One Solution to the Worldwide Financial Crisis

antdon

UrWntr wrote: »

Don't forget that debts aren't owned by faceless organisations. Debts are owned by the general population.

Most of the major debt owed by governments are held by other governments or their state banks

UrWntr

antdon wrote: »

Most of the major debt owed by governments are held by other governments or their state banks

I'm not sure what your point is, but do you have a source? I don't doubt you of course, just interested.

Thrugelmir

The debt crisis is very much focussed in the Western World not as global as it may seem.

John_Pierpoint

At the start of the attempts to keep the infinity growth, (really exponential debt) economic circus on the road, the new printed money was fed to the bankers. Yes the wally bankers, who were 50% responsible for causing this mess. The other 50% can be laid at the door of the politicians who found every increasingly stealthy ways of stealing our children's future, by financing current consumption with debt.

It was suggested that throwing the new money out of helicopters would have been more effective, as all that has happened is the bankrupt banks are using the new money to bolster their marble hall standards of living, to which they claim an entitlement. Then they can get back to that parasitic wealth generating activity of betting against their customers.

http://en.wikipedia.org/wiki/Liquidity_trap

However we all know that throwing the money from helicopters would result in yet more irresponsible short therm spending and the start of hyper inflation.
http://www.telegraph.co.uk/finance/breakingviewscom/6462168/Money-from-helicopters-is-Ben-Bernankes-modern-encapsulation-of-Milton-Friedmans-bold-revelation.html

There is an alternative - feed the new money to the citizens.
The greatest need is to relieve those foolish or unlucky enough to be "debt slaves", they need enough of a hand out to stop them going bankrupt, when the market realises that even the UK is no longer triple A rated and up goes our interest rate.

So here is the proposal:

Every citizen is to be entitled to a grant of the new money; HOWEVER this money can only be used for paying off debt; preferably long term debt - mortgages.
OR
It can only be invested in long term investments
- Pension schemes.

As the debt money supply contracted, then the banks would be forced to contract and restructure.

This idea has already has an airing over on the not immediately understandable thread, with the title "GFC - End Game?" (where GFC is the TLA for Global Financial Crisis).
So I make no apology for repeating the links here:

https://forums.moneysavingexpert.com/discussion/3591901

John_Pierpoint wrote: »

Have a good listen:

http://www.bbc.co.uk/iplayer/console/p00lmvyl

Availability:

7 days left to listen
Last broadcast today, 09:05 on BBC World Service (see all broadcasts).

This programme is on air now:

Listen Live on BBC World Service (Started at 12:05)

Synopsis

'Another Great Depression is all but inevitable’ - that's the view of Steve Keen. No wonder he's been called the ‘Merchant of Gloom’.
But then Keen is one of the few economists to have predicted the global financial crisis.
And while he used to be a lone voice challenging the economic consensus, more and more people are now listening to him.
His way of avoiding depression? Write off the debt, bankrupt the banks, nationalize the financial system, and start all over again.

Update:

I have a nasty feeling that this guy might know what he is talking about:

http://en.wikipedia.org/wiki/Hyman_Minsky

This is not a universal panacea; but it does address about a third of the problem - the indebted and scared citizens.
We still need to address the excessive amount of speculative "instruments", that create as pool of "hot" money, used as gambling chips by casino banks to attack irresponsible politicians.

Flight2quality

antdon wrote: »

First… I know the following is very very very simplistic….
It’s meant to be….

Second…. Please give some proper thought before instantly slating……

Third….. Give it more thought…..It could be made to work if all the world economies want so stave off worldwide financial collapse…



First premise…. Currencies are digital (ones and noughts in computers)…. Currency isn’t linked to tangible assets i.e.gold (hasn’t been for years)

So…
If every world economy agreed to ‘Quantative Easing’ on a global scale…..
i.e. Each country prints 50% more currency and uses this to pay debts (to each other)….

Currencies will not devalue against each other (as they have all printed 50% more)

When the debts are repaid…. Each country agrees to remove 5% of the excess currency per year until the original balance is restored…….

IT IS VERY EASY TO SLATE THIS, AND FIND REASONS IT WOULDN’T WORK,
BUT THINK.... SOMETHING HAS TO HAPPEN BEFORE EVERYTHING COLLAPSES

Some people say there is not enough gold and silver in the world to keep up with expanding population now over 7Bil.

I say there is enough, if every mil gram of silver was given a serial number and the was able to digitally transfer from buyer to seller.

This would be a return to honest money again, and no more currency abuse would be possible.

Get-real-buy-real

antdon wrote: »

First… I know the following is very very very simplistic….
It’s meant to be….

Second…. Please give some proper thought before instantly slating……

Third….. Give it more thought…..It could be made to work if all the world economies want so stave off worldwide financial collapse…



First premise…. Currencies are digital (ones and noughts in computers)…. Currency isn’t linked to tangible assets i.e.gold (hasn’t been for years)

So…
If every world economy agreed to ‘Quantative Easing’ on a global scale…..
i.e. Each country prints 50% more currency and uses this to pay debts (to each other)….

Currencies will not devalue against each other (as they have all printed 50% more)

When the debts are repaid…. Each country agrees to remove 5% of the excess currency per year until the original balance is restored…….

IT IS VERY EASY TO SLATE THIS, AND FIND REASONS IT WOULDN’T WORK,
BUT THINK.... SOMETHING HAS TO HAPPEN BEFORE EVERYTHING COLLAPSES

This is basically what is happening today. But all currencies are racing each other to the bottom. Read currency wars by Jim Rickards to understand what is happening with the GFC.

What you outlined there is what the monetary system has been since we came off the gold standard. The problem is there is no limit to how many units of fiat currency can be created and added to the worlds supply.

The supply of gold and silver is finite and with gold at least is going up at around the same rate as population expansion.

MacMickster

John_Pierpoint wrote: »

So here is the proposal:

Every citizen is to be entitled to a grant of the new money; HOWEVER this money can only be used for paying off debt; preferably long term debt - mortgages.
OR
It can only be invested in long term investments
- Pension schemes.

As the debt money supply contracted, then the banks would be forced to contract and restructure.

The problem, as I see it, is that with Fractional Reserve Banking, new money is created when a loan is made by the banks and then ceases to exist when that loan is repaid.

Over the last 15 years in particular as the UK population has become more and more indebted, more and more money has been created.

Some of this new money was used to fund the consumption based economic growth bubble that we have seen, with money being borrowed to fund electronic gadgets, holidays, cars etc. This money circulating within the economy brought a general feeling of prosperity to all.

The remainder of the new money was tied up in long-term fixed assets, particularly housing, causing assets to become over priced. As mortgages are being repaid, and the borrowed money ceases to exist, we are left with the over priced assets which have merely served to deplete the amount of money circulating within the economy and acting as its life blood.

Consequently, what we need now is not new money which can only be tied up in long term investments. We need new money which can circulate in the economy.

Without this, as a country we become the equivalent of the old widow sitting alone in her million pound former family home, with the state pension as her only income and unable to both heat the home and feed herself - asset rich but cash poor.

Generali

CLAPTON wrote: »

sorry meant to add

and write off everyones savings too

One man's savings are another man's debts.

worldtraveller

We've now had "derivatives". We've now had "sovereign debt". The latest buzzword/phrase that should be a whole lot more scary for those that have not been !!!!less over the past 10-15 years with their money is "socialisation of debt"!

thor

Why not get all the world's millionaires and billionaires to pay a one off amount of tax(say 20% of their total wealth) to get rid of the debt mountain? I have no idea if they possess enough to do so but they will be the ones who will benefit the most as they most likely will have their money tied up in stocks and property which can only go up if confidence is restored with the wiping of the debt.
If we do continue to stumble through countless recessions they will lose a lot of their wealth anyway.