Finally Blue Print for the New Economy. Remove Capitalism and allow Monetarism to Flourish.

Abstract: allowing The Democratic State to compete as a lender with the wealthy reestablishes power in the hands of the democratic mass and removes the distortions of an economy run for the rich allowing it to function correctly.

Without going into too much detail on the problems of Capitalism which I've covered over the last few years here, the key problem is the further rewarding of the already rich.

In Capitalism the wealthy have the opportunity to lend at interest. This might be renting a property or a lawn mower, or it may be direct financial assistance with lending for a mortgage.

The obvious problem with this system is that it makes the wealthy more wealthy and pushed the poor further into poverty. If I cannot afford a house in cash I must either take out a mortgage or rent. In either case the wealthy who have spare money can get an income from their extra money, while the poor who do not have enough must on top of this pay the rich. It is an absurd system and one that has been tolerated by some kind of miracle.

So what is the solution?

You get great insights into systems when they break. In 2008 when wild gambling by the wealthy created such huge unpayable gambling debts that the Western financial system was brought to the point of collapse it was the tax payer (as usual) who was called upon to bail out the wealthy. The tax payer is pivotal to the whole economic system. It is the tax payer paying back debt that creates the AAA rated government gilts and bonds that under-pin the whole financial system. And, with the tax payer always there to bail out the financial system, there is unreasonable trust in its products vastly reducing risk and increasing profits for the wealthy. In short the tax payer is continually exploited by the wealthy to keep their system of returns on capital running. Indeed without the tax payer it would collapse and historically, even with the usual level of support by the tax payer, it required extra-ordinary tax-payer measures at least twice.

And again this year 2020 the capitalist system has folded and the tax-payer once again is bailing the system out. But this time unlike in 2008 where the tax-payer bailed out the rich, the tax payer is bailing themselves out! And this is the key, why do we need Capitalism when the tax-payer can finance themselves? Why do we borrow from the rich and make them richer when we can just borrow from our self?

So why does the tax payer host the world's wealthy? What do they gain from it?

Well some would say it is because of banks that I can afford to buy a house. They kindly offered me a mortgage to buy my dream home. But wait. By offering mortgages and flooding the economy with extra money all the banks do is increase the price of houses because everyone can apply for mortgages and so afford to spend more and so the prices go up. This is a classic example of the "tragedy of the commons". Originally conceived to criticise the Commons (which contrary to the argument operated quite successfully) it is more often used by the wealthy to trap the poor. For instance here by offering lending, the wealthy create a system where you are able to spread pay back over time - a kind of reverse saving. Instead of save while not having and buy in the future, it is buy and have now but pay twice as much in the future. But this has the effect of increasing the prices so you force other people to do the same. Eventually prices rise so far that everyone has to borrow even to get what they could afford before, and all this borrowing from Capitalists means they have the extra burden of paying interest to the rich. How the poor must curse that first person who look a loan from a Capitalist and lead everyone who followed into poverty.

Every way you look at Capitalism it is designed to extract wealth from the poor non-capitalists who are also the majority tax payers (by coincidence?).

So the answer is for the nation of tax-payers to take back control of their finances. We can borrow from ourselves! And in so doing also avoid interest payments to the rich on national debt. Any interest paid on this debt goes to the treasury which is owned by the tax-payer! Indeed taxation could be replaced with just interest payments on treasury debts. But rather than the money going to buy a new palace for some rich aristocrat the money exists in the public fund to be used by government for their elected purpose.

Capitalists would argue that if the tax-payer borrows from them-self then what is to stop them just borrowing and never paying back? Nazi Germany running into hyper inflation being an example. The answer is "real economics" rather than some artificial fear of losing a fake Moody rating like AAA. Consider:

If we just borrowed and never paid it back then we would flood the economy with money and this would create inflation. This is called "money printing" and the result is increased prices so people end up paying the debt back anyway but through a quite natural tax of inflation. No need for messing around with VAT or interest rates. Milton Friedman and Monetarism is actually an economics that works perfectly Without Capitalism!

It means we can just ignore the Central Bank. Everything they say becomes irrelevant. Indeed the whole financial system becomes irrelevant. Companies don't need to float shares to raise money, and no-one needs to visit a bank. They simply need to apply to the treasury for a loan.

The treasury being controlled by the Democratic Politicians as a Public entity has its finances completely under scrutiny and transparently available quite unlike the completely closed, very loosely regulated (and therefore criminal) world of private finances.

The Capitalist argument here is that you need to let the wealthy make the decisions because the politicians will use financial decisions for political purposes. But as argued already Monetarism shows us that true economics will always have the last laugh and if the public only ever vote for governments who spend they will face rising prices.

The corollary of this is anathema to Capitalists: a government who saves will lead to falling prices! Deflation is impossible under capitalism because once prices start to fall people start to wait to shop knowing it will be cheaper in the future. This starts to puts the breaks on the economy and prices spiral down, and this hurts the Rich cos their dividends and interest payments start to fall too. The rich will argue that the problem is loss of jobs, but a we've seen in 2020 there is nothing to stop the treasury just paying salaries to keep the economy going. Prices can't drop forever: there are things people must buy. You can't delay food purchases for ever. So deflation actually trims the economy perfectly to keep it efficient and stop unnecessary production. This in a single step solves the whole problem of ecological destruction through unlimited economic growth.

Now a nation with a good economy who can pay off its debt to itself has the opportunity to lend. This is not something in the spirit of this article but the 3rd world has been in bonded labour to the 1st through interest payments to the global rich elite. And the placement of corrupt officials by the British in countries around the world enabled countries everywhere to become drowned in debt. This is usually blamed on the corrupt leaders but never a mention of the installation and support for that leader by the Common-Wealth and the City of London as the money launderer and broker for the corruption. 90% of the world corrupt money goes through the City of London. The wealthy global elite Capitalists don't just rot the UK they rot the world. But if the tax-payer was to continue this exploitation and lend from the treasury rather than the rich then the UK tax-payer would be the beneficiary of those interest payments. The UK properly managed by Democracy rather than by a Plutocratic tyranny of the wealthy could actually become a Capitalist itself and the people of the UK benefit from their finances rather than being exploited to prop up a corrupt system of aristocracy and wealthy which is orders of magnitude more extreme and opulent than any in history.

In summary. By removing capitalism and allowing direct funding by the democratic treasury of the nation so that the rich neither control nor benefit from the economy then a "true economy" will emerge that works by the exact and proper principles laid out in Monetarism. Capitalism in fact damages and distorts economies and does nothing to help anyone but the rich. That simple irrational error of rewarding the rich has created a system that simply doesn't work. And the tax-payer has been exploited in a desperate attempt to protect the rich and make it look like it works. Allowing the tax-payer to be the primary lender in a nation corrects all the biases in an economy which otherwise distort it to favour the rich at the expense of the poor.