Chapter 11 - The Cure

The Cure

There are two cures for Greece.

  1. More Money. This is the illogical approach. This means borrowing more bank credit.
  2. Make the money that exists move faster. I call this a “Velocity Repair”.

The banks have failed to maintain their credit component of the Money Supply. Credit comprises 82% of the Greek Money Supply. The banks have allowed their component of the Money Supply to fall from €221 billion in 2008 to €127 billion. The banks are the poorest performing entity in Greece. They have failed in their duty to the nation. The Cash Currency created by the ECB had not fallen. The Cash Currency has increased from €14 billion to €26 billion during the same time. We are talking about an utter failure of the banks to maintain the level of credit in the nation. A worse behavior by private banks could not be wished on any nation. You would not even be this cruel to your enemies. Only Moses from the old testament was this cruel.

Moses: “... and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.” [Deuteronomy 15:6]

And the heartless giving away of other people's land:

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]

The chances that Greece will manage to get the banks to resume lending is small. They are using illogical arguments to avoid doing so. Anyone that argues that the debts need to be repaid when there is not one country in Europe that can repay its debts is a fool. The bailouts are a pretense that the banking establishment is saving Greece. Money is a freely created commodity. The bailouts are saving the banker’s money system. Without the bailouts, the money system goes down. That is not the fault of the Greek government. It is not the fault of the Greek people. It is the fault of the banks failure to maintain their component of the Money Supply.

A graph of Money Supply for the Greece. Graph by Andy Chalkley. Creative Commons Attribute

It is the fault of the banks creating an impossible contract. It is the fault of the banks creating unpayable debt. The banks collectively create credit which they require to be repaid with more credit than was issued.

This leaves us with the second option. The cure for Greece is to get the money that exists in the nation to move by any means possible. Greece has taught us many things through the centuries. The time has come for Greece to lead the world and show how to escape the Houdini grip of the money hoarders. Freedom starts beyond the four walls that is your money system. Greece has a money shortage that is not a money shortage. Greece needs a velocity repair.

To get the money to move faster, various actions are helpful.

Money can be created in any quantity at no cost. The value is not in the money. A nation is not richer when it prints more money. It is richer when that money flows rapidly.

Greece has far more money than it needs. The problem is that most of this money is sitting idle. It must be made to move by any or many of the ways that I have mentioned.

King Pin found that his tax changes had done something strange. The people were better off and he was collecting more tax. He spent the extra tax straight back into circulation by building a town hall, a library, a sports facility, a recreation center, a swimming pool, new roads, a central marketplace free for traders, and other facilities. King Pin was fascinated with his changes because they defied traditional logic. There was no extra silver in the nation, but people were far better off. His people lived in brick houses with windows and heating rather than mud huts. Everyone got a free education. He realized that money tokens both had to exist and be moving. The moving part had been the trickiest to achieve because of the strange human habit of hoarding the tokens that enabled the transactions that enabled humans to trade that allowed humans to exist. Humans have a habit of destroying that which enables civilized life. This includes married family life, the land, water supplies, the sea, and the money token system. King Pin had to protect all of these with strict rules to prevent the destruction of society. To make money move he taxed the non-use of money rather than the use of money. King Pin cut or eliminated taxes on the use of money such as: Sales Tax, Income Tax, and Business Tax and taxed the non-use of money with a tax on money left idle in bank accounts. By doing so he made money move faster and complete more wealth generating transactions. He realized that the value of money lay in the transactions and not in the holding of money. There was no more silver in the nation, so King Pin made it work harder. King Pin had learned to avoid taxing the transactions that benefit the well-being of society and to tax items that were not labor. He realized that land was a gift from nature that needed to be taxed to ensure that it was well used and not hoarded. If people wanted to use land, they paid a tax on it. This altered nothing but it stopped the speculative acquisition of land. King Pin realized that the value of land lay in the adjacent facilities that had been built by the government and the availability of employment. The value of land lies in its proximity to water, roads, food, employment, schools, hospitals. The value of land did not belong to a previous owner, but to the community that built the facilities. He also had a very small wealth tax of 0.1%, a general Transaction Tax of 0.1%, Inheritance Tax and Death Tax on all but family businesses.

To reduce people’s desire to hoard, King Pin created a welfare system to help those who could not earn and to help those in old age. By taking money worries away from people, people hoarded less, money moved faster and he collected more tax. He also created a free health care system. King Pin knew that the nation would not be efficient if he did not keep his people healthy. King Pin collected more tax from a fit and healthy people.

Tax the non-use of money rather than the use of money.

And by the way, if you do escape the euro, you will be given only one choice: a debt based drachma. Your debt will follow this pattern:

A graph showing money and debt at ten percent increase each year and ten percent interest rate. Graph by Andy Chalkley. Creative Commons Attribute

You will not be given a choice of debt-free-money. You will be given a choice between a debt-based euro or a debt-based drachma. You will not be offered a debt-free drachma. A debt-free drachma is a money system where the drachma is created by the treasury and spent into circulation relieving the need for excessive taxation. A government public bank would lend at low interest rate and fund the government and business.

So don’t try to fix the debt situation. Just make the money you have move.

If you do want a debt free system, you will need the treasury to create all the Drachmas for the nation. This will include paper Drachmas and digital Drachmas. The government will spend the money into circulation and tax the money back out of cirucualtion to prevent oversupply. This will take a lot of engineering. Current problems can be solved by increasing the flow of the money that exists in Greece by adjusting the tax.