Friday, October 26, 2012
A revolutionary paper by the IMF claims that US debt could be eliminated at a stroke, and the same could be done for Britain, Germany, Italy or Japan.
Private debt could be slashed by 100% of GDP, while boosting growth, stabilizing prices and dethroning bankers at the same time. It could be done, quickly and painlessly, by legislative command.
The trick is to replace our system of private bank-created money with state-created money. Specifically, it means an assault on the fractional reserve banking. If lenders are forced to put up 100% reserve backing for deposits, they cannot create currency out of thin air.
The nation regains sovereign control over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. Accounting sleight of hand will do the rest.
The IMF study came out in August and has begun to acquire a cult following around the world.
Entitled "The Chicago Plan Revisited", it revives a scheme first put forward by professors Henry Simons and Irving Fisher in 1936. They saw that credit cycles led to an unhealthy concentration of wealth as creditors foreclosed on destitute farmers in the 1930s, seizing their land or buying it for a pittance at the bottom of the cycle.
The farmers found a way of defending themselves in the end. They muscled together at ‘one dollar auctions’, buying each other's property back for almost nothing.
Evans-Pritchard hasn’t reached a conclusion in this debate; he says to let it run until all the arguments are flushed out.
Posted by Unknown at 12:24 PM