Stuff The National Debt

Posted by Guest Blogger on Wednesday, 31 March 2010 00:18.

by Alexander Baron

On March 29, 2010, Channel 4 TV screened a so-called debate between the Chancellor of the Exchequer, the Shadow Chancellor, and Vincent Cable of the Liberal Democrats.

Although it would be true to say that at times they all made intelligent comments, observations and suggestions, especially Vince Cable, it is also true to say, sadly, that none of them really knew what they were talking about, so it was not a case of them failing to grasp the nettle, they simply had no idea there was anything to grasp.

All three acknowledged that Britain is up to its ears in debt.

On March 25, the “Daily Telegraph” reported that next year the interest on the National Debt will be £73.8 billion. That is just the interest. Where does the Government get the money to pay this interest? From tax revenues, basically, and, we are now told, from cuts in public services. To whom does the Government pay this interest? To the banks. And where do the banks get the money which they lend to the Government? They create it out of nothing, that’s where!

Up until recently this strange fact was denied by mainstream politicians, or even unknown to them, and you would have found no discussion of it outside of specialist economics textbooks or the more popular – and at times whacky – conspiracy literature.

Let’s forget about the conspiriologists for the moment, and let’s forget about economics textbooks.

After the big banking collapse and the phony recession we were told the banks were pumping money into the economy by a newly discovered process called quantitative easing. In fact, this process is anything but new, the banks, we were told, were creating new money out of thin air, and this was working wonders, at least for the Japanese economy.

So where is all this money now? It has gone to recapitalise the banks and to bond holders who will be paid interest on it. This is what happens when the banks create new money. The big question though is, if the banks can create money out of nothing and then lend (ie sell) it – at their whim – to industry, entrepreneurs, to individuals, and most of all, to the government, why can’t the government create its own money out of nothing and spend it into circulation both debt-free and interest free? If it were to do that, the national debt would slowly evaporate.

This is what the government should do. It has been done before, and it still happens. Abraham Lincoln financed the American Civil War with his famous greenbacks; the Island of Guernsey created its own credit and still does; and up and down Britain and many other countries, local traders are issuing their own notes.

The Lewes Pound, a local currency in use in the town of Lewes, East Sussex, inspired by the Totnes pound and BerkShare

Even the British Government issues a certain amount of money debt-free: coins are minted and notes are printed at a fraction of the cost of borrowing from the banks. As all really major transactions are carried out with credit, which costs nothing to create, there is absolutely no reason the government cannot create its own credit for no cost at all.

The election is looming, and whatever party wins, or even if there is a hung Parliament, ordinary people and industry alike face a bleak future. The answer is not to make spending cuts – what we need are more genuine public services, not fewer; the answer is not to tax the rich (which reduces their investment capital), or even to tax the banks. The British Government must create all its own credit, and must tell the bankers to stuff the national debt.

What happens if the existing debt is not serviced? The standard line is that a) we must service the national debt because to renege on it, or on any debt, is immoral, and b) that if Britain (or any country) were to default on its national debt, we would lose our credit rating, no one would want to do business with us anymore, and investors would lose their money, especially those poor pensioners.

Let’s deal with the first objection first. In the first place, running the country is not a moral problem. Only moral problems have moral solutions. In the second place, as this debt – or the vast bulk of it – was purchased with money created out of nothing – we are not the ones who should be agonising over morality, because we are the ones who have been ripped off. The government is our servant as well as our master, and ripping off the government is akin to ripping off the people.

Secondly, it is simply not true that government debts cannot be repudiated. In the wake of the recent Haitian earthquake, the island’s debt or the bulk of it was simply written off. This is not the first time this sort of thing has happened, usually under political pressure.

According to the Office For National Statistics, as of September 30, 2009, the bulk of the national debt (in gilts) was held by insurance companies and pension funds followed closely by unspecified overseas investors, then by the Bank Of England. Building societies, households and local authorities held a tiny fraction of the debt.

As the Bank Of England is theoretically owned by the nation – ie us – there is absolutely no reason why that part of the national debt, or most of it, should not be repudiated at once. The Duke Of Bedford outlined a plan for abolishing the national debt way back in the 1940s.

We have little time to act. Unless we want to see more public services scrapped or run down, more companies going bust, and more workers thrown on the scrapheap, we have to persuade whoever wins the next election to repudiate the national debt, and to create the money for government expenditure for free at the stroke of a pen, instead of allowing the banks to do it, and pay them for the privilege.

Alexander Baron’s website is here.

Tags: Economics & Finance

Comments:

Posted by CFE on Wed, 31 Mar 2010 01:37 | #

up and down Britain and many other countries, local traders are issuing their own notes.

The Lewes Pound (like the Totnes pound) seems to me to be a complete fraud. Not only is it the spawn of the globalist, foundation funded anti-waycist “Transition Towns” network, but, you have to buy them at 1 to 1 with your hard earned Jewish pounds.

As for telling the Shylocks to go hang - I think it could be a vote winner.

Posted by Gorboduc on Wed, 31 Mar 2010 11:18 | #

What’s the relation of today’s National Debt to that originally incurred by William II on our behalf when the Bank of England was set up in 1694 to fund Dutch King Billy’s wars against France? We have financed countless ruinous wars then, to our own double disadvantage, but has the original account been closed, or blown up to gigantelephantesque proportions?
William Patterson’s 1694 words are remembered “The Bank hath benefit of interest on all moneys which it creates out of nothing.”
My local MP was absolutely insistent on the claim that today’s Debt has to do with imports and exports, and the older matter is a mere detail of history.
A number of writers and theorists tackled the problem from the 1900’s onwards, among whom were: Fr. Denis Fahey, Belloc Christopher Hollis, Professor Soddy, A.N.Field, R. McNair Wilson, Arthur Kitson, Commander Herbert Shove, and G.M (Gertrude) Coogan: an internet search linking any of those names with “banking”, “debt” or “finance” will produce interesting results.
Many of those theorists thought the issue of money should be controlled by a strong theory of social justice, so some of them will be found in the Catholic camp, or at least to be in some degree followers of Aquinas.
I hope that won’t cause them to be written down as “conspirologists”!
And as the Debt represents an infringement of natural justice and is a means of keeping us under, I agree with you, Mr. Baron, that it should be repudiated immediately and irrevocably.
It;s worth noticing that modern politicians and usurers call programmes for financial reform and a sound money-supply “funny money” when that term should be applied, as it always used to be, to the corrupt system they espouse.
There’s a quaint little video “Money as Debt” here

Posted by Gorboduc on Wed, 31 Mar 2010 11:20 | #

That is, HERE: sorry again.

http://video.google.com/videoplay?docid=-2550156453790090544&ei=mLX3SaiyIqeg-AGWhq2ECw&q=money+as+debt+full#

Posted by Gorboduc on Wed, 31 Mar 2010 14:32 | #

Having looked at the Lewes’ Pound’s official website, I’ll say the LP doesn’t have anything to tell us about new currency.
To get into the process, you buy the notes for sterling: and exchange them for sterling when you leave the area , outside of which they’re valueless. (There seems to be a hope that you’ll buy some and keep them as collectors’ items, but this is a denial of the nature of money, which is, to be kept in circulation)
I don’t see how using the Lewes Pound differs from writing a cheque, or passing (or attempting to pass) the occasional Scottish banknote that floats down over the border.

It’s a mere conceit, and contributes to reform no more than the Two-for-One MacDonalds deals printed on the backs of receipts or the tokens won at local raffles/auctions for beauty-treatments or gardening sessions.

Years ago Borsodi invented the Constant: they were to provide inflation-proof currency in farming areas. A Constant was supposed ALWAYS to equal (e.g.) 20 oranges, or 5 lb. of bread or a half-dozen roofing tiles. You still had to buy them: I don’t know that Borsodi handed them out in exchange for petrol or new-laid eggs.

http://www.motherearthnews.com/Nature-Community/1974-05-01/The-Borsodi-Constant-an-Inflation-Free-Currency.aspx

Not long before it’ll be “A dozen rounds for the binoculars? Make it 2 dozen and I’ll throw in the torch-bulbs!”

Posted by Mark Herpel on Wed, 31 Mar 2010 17:24 | #

Great Article.

The comments are not correct. Lewes pound and other local currency is NOT a replacement for national currency and does not attempt to do what government money does….it is not a competition, local money works alongside national.

All a local currency does in reality is encourage shoppers to buy from local shops and stores. Since the notes cannot be used at big retail chains it is simply a tool to bring in more shoppers to locally owned and operated stores. A local currency is not in competition to reform the money system or government debt. Checks are accepted at large chains like Wal-Mart, local currency is NOT.

Local currency is NOT “new currency” to replace what the government puts out. Gov issued money is LEGAL TENDER, it must be accepted. The law requires you accept legal tender or the debt trying to be paid is erased. Lewes Pound is voluntary you make the choice to accept it showing support for your local economy. Accepting and spending Lewes Pounds means you patronize local business, it means you want to improve your local surroundings and not give jobs to foreigners overseas.

Mark Herpel
.(JavaScript must be enabled to view this email address)

Posted by Roger Gray on Wed, 31 Mar 2010 21:09 | #

Not only is it the spawn of the globalist, foundation funded anti-waycist “Transition Towns” network…

Would you care to provide some documentary evidence for this assertion? It so happens that I attended a transition town meeting in Manchester on Monday night, to my mind a movement that seeks freedom from corporatism and its discontents, such as unwanted multiculturalism and the hollowing out of Britain’s industrial base, so it comes as a considerable surprise that the movement is being funded by its ideological foe.

Posted by Gorboduc on Wed, 31 Mar 2010 21:53 | #

Dear Mark: in the struggle to break free of the national debt, what’s needed IS an alternative, competing, system.
In the old days, but well withinliving memory, you could pay your doctor with a case of decent wine.
The establishment now makes barter a taxable matter.
Belloc (“Economics for Helen”) has a hypothetical case of two men who between them have a single loaf of bread and a repertoire of songs.
Man A trades the loaf to Man B, to hear a song: then the loaf is traded back, for a song. this goes on for some time, and the men find they are liable for taxation, although no new value has been created, and no new purchasing power generated. But Debt has arisen.

If the LP isn’t taken at Walmart., great: but although it might help local traders it won’t close Walmart down, decentralise the economy, or help us out of the Debt.
Fruit machine tokens also come to mind, unfortunately.
And what about the old token system, colourfully depicted in Disraeli’s novel Sybil, by which ironmasters or coalowners paid their workers in currency only exchangeable for overpriced goods at the Company Store?

In the Uk there have been attempts at local postal services: the Lundy one was fun for philatelists, but I don’t know if a letter stamped to the tune of 21 Puffins ever made it to the mainland.

http://www.stampingonlundy.co.uk/1929_Puffins.htm

And what happened here?

http://www.numismondo.com/pm/pad/

Posted by Revolution Harry on Wed, 31 Mar 2010 23:56 | #

Good article but it’s a shame he falls into the trap of airily dismissing ‘conspiriologists’. We’ve all been brainwashed into dismissing the World Government/New World Order agenda as mere conspiracy. For some reptile free articles on the subject please check my blog.

“What seems required is a public body removed and divorced from political pressure, staffed by Treasury officials, invested by Parliament with the duty of creating, free of interest, as much money for necessary government purposes as the country at any given time should, in their considered judgment, need to ensure the maximum possible employment of its productive resources. The exercise of the right inherent in every sovereign state of creating and issuing a sufficiency of money to make financially possible what is physically possible and morally desirable, would enable as much real wealth to be brought into existence as, with its immense inventive and scientific potential, it is capable of making”.

Sir Arthur Bryant, London Illustrated News, February 1983.

http://revolutionharry.blogspot.com/

Posted by Alexander Baron on Thu, 01 Apr 2010 21:10 | #

I don’t dismiss conspiriologists, conspiracy is the way of the world, but as soon as you mention the word conspiracy in connection with banking, some assholes mentions the word Jew, some other asshole - from Searchlight or the ADL throws in the Protocols of Zion, and nobody listens to a word you say. They don’t anyway, but I see no point in giving these assholes ammunition. I’d rather they invented lies about me - as they usuall do - so I can expose them later and make them look even more stupid.

Posted by Roger Gray on Fri, 02 Apr 2010 15:16 | #

conspiriologists

Maybe “conspiracists” is a better word. And conspiracism is more compact than conspiracy theorist. I learned both words from Daniel Pipes, who wrote a book-length, and tediously repetitive, diatribe against conspiracy theory titled Conspiracy: How the Paranoid Style Flourishes and Where it Comes From.

A few years later I learned that Pipes, and his father, Richard, are fanatical Zionists, and Daniel is a neocon to boot. And he has the cheek to write a book that both argues against conspiracism and seeks to pathologise its practitioners. Such chutzpah!

Posted by CFE on Fri, 02 Apr 2010 15:20 | #

Not only is it the spawn of the globalist, foundation funded anti-waycist “Transition Towns” network…

Would you care to provide some documentary evidence for this assertion?

Certainly, though I must say that it’s an unrealistically high standard to require “documentary” evidence for every assertion made.

In this case, it’s easy - just visit their website.

Our trustees and funders want to make sure that while we actively nurture embrionic projects, we only promote to “official” status those communities we feel are ready to move into the awareness raising stage…

“Setting up your Transition Initiative - criteria”:

13. a commitment to strive for inclusivity across your entire initiative. We’re aware that we need to strengthen this point in response to concerns about extreme political groups becoming involved in transition initiatives. One way of doing this is for your core group to explicitly state their support the UN Declaration of Human Rights (General Assembly resolution 217 A (III) of 10 December 1948). You could add this to your constitution (when finalised) so that extreme political groups that have discrimination as a key value cannot participate in the decision-making bodies within your transition initiative. There may be more elegant ways of handling this requirement, and there’s a group within the network looking at how that might be done.

http://www.transitionnetwork.org/community/support/becoming-official

And here:
http://www.transitionnetwork.org/about/funding

‘Nuff said?

About 18 months ago there was mention of the Pears Foundation on their website, but this has now disappeared.

It so happens that I attended a transition town meeting in Manchester on Monday night, to my mind a movement that seeks freedom from corporatism and its discontents…

They insist on working closely with your local council, and thus with the “corporatist” UK gov.

...such as unwanted multiculturalism…

Surely not wanting multiculturalism is “extreme”, and not “inclusive”? Still, if the Manchester franchise has gone rogue and declared itself all white, that would be great news. Somehow I doubt it.

...and the hollowing out of Britain’s industrial base…

I suggest that your average TT drone, and certainly the leadership would “celebrate” that.

“Isn’t the only hope for the planet that the industrialized civilizations collapse? Isn’t it our responsiblity to bring that about?” - Maurice Strong

...so it comes as a considerable surprise that the movement is being funded by its ideological foe.

Astroturf.

Posted by Roger Gray on Fri, 02 Apr 2010 16:02 | #

Perhaps it is rude of me to ask for documentary evidence, but an unqualified assertion is just that. Your response is good, though, and I thank you for it.

I don’t know whether I’m amused or annoyed to learn that the embryonic movement has already moved to head off nativists (“extremists”), but I feel sure they’re deluding themselves if they think central authority in the form of the UN will prevail on the down slope of Hubbert’s curve. Communities will be at liberty to decide who they will include, if the future looks like what I expect it to.

But, obviously, on the basis of what you’ve brought to my attention, I need to rethink whether I want to be part of TT.

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