Thursday, 22 August 2013


Letter to the Guardian - 22 August 2013.


“Talk of tapering by Fed exposes…” Guardian 22 Aug 2013, and other confused articles on money supply were mirrored last night on David Baddiel’s BBC Radio 4, Four Thought, in a talk about credit creation – “Where does money come from?”

 Journalists need to know that Money is simply an ephemeral intermediary “paper /digital” agent to enable any of us to buy goods or services from the Real Economy – a car, a house, a meal, a computer etc. The medieval alternative to sufficient credit and liquidity is for, say car, buyers to save for 15 years from our below Living Wages before going to the car factory in the Real Economy; which must wait 15 years before making our car, or medicine, or shoes, or book, or house etc. It is governments’ duty to ensure sufficient liquidity for our transactions (personal borrowing, debts) – which the Real Economy generates at about 1% of global GDP per annum. Currently global liquidity is paralyzed because $32 trillion (80 million jobs – 30 years production surplus) of tax-evasion-capital-flight is buried by 0.1% of the world’s people in tax-havens and is only available to the 99.9% via loan-sharks at vast, inflation causing expense. This paralysis MUST be cured by releasing or replacing the $32 trillion and allowing it to lubricate our transactions in the Real Economy.

The Anglo-Saxon Free Market system “lost” about $4 trillion in the 2008/09 bank crash (with $4 trillion increase in tax-haven accounts) – and perhaps a further $4 trillion by restricting bank-leverage (banks lending many times their assets); Quantitative Easing (printing paper money) has only replaced a few hundred billion so far. Much more liquidity is required to meet our needs in the Real Economy.

The Money-Economy ought to be nationalized globally, rationalized and regulated. All incontinent gambling by bent and deranged City bookkeepers should be banned and the Money-Economy managed on 10 IBM mainframes by a few thousand people. To start to re-boot the economy; Snowden and Manning have shown that the NSA and GCHQ have all the data about the illicit $32 trillion (much of it is from organised crime) so governments could easily repatriate it to the nations of origin. Is the “ownership” of the tax-free $32 trillion the real “Threat to Democracy” posed by the published data?

e.g. IF the UK economy built much needed new houses – say 150,000 homes at £100,000 each, to avoid the 15-25 years savings delay, the Money-Economy, the bookkeepers, MUST immediately provide an extra £15 billion (of Debt - which is also an Asset) to enable new buyers. Medieval economics would consign us all to wooden huts, rags, rickets and bubonic plague. We need inexpensive credit and debt.

Noel Hodson

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