REDUCE THE COST OF MONEY

13 july 2012.

THE PRICE OF MONEY IS TOO HIGH

LIBOR rates aside, the price of money is far too high. It is wildly inflated and overpriced. In 2009 alone Money-Economy mistakes cost £52,000 per household, in addition to the underlying annual costs of about £3,111 per household. How can we make money cost less?

1) Reduce Employees. The Money-System employs about 5% or 1/20^th of the workforce. These include clerks, managers, directors, experts, dealers, wheelers, brokers, insurers, re-insurers, minters, printers, guards, advisers, salesmen and money-police-persons. Everyone wants in on the game. The huge numbers are an anachronistic hangover from days when armies of clerks wrote in thick ledgers with quill pens and did arithmetic in their heads, aided by abacuses. Employ more computers and cut this ludicrously overmanned sector.

2) Reduce Uncertainty and wild fluctuations. Gambling in the Money-Economy by investment banks and individuals costs every household £750 a year; paid for by higher currency, share and commodity prices. Commercial speculation by real buyers and sellers, e.g. chocolate makers buying cocoa bean crops a year ahead for example and hedging the currency, for the Real-Economy, costs the public nothing and is necessary. Cut gambling by insisting on real completion, full-payment and real delivery of all financial contracts – and a minimum holding period of, say, 3 months.

3) Redirect the clever. Far too many of the brightest school, university, industrial and civil-service folk devote themselves to getting into The City or Wall Street or equivalent global Money-Economy centres, for easy pickings; to become tapeworms and parasites. These people are needed to solve serious problems elsewhere. Cut the numbers and cut the pay. Insist that even financial-folk pay full taxes.

4) Reduce the barriers and confusion. Having hundreds of currencies and thousands of issuing banks, with no central controls and so able to shock the world system without warning, is a monstrous cost to households and business. Small cross-border payments of say $5 can cost $25 to transmit via banks. This is bonkers – or bankers. Have a single world currency, the DOLLAREMINSIYENEURO for example and centralise information about all major Balance Sheets daily – to ensure the right global liquidity on a daily basis. It is not rocket science; just bookkeeping; a doddle for Microsoft Excel. Remove the right of non-government banks to create credit and print money – they only use those rights today to gamble and distort. Decide the liquidity for sectors – such as small businesses – and ensure the correct liquidity; fed through specialised sector banks to the customers.

5) Reduce interest rates. Interest and charges now bear little relationship to Base Rates. They are imposed on every business transaction – from mining to smelting to mass-producing to consuming. Consumers pay extraordinarily high rates on credit cards. An average product takes about 20 stages through the making and consuming cycle. At every stage, the re-financing adds costs. Costs of a typical new house for example include up to 25% of bank finance. Then the 20 year mortgage kicks in. At the evil end of the scale, loan sharks can now legally charge 4,000% (four thousand percent) a year, in the USA and UK. Such “lenders” should be guillotined. With Base Rates generally under 1% - all loan rates should be capped at 5% per annum. This will reduce loan costs, liberate those trapped in debt, eliminate bad debts and reduce the majority of goods and services prices by about 25% as all the 20 stages costs are reduced. Start to Finish finance for particular goods should be brought in at low rates by the business-chains.

6) Rein in the insane. Our new fast communicating global village economy has been hi-jacked by gambling lunatics who are habitual, addictive gamblers; alongside irresponsible villains who clamber into boardrooms like slavering kids in sweetshops – empty the safes into their own pockets – and siphon their spoils tax free to tax-havens. They indulge in false accounting, misrepresentation, fraudulent conspiracies, cartels, monopolies and socially destructive politics – to maintain their positions and feed their insatiable gluttony. They cost the world a mint. Put them in prison and repatriate all the tax-haven funds; that the OECD tell us are about $18 trillion – enough to correct all world deficits and to pay for installing the new system recommended here.

Then we can get on with enlarging and sharing the fruits of the Real-Economy.

Let me know if I have missed out any useful measures.  

QED