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European Central Bank should have sole rights to print money

ViestiLähetetty: 03.02.2013 14:16
Kirjoittaja Antti Roine
European Central Bank should have sole rights to print money

Antti-Roine.jpg
Antti Roine

THE MARKET economy has been controlled for the past hundred years using the same old basic principles, even though we always end up in recession and economic impasse. Unfortunately, year after year, the problems are solved simply by treating the symptoms rather than the actual causes of the disease. The structural causes remain hidden, because the current beneficiaries are skilfully guiding the public debate to side issues and trivialities using misleading and irritating arguments.

IN addition, confusing terms, such as the European Stability Mechanism, leverage and quantitative easing make the political solutions sound brilliant to the ordinary voter. However, it is basically a question of who guarantees, who pays, who receives and how much.

PRIVATE companies and banks are the most effective tools of society, which makes it possible to get the work done in an efficient and economic way. The company is a similar tool to a car, needing an owner and a driver, who will take full responsibility, but also get some benefits from their risk and work.

TRAFFIC does not work if every car follows its own rules of the road. In the same way, the market does not work if companies, banks, and governments implement their own rules. Even the European Union cannot function properly unless it starts to apply majority decisions and places real sanctions on member states that break the rules, or expels them from the union.

THE FINANCIAL Market Tax is one of the first small steps in treating the actual disease. This tax will also make financial institutions participate in the development of society in the same way as other companies, manufacturers, and services do. In addition, through this tax, market turmoil can be moderated.

“THE CONSUMER will end up paying the Financial Market Tax:“ is the most common argument used by financial representatives to shoot down this tax. However, this argument also means that society would be unable to collect any taxes, as the consumers always end up paying the bill. Even the high number of financial transactions is no excuse in the current computer age. Nor will a return to national currencies save us, because the national currencies are even easier for the financial markets to control than the euro, unless we want to isolate ourselves like the North Koreans.

WE SHOULD join the same Financial Market Tax system if the majority of EU Member States do so. However, at the same time, we also need a tax that is levied on transfers to countries that do not participate in this tax system. Otherwise, parasite countries will collect the tax benefits of the financial markets. Somebody must be accountable for every company, bank, asset, and transfer of funds. Anonymity and secrecy only support corruption and crime.

THE ROOT cause of national debt problems, along with reckless budgeting is, however, the fact that states have given banks the right to create money out of nothing. Banks need only nine per cent of “own money”; the rest can be created with the click of a button on the computer without any production costs. In practice, even less self-sufficiency is needed if the money is moved to banks in different countries and tax havens. This leads to a similar situation as in the game of Nine Men’s Morris, where two pawns mean you win every time you move; in this case bank owners gain the profits and losses are socialized whatever happens.

MONEY is the fruit of a functioning society and society also bears responsibility for the currency. Therefore, society should be in charge of printing money. In practice, this means that only the European Central Bank should have the right to print money and all the other banks should have to borrow money from the central bank. We can transfer the power from the banks back to society only in this way, because only then will society define the interest rates and also get a fair share of the profits of society’s most important resource — money.

MONEY is a product of our society; however, for some reason we have given money-printing privileges to the banks. So far, financial markets have eagerly exploited this privilege and harvested at least five times more money than all the countries use annually. They can easily control and manipulate democratic governments using this money. However, society is the boss and banks are tools. In this respect, it is quite strange that banks set the interest rates and society pays interest on the money to the banks.

TRANSFERRING the rights to print money from banks to the European Central Bank may sound difficult, but fortunately it can be implemented gradually without disrupting the existing system. The EU would only need to specify a date after which banks would have to borrow all the money from the central bank. Then society will gradually gain real control of the financial markets. Actually this can be done also within one night by moving the loans from bank's balance sheet into central bank balance sheet.

THE CURRENT financial system is a travesty of the market economy and capitalism, because the risks of the financial institutions have been transferred to the society consumers, and taxpayers. Governments are trying to solve these problems by overly stringent austerity policies that increase unemployment and bankruptcy rates. However, they should also start to collect tax and interest from the financial markets, which have been a freeloader up to now. We have to make the money to run real work, which increases our welfare— instead of running the financial virtual reality.

Antti Roine, Ulvila, September 11, 2012

Reference: J Benes and M Kumhof: The Chicago Plan Revisited, IMF Working Paper, August 2012, WP/12/202
http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
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Published:
Helsinki Times, 18 Oct 2012
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