Europe is,
from an economic point of view,
on the same level as China and the United States.
Unfortunately today,
Europe is disunited
and world statistics sometimes do not even present it as a common entity
but show the results of the different member countries,
each separately from the other ones.
* https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
A successful monetary union
is the most efficient and realistic of all possible options.
The benefits of a fully achieved monetary union in Europe
would be immense, unimaginable.
The situation is complicated,
but solutions are simple.
Making the Euro a sovereign currency in Europe is possible.
Our system would both restore sovereignty
and unify states.
There are two important measures:
1. The euro becomes a sovereign currency
according to the rules we have just set out,
i.e. the central bank can once again finance, with zero interest loans,
the national and, by extension, supranational public purse.
2. The Sovereign Currency Committees of each Member Nation
are the bodies which determine the monetary need
of the Member Nation in question in the New Europe.
If laws, in particular labour laws, tax laws and environmental laws
were harmonized for the common good,
then everything would be possible again.
The interdependent monetary bodies of each nation
would be sovereign in the terms we have just described.
When the nation’s monetary and political bodies are sovereign,
then the nation is sovereign.
The European Central Bank
would nevertheless remain the official and institutional central bank.
European Central Bank
which will have to provide each country with the quantity of money
deemed to be useful for the national interest of the country in question
according to the terms, criteria and measures we outlined earlier.
These terms, criteria and measures are clear enough
to ensure that there is no risk of major disagreements
as is unfortunately the case at the time of writing.
Please read again, if necessary.
All safeguards are in place.
Although we can and always will be able to do better,
the geometry is accurate.
The foundations are concrete.
The building is solid.
Thus,
together with political institutions
and laws that are both harmonized and humanized,
monetary reform in Europe is possible.
Europe could set an example and show the world the way.
And if Europe were to hesitate,
then may England, adventurous England, insular England,
the birthplace of Positive Money,
fulfil its mission and show the way to survival and salvation
to all of humanity.
The architecture is simple but solid.
This is the frame of Noah’s Ark
that will save us from the Flood and the Apocalypse.
Don’t you see it in your mind?
1. The Euro becomes a sovereign currency,
i.e. States finance themselves directly at the European Central Bank at 0%
without having to resort, as is currently the case, to the financial markets.
2. It is the States,
through their Monetary Creation Committee and their parliament,
that decide on the amount of money needed
to meet the needs of their economy and population,
a monetary quantity calculated according to the terms described above.
If at the same time laws are harmonized as well as humanized,
then Europe has everything to gain.
Nations would regain their sovereignty,
and at the same time, Europe would be more united than ever.
Interdependence would be optimal.
Europe would be stronger than ever.
The dawn of the European Union is not yet over,
but the dusk already seems to be falling on the continent
and sounding the death knell for the noble and great project
of a united, peaceful and harmonious Europe,
which could be both powerful and beneficial,
economically prosperous and ecologically sustainable.
The stars of each nation shine on the blue background of the European flag.
Working together,
we could make Europe shine with a new harmony
like so many suns.