The Wolfson Prize, I win!
A Lord Wolfson has just created a one off prize for the best proposal to manage the exit of the euro.
This morning I submitted my, no doubt winning, contribution:
Dear Lord Wolfson,
Many thanks for your invite to devise a clear cut plan to manage the transition of the post euro financial system. Most timely, and most needed.
Of course the dollar is toast also, but rest assured: the simple measures proposed below will take care of that problem also.
I was rather surprised to see you looking at the academic world for answers. Not only were these honorable professors deeply involved in the development of the euro, they also seemed very surprised by the advent of the credit crunch. They also seem to express continuing shock at the rather dismal figures the global economy has been producing the last three years.
In my experience academics are good for one thing: producing illegible, irrelevant, expensive and massive papers. To be honest, I would not rely too much on them, they are as clueless and obsolete as bankers and politicians are.
Now, about the 250.000: you keep that, you probably need it more than I do. It’s more important that things get fixed.
Thanks much and all the best with your efforts!
In order to have an orderly post euro (and post dollar) transition, we propose these measures.
1. All banks will be nationalized. They needed more than 20 trillion dollars in handouts and easy credit from Central Banks and Governments and are still all under water. Shareholders will not be reimbursed, their property is worthless.
A full investigation into the activities of these banks is ordered. Senior staff and management will be prosecuted where necessary.
2. All interest payments by and to these banks will be frozen. Since banks create the money they lend out through fractional reserve banking, they don’t need interest payments. An average mortgage of 200.000 costs up to 300.000 in interest payments during the thirty years the loan is payed off. If this money represents the ‘costs’ of the bank for providing the loan, these organizations must be among the most inefficient known to man.
3. All financial products, including derivatives, will be frozen. Within a year there will be a final decision on what to do with them, but a minimum of 95% of them will be canceled. There will be no reimbursements. Where necessary speculators will be burnt.
4. All real debts, mortgages, business loans, personal credit, the national debt, will be maintained and repayment according to contract, but excluding interest, is ordered in full. The real costs of managing these debts will be passed on to the debtor. Odious debts will be forgiven.
5. All Central Banks will be closed. Where necessary, their operations will be taken over by independent commissions and within a year they will be terminated.
6. All income tax will be abolished. The State will finance itself by taxing wealth and consumption of non essential goods and services.
7. All Banking families will immediately give full disclosure on their asset positions and records. Their activities will be investigated and when necessary they will be prosecuted. All their assets will be disowned.
All these assets will be centralized in a Trust, in which every citizen of the world has one share and one vote. These shares will not be tradable for the first year. We will provide all with the means and information necessary to exercise the rights associated with this share and vote. Within a year a number of scenarios for the liquidation of this trust will be proposed. A referendum will take place to decide which plan is best.
8. A legal framework for a free market of currencies is ordered within a year. This framework will be concise but will make clear that:
a. Governments will accept payment of taxes in these currencies when there turnover is sufficient for Government to spend the income of taxes in a useful manner.
b. Manipulation of these currencies, either by insiders or outsiders will be severely punished.
c. All currencies will be given free access, metal- or credit based or debt free. For Profit, or not for profit.
d. The prohibition of fractional reserve banking, to avoid insolvency of credit facilities. Credit will be created on a mutual credit basis.
The economy needs a free market for currencies, so that the most efficient will thrive.
9. A full investigation into the manipulation of the gold market is ordered. The culprits will be punished, fines will exceed the profits obtained with these frauds.
10. We the people take responsibility for having allowed this financial system to happen. The useful idiots within the system will therefore be treated with leniency, if they cooperate in the full disclosure of these operations.
11. A concise but comprehensive education program on the fundamentals of money will provided to all. We will again never allow ignorance to be exploited again.
12. All destruction of evidence as of now will be severely punished.
With these measures we will achieve the following:
– An immediate end of the wealth transfer from the many to the few through interest.
– An immediate end to poverty all over the world.
– A massive decentralization of economic power to the peoples of the world.
– An immediate end to the depression.
– An immediate end to the most destabilizing and warmongering class: the plutocracy.
– A solid and stable financial system, costing no more than 1% of GDP, providing the economy with the liquidity it needs.