How to Get Your Country Out of Trouble – Part Two
How to Get your Country out of Trouble Part Two – the Solution by Stephen Cook Continued from Part One
With countries such as Greece, Italy, Spain, the UK and even that mighty economic powerhouse, USA, in severe trouble with debt and their governments spouting economic gobbledygook while steadfastly refusing to look for the real cause of the problem, their citizens could do themselves a favour by demanding the following: 1.) Immediately remove from private banking institutions the right to create money. Banks will retain the right to lend money but may only lend money they actually have on deposit and may not create money out of thin air in order to lend it. 2.) Immediately restore to government - and to democratically elected, accountable 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 producers and consumers 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. Charge that Agency with the duty of correctly calculating money supply. The yardstick by which that correctness is measured is: KEEP THE PURCHASING POWER OF THE CURRENCY STABLE. In other words, the Agency should steer a course between inflation (too much money resulting in a decline in the currency’s spending power) and recession (too little money in circulation). Stability of spending power of the currency is in any case vital for confidence and the ability to plan and predict. 4.) The above mentioned Agency will not have the power to create money. Its sole function will 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. 1
How to Get Your Country Out of Trouble – Part Two
6.) The deliberations, calculations and conclusions of that Agency will by law be open to scrutiny by any citizen of the nation and all its councils, conferences, deliberations and meetings will be held publicly in the presence of witnesses or on camera. 5.) Government will 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 the 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. It may not use newly created money to buy imports, For example, if it wishes to spend ÂŁ10 billion into circulation by building a new bridge, it must hire indigenous labour and buy indigenous materials from indigenous suppliers where possible. Thus, through the purchase of materials and the payment of wages, new 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 with which to finance its various projects in service of the people. Bear in mind that new money is created so as to finance various projects all the time. But it is currently done through the mechanics of bank lending described above and the benefits of that method accrue to private banking institutions. Under the new system, the benefits will accrue to the people through a reduction in their tax burden. 9.) Government will thus have a new source of revenue: the creation and spending into circulation of new money. If it wishes to increase its 2
How to Get Your Country Out of Trouble – Part Two
revenues without increasing taxation, it will be able to do so by helping the people increase the production of goods and services both in quantity and quality (wealth). The more benign it makes the environment for human enterprise, for the producer and the honest citizen, the more it supports and encourages the citizen in his efforts to create wealth, the more revenue it will have. 10.) 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-toadminister 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. 11) 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 see it clearly and assess and decide upon the performance of their 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 mismanagement. 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. As tax is paid only when goods are bought, it will be impossible for anyone to evade taxes, either through illegal means or the hiring of creative accountants. The wealthy will naturally pay more tax than those less well off in so far as they buy more goods, more expensive goods and luxury items. Whatever the percentage set for the purchase tax, it will be applied uniformly to all purchases. 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. The majority of citizens will 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. 12.) The spending of new money into the economy to offset the tax burden, coupled with the abolition of all taxation upon income and its 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. 3
How to Get Your Country Out of Trouble – Part Two
13.) The abandonment of the system of producing money as debt, with interest on the debt being in effect a toll or tax one pays (to private banks) for the privilege of using the nation’s means of exchange, will also reduce the debt burden and remove further strain from the citizen. 14.) Banks will return to their primary function of safeguarding and investing the money of their savers and the provision of loans for the purchase of large consumer items such as houses. But houses, given the economic measures above, will become relatively cheaper in any case, obviating the need of the citizen to take on a lifetime of debt so as to have a home. Large banking cartels will no longer be able to manipulate the economy and thereby the fortunes of the citizen, through the manipulation of interest rates or strategic lending. The hidden whip hand held by banking cartels over elected governments and entire nations will be removed. 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 pressure on the citizen. These measures will remove the debt burden from both citizen and government and enable those who manage their affairs well to be truly solvent. They will also remove the tax burden that penalises production and inhibits enterprise and the hidden influence upon government of the money powers. 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 road and thus make his focus on other essential tasks a little easier. Acknowledgements 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. Stephen Cook
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How to Get Your Country Out of Trouble – Part Two
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