The government closes hospitals and schools down because of lack of money. Does that mean there are suddenly not sufficient people with sufficient ability and sufficient willingness to keep these hospitals and schools running? Of course not! All it means is that the government mistakenly believes that "lack of money" = "we can't do it". We have become slaves to the banks, when instead we should be their masters.Attempts by a government to reduce the national debt can be disastrous for the economy, and why those countries with the largest national debts are in fact those who have achieved the greatest economic success. Sounds paradoxical? It isn't at all, once you understand what the national debt is and how banks create money.
The boom-and-bust cycle is a necessary consequence of the way in which the vast majority of money in a nation's economy is created (by banks) as a debt. One way to escape this cycle is to turn our economy from a debt-based to a credit-based one. How? A simple solution, involving the creation of debt-free money by the government is the way out of debt slavery.
If anybody should question whether it is entirely "fair" that the government create such money, let them ask this question: Is it "fair" that we should let private institutions create, with no effort on their part, and then CHARGE US FOR USING (in the form of interest payments on debt) 97% of the money in our economy?
The government has a right to create its own money debt-free, and it should exercise that right. As long as it is created free of debt, distributed in the right way, and with parallel supporting measures, such money can be created in complete safety. It could take the form of income paid to citizens and grants to industry and budgets to the public sector.
Why is there an assumed crisis? Commentators think the UK cannot take on more debt for fear of default, pushing up interest payments for the government because it is required to sell the gilts with higher interest attached to them.
From figures published February 18th 2010, UK public sector net debt was £848.5 billion. (or 59.9% of National GDP) – Source: Office National Statistics
The cost of paying interest on the government’s debt is very high. In 2008 Debt interest payments will be £31 billion a year (estimated 2.5% of GDP). In 2009, they will be £35 billion (similar to defence budget). Public sector debt interest payments could be the 4th highest department after social security, health and education.
The UK national debt is the total amount of money the British government owes to purchasers of UK gilts. Who buys these gilts?
The biggest owners of gilts are insurance companies and pension funds, both UK and overseas. For them, gilts are predictable investments, which are particularly useful when a low-risk product is needed.
Pension funds, for example, will usually switch an individual's holdings from higher risk investments, such as shares in companies, and put them in gilts as the person gets closer to retirement.
The government thinks it needs to borrow because it spends more than it receives in tax revenue, forgetting that it could issue the money debt free and it has the power to.
In the wake of the financial mismanagement that has plunged the world into a new Great Depression; the profound unfairness facing our members is shocking.
UK worker’s pension funds have been called on to buy the treasury bonds used to bail out the banking sector -- and now they face cuts in jobs and pay on the grounds that government borrowing must be paid back at a faster rate than is required. One might even call it the biggest con-trick in history.
Solution 1: Campaign for the debt repayment to UK pension funds to be rescheduled to save on public sector jobs, services and investment.
Solution 2: Campaign to demand the issuing of debt free government money to pay back the debt and increase money supply to improve the economy. In particular a citizen income and debt free grants for manufacturing.
Graphic: Who Owns UK Government Debt 2009?