Governments around the world are being stampeded by financial commentators and international organisations (IMF, OECD, G-20) to implement austerity programs to get their “deficits under control”. All sorts of horrendous predictions are being touted in the press daily by the deficit terrorists.
The financial sector, which controls the money supply and can easily capture the media, cajoles the populace into compliance by selling its agenda as a "balanced budget," "fiscal responsibility," and saving future generations from a massive debt burden by suffering austerity measures now. Bill Mitchell, Professor of Economics at the University of New Castle in Australia, calls this "deficit terrorism." Debt becomes more important than schools, medical care or infrastructure. Rather than "providing for the general welfare," the purpose of government becomes to maintain the value of the investments of the government's creditors. http://www.huffingtonpost.com/ellen-brown/deficit-terrorists-strike_b_615813.html
The reality of the situation is that Bankers are in the debt business, and if governments are allowed to create enough money to keep themselves and their constituents out of debt, lenders will be out of business. The central banks charged with maintaining the banking business therefore insist on a "stable currency" at all costs, even if it means slashing services, laying off workers, and soaring debt and interest burdens. For the financial business to continue to boom, governments must not be allowed to create money themselves, either by printing it outright or by borrowing it into existence from their own government-owned banks.
Unless of course the money creation is fed into the banks themselves which is what quantative easing was. £220bn was created electronically by the Bank of England and paid into the accounts of the failing banks.
A government committed to the people and not to the bankers would do the same to reduce the debts by paying it back to our pension and insurance funds without slashing our living standards.
The alternative to throwing massive amounts of money at the banks is not to further starve and punish businesses and individuals but to feed some stimulus to them directly, with public projects that provide needed services while creating jobs. There are many successful precedents for this approach, including the public works programs of England, Canada, Australia and New Zealand in the 1930s, 1940s and 1950s, which were funded with government-issued money either borrowed from their central banks or printed directly. The Bank of England was nationalised in 1946 by a strong Labour government that funded the National Health Service, a national railway service, and many other cost-effective public programs that served the economy well for decades afterwards.
This is the task set any new leader of the Labour Party and one we should start demanding of them now.
