US capitalism is bankrupt. Let' s change the terms of the debate. Call for nationalization of the banks.
To support capitalism's infrastructure, the United States borrows much money and taxes those citizens who have jobs.
The infrastructure that upholds capitalism throughout the world consists of the US military and global banks. US capitalism in its greed has sent most US technology and jobs outside the country.
Wall Street, protected by US military support and US support of global banks, prospers from these investments in other countries. The US Main Street, however, with fewer jobs and government support (healthcare, education, transportation, research, etc.) is in decline. There are now fewer US jobs to pay for military spending and government debt service.
The result is that the United States has fewer jobs, a large military budget, huge debt service and little money for greater domestic needs. There is, however, huge wealth for those who own global stocks.
The only reason countries still lend to the United States is that its defends capitalism with its huge military and global banks. Eventually the United States will not be able to support its debt and thus its military and global banks.
The only solution to this downward spiral is the the monetizing of the banks and the national debt by nationalizing the banks. We need a global organization to regulate internatioal balances of payment fairly using a global currency. We need a global organization to assume the role of protecting and regulating capitalism.
Banks must not be allowed to create money. Today when they create loans they create money and have a liability for the money they created. When they fail, the government must cover this liability. The bank is risking little of its own money. When banks have bad loans it greatly impacts their capability to create money, so money is leveraged out of the system and credit becomes scarce. If banks are not allowed to create money, they must use only their investors' real money, which the government does not need to insure. The banks, using their own money, would be more prudent and their bad loans would not remove any money from the system.
By nationalizing and monetizing the banks, created money becomes real money belonging to the government and this money stays in the system until removed by the government.
By monetizing the national debt, the national debt becomes real money and interest is no longer owed.
Once the government is completely in charge of the money supply, it must regulate it so that no inflation or deflation occurs.
This new government responsibility demands a very well informed citizenry. The government must have a large presence in the media to keep the public well informed of all the trade-offs involved. The government must also create avenues for policy input on both a global and local level.
Money today is simply a medium of exchange. It is just a float waiting to be used for the next exchange. The government should own and regulate this float.
Redwood City, CA
Feb 3 2010 - 1:21pm