The virus killing the economy – and the antidote

Beyond some cosmetic tinkering, government has steadfastly done nothing to correct fundamental economic flaws that inhibit our efforts to flourish

A Manifesto For National Economic Recovery


Okay, so the economy continues to cough and splutter like an old banger with kerosene in the gas tank. The occasional economic upturns soon dissipate into the same relentless constriction and decline, escalating debt, soaring fuel and other prices, money scarcity and the coincentrsation of more and more wealth into fewer and fewer hands.

The problem the government has is that beyond some cosmetic tinkering, it has done nothing to correct fundamental economic flaws and while those flaws go uncorrected, the decline is going to continue.

The “promised land” of European Union has the same problem, The nations of Europe have banded together to apply the same “solutions” and economic policies and use the same flawed money system that got them into trouble in the first place.

If something got you into trouble, doing more of it and then more of it still is not going to get you OUT of trouble: it will inevitably get you into deeper trouble, which is precisely what is happening to us.

The fundamental flaw is in our money system, the “held down seven” in the calculator that makes all its sums come out with wrong answers. Our very means of exchgange has been hijacked, sunverted and rigged

I hope you will take the trouble to understand the great money hoax because when you understand it a lot of what is currently happening will make sense. Moreover – and most importantly – a road out of our economic mess will become apparent. If you study my book, The Prize, you will see what I mean.

While the problems seem complicated – and one usually winds up in a mire of complexity when one applies wrong explanations and wrong solutions to a problem that was never properly identified and confronted – the solution is actually pretty simple.

I am going to summarize problem and solution here, very briefly.

The problem with our economy is that the government does not create money. It has handed that privilege to banking institutions. Banking institutions create money OUT OF NOTHING and then enter that new money into circulation by LENDING it to you and me, business, governments and so forth. Those loans are made AT INTEREST so that every time a sum of money is created and entered into the economy, it does so as a DEBT and MORE DEBT THAN MONEY IS CREATED.

Our economy runs on debt, not money. There is virtually NO TRUE MONEY, per the proper definition of money, in circulation! That it is CALLED money does not make it money any more than putting kerosene in the gas tank and calling it gas, will make it gas. Call it gas all you like, believe that it is gas all you like but the car still won’t run properly.

And THAT in a nutshell is the fundamental flaw that underpins all the economic trouble we are having, our precipitate decline, instability, relentlessly escalating debt, money scarcity and declining standard of living.

Understanding that basic “why” of our trouble enables one then to come up with a very simple manifesto for national economic recovery, that will enable us to extricate ourselves from the mire in which we are stuck, turn around our national fortunes and bring about a boom beyond all imagining.

Bear in mind that whatever trouble we have it is never an inability to produce in abundance all the food, clothing, furniture, computers, roads, houses, schools and so forth we need. We can produce any amount of these things and so the potential for material wealth is there.

There is a difference for example between being hungry because the crops won’t grow and being hungry because we don’t have the money to BUY crops that either HAVE been grown or CAN be grown.

What is missing here is our ability to EXPRESS DEMAND for what we want and so businesses go bust due to a “decline in demand.” But it is not people’s desire for industry’s products that has suddenly inexplicably waned. What has happened is a growing scarcity of money and money is the means by which demand for goods and services is expressed.

If you haven’t got the money you cant buy the sofa and if you can’t buy the sofa, the sofa manufacturer can’t sell it and so goes out of business, no matter how much you want he sofa nor how much he wants to sell it to you!

So here then is what our government should be doing if it a.) understands the money system with which it is trying to work and b.) seriously wants to bring stability and prosperity to its people.

1.) Immediately remove from private banking institutions the right to CREATE money. Banks can retain the right to LEND money but may only lend money they actually HAVE and may NOT create money in order to lend it.

2.) Immediately restore to government – and to democratically elected government ONLY – the right to create money according to the economy’s need for money so as to ensure and facilitate the smooth exchange between producer and consumer of goods and services.

3.) Immediately set up an autonomous Agency whose sole right and duty is to calculate the economy’s need for money and charge the Agency with the duty of correctly calculating money supply – and the yardstick by which that correctness is measured is: KEEP THE PURCHASING POWER OF THE CURRENCY (IN THIS CASE THE POUND) STABLE. In other words the Agency would steer a course between inflation (too much money resulting in a decline in the currency’s spending power) and deflation (too little money in circulation resulting in money scarcity and a rise in its unit value). Stability of spending power of the currency is vital for confidence and the ability to plan and predict.

4.) The above mentioned Agency must NOT have the power to create money. Its sole function would be that of CALCULATING how much new money must be created and then INSTRUCTING government to create it.

5.) The above Agency must be protected BY LAW from ANY influence or interference by ANY person or agencies INCLUDING government, with stringent penalties for violation of such law and removal from office of any official or politician who violates that law.

6.) The deliberations, calculations and conclusions of that agency MUST BY LAW be open to scrutiny by ANY citizen of the nation and all its councils, conferences, deliberations and meetings MUST be held publicly in the presence of witnesses or on camera.

5.) Government must be obliged and bound by law to create and spend new money as instructed by the above mentioned agency. The Agency may only instruct government as to HOW MUCH money it must create and spend. It may NOT instruct government as to on WHAT it spends the money.

6.) Government must spend into circulation exactly the amount it is instructed to spend. It may spend it on roads, schools, pensions, subsidies and so forth, whatever it decides to spend it on according to the priorities, policies and mandate upon which it was elected to office.

7.) Government must spend the aforementioned money INTO ITS HOME ECONOMY so as to ensure it enters circulation in the economy. For example, if it wishes to spend a £billion into circulation by building a new bridge it must hire indigenous labor and buy indigenous materials. Thus through the purchase of materials and the payment of wages now money will enter the economy WITHOUT A DEBT BEHIND IT and will then circulate. Further, this will greatly help the employment and prosperity of indigenous people and businesses.

8.) New money created by government according to the calculations of the fully autonomous money calculation Agency and spent into the economy on things such as roads and schools or simply used, if government so wishes, to reduce the tax burden of the citizen will enable taxation to be reduced as the creation and expenditure of new money AS THE ECONOMY NEEDS IT will become a new, additional source of revenue for government in carrying out its various projects in service of the people.

9.) Immediately abolish all taxation (income tax, VAT, death duty, stamp duty, road tax, tax on fuel and so forth.) I say again, ALL existing taxes of any kind. Replace the currently unwieldy and expensive-to-administer tax system (whose complexity has the sole purpose of hiding from the people exactly how much tax they are paying) with a SINGLE PURCHASE TAX.

10) The levying of a single purchase tax will enable the people to know as they pay it exactly how much they are paying. Whether the level of purchase tax be set at 25% or 10% by government or raised or lowered by government the people will be able to assess and decide upon the success or failure of government in managing the nation’s financial affairs. It will thus be impossible for government to hide taxes or its own incompetence, overspending or economic mis-management. Thus consumption will be taxed but all production will NOT be taxed anywhere at any time. All wages and profits will be received FREE OF ANY TAX and the citizen or business will pay his tax as and when he buys goods and services. Moreover as the system will be simple, requiring only that a percentage be added to purchase prices and only points of sale will be required to present tax accounts, the administrative cost and burden of tax collection will be vastly reduced And the majority of citizens may never need to be involved with tax authorities at all. Those who, being points of sale, are required to deal with tax authorities will find a much greater simplicity than the current system of tax returns.

11.) The spending of new money into the economy to offset the tax burden, the abolition of ALL taxation upon income ands this replacement with a simple purchase tax will remove from the citizen much of the burden of taxation that has until now so stifled his efforts to prosper.

12.) The abandonment of the system of producing money as debt, with interest on the debt being in effect a toll or tax one pays for the privilege of using the means of exchange, will also reduce the debt burden and remove further strain from the citizen.

13.) Banks will return their primary function of safeguarding and investing money of their savers and the provision of loans for the purchase of large consumer items such as houses (although houses, given the economic measures above will become relatively cheaper, obviating the need of the citizen to take on a lifetime of debt so as to have a home.)

14.) Immediately set up a national bank as a NON PROFIT SERVICE to the citizen. Such a non-profit bank, constituted as a public service, will operate like any other bank: keeping safe the citizen’s money, proving chequing accounts and debit card facilities and so forth and the citizen may use its facilities as he or she wishes. Being non-profit and without shareholders to pay, the national bank will be able to provide low charges for its services.

15.) Set up a fund from tax revenues for advancing loans to businesses and the consumer. The advancement of such loans will be administered through the National Bank (quite separately from its function of looking after citizens’ money) according to sound lending policies (the ability of the borrower to repay and so forth). As the money for such lending comes from a central fund set aside from tax revenues and as the purpose of it is service and help to the borrower and as profit is not required beyond financing the cost of administering such a service, interest on the loans can be kept to one or two per cent.

16.) It should be noted that the current system REQUIRES escalating levels of borrowing in order to sustain a money supply, the new system will see a vast reduction in the NEED of the citizen to borrow; the pressure placed upon him to borrow will be vastly reduced.

There are of course other ills in our society that also need to be corrected and the above measures will not of themselves bring about a Utopia but we can at least remove the distractions of economic constraints and debt slavery from Man’s roads and thus make his focus on other essential tasks a little easier.

I am indebted to the late Dr Edward Hamlyn for introducing me to the principles of monetary reform, the economist Michael Rowbotham and his masterful and enlightened work Grip of Death, and to Abraham Lincoln for his Monetary Policy.

About Steve Cook 2186 Articles
Director, UK Reloaded

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