hollywoodtone.blogspot.com What would happen if the National Debt were cancelled?
hollywoodtone.blogspot.com What would happen if the National Debt were cancelled?
London - What would happen if the United Kingdom were to default on its National Debt? Some people would like us to believe the sky would fall.
This morning, Chancellor George Osborne was quoted in the Daily Telegraph: "We’re borrowing around £100 billion a year — and paying half that money a year in interest just to service our debts. We’ve got to make more cuts.” Did you get that? We are borrowing around £100 billion but in effect we are spending only half this because the other half is going right back to the banks, and because of this we - meaning you - are going to have to endure yet more cuts to essential public services. The question needs to be asked, is there a better way to fund public spending? The answer is yes, but before we proceed to explain, we need to answer another question: from whence does the National Debt come? In 1694, the King of England, William of Orange, borrowed £1.2 million from a cabal of financiers headed by William Paterson. The loan was to earn 8% interest. A famous quote has been attributed to Paterson: "The bank hath benefit of interest on all moneys which it creates out of nothing." It remains to be seen if he really said it, but there is now no disputing the truth of the matter. Foolish but well-meaning people - like Peter Schiff, believe investment comes from savings. The reality is that investment is not possible without the continued issue of credit, because the entire banking system worldwide as constituted is one enormous Ponzi scheme. That much Schiff does recognise. In any discussion of the national debt one tiny but vitally important fact is usually overlooked. There can't simply be a debt; if an individual, a company or a country is in debt, then he, she, they or it must be in debt to someone or something. The bottom line is that Britain and the world has gone increasingly in hoc to the banking system. To see how this comes about, here is a very simple explanation courtesy of Major Douglas. The following illustration is from The Monopoly Of Credit, 4th Edition. A new bank is started, and ten customers each deposit £100, making a total of £1,000 liabilities. These parties do business with each other, mostly by cheque. After a while, customer number 10 decides he needs a £100 loan. He is a manufacturer, and has just had a big order, so he goes to see his bank manager who opens a loan account, in which the bank deposits £100 to be repaid at 2% interest. The bank has not taken a penny of this new money from any of its existing customers, it is literally new money. The manufacturer draws the full amount, and the situation is now as follows: All ten customers including the manufacturer have £100 each in their accounts, but the manufacturer has a debit of £100 to his loan account. The manufacturer is successful, after paying his staff and his own personal expenses he deposits £102 into his loan account. The £100 loan is cancelled out of existence, and the bank is richer by £2. Now consider this on a global scale, if all banks do the same, from whence comes the additional money to pay the interest? Governments do create some money themselves - the note and coin issues. In addition to that, the money the banks spend negates a tiny portion of this debt, but without new money issued debt-free, the world as a whole must go deeper into debt. This has resulted in defaults, the current terrible situations in Greece, Spain and elsewhere, and is the real cause of poverty in the so-called Third World. And that without the other banking scandals we have seen of late - PPI for example. Now let us return to the figures with which we began: the British Government is borrowing £100 billion a year and paying £50 billion in interest. Or to rephrase that, the British Government is paying £1 for every £1 it borrows. How can this be avoided? As we have seen from the example given by Major Douglas, the bank creates money out of thin air and sells it at interest, so the Government - because it is the Government - can do precisely the same thing - ie create its own credit and instead of lending it, spend it into circulation debt-free. This was in fact the recommendation of the Australian Royal Commission back in 1937! Of course, no government can simply print money like confetti, otherwise it becomes as worthless as confetti, but there is absolutely no reason for Britain or any nation to pay a dollar for every dollar borrowed. It would be far more intelligent for the people in HM Treasury to decide how much is needed to run the country, to print or create that money as book entries, and then spend it into circulation debt-free. If they miscalculate in any great measure then the excess can be retired through taxation. There is absolutely no need for any government to borrow money except for grand projects like building a new city from scratch, and even then there is an alternative to borrowing, lenders can become shareholders, and indeed if all government debts were at some point converted into equity, we would solve the problem of the national debt for good. All this begs the question, if the solution is so simple, why isn't it done? Ask George Osborne, or better still, his paymasters. The real credit of a nation is the goods and services it can produce, as Austin Mitchell MP realises. If the British Government and others were to create their own credit debt-free, responsibly, there would be no need for austerity, and both the banksters and people like Alessio Rastani would have to look elsewhere for their profits instead of battening off our misery.
hollywoodtone.blogspot.com What would happen if the National Debt were cancelled?