Thanks for disseminating Raymond Torres well writt...

2010-03-11T12:41:19.128+01:00

Thanks for disseminating Raymond Torres well written and well intentioned article. He very rightly points out the need to address the root problems, in particular i) inadequate and incomplete regulation, and ii) inappropriate incentives for risk-taking and pay of bank executives and traders

According to me - the root problem is the monetary system in the world today where control over national money supply – in particular the control over dollar – the reserve currency of the world – is in the hands of private banks. Under the current monetary system, money creation and issue of currency is a function of central banks, rather than a sovereign right and function of elected governments. If government can issue bonds (a promise to pay against which it borrows money from central banks), why can the sovereign government not print and issue its currency? Why does it have to borrow on which interest has to be paid to private interests? International trade union movement needs to look into this aspect.

(for details, refer to Web of Debt by Ellen Brown (www.webofdebt.com)

This book - while it focuses on US dollar and American system - is just as relevant for Europe or other countries where by increasingly it is the autonomous central banks that control money. It clarifies and points out the following:
Under the current system money (dollars) comes into existence through debt and that debt is used by the banks as deposits/reserves to multiply currency many times over (through fractional reserve system that banks follow). It needs to be noted that the money that banks lend is not recycled from pre-existing deposits. It is new money, which did not exist until it was lent (through mere book entry into the account). Banks create the principal but not the interest to service their loans. To find the interest, new loans must continually be taken out, expanding the money supply, inflating prices — and robbing people of the value of their money. Inflation is not caused by the governments irresponsibly printing currency but it is caused by banks expanding the money supply with loans. It is this private banking cartel that causes inflation, depressions and booms so as to buy up assets at throw away prices. And the current crisis (depression) is yet another example of how private money cartels contract money supply to cause depression so as to transfer wealth once again (as during the depression of 1930s).

If power to create nations' currency was taken away from the Banks and was restored back to the government, the money creation will become debt free process. The Banks should be re-regulated so that they do what they were originally supposed to do – take deposits and give out loans (rather than multiply currency in the economy through abuse of fractional reserve banking system and use that to manipulate financial markets). If monetary system is reformed, then there would be enough resources to meet the needs of the economy, including to address climate change challenges. There would be no need to do what Greece and many other developing countries are forced to do by IMF and other money lenders (make people pay, while banks continue to fleece the country thru debts)

arun kumar

Comments on Global Labour Column: Global Financial Crisis 2.0

Thanks for disseminating Raymond Torres well writt...