SevyShasha

http://www.telegraph.co.uk/finance/comment/9623863/IMFs-epic-plan-to-conjure-away-debt-and-dethrone-bankers.html So there is a magic wand after all. A revolutionary paper by the International Monetary Fund claims that one could eliminate the net public debt of the US at a stroke, and by implication do the same for Britain, Germany, Italy, or Japan. One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined. The conjuring trick is to replace our system of private bank-created money -- roughly 97pc of the money supply -- with state-created money. We return to the historical norm, before Charles II placed control of the money supply in private hands with the English Free Coinage Act of 1666. Specifically, it means an assault on "fractional reserve banking". If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money 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 legerdemain will do the rest. That at least is the argument. Some readers may already have seen the IMF study, by Jaromir Benes and Michael Kumhof, which came out in August and has begun to acquire a cult following around the world. Entitled "The Chicago Plan Revisited", it revives the scheme first put forward by professors Henry Simons and Irving Fisher in 1936 during the ferment of creative thinking in the late Depression. Irving Fisher thought credit cycles led to an unhealthy concentration of wealth. He saw it with his own eyes in the early 1930s as creditors foreclosed on destitute farmers, 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. Any carpet-bagger who tried to bid higher was beaten to a pulp. Benes and Kumhof argue that credit-cycle trauma - caused by private money creation - dates deep into history and lies at the root of debt jubilees in the ancient religions of Mesopotian and the Middle East. Harvest cycles led to systemic defaults thousands of years ago, with forfeiture of collateral, and concentration of wealth in the hands of lenders. These episodes were not just caused by weather, as long thought. They were amplified by the effects of credit. The Athenian leader Solon implemented the first known Chicago Plan/New Deal in 599 BC to relieve farmers in hock to oligarchs enjoying private coinage. He cancelled debts, restituted lands seized by creditors, set floor-prices for commodities (much like Franklin Roosevelt), and consciously flooded the money supply with state-issued "debt-free" coinage. The Romans sent a delegation to study Solon's reforms 150 years later and copied the ideas, setting up their own fiat money system under Lex Aternia in 454 BC. It is a myth - innocently propagated by the great Adam Smith - that money developed as a commodity-based or gold-linked means of exchange. Gold was always highly valued, but that is another story. Metal-lovers often conflate the two issues. Anthropological studies show that social fiat currencies began with the dawn of time. The Spartans banned gold coins, replacing them with iron disks of little intrinsic value. The early Romans used bronze tablets. Their worth was entirely determined by law - a doctrine made explicit by Aristotle in his Ethics - like the dollar, the euro, or sterling today. Some argue that Rome began to lose its solidarity spirit when it allowed an oligarchy to develop a private silver-based coinage during the Punic Wars. Money slipped control of the Senate. You could call it Rome's shadow banking system. Evidence suggests that it became a machine for elite wealth accumulation. Unchallenged sovereign or Papal control over currencies persisted through the Middle Ages until England broke the mould in 1666. Benes and Kumhof say this was the start of the boom-bust era. One might equally say that this opened the way to England's agricultural revolution in the early 18th Century, the industrial revolution soon after, and the greatest economic and technological leap ever seen. But let us not quibble. The original authors of the Chicago Plan were responding to the Great Depression. They believed it was possible to prevent the social havoc caused by wild swings from boom to bust, and to do so without crimping economic dynamism. The benign side-effect of their proposals would be a switch from national debt to national surplus, as if by magic. "Because under the Chicago Plan banks have to borrow reserves from the treasury to fully back liabilities, the government acquires a very large asset vis-à-vis banks. Our analysis finds that the government is left with a much lower, in fact negative, net debt burden." The IMF paper says total liabilities of the US financial system - including shadow banking - are about 200pc of GDP. The new reserve rule would create a windfall. This would be used for a "potentially a very large, buy-back of private debt", perhaps 100pc of GDP. While Washington would issue much more fiat money, this would not be redeemable. It would be an equity of the commonwealth, not debt. The key of the Chicago Plan was to separate the "monetary and credit functions" of the banking system. "The quantity of money and the quantity of credit would become completely independent of each other." Private lenders would no longer be able to create new deposits "ex nihilo". New bank credit would have to be financed by retained earnings. "The control of credit growth would become much more straightforward because banks would no longer be able, as they are today, to generate their own funding, deposits, in the act of lending, an extraordinary privilege that is not enjoyed by any other type of business," says the IMF paper. "Rather, banks would become what many erroneously believe them to be today, pure intermediaries that depend on obtaining outside funding before being able to lend." The US Federal Reserve would take real control over the money supply for the first time, making it easier to manage inflation. It was precisely for this reason that Milton Friedman called for 100pc reserve backing in 1967. Even the great free marketeer implicitly favoured a clamp-down on private money. The switch would engender a 10pc boost to long-arm economic output. "None of these benefits come at the expense of diminishing the core useful functions of a private financial system." Simons and Fisher were flying blind in the 1930s. They lacked the modern instruments needed to crunch the numbers, so the IMF team has now done it for them -- using the `DSGE' stochastic model now de rigueur in high economics, loved and hated in equal measure. The finding is startling. Simons and Fisher understated their claims. It is perhaps possible to confront the banking plutocracy head without endangering the economy. Benes and Kumhof make large claims. They leave me baffled, to be honest. Readers who want the technical details can make their own judgement by studying the text here. The IMF duo have supporters. Professor Richard Werner from Southampton University - who coined the term quantitative easing (QE) in the 1990s -- testified to Britain's Vickers Commission that a switch to state-money would have major welfare gains. He was backed by the campaign group Positive Money and the New Economics Foundation. The theory also has strong critics. Tim Congdon from International Monetary Research says banks are in a sense already being forced to increase reserves by EU rules, Basel III rules, and gold-plated variants in the UK. The effect has been to choke lending to the private sector. He argues that is the chief reason why the world economy remains stuck in near-slump, and why central banks are having to cushion the shock with QE. "If you enacted this plan, it would devastate bank profits and cause a massive deflationary disaster. There would have to do `QE squared' to offset it," he said. The result would be a huge shift in bank balance sheets from private lending to government securities. This happened during World War Two, but that was the anomalous cost of defeating Fascism. To do this on a permanent basis in peace-time would be to change in the nature of western capitalism. "People wouldn't be able to get money from banks. There would be huge damage to the efficiency of the economy," he said. Arguably, it would smother freedom and enthrone a Leviathan state. It might be even more irksome in the long run than rule by bankers. Personally, I am a long way from reaching an conclusion in this extraordinary debate. Let it run, and let us all fight until we flush out the arguments. One thing is sure. The City of London will have great trouble earning its keep if any variant of the Chicago Plan ever gains wide support. Pretty sure if this were to happen Iraqi currency would increase in value. Iraq has a GDP similar to Greece but a currency way way way worse than it.

LOL Who voted Tie!? Come on! Got to admit I have a lot riding on this election. I was shaking with adrenaline as it started. I did not want a screw up from our boy Mittens. But boy did he deliver! I got more relaxed 30 minutes in and just loved every second of Romney's leadership on stage and Obama...acting like a meek college instructor (he was not actually a professor!). Best part was when Obama screwed up his own line at the end. LOL. "Everybody deserves a fair shot. Everybody deserves a fair share....eughr - excuse me - everybody deserves a fair shake." LOL. Cringe worthy TV from the empty chair in chief.

Debates like the other night are not about facts. It is not a courtroom. It is a room for the visions of the two candidates. A billion above / below or some minor deduction covering X part of X plan is totally irrelevant. Sticklers & people who love to focus on statistics don't get that part. Romney's vision for America is something he persuaded the audience to believe in. Whether the plan on paper is good or bad is not really of any relevance. We elected Obama on hope and change - not cold hard statistics. And statistics contrary to anything Romney says can be manipulated. Romney won't raise taxes. Obama will. Now Obama seems to think that if you raise taxes 5% you get 5% more money. But the economy is way more complicated than that. Sometimes, that 5% pushes business over the edge, they leave and a cascade follows - then you have less people paying you 5% more. Obama can't get it into his head that lowering taxes raises revenues. He thinks 2+2=4. 5% more is not 5% more. 10% less is sometimes 5% more money for the government. All the liberal economists hating on Mitts plan don't take into consideration the growth of business, flooding of foreign income to the US (seriously where else will I invest - Greece!?) and so many more businesses paying taxes consumers paying taxes. I don't care if Mitt said 47 lies yesterday. I and most of America believes in he can fix our problems and no liberal economists who have no real life experience (LOL LIKE OBAMA) are not going to stop the Romney Pain Train about to hit the station in the next debate and send a swift kick to Obama's 3rd rail.

LOL If I agree with you I am informed. If I disagree I am misinformed. Romney did well in the debate last night. Dems are scared

I'm totally republican now loving Romney but in 2008 I actually wanted Obama to win 100%. Cool 1st black guy who promised really great things. If he lived up to his promises, he really would be a great president. He made arguments the left and right liked. He said for example he'd half the deficit. So for fiscal conservatives / independents he won them over and healthcare wins the lefties. He was the hero for all people. But then he came into office and did not deliver. So its time we let him go.

Lets say the cost of labour for a programmers time is $30,000. If that is too low for a college degree and years of experience, for a job that requires it, you are going to have to engineer a system that can pay MORE than the true value of the cost of labour. So you pay him $30,000 a year, but you give him a $20,000 a year 401k, or stock options. You compensate for that additional margin between the cost of labour and the availability/supply price of labour with debt. Because sometimes, $30,000 won't get the job done. So you create debt to finance the rest. But eventually, that debt needs to be cleared as it will never be paid back. I think that is the stage we are at now. The housing boom of the 2000's financed the lifestyle we enjoyed, but it was a false reality anyway so in 2008 when it collapsed, which was inevitable, we cleared some of our debts. I think the next boom starts in January 2013 - after we elect a new man to the whitehouse. What will this boom be fueled by? Capital gains tax of IQD RV I hope. But probably a 'breakthrough' in green technology or 'space mining' or investment in Africa / Middle east. I'm not an economics genius. But I think there are some jobs that have a higher cost of labour than the supply. For example, I read that in Australia, in Diamond mines, the workers are being paid $80,000. Now, they were encouraging in this news article the emigration of US workers to this 'hot' new industry. But really, that's just an attempt to increase the supply of workers so that with competition for jobs, the salary can be driven downwards to say $60,000. This might be to do with greed. But I think it is more to do with the fact that the economic value of such a job may only be $60,000, and paying more than that is unaffordable. So what do we do in this situation? If we can only get $60,000 of output and have to pay $80,000, something needs to finance that $20,000. Maybe banks are willing to loan money to our mining corporation because of the promise of an increasing global need for Diamonds...etc. In Iraq, we have the opposite, workers who do not meet the requirements due to education etc. I think that is why we invaded them, gave them 'democracy' and installed new central banks so we can build their road / bridge infrastructure as the government / domestic labour force did not comply or meet the skill set. See Afghanistan has a working distribution network now, and a government that is more capable of securing it and trade that flows through it. I'd assume the same in Iraq too to the West of Iran. 'Extending 4,000 miles (6,500 km), the Silk Road gets its name from the lucrative Chinese silk trade along it, which began during the Han Dynasty (206 BC – 220 AD).' http://en.wikipedia.org/wiki/Silk_Road I think our interest in terrorists and care for democracy (we didn't care when dictators ruled them before) is to improve these trade routes to facilitate the next boom. Believing these wars are about oil or terrorism is a little too simple an explanation for me so I try to believe in crazier theories.

Well I know I'll be voting Obama now because of something I read about how Mitt Romney's son may have had a lawyer who might have had something written in a contract which might have been acted upon but probably wasnt. Yeah. It is a dealbreaker for me. Right now. I don't care if Mitt Romney is an alien. Enough personality BS. Obama was a nice guy. Look where that got us. Romney has the solutions - I don't care if liberals come out with how he was abortion overlord on Venus in 260BC. All they have left is mud slinging. Obama failed so its time to let him go so he can change Washington from the outside like he recently said was the only possible way.

US debt is 16,000,000,000 US GDP is 15,300,000,000 Numerically, 16 trillion is scary. But a lot of countries are at +100% of debt to gdp. http://en.wikipedia.org/wiki/List_of_countries_by_public_debt Greece is 160%+ Italy is 120%+ Japan is 208%+ USA is only 104%. Neither Obama or Romney will magically turn the tables on the debt piling higher and higher. But I'll be voting Romney as it is likely to lead to a slower creation of more debt and more importantly - JOBS. China has an economy built on building cheap crap. If the USD collapsed along goes China and India and every other country. It would cause insane economic damage. Worse than if every bank collapsed in 2008. USD collapsing will not be allowed to happen. It would hurt everyone.

Buy a Vietnamese lawyer who speaks English who can help me purchase a house there and not get it stolen by the government! Asia is a great place to spend money. You can live like a king for $200-$300 a day. I'm talking +5 star hotels, spas, cinema, taxi everywhere! I'd like to live in Asia so my money goes further, marinate in wealth a little longer and mature, understand business more, setup a business, move to Arizona, build a fence for them - someone has to - and then...build a space rocket to send my coffin to the moon.

Barry hates America. Romney 2012 switch and an RV to kick start a Romney boom and create a Reagan II legacy is how I think it'll pan out.

1992. Pollution was a problem then. As it is 20 years later. Where will we be 20 years from now? If people on the left have their way, in 20 years time, we'll be less reliant on oil as the government has subsidized green tech products, paid for by high taxes. But we won't have solved anything - we will still be polluting. We'll be using sub standard green energy solutions that the private sector has no interest in. If I had my way, we'd pollute our way to prosperity by drilling in the short term and marking down a percentage of those revenues to green tech research. Hopefully in 20 years the technology we will have won't need government subsidies to survive. The internet exploded in ideas and revenue opportunities for business. Green tech needs to be the same. We need to stop thinking our current solar panels are good; they are awful and we need to relax for 10-20 years and get better technology. Then companies will produce them without government help and compete with each other to have better, cleaner tech. What we are doing now is inventing the tape recorder and installing it into every home in the nation, only for it to get crushed by CD's a few years later. Current green tech is pretty bad; that's why it cries like a baby for government handouts.

still waiting

Feels like theatre to appease the masses showing them that heads have rolled and that the financial crisis has reached its end, justice for those who 'caused' it. I suspect these financial crisis themselves are intentionally created so the later high profile excessively media flogged hearings and 'investigations' are part of the puzzle - the end game hopefully (so we can start our next great bubble and finally get jobs!).

lol @ democrats 4 years of fail and you want more

LOL at the arrogant intellectual wannabe's who use pro 'logic' to debunk the RV QUOTE All you have left is your stupid personal attacks “Ya’ll secretly hold Dinar”. How utterly senseless is that? If I held Dinar’s because I got sucked into the “RV” scam I wouldn’t be here debunking it would I? Even the “logic” behind your childish insults is completely back to front… QUOTE Apparently this guy is the smart one with all the charts and stats showing no RV. I feel so sorry for people who think they are so smart but cannot see how stupid they really are. Typically these kids are your A* Star school graduates who have absolutely no common sense and simply spit out what they learned in class to pretend to have a brain. Apparently only people who hold the dinar can be pro dinar and those without MUST debunk it. No other way around it. Talk about ***********. And he even harps on about how his opponent is illogical. Logic is not all its cracked up to be. Try using logic when you think the world is flat and the moon is a god and the volcano - a pissed off god. Logic would never bust you out of that cycle - only thinking outside of the box would.

' ***frank26 recorded CC w/ Delta*** 6/17/2012 Delta puts the LOP to bed...AWESOME!!!!! ' My link Delta starts at 44:40

Turn off MSNBC Obama black unemployment statistics. Research them. You think Romney can do any worse? Oscar the grouch could not do any worse than Obama.

lol negs on OP Romney 2012

We need 4 more years of Obama so we can continue spending money we don't have to keep unemployment really high. It is hard work playing golf and doing this badly. He has done so well at being so bad.

Money even as an 'asset' in your pocket / governments purse is still technically a debt to the Federal Reserve, where it was obtained from. Even our assets are liabilities

Get the tax in place and RV to enrich these people - while taxing them to build infrastructure. 50% is ridiculously steep and something that would make sense in my mind only if the govt. is planning on the Iraqi citizen's purchasing power being significantly superior to before. 50%...You can't even do that in advanced economies. Hope it is an RV. If it is, my money is going into a holiday...a long one...and property before the ever looming next bubble.

Original poster. If this does not happen by 7pm central - how are we to trust you in future? I'll give you a chance until 7pm...but if this does not happen - it just gives me one more person to ignore on here. Break the RV news by all means, but don't come here with BS and expect me to believe you in future.

Romney needs time to campaign against Obama. You can't just compare the existing president - the most powerful guy out there - with the new contender who has not even won the RNC nomination yet. Obama has a platform to campaign any time he wants and set the agenda. Romney has to wait for Ron Paul to get out of the race - Ron can't win. Once that is done and you have 2-3 months of campaigning against each other you will see who is fairing better. Romney will win in 2012 because Obama is awful and everyone knows this. I can't think of one good thing Obama has done. Even killing Osama and drone pillaging are just carrying on what Bush did. Nothing he has proposed has worked. He mocked Bush in the election for taking out a credit card from the Bank of China in the name of our children. He mocks him for spending a lot over 8 years. Then Obama spends MORE than Bush did in 8 years, in 4 years and apparently this is...not 'unpatriotic'. Massive debt spending on his own stupid pet projects like Solyndra that failed miserably - paid for by the taxpayer. No meaningful cuts or budgets passed WHEN DEMOCRATS HAD CONTROL OF THE HOUSE. You hear democrats crying about how the Republicans are so partisan in Washington and oppose everything they want. Even when they had control of the house to pass anything they wanted, they did nothing. No welfare reform. Nothing. Obamacare is unconstitutional and the SC will declare this pretty soon. Obama strategy for 2012-2016: Tax the rich more. Problem: Even if you tax them 100% - you still cannot pay for government. Not even close. Government is SO big and SO costly that we cannot pay for it and he is NOT willing to cut. All he has is 'Romney is an evil rich guy'. Apparently they don't pay enough. Tell you what Obama. Tax the rich 100%. Then pretend it is STILL the rich man's fault as the deficit would still be hundreds of billions in the red every year. Fun fact: The debt interest we pay every year would hire 30,000,000 public school teachers. But apparently the debt is not a problem, taxing the rich guy more so he leaves the country is a priority.

Being genetically more Arab than African American was interesting. But I don't think him not having visited any other countries (other than middle east / africa) is true, he must of visited Aus / China / Japan / Russia / EU / South America as I can remember some of the news stories. South American free trade agreement or something.

Have you seen how pretty womens bathrooms are compared to mens? Women get the full spa treatment - murals on the walls, Persian tapestry on the floor, mirrors everywhere, maybe a butler in the corner offering hot hand towels and massages. Some flowers and fragrances and doves flying around the air. Men's bathroom is essentially a bucket in a box (called a cubicle) and maybe if we are lucky they give us sinks. Here's a question for you. If you were a man in a Burka, are you allowed to go into a women's bathroom? Technically they can't unmask you (perhaps you can say it is against your religion) so if you ever need access to the cleanest, emptiest place to do your business - bring a Burka!