Spain is to get €100 billion to bail out its banks.
That money has come out of thin air. See here for an explanation.
It has come at cost to no one.
But there is still a question to ask.
If we can do this for banks, why can't we do it for the unemployed?
Answers on the back of a €10 note to me at the usual address please so I can pass them on to those who need them. 🙂
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Why can’t we all set up our own banks?
Because bankers have captured regulation to make sure we can’t
BUT you can join a local mutual society or credit union
“Which brings us to a bigger question: now that Spain is officially to be bailed out, what happens next. And by that we mean of course the big one: Italy. Recall that as we posted in “Brussels… We Have A Problem”, once the contagion spreads again to Italy, and that country also needs a bailout, it is game over”
http://www.zerohedge.com/news/spain-greece-after-all-here-are-main-outstanding-items
It might have originated out of the thin air at a cost to no-one but the interest on it which will have to be paid back will have to be worked for by the general community and will all of it be pure profit. There, in a nutshell, you have how banking works. We all work for the banks. It’s difficult to think that the Euro wasn’t specifically designed with the ultimate aim of facilitating the banks taking their money extraction scheme to an international level. It’s like a giant money laundering operation, the banks creating fake money out of thin air and the poplation having to give them real money for the principal and interest in return. Giant scam or what? 🙂
Well said.
And if we can produce money out of thin air for the Spanish banks and the unemployed, why stop there?
Why not take the concept further and simply distribute £1m (or €1m or $US1m, whatever) to every adult through the world. Then we would have a world of millionaires, enjoying all the trappings and luxuries and life of leisure that come with it. And the concept of ‘privilege’ would become meaningless, as we would all become privileged.
This is an idea whose time has come.
Reminds, me BIl, of the story of the man who hibernated in 2000 for forty years after investing his money. When he woke up he found a letter on his mat.
Your money £1000 invested at compound interest is now worth £500,000.
“I’m rich he shouted. Then he read the rest of the letter. To claim this sum please write and put a £100 stamp on it.
As we are discussing bright ideas-
UKIP has been saying if the EU had stuck with national currencies, the PIIGs could just have devalued and that would have enabled them to recover.
By that logic Northern Ireland, Northumbria and Cornwell who have high unemployment and low incomes, need to adopt their own pounds. What works for the PIIGS should work here. We could reduce all those regional subsidies! What do you think, Bill?
You hit a sensitive nail on the head
In theory regional curencies buy labour in poorer parts of the Uk into the market
At the price of regional pay variance and the compounding of income differentials
The question is whether, as a communtiy, that is what we want
I suggest not – but it is a debating point
I’ve often thought places like Wales (the ex-mining bits) and Liverpool should have their own currencies, so it would make sense for someone from there to come to London to work in a bar or whatever and then go home wealthy due to the favourable exchange rate as the Polish famously do. It’s easy to see why they have the reputation of being willing workers, effectively they’re being paid far more than their UK equivalents would be. It’s a bit like we’re a mini-Europe, one economic unit can’t work for all the different areas in the UK any more than the Euro can work all over Europe as all areas have their own local economies. The Euro apparently only really works for Germany and one could argue the pound really only works for The City. What I’d really like to do is set up Worgls everywhere and see how they got on together. There’s a reason the banks had the Worgl experiment killed off and I suspect it’s because if left alone it would have killed them off. There’s reason alone to look into it further.
Why not indeed, Richard!
Might it perhaps be as simple as the absence of democratic control of and accountability for all our money supply?
What do we ‘the people’ want?
It’s surely self-evident that we do not want mass un(der)employment!
When governments (who cannot themselves make money) are forced to borrow money to maintain a knackered banking system (with ever increasing handouts to execs), they are then told by undemocratic and unaccountable masters of our money supply that they have too much debt and must not be allowed to borrow more for ‘big state’ spending that offers insufficient ROI to service the debt and compound interest – like welfare support for the most vulnerable.
Money is not a fixed and finite resource to be simply moved from here to there.
It is a human invention, a fiction with infinite supply – a simple tool to motivate human activity.
A democratic and accountable money supply would prioritise money flowing to the areas and activities of life that protect and enrich the 99%.
But instead, the current collective madness permits and promotes thousands of seriously sick and disabled citizens to be wrongly declared ‘fit for work’ (i.e. dole) by an ATOS and DWP ‘points system’ which proceeds to swiftly remove essential financial support; thousands already now dead from pressured suicide and worsening health – many more thousands right now in this hellish industrialised pipeline, costing us the public more than £100 million each year paid to ATOS plus tens of millions more spent on appeals.
The ‘theory’ of this inhuman ‘Work Capability Assessment’ programme is cheerleaded by people who really should know better and should care far more about the ‘practice’ in the real world – David Freud, Ian Duncan Smith and Chris Grayling, aided and abetted by ‘healthcare professionals’ willing to take the extra money and hide behind the ‘commercial confidentiality’.
(I wonder if grainy, black and white photos of these horrors might be a helpful reminder of the road we are on once again?!)
If the good people of our nation can tolerate, or remain wilfully blind to, such levels of cruel madness, then we will surely end up justifying all manner of daily atrocities and, like nations before us in history, one day look aghast in horror and shame at how we sleepwalked into tyranny.
The deadly dogma of ‘deficit austerity’ is directly linked to the fact that the blood flowing through our economy is poisonous and parasitic debt – not forgetting the industrial scale tax dodging abuse and rampant and escalating wealth injustices, inflicting horrific damage on the public purse.
I and many others are deeply grateful to you, Richard, amongst others courageously fighting for tax and financial justice, because this fight is not about ‘wonkish’ preferences for flavours of neat and orderly finance; no, it is all about cause and effect – the effect of accumulating misery of inhumanity caused by proactive choices by the few, in direct support of financial injustices.
I saw this on twitter recently (echoing someone’s comment on your blog) :
” ‘Austerity banking & economics’: “bleeding the patient, slowly, just short of death, to keep the brain tumour alive as long as possible” ”
There is now no more urgent task than to diffuse the weapon of mass destruction that is our current debt-money system by demanding and implementing a fully democratic and accountable money supply for the benefit of the 99%.
Don’t forget the 5-year 100-million contract with a credit checking company to check that benefit claimants have no savings, no undeclared income and that they are not paying 500 quid a month of bills with a 250 quid income…….which gets around the various data protection laws…..
Why can’t we do it for the unemployed? The answer is that inflation permitting, we could. (£10 note in the post).
Modern Monetary Theory (of which I am a fan) has been making this point for years. Positive Money makes the same point (not that I agree with EVERY claim made by MMT or Positive Money).
As you say, Richard, we are just stumbling over man-made obstacles and there are many ways to solve these banking problems – as Ellen Brown explores here:
http://www.opednews.com/articles/Greece-and-the-Euro-Fifty-by-Ellen-Brown-120607-898.html
It would appear that there is an agenda to inflict pain and discipline when it is totally unnecessary.
I am not sure how to attach a €10 note to this!
http://en.wikipedia.org/wiki/The_Denationalization_of_Money
The denationalisation of money is the central mantra of the neoliberal market fundamentalism.
http://en.wikipedia.org/wiki/The_Denationalization_of_Money.
It is part of the holy grail of neoliberals to remove as much power from government as possible by what they call “starving the beast.” It has now become irrational, as all money we have is a debt to the bank – even at zero interest, there is no real money – it is all debt, apart from now 2.6% cash. The banks have seized control of the money supply, and are using this special privilege to gain as much profit as possible regardless of the damage to the economy.
During booms there is the profits of repayments and interest, during bust there is the gaining of defaulted on assets. The deflation transfers wealth from the poor to the rich as they have money to mop up the land and housing foreclosed upon. Businesses debts increase because they are dropping all their prices and sacking workers.
A brand new book just published by Cambridge University Press called “From Financial Crisis to Stagnation” by Thomas I Palley describes how housing debt bubbles have replaced the real productive economy in the USA. (Relevant in the UK).
He explains that a “triple haemorrhage of offshoring investment and jobs, spending on imports, and the collapse of internal manufacturing” have led to the US economy stagnating. The only way to get spending going was to have house price inflation and lending. The money supply became a massive bubble. The triple haemorrhage and suppressed wages has been the failed neoliberal model of globalisation, he says. It is caused by the neoliberal mantra of having free markets and a greedy global model of finding cheap labour abroad. He says that in addition, rising asset bubbles and debt have been the failed neoliberal model of growth.
He also despairs about the capture of left wing parties by the neoliberal consensus, because he says that if it continues we face a “great stagnation.” Debt has got so bad that Keynesian stimulus will not be enough we need massive Keynesian restructuring.
The banks ability to create debt is central to it, but it has the other neoliberal props around it.
This book is the most encompassing and complete description of the failure of the past thirty years I have read so far.
Governments can always find money for things they really want to do. Even Eurozone governments.
Odd that, isn’t it?
Regional currencies–I come down on the side of communities. But this is an emotional/value argument, not a quantitative one.
And where does the community begin and end? To a few England, to more the UK, to a growing minority (until recently) being part of the European Community. This is what the EU used to be called and a term I preferred.
As you point out in your book economics is about moral choices, not just figures and logic.
Therapists use the term paranoid -schizoid position, which means one sees the world as threatening (paranoid) and divided into the good guys -usually US, but if not then just us-and THEM who are usually also the bad guys.
Adopting this position creates lots of energy and passion but usually little light.
Of course, others do that, not me!!
Three times, the economically illiterate John Humphreys asked Robert Peston on the Today programme ” Where is the money to bail out Spain coming from?” and three times Peston answered another question. Why do you think that was? Would it have contradicted Stephanie Flander’s editorial line? It seems impossible that Peston doesn’t know the answer.
Interesting
Peston may not know
And that would put him firmly in the camp most economists are on
My guess is that Peston’s an Uncle Tom. He appears to explain economic matters so people watching his documentaries come away from them with the satisfying feeling they’ve grasped what’s really going on. They haven’t though, as Peston simply gives the appearance of explanation while ignoring the real one. In practice then his viewers just happily absorb the party line he feeds them, making him very useful to the establishment. Arise, Sir Robert?
This is more a political problem than an economic one. The banks SHOULD be nationalised as you suggest Richard. But will they? This is a true test for democracy in Europe. If the govts don’t do as you suggest, then we shall know who is really in charge. The ’emperor’ will finally be acknowledged to be ‘without clothes’.