A new monetary system for Ireland?

Prakari

The procedure would be as follows:

Ireland leaves the euro-zone and creates its own national currency. The government would have the ability to produce this currency debt-free. This would be in contrast to the vast majority of nations where a private central bank firstly creates the money and then loans it to the government at interest (like the Fed in the U.S). Public expenditure and existing debt (after restructuring of bank debt) would be paid using this currency. To prevent hyper-inflation, the reserve requirements of Irish banks would be gradually increased (over the long term to 100%). This is vital as the quantity of the money supply could spiral out of control if the private banks also are able to create money out of thin air using the fractional reserve system. I advocate this monetary system for the following reasons:

1. The most important economic factor in people’s lives - the expansion and contraction of the money supply - would be under greater democratic control. Over the long term, the government would be essentially trying to keep the money supply within certain limits to prevent extreme expansions or contractions (and regulated to ensure it is not used for political gain, such as when approaching elections). If the monetary supply continues to be freely determined by the profit motives of the banking system, boom and bust cycles will be inevitable.
2. The current dormant domestic economy could be stimulated by the government without having to pay interest on the money used (The cost would be the inflationary effects).
3. The costs of our economy could be reduced without crippling the domestic economy and increasing unemployment. Essentially, it is a less socially-destructive way for the nation to start living within its means and becoming more competitive.
4. The eurozone is too economically diverse to control financially. For instance, at one point in time the reduction of liquidity by the ECB may be beneficial for Germany and France but detrimental for Ireland and Portugal.
5. It frees us from the serfdom of international banks. When governments are in deficit and cannot create their own money, they are subservient to those international banks with the power of mass money creation. These banks can create money out of thin air through the fractional reserve system, lone it to nations at interest, and then force nations into selling off state assets when the repayments cannot be met.
6. If we wait for the debt-saturated euro system to collapse, the economy may be in such a weak state, and uncertainty rampant, that a national currency would face a greater threat of hyperinflation. The country may be drawn into accepting some form of a global gold-backed standard. This is a problem as a gold-backed currency would be incredibly easy for the international banks to monopolise, thereby creating even greater wealth inequalities within nations.

Given that Ireland has a strong export-sector and is politically and environmentally stable, the potential for an extreme devaluation of a national currency would be low. However, if we did not radically restructure our banking debt, the currency would come under strong attacks by the market.

I would ultimately argue that the welfare of the majority of people, regardless of nationality, would be greatly increased by the putting the control of the money supply back into the hands of democratically elected governments. One can never underestimate corruption or incompetence within government, but you have to ask yourself this question – Is it more dangerous for governments to be in the business of banking or banks to be in the business of governance?

Pete_Cavan

Prakari wrote: »

Ireland leaves the euro-zone and creates its own national currency. The government would have the ability to produce this currency debt-free.

And what is this new currency back by - ghost estates is Leitrim?

Prakari wrote: »

I would ultimately argue that the welfare of the majority of people, regardless of nationality, would be greatly increased by the putting the control of the money supply back into the hands of democratically elected governments. One can never underestimate corruption or incompetence within government, but you have to ask yourself this question – Is it more dangerous for governments to be in the business of banking or banks to be in the business of governance?

With the way government institutions like HSE and FAS have been run, I would rather the government stayed out of day to day operations and actually regulated the sector, as they should have been doing. Also, private banks should be allowed to fail if they find themselves up sh*t creek, as capitalism dictates they should. Light touch regulation during the boom and then a knee-jerk reaction blanket guarantees has us in the mess we are in now, both came from our "democratically elected government".

Aka Ishur

I am going to create a new currency. I decree that it shall be called the fouro and each fouro will be worth four euro. Buy your fouros now by pm....:rolleyes:


Edit: ok i'm tired and being facetious but after 18 months of 'Hai guys, I've a great idea, lets start our own currency etcetcetc' I think i can be excused. It won't happen, it won't work, and it would leave us with the same massive debt, only we'd have to pay with a worthless currency.

loldog

Pete_Cavan wrote: »

And what is this new currency back by - ghost estates is Leitrim?

What is any modern currency backed by?

hmmm

loldog wrote: »

What is any modern currency backed by?

A modern currency represents a claim on the assets of an economy, with the central bank issuing the currency with the weight of a government standing behind it.

This new currency proposed by the OP will have the weight of the Irish state standing behind it, so will be essentially worthless. All the guff about reserve requirements etc will leave Ireland without a modern banking system and strangle investment and trade. Read a history of Venice as an example of a country that discovered how a modern banking system facilitates an explosion of trade and investment.

ei.sdraob

hmmm wrote: »

This currency guarantee will be essentially worthless.

fyp

ednwireland

everyone would just keep carryiing on using the euro (i certainly would want to paid in that or sterling) not some worthless rag printed at will by whatever gov. we happen to have.

i remeber poland in the after the fall of communism the official currency was dollars or deutchmarks because the zloty was in hyper inflation (notes with zeros added were common )

Prakari

Pete_Cavan wrote: »

And what is this new currency back by - ghost estates is Leitrim?



With the way government institutions like HSE and FAS have been run, I would rather the government stayed out of day to day operations and actually regulated the sector, as they should have been doing. Also, private banks should be allowed to fail if they find themselves up sh*t creek, as capitalism dictates they should. Light touch regulation during the boom and then a knee-jerk reaction blanket guarantees has us in the mess we are in now, both came from our "democratically elected government".

I would argue that the expansion and contraction of the money supply is so important to people’s lives that it must come under government control - in the same way health or education is. No matter how many laws you pass or regulators you put in place, you can’t get around the basic problem that banks, through the fractional reserve system, determine the money supply for profit motives, not for the welfare of the nation. Furthermore, even if banks manipulated the money supply for the good of the people, we would still be in a perpetual cycle of boom and bust because of our debt-based money system. Under our current system new debt has to grow at a larger rate than new money and therefore the system will ultimately collapse under the weight of debt.

hmmm

Prakari wrote: »

I would argue that the expansion and contraction of the money supply is so important to people’s lives that it must come under government control

It is under government control, they set the reserve requirements. They can set that requirement to 100% if they so desire.

Prakari

Aka Ishur wrote: »

I am going to create a new currency. I decree that it shall be called the fouro and each fouro will be worth four euro. Buy your fouros now by pm....:rolleyes:


Edit: ok i'm tired and being facetious but after 18 months of 'Hai guys, I've a great idea, lets start our own currency etcetcetc' I think i can be excused. It won't happen, it won't work, and it would leave us with the same massive debt, only we'd have to pay with a worthless currency.

The creation of a national currency with value is actually quite simple. The value of a currency comes into existence when:
1. The nation’s people accept it for economic exchange – usually legitimised by stating that the government would accept it for payment (such as taxes).
2. The economy of the nation has value. If the nation is a barren wasteland, the relative value of the currency would be worthless, regardless of whether the people within the nation accept it. Furthermore, if the nation is crippled with unsustainable debt, there will likely be a run on the currency causing hyperinflation.

The currency does not need to be backed by a physical resource (e.g. gold) and can be a variety of materials. For example, in the 19th century the British successfully used sticks (split in half so they would be original) until they were outlawed. Just to add that the current debt-based monetary system will crash in the not too distant future because of debt saturation. The banking system will likely determine this new monetary system. If the majority of people remain apathetic about the monetary system, there will be no political pressure, and the international banks will simply create a new system which allows them to gain an even greater monopoly over the economies of the world.

Prakari

hmmm wrote: »

It is under government control, they set the reserve requirements. They can set that requirement to 100% if they so desire.

This is true. However, someone now needs to create new money to allow people to pay back interest on their loans. The government should have the ability generate this new money in the system in a way which is debt-free.

Prakari

hmmm wrote: »

A modern currency represents a claim on the assets of an economy, with the central bank issuing the currency with the weight of a government standing behind it.

This new currency proposed by the OP will have the weight of the Irish state standing behind it, so will be essentially worthless. All the guff about reserve requirements etc will leave Ireland without a modern banking system and strangle investment and trade. Read a history of Venice as an example of a country that discovered how a modern banking system facilitates an explosion of trade and investment.

The fractional reserve system will obviously lead to the explosion of trade and investment when the money supply is increasing. However, it comes with a catch – an inevitable bust. What I am arguing is that this debt-based monetary system, characterised by a boom-bust cycle, is simply too high variance and completely unsustainable. It leaves the average person playing a game of musical chairs. If they take out a loan to open a business or buy a house during the beginning of the monetary expansion phase, everything’s fine. If they do this prior to the beginning of the monetary contraction phase, they are left as debt slaves. Unless you have insider information from the international banks, no one knows the when the music stops (such as when Lehman’s collapsed).

As evidence for my argument, I would direct you to the economic history of America where there has been an ongoing battle between the government and private banks for the control of the money supply. It is well captured in this film - http://www.youtube.com/watch?v=JXt1cayx0hs It essentially provides a sort of ABAB experiment of what happens when the control of the money supply goes back and forth between governments and banks. If you don’t get round to watching it essentially illustrates three points:

1. That institution which controls the money supply of a nation is the most powerful force within that nation
2. International banks can make huge profits from boom and bust cycles. It essentially allows them to buy up hard assets from the indebted for pennies on the dollar.
3. Debt-free money issued by the government can work well, even in the context of wars which require huge amounts of money to be created.



I’ll finish with a quote from Thomas Jefferson who I consider to be a figure of high competence and integrity. Looks like his predictions may be starting to come true:

"If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up
homeless on the continent their Fathers conquered”

Prakari

ednwireland wrote: »

everyone would just keep carryiing on using the euro (i certainly would want to paid in that or sterling) not some worthless rag printed at will by whatever gov. we happen to have.

i remeber poland in the after the fall of communism the official currency was dollars or deutchmarks because the zloty was in hyper inflation (notes with zeros added were common )

If the people reject the new currency, it would die instantly. If this monetary system was implemented you would firstly need to instil a real sense of patriotism within Irish society. This patriotism is currently dormant as we keep engaging in meaningless fights about public v private, and right v left. We have to realise that we are all slaves to the international banks and that by fighting with other, we are blinding ourselves from the current re-distribution of wealth towards the banking institutions. These international banks are not lending us their own money out of good-will, they are creating the money virtually out of thin air and then holding us as debt-slaves. Just look at what they have done to the third world.

We have got to stop feeling so guilty about the excesses of the boom period. It’s been repeatedly shown throughout history that humans will take as much money as the lender will give. Boom and bust cycles are inevitable within this monetary system; we are not the first and we will not be the last. As a nation we certainty need to start living more within our means. However, we do not deserve the socially destructive consequences of the austerity measures that have and will be implemented – e.g. permanent emigration of the educated young, a fifth of the workforce not being able to provide an income for themselves, increased crime as people experience poverty of primary needs. Other nations have lower GDP/capita and are more politically and environmentally unstable yet they have low levels of unemployment and do not export their young. Again I repeat; we deserve to live more within our means but we do not deserve to have the social fabric of this society destroyed or be slaves of a private banking corporation. I argue that a debt-free national currency would allow us to start living within our means without the need for socially destructive consequences and enslavement to the international banks.

Prakari

Some of you may be asking the legitimate question: If a debt-free monetary system under the control of the government is so great, why is almost all the money in the world created by debt through private central banks? Some would argue that the governments of the world have been held hostage by the international banks. Essentially through various means the international banks have pressurised government officials into rejecting any legislation for a debt-free monetary system. This may certainly have been the case in the past. During the 18th and 19th century in America, the U.S. citizens experienced the benefits of a debt-free monetary system (e.g. Colonial script, Greenbacks). Given the popular sentiment for debt-free currency, the international bankers used bribery, war instigation, suspensions of lending, political funding, media funding and assassinations to regain full control of the monetary supply. For instance, it is probable that the assassination of Abraham Lincoln (who created Greenbacks), and highly probably that the attempted assassination of Andrew Jackson was under the guidance of the international bankers – Jackson is quoted as saying about the bankers “You are a den of vipers and thieves. I intend to rout you out, and by the grace the Eternal God, will rout you out”.

This answer is nice and simple if you’re a conspiracy theorist but it is incomplete. The sort of malevolent behaviour committed by the international bankers centuries ago would obviously have to be toned-down a bit in today’s modern society. So let’s assume that the international bankers initially gained control of the money supply in Europe and the Americas through force. Why aren’t governments attempting to break free of this monetary culture. I believe that the answer can be summed up in one word – HYPERINFLATION. Governments know that if hyperinflation happens on their watch, their political careers are finished. Governments would rather leave their people open to the slow form of debt-based slavery than risk the political consequences of the social upheavals that hyperinflation would bring. Look at our own government. They were so afraid of a few days of “chaos on the streets” that they virtually sold the state to avoid it.

I would argue that the potential of hyperinflation in Ireland would be extremely low if you take away the money creating power of the banks. However, make no mistake, if international speculators want to take our currency down, they could do so. A run on a currency could be co-ordinated by the central banks of the world selling off our currency. For instance, some have argued that the Asian currency crisis of the late 1990s was purposefully encouraged by the world’s central banks to force these economies into accepting international finance laws. I ultimately propose that the threat of hyper-inflation is the price of freedom. Hyperinflation can be highly destructive economically, but as long as sufficient primary resources are produced within the nation, and we retain our communal values, nobody is going to be left starving or homeless during a period of hyperinflation (there will not be martial law as the bankers will suggest). The consequences are also far more short-term than the effects of the regular bust phases of our current debt-based monetary system.

Just to note, I am not suggesting that the government would try to keep the quantity of the money supply under highly strict limits. For instance, if the government believes that the population is increasingly rapidly, or that technological advancement is increasing the value of the economy, then there should be a proportional increase in the money supply. What I do not agree with would be a large expansion in the money supply to facilitate something which adds little value to the economy (such as a housing boom).

Euroland

Ireland should leave the Euro zone a.s.a.p.

digme

"We were not foolish enough to try to make a currency coverage of gold of which we had none, but for every mark that was issued we required the equivalent of a mark's worth of work done or goods produced. . . .we laugh at the time our national financiers held the view that the value of a currency is regulated by the gold and securities lying in the vaults of a state bank."

The above makes sense when you think that banks create money out of thin air and then make you physically work to pay off the interest they charge you on the nothing.

So basically we are sending our politicians to Europe to ensure our entrapment continues trying to secure less interest....

How perverse is that?

jimmycrackcorm

Euroland wrote: »

Ireland should leave the Euro zone a.s.a.p.

Why not sooner than that?

thetonynator

Euroland wrote: »

Ireland should leave the Euro zone a.s.a.p.

Bit of an ironic statement when your username is Euroland.

:P