17 Jun 2015

A message for Alexis Tsipras - Tell your creditors that Greece will only pay back loans made with "real" money

The Shylocks at the IMF, the ECB and the European Commision want their pound of flesh. They are saying that the Greek goverment has to cave in to their demands, or else.

I think it is time to make a few basic facts clear. Between 2013 and 2014, the Greek government cut public sector debt by 0.7% - from €319 billion to €317 billion. Over the same period, Cameron and Osborne increased UK public sector debt by 14.6%, from €1794 billion  to €2055 billion.  Which Government is being the most irresponsible?

In April 2015, Greece was forced to pay 12% interest on its public sector debt. The Germans only paid 0.56% on their debt - currently the largest in the European Union -  no less than €2180 billion at the end of 2014. Amazingly, Luxembourg is only paying 0.06% interest on its public sector debt. Why the difference?

I'll tell you why. It's because governments are forced to borrow money from the commercial banking system, and that banking system has the power to blackmail governments who don't do what they are told.

But the really shocking fact that Alexis Tsipras should bring out into the open, is the fact that the Commercial Banks who lend money to governments don't actually need to have any money to make those loans. They have a licence to create infinite amounts of "money" that they can lend to governments. If the government in question plays ball, then they get a AAA  or a AA- rating from the ratings agencies. (Fitch, Moody's and Standard and Poors).  And if they have a nice high rating like that, the Banks can literally create as much "money"  to make loans as they like - because the wonderful Basel Banking Regulations stipulates that lending money to such governments has a risk-weighting of 0%. They therefore need no capital at all - and can create infinite amounts of debt. 

In contrast, when the ratings agencies decide to give countries like  Greece a rating of CCC, those loans made with fictitious money created out of thin air suddenly have a risk-weighting of 150% - meaning that for every €1 billion  in loans, the Banks have to hold capital reserves of something like €150 million. Since they don't have that level of capital, a country like Greece will no longer be able to borrow at all.

How can this insane system be broken?

Here's what I think Alexis Tsipras, the Greek Premier, should say to his creditors. He should say that Greece will pay off any loans made with money that  existed before. Thus, if a Bank that could prove that made a loan using money that it already had (because, for example, it used money deposited with them by savers), the Greek government would be happy to pay back the loan in full, including the interest.   In contrast, if it turns out the the Banks were unable to prove that they used pre-existing money, and that they had made a loan using money that they had simply created of thin air, the Greek government  could reasonably argue that there is no reason why they should have that "money" paid back at all. And they certainly shouldn't be allowed to claim 12% interest for lending their fictitious money. 

If the Greek government were to do this, they would force the Banks to admit that most of the time, they don't actually  have the money they use to make  loans. This could completely undermine the elaborate con trick that Banks have been using for centuries to extort money from taxpayers. Remeber that of the €12 trillion currently owed by European Union's 28 governments, over €6.6 trillion (55.1%) is entirely due to the interest payments made to the Banking sector since 1995. Our governments have not being spending too much on public services, pensions, education and so forth. They have been paying too much money to Banks for making loans with non-existent money!

Going back, you can trace the origins of this scam at least as far back as the creation of the Bank of England in 1694. Since that time, UK taxpayers have been paying an average of 4.4% of GDP every year in the form of interest charges on public sector debt - interest payments made to Bankers who didn't even have the money they lent - they just created the "money" out of thin air! Since the signing of the Maastrict and Lisbon treaties, this same model has now been extended to every single country in Europe.

So, go for it Alexis! Tell your creditors  that Greece will happily pay back all loans made with "real" money - money that actually existed before the loan was made.  For example, they would pay back money that had been deposited by savers with a Bank. In contrast, any loans made with "money" that didn't exist before is simply fraud. It should not be repaid, and nor should there be any interest to pay.

Could it be that the current Greek crisis could finally take the lid of what must surely be the biggest racket ever?

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