Sun on Sunday – the Chicago Plan

The print article is available (here)… Here’s a bailout worth considering…. f”34k the banks, and start a new one. This is not a novel idea, it’s called capitalism, one of the key things people bang on about is how ‘capitalism has failed’, it hasn’t, politicians have failed by putting national resources behind institutions that scarce warrant the unending support they have received.

That we are starting to figure this out only AFTER we have spent all the money, so most of this is about spilt milk, but not all of the milk has been spilt, just this week we blew €600,000,000 on defunct and toxic Anglo (now ‘IBRC’) and on the 1st of October we’ll be blowing €1,000,000,000 on AIB.

And the same morons who are happy to pay this out wanted to cut personal assistance hours for the people with disabilities? That meagre €10.8 million cut (the government call it ‘savings’ but it isn’t saving the people affected, it’s more like €10.8 million of ‘hurtings’) is a mere 0.068% of what we have paid to the banks this year! NOT EVEN 1%! So the state are willing to put people who are already disadvantaged physically or mentally on the chopping board when their costs are not even 1% of what we have already paid to banks?

That doesn’t stop the vultures from hovering around disability though, instead they are going to hit travel costs in the disability sector, thus shifting their modus operandi from disgusting to merely dishonourable.

Back on track to a new bank. This idea isn’t new, before Labour sold their souls to Fine Gael they had a press meeting where Eamon Gilmore stood up in Boswell’s Hotel and proudly proclaimed the need for a National Investment Bank, that would be started to aid national recovery. Have Labour delivered? Nope… nor will they.

In the UK Chancellor George Osborne is calling for a new ‘government backed bank’ for small businesses and to prop up the wider economy, this was to bring together the ‘alphabet soup of schemes’ already in place, unlike here they actually have an alphabet to bring together, we only have a few vowels and consonants and depending on how you arrange them they spell ‘$h1te’.

Instead of €64 billion to the banks we could have opted to let them hang and spend €20 billion on a new bank, the fallacy being that if we had let banks go down it would have triggered a European crisis, news flash – we’ve had one for several years now irrespective of this.

Why has the UK and USA gotten new banks while we spend more per head of population saving banks and yet have NO new banks? What we have done is narrow the field down to two ‘pillar banks’, one cost us over €20,000,000,000 (AIB) the other one meant we overpaid for our investment and they now boast the highest mortgage rates in the nation (BOI/ICS). What Labour should do before they become the ‘Continuity Green Party’ (in terms of selling out every good idea they ever had) is look for that bank to open.

The new bank could become like the State Bank of North Dakota (it’s unique even in the USA) which is a bank that has always made money since 1919, the profits could be spent making roads or other things that serve the nation.

North Dakota has low unemployment, some people say it is due to the state bank, what the world famous economists Reinhart & Roghoff who are leading experts on the effects of debt and financial bubbles have shown is that banking crises have a long term drag on growth and are often linked with high unemployment (just as a boom in credit can push unemployment down).

The IMF recently released a new paper called ‘The Chicago Plan Revisited’, the idea was to create banks that had 100% reserves unlike our banks now that often have actual cash of only 10% of what they are liable for. You see, the thing we don’t talk about often is that money is debt, banks create money when they create debt, that is a key problem with paper money. The Chicago Plan would have done away with banks creating money out of thin air by creating debts.

Seems we are going to be getting a ‘Chicago Plan’ of our own this year, but it won’t be drawn up by economists, instead it will be drawn up by the financial equivalent of old Al ‘Scarface’ Capone and it will be far from giving the people of Ireland what is best for them.

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