The reaction of the Greek Government to its debt crisis has been to submit to the dictatorship of finance with a package of “austerity” measures. An alternative solution is for Greece to default and take back its sovereignty.
Last Friday, an article by John Authers published in the Financial Times came out with a fine piece of sophistry regarding the current Greek debt crisis. Taking the view some sort of default is inevitable, the author suggested in Little for it but to suffer Greeks’ democratic pain that “defaults come in many varieties. If carefully negotiated, it is even possible to get away with a claim that a default is not a default. If the different parties show some common sense, a default need not be too damaging.”
So if we all use a different name, everything will be all right! Think of the benefits that would have for all mankind if it were applied to medicine.
Emergency – which service do you require?
Ambulance, my husband has just cut himself with a circular saw and is bleeding to death.
No caller, he’s only stubbed his foot.
Heck, if we renamed heart attacks, called them say indigestion, think of all the lives that would save.
Unfortunately, as in the old legal maxim, it is the content of the container and not the label that matters. Putting drain cleaner in a milk bottle does not turn it into a nourishing drink. John Authers is regarded as one of the world’s leading financial journalists, and this article of such importance that it was republished the following day with a slightly longer title, although it is not entirely clear what he suggests Greece or the rest of the world should do about the current crisis.
The world owes much to Greece. Among other things it gave us many great philosophers: Anaximander - who developed a theory of evolution two and a half thousand years before Darwin; Plato and his student Aristotle - who developed a theory of knowledge; Socrates - who founded the Socratic method which is still used today.
Then there were the great Greek mathematicians; who hasn’t heard of Pythagoras? Euclid – whose name is synonymous with geometry; Thales – the first person to successfully predict an eclipse...
Alas, one branch of mathematics neither the rulers of modern Greece nor the world’s economists seem to have mastered is how to repay a debt with money they don’t have, which no one has, because it does not exist. In 1924, Major Douglas used Calculus to demonstrate how the issue and repayments of bank loans control the amount of money in circulation; the problem of why there must always be a shortage of money under the current financial régime can be solved using first year primary arithmetic.
Let us though use a practical if fictional example, that of Salvation Island. For those who wish to read the full, edifying story of Salvation Island, it can be found here, but here is a précis of this tale of rebellion against debt-bondage, the relevance of which will soon become clear.
A group of men had the misfortune to be shipwrecked on a desert island, the upside being it was populated with livestock, had abundant resources, freshwater, and so on. Being skilled men they set about building a small agricultural community, but had difficulty trading with each other until another shipwreck survivor arrived, who just happened to be a banker carrying a barrel of gold, which he buried, and began issuing notes so the citizens of Salvation Island could trade with one another. Which they did, and the community continued to thrive, but for one small problem; the banker issued the notes at 8% interest, and at the end of the year there was always a shortfall.
This perturbed the citizens of Salvation Island, but the kindly banker solved the problem by rolling over the debt at the end of each financial year, though it continued to increase, taxes were introduced, the banker acquired more and more of their assets, until finally they rebelled and overthrew his tyranny.
The punchline comes near the end of the story when the banker is frogmarched to where he buried his barrel of gold. When our heroes open it, they find it contains not gold but rocks.
What is happening in Greece is the equivalent of the islanders’ rebellion against the banker, except that the Greeks are rebelling against their government instead of their real masters.
In order to “rescue” the Greek economy, the IMF has demanded tough austerity measures: slashing public services and raising taxes. We in the West are being led to believe that if Greece defaults, this will lead to a domino effect all around the world precipitating a new global recession, but is this true?
By rescuing the Greek economy, the IMF means – and this is the important part – writing figures in a book or blips in cyberspace – because that is all money is. This credit/money has no tangible existence; like the banker’s note issue in the classic fable of Salvation Island, it is created on a whim and sold at interest, yet it functions only as long as people believe in it. The denizens of Salvation Island were able to run their small community efficiently, farming, manufacturing goods and trading without money, but the issue of money made it easier, it was a mere convenience enabling them to distribute equitably the wealth the community created.
Money still serves that function in modern society, but it has also enslaved us because the banking system has been given the monopoly of credit, and this credit is issued at interest which can never be redeemed. Somewhere down the line there will have to be a default, either that or inflation, which is one mechanism by which governments reduce the burden of debt on themselves and their people at the expense of savers.
Make no mistake, if the Greeks allow the parasites of international finance to “restructure” their economy, more “restructuring” will follow, but it doesn’t have to be that way. With the growth of the Internet, there is now sufficient awareness of the real problem, the continued issue of credit as a debt against the wealth of nations and the enslavement of their people, all people.
If Greece says no, there is a real chance the monopoly of credit can be broken in the next few years. The absurdity of the national debt – of any national debt – was exposed decades ago by the Duke of Bedford, the same man who wrote Propaganda For Proper Geese, but even then his solution was nothing new.
A year ago, one national newspaper reported that Greece owed Britain $15 billion. Does this mean that if Greece were to hand over all this money, Britain would be $15 billion richer? No, it does not. This money would go into the coffers of privately owned banks where it would be used as the basis for creating yet more credit, and yet more debt.
So what is the solution to the Greek crisis? First and foremost it is to default; Greece must refuse to pay in real money – goods and services – for imaginary credit which was created at no cost with the stroke of a pen. Then it must create its own credit. There are some who advocate a return to the Gold Standard, among them hard money proponents such as Ron Paul, but the example of Salvation Island refutes that, and for those who argue that this is an imaginary proposition, we can use a real example. Professor Quigley, one of the authors so beloved by conspiracy theorists and Bilderberg watchers tells us in Tragedy & Hope at page 316 that:
“The outbreak of war on August 4, 1914, found the British banking system insolvent in the sense that its funds, created by the banking system for profit and rented out to the economic system to permit it to operate...could not be liquidated rapidly. Accordingly, the bankers secretly devised a scheme by which their obligations could be met by fiat money...but, as soon as that crisis was over, they then insisted that the government must pay for the war without recourse to fiat money...but by taxation and by borrowing at high interest rates from bankers.”
The reason a bankrupt nation was able not simply to fight but win a war is that “Wars, as events have proved since, are not fought with gold or even with money, but by the proper organization of real resources...”
Indeed, it was rearmament and the Second World War that is generally credited with lifting the world out of the Great Depression. Our overpaid economists never seem to appreciate just how ludicrous this proposition really is. The world is idle, there is literally hunger, homelessness and desperation in even the United States, and suddenly a war is in the air, so the unemployed are set to work building ships, planes, tanks, manufacturing ordnance, which are transported thousands of miles and used to destroy infrastructure and private property in foreign countries, and this goes on for as long as is necessary until one side throws in the towel, not because it runs out of money, but because it suffers utter devastation. Indeed, the city of Hiroshima was totally annihilated in 1945, yet within ten years had been rebuilt.
The reason this is possible is because during times of war, the government – every government – operates a cheap money policy. Indeed, during the American Civil War, the government of Abraham Lincoln ran out of money and could borrow only at usurious rates, so Lincoln printed his own, the famous greenbacks, which enabled the North to win the war.
The Greek Government can do likewise if it breaks away from the Euro; it can issue its own currency debt-free backed by the real wealth of the nation, the goods and services its citizens can supply. Speaking on the BBC Breakfast news programme this morning, the senior Conservative MP and one-time aspiring Prime Minister John Redwood said that Greece has been effectively bankrupt for the past thirteen months, yet he had no real solutions to the problem; certainly he did not advocate an actual default, yet this can be done and has been done very recently. In January of last year, the island of Haiti was hit by a devastating earthquake which left tens of thousands of people dead, and over a million homeless. Aid poured into the country from all over the world, and under pressure from world leaders, the island’s international debt was cancelled. And, surprise, surprise, the world did not end, there was no major international collapse, and although there is a long way to go, Haiti is still being rebuilt.
The Greek so-called debt crisis has shown us that like government, money can be a dangerous servant and a fearful master, but if Greece stands up to the banking cartel, it can break its chains, and money will no longer be our master, but our faithful servant, but it is necessary first for the leaders of Greece to show leadership, and to rebel as did the denizens of Salvation Island against the dictator who stole the fruits of their labours for a barrelful of rocks.
If Greece does not choose the Salvation Island solution, it may end up like the Salvation Islands. This is a real place off the coast of South America; its legacy to the world is a leper colony and a prison, the infamous Devil’s Island. The time is right for Greece and the world to rebel against the dictatorship of finance; only then can we solve all the problems that we now face from environmental despoliation and the fiasco of Deepwater Horizon and other man made disasters to rapidly dwindling natural resources, by making money our servant instead of our master.
[The above op-ed was first published June 22, 2011.]
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