Think of the economy as a pyramid with poorest at the bottom and the richest at the top. What we’re doing presently with bank bailouts and quantitative easing is bailing out the people at the top in the hope that some of that wealth will trickle down the pyramid to you.
The rather obvious thing to note however is that the people at the top are rich because they are very good at hanging onto money. They’ve got deep pockets and no intent to spend anything. In short there is no chance of them spending a penny and it trickling down onto you. That’s how tight they are, they won’t even spend a penny!
The rich don’t want to spend, they don’t even want to spend their money or even pay their taxes and as such are offering no support to our once great nation. Meanwhile the ordinary Joe Public is putting up with ever increasing price hikes, stagnant incomes which in real terms are actually falling and absolutely no chance of getting a loan from their local bank for the nice things in life he’d like to have but sadly can’t afford.
Thing is though, the politicians that be will have you believe that there is no other way, that you’ve got to have the cuts to pay for the bank bailout and the previous shower’s overspending, but there is another way…
Why not use quantitative easing (aka virtual money printing) to pay for government spending, just pump the newly created cash into the economy where it can do the most good straightaway. Why support the banks when they don’t want to support us? It’s time this nation went it’s own way and said bugger the banks.
If the government took back control of the economy from the Bank of England and had the treasury do the work of the bank instead, then it could create the money it needed and not to have to borrow money from someone else such as the Chinese and Indian government (the latter we’ve been giving aid to). The government wouldn’t need to worry about taxing the rich or indeed the rich tax dodging companies that don’t pay their fair share because they would no longer need tax income. They just decide upon a budget and create the money out of thin air, push that money through the various government departments to get things done and hey presto no need for cuts.
At this point a lot of people might think well, that’s what happened in Zimbabwe or some other country that has since seen runaway inflation and empty supermarket shelves. This measure on it’s own does create inflation unless of course there are equally sized sinks in the economy. A financial sink is a mechanism that removes money from the economy, making the remaining money worth more and is sometimes referred to as Quantitative tightening. The idea being that if you remove money by recalling bank notes and burning them, the remaining supply will be worth more etc. Obviously burning banknotes in this day of age of electronic money transfers would be totally bonkers, but requiring companies and individuals to pay their taxes in your currency is a really good start. Taxation makes a superb financial sink if the collecting government immediately takes that money out of the economy by electronically destroying it, thus balancing the economy and maintaining the value of money so that a loaf of bread doesn’t cost a couple of million pounds. That’s right, all money collected via taxation should be destroyed, after all in this new system it’s not like the government actually needs the money and tax avoidance or evasion should be clamped down on ruthlessly for moral reasons but also because in this new system not paying taxes impoverishes everyone by inflating the amount of money in the economy and thereby devaluing everything all other money.
In sense tax avoidance already impoverishes the rest of us because unless we collect the tax we can’t spend it on the things that matter such as hospitals, housing and roads etc, but in this new system that would be even more painfully obvious.
Think about it though, the government would have infinite amounts of money, therefore every road would be pothole free, every hospital would be world class and every school would be better than eton, with state of the art teaching facilities and resources.
Aside from that our armed forces would be second to none and we would be able to afford to police our streets properly and put a bobby on every street corner if need be. The government could finance itself properly and allocate itself the resources to ruthlessly crack down on big businesses that avoid paying taxes instead of having to cosy up to them, do deals or run in fear of their high class lawyers. Government debt would also be a thing of the past as any government could settle its debts overnight under the auspices of this system of quantitative easing for the masses.
Business would also benefit, as the government could afford to stimulate new industries with generous grants and massive amounts of investment, just putting a good road to a remote area can often be enough to bring prosperity to a formerly run down region. What about the highly desirous and much needed future green technologies, such as hydrogen cars, tidal power generation and fusion reactors. On a much simpler scale the government could afford to employ more workers to get things done properly and those workers would of course have valuable cash to spend, making it a boom time for british businesses, reducing the dole queue at the same time whilst abolishing student tuition fees and student loans. Housing could be cheap as it could be built anywhere at anytime in a way that is sensitive to the environment and our outstanding natural beauty. Medically we could throw everything we have at researching cures for cancer, hiv, alzheimers. Can you imagine how much further along we would be at tackling these debilitating diseases if money wasn’t an issue?
The way I see it, lack of money is a brake on human productivity, it saddens me that we live in a world where the words ‘not economically feasible ‘ means that a great idea won’t ever get done, but the words ‘economically feasible’ means that a terrible idea is lept upon such as fracking for gas and oil (which really is scraping the bottom of the barrel). I mean people actually want to destroy the planet’s geology in order to get the last of the world’s gas and oil and the government supports this instead of researching sustainable alternatives.
On the subject of the planet, we care in the west about our environment, no one normal wants to see the amazon cut down, but the people who live there are usually so poor and desperate that they have to do it just to survive. We could create the money we need to pay those people to protect that rainforest for the sake of mankind. They could use our currency to buy the things we make that they need to not only ‘get on by’, but live a nicely comfortable lifestyle.
Better yet their government could adopt the same model and create the money they need to look after their own rainforest and we could create the money we need to help them build their infrastructure so that they too could live as well as us. Indeed helping foreign governments in this way by enabling them to solve their own problems at home will kill immigration concerns overnight! People won’t have to travel to another country to get a better quality of life, because the best they will ever get can easily be had at home, allowing would be immigrants to live with dignity in accordance with their own cultures. No man is happier when working for a bright future, he’s even happier when he can do that at home!
Has it been tried before?
In a sense yes, Abraham Lincoln who desperately needed money to prosecute his war with ‘The South’ blanched at the 36% interest rates offered by the banks (who would rather have had The South win) and instead got congress to pass a law authorising the printing of full legal tender notes known as ‘greenbacks’ due to the ink colour of the notes. He printed 450 million of them and used them to pay his soldiers, because they were legal tender they had to be accepted everywhere on the same basis as any other note.
Abraham Lincoln won the war, saved his country immense sums in interest but lost the peace to angry bankers who almost certainly had a hand in his assassination.
Without doubt a lot of work needs to be done to ensure that the creation of debt free money out of thin air can be implemented in a balanced and advantageous way which is the work of an economist, as it stands at the moment I think that this idea of quantitative easing for the masses has real value. It’s bound to have enemies, people who are currently at the top of the socio economic pyramid that think that ideas of this nature will deny them power when in actual fact these people have the most to gain both in terms of opportunity and financial reward. It’s easier to make money when there’s more to be had (any good business can tell you that) and it’s easier to be powerful when there’s more resources to manage, but do these people want to be rich or powerful in a way that benefits their friends, neighbours, countrymen and fellow human beings or do they want to be rich in a way that only advantages themselves. If it’s the latter I think it’s high time we recognised such sentiment for what it is, mental illness… There is nothing wrong with benefiting yourself by benefiting others, or being a great and powerful leader by taking your followers to greatness.
In summary quantitative easing for the masses can be seen as a reversing of the flow of money through the economy so that it starts at the top of the top of the pyramid with the government and enriches everyone it cascades down upon. The trickle down economics of the Reagan/Thatcher era are an illusion. Money only gets sucked up the socioeconomic pyramid that’s why the rich at the top!