Chapter 4 - Can Germany Pay Its Debts?

Can Germany Pay Its Debts?

Angela Merkel is playing hardball, but can Germany pay its debts? Germany can only pay interest. Germany only manages to pay interest because the banks keep extending fresh credit. In Germany, the banks keep lending money which enables Germany to pay interest on previous debts. Germany, like every nation in Europe, is swimming in unpayable debt. If the banks stopped creating credit in Germany, Germany would suffer the same indignity as Greece. Picture by Andy Chalkley, Athens 2017-01-27. Creative Commons AttributeAngela Merkel is playing hardball, but can Germany pay its debts? Germany can only pay interest. Germany only manages to pay interest because the banks keep extending fresh credit. In Germany, the banks keep lending money which enables Germany to pay interest on previous debts. Germany, like every nation in Europe, is swimming in unpayable debt. If the banks creating credit in Germany, Germany would suffer the same indignity as Greece.

Greece has an artificially created shortage of money. Do not forget that money is a freely created commodity. It can be created in any quantity at no cost. The shortage was created by the banks. Greece is being operated for the financial gain of German banks. The German banks are profiting at the expense of the German people. The banks and the companies they own, are having a feeding frenzy on Greece. The banks are effectively attacking the weaker members of the Eurozone when they are at their weakest. The people of Greece suffering under an artificially created shortage of money caused by banks are now being trampled on by the banks. This is the very reason Jesus became reactionary.

In the graph below, you can see that any attempt by Germany to repay debt would destroy the vital German circulating medium. Germany uses a small quantity of Cash Currency shown in orange. Almost all transactions in Germany involve the transfer of fictitious credit from account to account. The credit shown in green did not originate from the German branch of the ECB. Germany is living on credit. The credit is provided by banks.

Germany Money Supply and Debt. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

Tell Germany “Greece will pay its debts the same day that Germany clears its debts.”

If the banks were to cease issuing credit in Germany, the German people would be robbed of their savings and their property. The nation would sink into depression and the German GDP would be destroyed. It is less likely to happen whilst Mrs. Merkel sings to the tune of the banks.

Tell Germany “Greece will pay its debts the same day that Germany clears its debts.”

Germany was treated unfairly after WW1. Germany was saddled with debts that were impossible to pay. The level of debt was tolerable until the loans were called in. Germany was assisted with a level of debt relief and financial assistance in 1953. Its foreign debt was halved. Greece can actually manage without debt relief. Unlike Germany at present, Greece has no access to credit. This causes a lack of vital circulating medium and a lack of available credit for business expansion. Greece can get the same effect by raising the velocity by about one percent each month. The ‘Debt to GDP’ figure for Greece is high but not unlivable. China runs a public bank called the China National Bank. In this situation, much of the debt is owed to the government. Thus the government owes money to the government which is a much more comfortable situation for the government. This table that gives values for Debt to GDP. It is a little unfair comparing debt to GDP because the actions of the banks destroyed half of the potential GDP of Greece. If the banks had not destroyed the supply of credit in the Money Supply, Greece would potentially have a GDP of twice its 2016 value and would have a debt to GDP closer to Germany. Debt to GDP for Greece in 2007 was 107% Eurostat whilst that for Germany was 68% Eurostat Note: Germany was not positive, nor zero. Germany was also running on debt and Germany’s debt has since increased:

Debt in Greece in euro has fallen since 2009. Debt in Germany in euro has increased since 2009.

GermanyGreece
Total Debt 2009-12€4732€578
Total Debt 2014-12€5353€548
An increase of 13%A fall of 5%

This next graph is National Debt to GDP for the nations of Europe. The graph is a little unfair because Greece has had its GDP destroyed since its Money Supply was destroyed by banks.

A graph of the debt to GDP for European nations. Data: Eurostat. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

When it comes to Private Debt, Greece is in the middle of the pack:

A graph of the debt to GDP for European nations. Data: Eurostat. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

It is very unfair comparing debt to GDP figures when the GDP of Greece has been destroyed by bank action. The banks destroy the GDP of Greece, then they claim that Greece has a bad debt to GDP figure, then they demand a dreadful austerity package, then they demand they sell off national assets to international corporations. Banks own the shares of corporations.

NationDebt to GDP
Japan229%
Greece177%
Lebanon139%
Italy133%
Portugal129%
Jamaica128%
Cape Verde123%
Bhutan119%
Cyprus109%
Belgium106%
Singapore105%
United States104%
Spain99%
France96%
Ireland94%
Jordan93%
Canada91%
Euro Area91%
United Kingdom89%
Croatia87%
Austria86%
Sao Tome and Principe86%
European Union85%
Egypt85%
Slovenia83%
Mauritania81%
Sudan79%
Ukraine79%
Mongolia77%
Zimbabwe77%
Bahamas76%
Sri Lanka76%
Hungary75%
Serbia73%
Albania72%
Germany71%
Brazil69%
India69%
Iceland68%
Belize68%
Djibouti68%
Ghana68%
Netherlands65%
Israel65%
Pakistan65%
El Salvador64%
Malta64%
Morocco64%
Finland63%
Costa Rica62%
Bahrain62%
Mauritius62%
Montenegro61%
Seychelles60%
Lesotho57%
Mozambique55%
Kyrgyzstan55%
Malaysia54%
Slovakia53%
Kenya53%
Poland51%
Gambia51%
Fiji51%
Vietnam50%
South Africa50%
Yemen50%
Venezuela50%
Guyana49%
Argentina48%
Uruguay48%
Tunisia47%
Dominican Republic46%
Trinidad and Tobago46%
Nicaragua45%
Philippines45%
Laos45%
Thailand44%
Senegal44%
Honduras44%
China44%
Sweden43%
Mexico43%
Georgia43%
Lithuania43%
Armenia42%
Central African Republic42%
Czech Republic41%
Denmark40%
Tanzania40%
Bolivia40%
Suriname40%
Panama39%
Macedonia38%
Romania38%
Colombia38%
South Korea38%
Sierra Leone38%
Iraq37%
Australia37%
Turkmenistan36%
Latvia36%
Niger36%
Tajikistan36%
Papua New Guinea36%
Qatar36%
Madagascar35%
Switzerland34%
Uganda34%
Gabon34%
Namibia34%
Republic of the Congo34%
Ecuador33%
Turkey33%
Cambodia32%
Guinea Bissau32%
Ethiopia32%
Myanmar32%
Hong Kong32%
Norway32%
Taiwan32%
Zambia31%
Bosnia and Herzegovina31%
Comoros30%
Syria30%
Guinea29%
Bulgaria29%
Malawi29%
Belarus29%
Azerbaijan28%
Burkina Faso28%
Ivory Coast28%
Rwanda28%
Moldova27%
Nepal27%
Bangladesh27%
Indonesia27%
Indonesia27%
Haiti26%
Chad26%
Togo26%
Guatemala25%
New Zealand25%
Liberia24%
Eritrea24%
Kazakhstan23%
Peru23%
Botswana13%
Luxembourg21%
Benin21%
Maldives20%
Palestine20%
Cameroon20%
Paraguay20%
Congo20%
Cayman Islands18%
Russia18%
Chile17%
Cuba17%
Iran16%
United Arab Emirates16%
Libya15%
Burundi15%
Kosovo14%
Nigeria11%
Kuwait11%
Uzbekistan11%
Estonia10%
Oman9%
Swaziland9%
Algeria9%
Afghanistan7%
Equatorial Guinea6%
Saudi Arabia6%
Brunei3%
Data: Trading Economics

Much of the credit that was lent to the likes of Greece, was money that banks had borrowed from the ECB at almost invisibly low interest rates and had on-lent at a higher rate to Greece. This is a form of scalping. Why was the same money not available to Greece from the ECB? Central banks were originally intended to finance nations. One might expect a central bank to look after the interests of nations. This is not the case. The ECB lends money to private banks at almost invisible interest rates and the private entities on-lend to governments at high interest rates. Where is the logic in this? The ECB can create money in any quantity at no cost. Money was invented to assist the trade between citizens. The ECB has descended to the level of the moneychangers in the temple. These are the rates at which the ECB lends to private banks:

European Central Bank interest rates.
2016-03-100.00%
2014-09-040.05%
2014-06-050.15%
2013-11-070.25%
2013-05-020.50%
2012-07-050.75%
2011-11-081.00%
2011-11-031.25%
2011-07-071.50%
2011-04-071.25%
[http://www.global-rates.com/interest-rates/central-banks/european-central-bank/ecb-interest-rate.aspx]

The banks could then lend to the Greek government by buying government bonds at upto 20%, 30% or 40%. Here are some interest rates for some other central banks for comparison:

Central Bank interest rates.
Central bank interest ratePercentageDate
United States0.75%12-14-2016
Australia 1.50%08-02-2016
Brazil 12.25% 02-22-2017
Great Britain 0.25%08-04-2016
Canada 0.50%07-15-2015
China 4.35%10-23-2015
Europe 0.00%03-10-2016
Japan 0.00%02-01-2016
Russia 10.00% 09-16-2016
South Africa 7.00%03-17-2016
[http://www.global-rates.com/interest-rates/central-banks/european-central-bank/ecb-interest-rate.aspx]
The Banks Strangled the Credit Supply of Spain

The banks in Spain have failed to supply sufficient credit to maintain the Money Supply. The private sector has been starved of credit which has pushed the government to take on more debt. The solution that we will use for Greece will work in Spain. It will work in any credit restricted nation suffering a recession.

Spain Money Supply and Debt. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au
Euro Area

The whole of the Euro Area has suffered in the straightjacket that is the private bank credit scheme with a puppet Central Bank producing a small quantity of paper currency to support the credit. The ECB is working for the interests of the banks rather than the interests of the nations. Their motivation is bank profit, not national prosperity. If you wanted to curtail prosperity in Europe, this is the way that you would do it. Here is the lending pattern for the banks in the Euro Area. The banks are not maintaining an adequate level of credit in the nations of Europe:

Euro Area lending. Data: Economagic. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

Here is a graph of the money and debt for the combined nations in the Euro Area. Yet again the banks have created an impossible contract. It is not possible to repay the debt with available credit. Previous debt is only repayable if more debt is created:

Euro Area Money and Debt. Data: BIS. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

In the above graph, the green credit is not expanding gently as one would expect in a healthy money system.

Worldwide Debt

The debt problem is worldwide. There is twice as much debt in the world as there is money:

World Money and Debt. Data: BIS. Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

Moses spoke of this in a manner that protected the locals, impoverished others, and encouraged oligarchy. The Old Testament needs to be thrown out. The old testament is an instruction book for oligarchy. This instruction by Moses is from one of his sermons. [Deuteronomy. 23:19, 20] It is typical of the evil of the Old Testament.

Moses usury Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

A scan from my family bible of 1878 [1]

The old testament is a formula for oligarchy. This instruction by Moses is from one of his sermons. [Deuteronomy 15:6]

Moses usury Creative Commons Attribute - Andy Chalkley. www.andychalkley.com.au

A scan from my family bible of 1878 [1]

Moses was not nice:

Moses  “But of those cities that shall be given thee, thou shalt suffer none at all to live. But shalt kill them with the edge of the sword, to wit, the Hethite, and the Amorrhite, and the Chanaanite, the Pherezite, and the Hevite, and the Jebusite, as the Lord thy God hath commanded thee. Lest they teach you to do all the abominations which they have done to their gods: and you should sin against the Lord your God.” [Deuteronomy 20:16 to 18]

Jesus spoke against the misuse of money and got nailed to a scaffold for his efforts. Mohamed was a trader and made strict rules concerning the appropriate use of usury. The Church recognized the problem and banned usury for over a thousand years. This is not a new problem. Proverbs 22:7 warned us: “The rich ruleth over the poor, and the borrower is servant to the lender”. In Deuteronomy 28:44-45, we are warned: “The stranger that is within thee shall get up above thee very high; and thou shall come down very low. He shall lend to thee, and thou shall not lend to him; he shall be the head, and thou shall be the tail.”

On 2011-12-21, and on 2012-03-01, the ECB was prepared to lend any amount of money to any bank in the Eurozone on unusually generous terms. No bank was refused. Why were governments not offered the same arrangements? Why were governments charged usurious rates? Why did the ECB favour private interests over the nations and people of Europe? 1,323 banks took up the offer borrowing an astounding 1019 billion euros. The 1019 billion euros was generated at no cost. It cost nothing to create. Money is a freely created commodity. As usual it was given a fancy name: 'Longer Term Refinancing Operations' (LTRO). Some banks were at risk of becoming unable to meet their payment obligations. One trillion euros was thrown at them at negligible interest rates. No such assistance was given to nations. Nations got the opposite treatment. Nations got restricted credit and increased interest rates on previous debts. This was a bailout for the banks by the ECB and a classic Shylock situation for nations. The ECB was clearly acting for the benefit of private banks whilst nations were being put in a debtors bind.

“The rich rules over the poor, and the borrower is the slave of the lender.” [Proverbs 22:7]

Some of the economically depressed nations were pushed to the point of insolvency. They found it very expensive to refinance their huge accumulated debts at ever higher interest rates. The usurer was in his element. The vultures pounced on the weak. The money lenders made extra profit from nations that had been put in a debtors bind. If the ECB and banks of Europe create a finite number of euros and these are lent out and more is expected to be paid back than was lent then an impossible contract has been created. It is not possible to pay back more euros than exists. If the ECB and banks stop increasing the volume of euro, whoever is the weakest will be the sacrificial lamb.

“Woe to those who enact evil statutes
And to those who constantly record unjust decisions,
So as to deprive the needy of justice
And rob the poor of My people of their rights,
So that widows may be their spoil
And that they may plunder the orphans.” [Isaiah 10:1-2]

ECB money rescued the Eurozone banks. It supported the bond market but not the nations. It supported those that were charging abusive interest rates to nations, whilst giving almost free money to private banks. It ensured that banks did not need to resort to fire-sales of their assets whilst nations were being forced to sell off assets to the private sector. Very little of this finished up in the real economy as can be seen by the various graphs of velocity. It finished up in the hands of the wealthy hoarders.

Banks were acting in a manner to look after themselves. In 2012, Spanish and Italian sovereign ten-year bonds were paying 4.9 percent interest. Private banks could borrow from the ECB at one percent interest and buy bonds at 4.9 percent and cream 3.9% from nations. Is there any doubt that the ECB acts for banks, not nations. The ECB enabled a trillion-euro bonanza for the banks at the expense of nations and their citizens. the ECB has made great effort to rescue and pad the private entities called banks and supported the banks and the moneylenders whilst they mistreated nations and citizens.