Saturday, December 20, 2008

Barclays John Varley backs monetary reform shock

Barclays Bank Boss John Varley says bankers should apologise for comprehensively fecking up the world's economy, putting millions our of work and out of a house, causing poverty, starvation, increasing community tensions and putting us all at risk of war, as politicians seek to divert attention from peoples' financial woes. And so they should. So far, so unremarkable.

What is astonishing is that Varley says: "a reduction in the overall quantity of debt in the economy was necessary".

Well, hello? Not to say, Duh?

The entire world financial system is based on debt. Debt is how banks make money. You go to the bank manager, asking for a loan. He looks at your shoes, notes that they are shiny, and decides therefore that you are a good risk. He writes some figures into your account. You go away and slave for years to pay back the loan and interest.

For instance, if you have a $100,000 mortgage at 5% for 20 years, you will pay back about $250,000, so $150,000 of that is new money introduced into the economy. Read all about it here.

So the whole world is swimming in debt. Here is one example.

Wikipedia's List of countries by External (=foreign) debt is worth a browse. You would think that 50% of countries would be debtors and 50% would be creditors, wouldn't you? You would be wrong. The only countries without foreign debt are Brunei, Leichtenstein, Macau and Palau.

So the foreign debt is all owed, not to other states, but to private finance corporations.

There is no intrinsic reason that banksters should have a monopoly on the creation of new monsy. In the UK in 1946, they only created half of it. The State created the other half, and it can do that on behalf of the people by issuing grants, which are debt free money.

This video is an excellent introduction to the topic.

Brian Leslie's website is a good resource.

I still find it extraordinary that the Green Left is a staunch supporter of the right of private financial corporations to have a monopoly on money creation, a position that adopt (I have to guess here, as none of them have taken the trouble to defend their position) because the some monetary reformers were fascists, an example of the Guilt by Association fallacy.

So if John Varley holds that a reduction of the amount of debt in the economy is necessary before the economy picks up, it follows logically that the Boss of Barclays Bank has joined the ranks of the Monetary Reform Movement. Welcome aboard, John. Be prepared to be sidelined, misunderstood and misreported.

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