I am going to quote Dumbledore and say “This is one of my more brilliant ideas–and between you and I that is saying something.” Now the obvious caveat applies that I am perhaps being stupid with confidence, but I think this will work:
A few posts back I posted some ideas on how to abolish the Fed. We need to apply this to the whole world. Let me explain.
One thing I was wondering about, was what happens with loans banks made. Main Street Savings and Loan loaned John Smith $250,000 to build a house, and collects say $2,500 a month on it. It’s not in default. It’s fine and a source of profit. It shows as both an asset and a liability on the books. If it goes into default, it shows only as a liability, which in enough quantities will either bring the bank down, or get it a bailout, depending on the size of the bank.
Here is my proposal: those loans are forgiven. They are marked paid in full. Now wait, you say, how is that not socialism or Communism. How is that not a patent abrogation of the right private property. Simple: THAT BANK NEVER HAD THAT MONEY TO BEGIN WITH. They loan money they haven’t earned. That’s how inflation happens in the first place. You can’t steal something somebody never earned. Frankly, they stole it from us in the first place, using the coercive police power of the State.
What do they keep? Their REAL assets, which is that money they hold at the Fed, or in their vaults. They get that cash, and can then make loans on that. Most of the employees at most of the banks in the country lose their jobs, but most of the home mortgages and other DEBTS disappear, freeing up an ENORMOUS amount of cash. The Federal debt disappears, since most of it was created through money manipulation, too. The creditors are paid. The carpenters and plumbers who worked on, say, the Federal Reserve building have all been paid. Nobody who made anything gets stiffed.
But what about foreign creditors? What about the Chinese? Here’s where it gets interesting. What we have to understand is THEY HAVE A CENTRAL BANK TOO. Much of the money they “gave” us was undervalued, for two reasons: one, they print money to fund the on-going expansion of their State; and two they artificially undervalue the yuan–I call them Mao’s, since as I understand it his picture is on them–to increase the amount of goods a dollar will buy.
We give them an ultimatum: switch to our gold backed system, or we default. Now, they can dump their dollars, and cause mass inflation. Provided we have this system already in the works, we can manage inflation, since it won’t matter what a dollar actually buys once we switch to a static currency. Maybe it takes $50 to buy a Coke: we shrug, raise wages, and deal with it. Bit of pain in the middle, but permanent freedom.
And if they play with us, they do the same thing. They switch to a static currency–which will still be the yuan, and under their “control”–and money is now real.
Same thing with Europe. They all have central banks, that have abused them the way the Fed has here. Greece’s debts are forgiven, and she has to behave in the future, which obviously would include not paying the huge benefits she has been paying. Austerity is forced on them, but without their debts.
So much horror has happened in the last century. Surely at some point the thugs who preach peace and freedom can, on balance, realize they have been speaking for and acting as Nazis, and let go.
One added thought: to keep gold speculators from making too much money from nothing, we could actually state something like: in the next month we will switch to gold, silver, or platinum, and pay whatever the rate is AT THAT MOMENT. There is no reason to use this as a wealth transfer mechanism between those who don’t have money and those who do.
Or we could simply say: we will pay X plus 10% for gold, where X is what the investor can prove they paid. That might work best. They make money–they already had X, so they would have needed to get reimbursed anyway, and they are thereby incented to sell–and we get the gold without a huge transfer of wealth.
A golden age ensues. Again, I may be missing something, but I think this will work.