By Ian Holt, North-West Reporter
Think you’re a free man or woman?
Every single person (barring a few untapped tribes in the Amazon) on this planet is a slave. A slave to debt!
James Abram Garfield (November 19, 1831 – September 19, 1881) served as the 20th President of the United States and in referring to monetary notes he said this “such paper should depend for its value and currency upon its convenience in use and its prompt redemption in coin at the will of the holder, .................... These notes are not money, but promises to pay money.
If the holders demand it, the promise should be kept.”
Pay the Bearer on Demand
You will see this promise (To Pay the Bearer on Demand the Sum Of) on most of the UK’s note denominations.
So, why are the words there and what do they mean?
In 1694 the Bank of England was established in order to raise money for King William III’s war against France.
Almost immediately the Bank started to issue notes in return for deposits.
Like the goldsmiths’ notes of old, the crucial feature that made Bank of England notes a means of exchange was the promise to pay the bearer the sum of the note on demand.
This meant that the note could be redeemed at the Bank for gold or coinage by anyone presenting it for payment; if it was not redeemed in full, it was endorsed with the amount withdrawn.
However, in 1931, that all changed as Britain finally left the gold standard and the note issue became entirely fiduciary, that is wholly backed by securities instead of gold.
Since 1921 The Bank of England has become the sole bank of issue.
Most world banks and these include the Bank of England now work on the system of Fractional-reserve banking.
This is a form of banking where a bank maintains "reserves" (of currency and deposits at the central bank) that are a fraction of the total amount of its customers' deposits.
Let me explain: Bank A accepts a deposit of £100. They then keep £20 in reserve and loan out the £80. Bank B accepts this as a loan keeps £16 in reserve and re-loans the balance out and so on up to ten times.
The depositor always sees their deposit as the original £100 but in effect it is only the reserve that is retained in that bank.
As many millions of depositors use banks and do not draw out all their deposits at once, there is more than enough reserve to cover.
However, when we see the likes of a run on the Northern Rock Bank and the panic that ensues you can understand how flawed this policy is.
Northern Rock -Why did the run happen?
Quite simply the banks debt was called in. The bank had loaned all the depositors monies through its mortgage sector to people who had paid zero deposits, were not credit worthy, received 98% mortgages and had defaulted. It requested liquidity support from the Bank of England and the rest is history. http://www.bankofengland.co.uk/publications/Pages/news/2007/090.aspx
Obviously when people realised what was happening they wanted their money.
We hear horrendous stories of our National Debt and how our 3 stooges of Cam, Clegg and Oz are enforcing austerity measures to reduce it.
The current figure of that National Debt for the UK is somewhere in the region of £16,500 for every citizen a grand total of £1,046,155000 (and for those of you that can’t quite get your head around those figures that is 1 Trillion, 46 Billion 155 million pounds) http://www.debtbombshell.com/
How did we, as a Nation (once the most prosperous in the World) build up a debt as gigantic as this?
Since World War II successive LibLabCon governments have quite simply bribed voters with a seemingly bottomless pit of loans.
Where have these loans come from?
Through the selling of short, medium or long term bonds or gilts to the private sector. Most of this government debt is bought by financial institutions such as:
And is sold on behalf of the Government by the Debt Management Office http://www.dmo.gov.uk/
In 2012 the interest alone on the UK national debt will cost £44.8 billion.
Based on the ideas of 20th-century economist John Maynard Keynes, Keynesian economics (which I believe to be the theory in practice with the current government and successive since Thatcher) advocates a mixed economy — predominantly private sector, but with a significant role of government and public sector.
It is quite a complex theory but let me try to simplify to basics.
Active fiscal policy
What is meant by this part of the theory is generally known as countercyclical fiscal policies.
This simply means to use deficit spending when in recession or recovery is delayed and suppressing inflation in boom times by more taxation or cutting government spending.
Now take a minute just to reflect and while you are doing that just think of the promises that are made at election time and what they concern?
Let me give you a hand:
•NHS and Social Services
Why Capital Expenditure?
Capital spending on the National infrastructure (e.g. improvements to the motorway network or an increase in the building programme for new schools and hospitals) contributes to an increase in investment across the whole economy.
Remember that Keynesian economics suggest that Fiscal policy can have powerful effects on aggregate demand, output and employment when the economy is operating well below full capacity of national output, and where there is a need to provide a demand-stimulus to the economy.
So what could be better at the start of a government term?
A bit of borrowing and spending can’t hurt anybody can it?
And if we’ve all got jobs and a surplus of cash everything’s ok isn’t it?
Gordon Brown and New Labour
In 1997 at the start of new labours spending and borrowing spree we were provided with just such a scenario.http://news.bbc.co.uk/onthisday/hi/dates/stories/may/6/newsid_3806000/3806313.stm
Gordon Brown, the now despised new labour chancellor, gave the Bank of England carte blanche on monetary policy. He said in his now classic faux pas: "I want to set in place a long-term framework for economic prosperity... I want to break from the boom and bust economics of previous years."
A noble aspiration but as we all found out in 2010 he had, together with Tony Blair’s full approval, increased our national debt from £350 billion to over £700 billion.
But just who is that debt owed to?
Private Investors, Gilt and Bond purchasers and any other purchasers of UK securities. As you can see from the chart above 75% of our National debt is held by the private financial sector and of particular worry overseas investors.
What is National Debt?
The money we can't raise from taxation needs to be borrowed, and as taxpayers, we're the guarantee on the loan. Every year, this budget deficit is added to our National Debt.
In a spin worthy of any government PA Paul Segal of the Guardian Newspaper provides this nugget of wisdom “What is called "national debt" is our own savings, looked at from the other side of the balance sheet.”
In typical left wing conspiracy journalism Mr. Segal continues to inform us that we as a Country have no debt, and that the money surplus is all our own doing as working, saving citizens!
Why would he take this line knowing that his credibility as a journalist is laughable?
Because he is a Socialist, a revolutionary from the Marxist school of British Left Wing Journalists.
How could he possibly agree with any capitalist system?
Is it any wonder, as our South-East reporter’s note, that the Guardians sales decline weekly?
With garbage like that even its readers have lost faith!
Can we eradicate National debt?
We will always retain a form of debt for liquidity purposes but it is possible to get the debt down to more manageable levels if there is still time.
It’s possible but spending and borrowing from government has to be slashed.
The public sector spending has to account for every penny, not an easy task and what is left has to go to funding large industry and infrastructure projects to stimulate and move the economy forward instead of this stagnation...........and I’m not talking just in London either.
The 3 stooges seem to have almost forgotten that there are citizens beyond the reaches of the M25?
However, it may well be too late. The figures are staggeringly serious.
Anyone that has been subject to a ‘quick cash’ loan knows only too well how difficult it is to pay that loan off when being charged an extortionate amount of interest and still having to live day to day.
It is slightly easier for the government as they can simply ask Mervyn King at the Bank of England to print more notes.
Quantitative Easing rolls off the tongue as easy as the bucks roll off the presses.
Country’s within the World banking system are not allowed to just print notes willy nilly.
So, in order to cover their intentions the Head of the BOE and the Chancellor The Right Honourable George Osborne tell us that this system is in place to ‘bring future inflation back on target’ http://www.bankofengland.co.uk/monetarypolicy/Pages/qe/default.aspx
The real corruption behind quantitative easing is that it is used to fund public spending.
Not only is the extra money circulated but the interest rate paid on this extra money is nominal. http://www.debtbombshell.com/quantitative-easing.htm
We’d all love a money tree like that one wouldn’t we?
Can we have a rock solid banking system?
This is possible but the fractional reserve system has to go and there needs to be an independent watchdog monitoring all trades and issuing extremely harsh penalties for gambling with investors monies.
We, as a Nation, need to get back to living within our means.
Who then is to blame for all these financial disasters and our continued slavery to debt?
A succession of LibLabCon-fidence tricksters who, at the start of a Parliamentary term court the money makers, bankers, press, private investors et al, dangle the carrot and all of middle England, pensioners and the wealthy classes vote for whoever dangles the biggest carrot.
So in conclusion, I leave you with this thought, Greece is now realising National debt is no joke and with no Central Bank to bail them out all they can offer is a begging letter to Germany.
I seem to remember a certain German dictator who ruled Europe with the same Iron fist?
If we have learnt anything at all from the history of Economics a good old war gets things moving?
Who is on the cards for regime change?