Latest Climate Genius Financial Proposal: Government Control of All Bank Deposits


Guest essay by Eric Worrall

The Guardian has promoted an idea for a new climate friendly financial system, to permanently halt economic growth.

To deal with climate change we need a new financial system

Jason Hickel

Abolishing debt-based currency isn’t a new idea, but it could hold the secret to ending our economies’ environmentally damaging addiction to growth.

When it comes to global warming, we know that the real problem is not just fossil fuels – it is the logic of endless growth that is built into our economic system. If we don’t keep the global economy growing by at least 3% per year, it plunges into crisis. That means we have to double the size of the economy every 20 years, just to stay afloat. It doesn’t take much to realise that this imperative for exponential growth makes little sense given the limits of our finite planet.

The question is what to do about it. How can we redesign the global economy to bring it in line with the principles of ecology? The most obvious answer is to stop using GDP to measure economic progress and replace it with a more thoughtful measure – one that accounts for the ecological and social impact of economic activity. Prominent economists like Nobel Prize winner Joseph Stieglitz have been calling for such changes for years and it’s time we listened.

One way to relieve the pressure for endless growth might be to cancel some of the debt – a kind of debt jubilee. But this would only provide a short-term fix; it wouldn’t get to the real root of the problem: that the global economic system runs on money that is itself debt.

The responsibility for money creation would be placed with an independent agency that – unlike our banks – would be democratic, accountable, and transparent, so money would become a truly public good. Commercial banks would still be able to lend money at interest, but they would have to back it dollar for dollar with their own reserves. In other words, there would be a 100% reserve requirement.

This is not a fringe proposal. It has been around since at least the 1930s, when a group of economists in Chicago proposed it as a way of curbing the reckless lending that led to the Great Depression. The Chicago Plan, as it was called, made headlines again in 2012 when progressive IMF economists put it forward as a strategy for preventing the global financial crisis from recurring. They pointed out that such a system would dramatically reduce both public and private debt and make the world economy more stable.

Read more:

I haven’t been able to locate the original text of the Chicago Plan memorandum, but the IMF revival of the Chicago plan is available here.

The main thrust of the plan appears to be to nationalise all personal retail bank deposits. When proponents of the plan talk about forcing banks holding a “100% reserve”, they don’t just mean physical cash – government bonds also count as cash. When you deposit cash into a bank under this scheme, you will effectively be buying government bonds, lending the money straight to the government. Other than holding physical cash, lending to the government would be the only option for earning an income from bank deposits.

Would this plan stop economic growth? It would certainly cause a lot of harm. Replacing private lending with government lending schemes has been tested to destruction on countless occasions. It turns out civil servants who don’t face personal consequences if the loan goes bad tend to do a poor job of checking the creditworthiness of applicants. Printing new cash to cover losses from poor centralised banking decisions is not a recipe for prosperity.

I suspect what this plan would do, if implemented, is accelerate the ongoing growth of the shadow banking sector.

Governments are rapidly losing control of the global currency system. Digital currencies like Bitcoin exist because their proponents want to liberate currency from the control of governments. While almost untraceable Bitcoin is undoubtably the currency of choice for scammers, terrorists, drug traffickers, and other assorted filth, it is also the currency of people who want to circumvent unfair restrictions on money.

Thanks to Bitcoin and similar digital currencies, even communist China can’t control currency movements anymore. One of the main reasons the value of Bitcoin has surged in recent years, is mainland businesses discovered they could use Bitcoin transactions to circumvent Chinese currency controls, to shift their profits out of China.

There is nothing new or mysterious about how Bitcoin and other digital currencies work. Bitcoins are simply the latest incarnation of the long history of informal value transfer systems, a tradition as old as tax collection.

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ken h
November 5, 2016 3:26 pm

The powers that be want an unelected one world government and cash to be outlawed. They also want open borders.
What can possibly go wrong??

Gunga din
Reply to  ken h
November 5, 2016 3:41 pm

Noble cause corruption. Dangle power and control (in the name of “the cause”) in front of people and “the cream” isn’t what rises to the top.

Reply to  Gunga din
November 5, 2016 6:28 pm

Turds float, too.

Reply to  Gunga din
November 5, 2016 11:03 pm

Eric Worrall:

It turns out civil servants who don’t face personal consequences if the loan goes bad tend to do a poor job of checking the creditworthiness of applicants.

This, of course, is totally unlike bankers who don’t face personal consequences if the loan goes bad who always …. oh wait, what was it that brought down Layman Bros. and nearly caused the whole international banking system to collapse and needed the US govt ( ie tax payers ) to throw one TRILLION DOLLARS into an anonymous black whole?
Even the most ultra-liberal economists of the Chicago school who were behind changes in the Regan era no longer think pure, unregulated free-market capitalism is a good idea since they have seen where it leads.
It seems that our Eric is a bit behind the curve with his black / white logic.
All the major banks that went under in the UK and needed a similar per capita state bale out using tax payer funded national debt were all privately owned commercial banks.
Nice ultra-liberal rant Eric but it just does not fit the facts.

Nigel S
Reply to  Gunga din
November 6, 2016 2:24 am

Lloyds Bank was the sixth safest bank in the world according to ‘Global Finance’ magazine on 4 September 2008 and then Gordon Brown told them he had a plan … (They bought HBOS, the Chairman got a peerage, my mother’s shares became worthless and her dividend income zero.)

Reply to  Gunga din
November 6, 2016 12:52 pm

Not disagreeing, but, in this era of sensitive souls/humans, may I politely venture that your
“black / white logic” may be a little better received as – at – ‘0/1 logic’?
Auto – a blunt seaman.

Reply to  Gunga din
November 7, 2016 7:28 am

Greg, I love the way socialists go out of their way to not understand how the private sector works.
Yes, private sector bankers sometimes make mistakes. And when they do, they go out of business, as Leyman et. al. should have done, except your socialists decided to bail them out.

Reply to  ken h
November 6, 2016 8:04 am

What can possibly go wrong??………
There’s not much left

R. Shearer
Reply to  Latitude
November 6, 2016 8:18 am

Insane, that man is.

Reply to  Latitude
November 6, 2016 9:08 am

Nope….they are perfectly sane…..they are getting away with it
…we are the ones that are insane….sitting back and letting them get away with it

Reply to  Latitude
November 7, 2016 7:30 am

Latitude, the problem is that we have reached the point where a majority of people are receiving money from the government while a minority is paying for it all.
This will only get worse until the final collapse occurs.

Reply to  MarkW
November 7, 2016 11:29 am

And there is nothing these arm-chair economists can do about it. Thankfully, I’m old enough that: “At this point, what does it matter?”

Reply to  MarkW
November 7, 2016 11:31 am

“…. what difference does it make?”

george e. smith
Reply to  ken h
November 6, 2016 12:54 pm

They don’t have the guts to say up front their aim is to terminate human population growth, and maybe a good part of the humans; with of course them being among the survivors.
Seems to me that humans like other animals tend to adjust their birth rates according to the resources available to them and their life cycles.
The more primitive a society is, the larger the number of offspring they seem to need to keep their system going. Once they get past the continual starvation threat they can then evolve other activities, and technology can maintain the essentials for survival with fewer people involved.
That allows time to develop more things in other ways.
Starving a culture of readily available energy is not a formula for success.
Money has a nasty habit of inhibiting politicians from giving away the store to maintain themselves in power. Without the need for money; the altitude of government largesse, would have no limits.

george e. smith
Reply to  ken h
November 6, 2016 5:37 pm

“””””….. curbing the reckless lending that led to the Great Depression. …..”””””
So you replace reckless lending with the reckless printing like we have now.
We could always go back to barter, where you exchange an item that has a real value, for another item that has a real value.
You can still get inflation even in barter, because different persons will place a different valuation on an item, depending on their own needs, or desires. Somebody who just has to own the Mona Lisa will offer almost anything he has to own it.
I remember eons ago, a chap started with a shiny new 4 inch nail, and traded it for something like a match stick (unused). He kept on his swapping, until he had finally obtained a motor scooter; at the time his story was published.
He said he was holding out for a house.
Obama has printed more money than all of the Presidents who preceded him. And George W Bush gave him the license to do it.

November 5, 2016 3:29 pm

“The responsibility for money creation would be placed with an independent agency that – unlike our banks – would be democratic, accountable, and transparent”
You mean like Hillary, Bill and Obama ?? No thanks….

george e. smith
Reply to  Marcus
November 6, 2016 12:59 pm

What you mean is everything should be controlled by people who have no skin in the game. Those would be perfectly unbiased decision makers.
Spare me the curse of the un-biased.

Reply to  Marcus
November 7, 2016 7:31 am

Banks do not create money. Never have. Fractional reserve deposits just allow the banks to lend out some of the money that you deposit in them.

Bloke down the pub
November 5, 2016 3:33 pm

To be fair, the Gruaniad has consistently supported any political party which was doing it’s best to halt economic growth.

Reply to  Bloke down the pub
November 5, 2016 11:10 pm

No, the Guardian has always supported the Labour Party, irrespective of policy, even when is it was practising Thatcherite economic policies under Blair and Brown and selling off the nation’s gold reserve at rock bottom prices.
The Guardian is the mouth piece of the Parliamentary Labour Party in the UK. That is different from the Labour Party itself, consisting of the paying signed up members.

Reply to  Greg
November 6, 2016 12:58 pm

“No, the Guardian has always supported the Labour Party, irrespective of policy, even when is it was practising Thatcherite economic policies under Blair and Brown and selling off the nation’s gold reserve at rock bottom prices. ”
And how!
Not merely flogging the gold at rock bottom – but HM Government having announced – in advance – that that was what Brown’s Treasury would do.
And poor hapless economically illiterate Blair let them get on and impoverish the UK.
That lot should never again be trusted to play ‘Snap’ for farthings . . . . .
Not even if some of the money is their own!

Reply to  Greg
November 7, 2016 7:33 am

Despite what they claim, and despite what the myrmidons believe, socialism has always been anti-growth.

Walter Sobchak
November 5, 2016 3:39 pm

“When you deposit cash into a bank under this scheme, you will effectively be buying government bonds, lending the money straight to the government.”
That is pretty much the way it is right now. And we have the economic growth that goes withit.
As for bitcoin. Like all existing government money, its value derives from the promises of the people behind it. Only in the case of bitcoin, they are anonymous. Why I should trust them is not apparent to me.
Remember, the the era of low growth started when the US government severed the l;ast link between the dollar and gold.
Like I said, who do you trust?

Reply to  Walter Sobchak
November 5, 2016 10:10 pm

I certainly don’t trust an unaccountable government bureaucracy, that’s for sure. Corruption simply grows over time when government agencies are not held accountable. The American VA (Veteran’s Administration) is a good example of that. I read about one employee who broke all kinds of rules, destroyed paperwork that resulted in the deaths of veterans who couldn’t get timely care, and even called the police on her boss for harassment when he asked her to do some work. When the VA scandal broke, she was finally fired from her job. Weeks later, she was rehired by the VA in Phoenix, Arizona. When her past was brought to the attention of the Phoenix VA, they claimed there was nothing they could do because union rules required them to give top priority to union members over other applicants, and even over veterans, applying for open positions.
Corruption in government just grows over time because no one is really held accountable anymore, and there’s no one to stand up for the taxpayer. The idea that private sector employees and management are evil while government workers and management are angels is a complete myth. High level government administrators often enjoy a revolving door between large private corporations like Goldman Sachs and top government jobs. They don’t suddenly become saints when they leave private employment to come to work for the government. So why should we trust them more once they put on their government hats?

Reply to  Walter Sobchak
November 5, 2016 11:18 pm

Remember, the the era of low growth started when the US government severed the l;ast link between the dollar and gold.

And that was when it all became a massive Ponzi scheme. Like all Ponzi schemes they eventually collapse that is why such schemes are illegal in most countries ( with a nice little exception for the banks ).
The system has been “stabilised” for a few years but it is still a giant Ponzi on the point of collapse and when that happens we will all start looking like Greece , or worse, total anarchy and civil war.

Whatever the merits of this scheme we’d better work out a better way that what we have BEFORE the shit hits the fan.

Solomon Green
Reply to  Greg
November 6, 2016 6:24 am

“All the major banks that went under in the UK and needed a similar per capita state bale out using tax payer funded national debt were all privately owned commercial banks.”
While much of what Greg says is true. This is not quite the whole story.
Two major banks went under. Both were Scottish, The Royal Bank of Scotland and the Bank of Scotland, which had some years earlier been merged with Halifax (a former building society) to form HBOS.
Because the Labour (Scottish) Prime Minister and Chancellor of the Exchequer were worried about losing the party’s support in Scotland, the government bribed Lloyds Bank to take over HBOS. Until then Lloyds would not have required recapitalisation by the government but could have relied on private Funding, as did its less well-capitalised rivals, Barclays and HSBC.
Incidentally, the sub-prime mortgage problems which brought down these banks, together with Merrill Lynch, Lehmans and other US banks originated as by-products of legislation initiated by Carter and enforced by Clinton, both with good intentions but oblivious to the foreseeable consequences.

Reply to  Greg
November 6, 2016 10:30 am

Greg –
I seem to recall that Mrs. Thatcher’s think tank once mooted a proposal to allow all banks to issue their own currency. This is not too different to primitive arrangements which emerged at the dawn of capitalism. The idea was never going anywhere. Far too many vested interests, the biggest of all being the Government, which likes to promise folk all kinds of goodies in return for their votes, and then has to try to deliver something towards those promises. Competing currencies would make this a bit more difficult, and QE positively hazardous.
The idea has more merit than might be immediately obvious, though. Honest currencies would gain value and attract solid custom, debased ones would actually fail, with consequences.The government couldn’t just go on increasing the money supply which, let’s face it, in the long term robs savers and rewards the profligate.There is no such thing as inflation, except that which the Government creates. Everything else is just a price change.

george e. smith
Reply to  Greg
November 6, 2016 6:32 pm

Well inflation means “inflation of the currency” (of money).
If you bring new money into an economy; but you don’t increase the productivity of that economy to provide more goods and services, then the prices asked for the existing goods and services will rise to absorb the new money.
If a new cowboy arrives in town with a load of gold, and the town has only a limited supply of hay. the new money can buy up the available hay which drives up the price of hay. Maybe some entrepreneur will get bust and grow some more hay.
When the Spanish pirates looted the riches of meso-America, and took all that gold and silver and gems back to Europe, that provided the Europeans with more money than there were goods and services, so Europe experienced a period of inflation where the CPI went up by a factor of six during the 1500s (Elizabethan times).
What the English Pirates like Frank Drake and his pals, took from the Spanish pirates got grabbed by Queen Elizabeth and throw into the Royal coffers instead, so England did not experience that first period of sustained inflation in history. The CPI returned to a level value at the new 6x level up until the USA went off the gold standard, and the same inflation spiral took off again and has been going ever since.
Currency, unsupported by products and services of value, causes inflation.

Roger Graves
Reply to  Walter Sobchak
November 6, 2016 8:44 am

“As for bitcoin. Like all existing government money, its value derives from the promises of the people behind it. Only in the case of bitcoin, they are anonymous. Why I should trust them is not apparent to me.”
The whole point about bitcoin and similar cryptocurrencies is that there isn’t anyone behind them, anonymous or otherwise. The records of every transaction that has ever occurred in the bitcoin system are freely available. Trust in bitcoin results from the fact that millions of independent and otherwise unconnected people around the globe are prepared to accept it as a medium of exchange. Moreover, it is a medium of exchange that is practically impervious to private or public theft, the latter category including any form of government control. If correctly designed, as bitcoin is, it is also inflation-proof. Quite the reverse in fact; the value of an individual bitcoin only goes up as more and more people use the system.
What defines the value of any medium of exchange is simply that large numbers of people are prepared to accept it as a medium of exchange. If everyone in the world woke up tomorrow and said to themselves “you know, I’m not going to accept the US dollar as a medium of exchange any more” then the US dollar would cease to have any value other than that of the paper it was printed on.
I think we are going to see more and more financial transactions being conducted via one form or other of cryptocurrency, for the very reason that it is impervious to, potentially corrupt, government control.

george e. smith
Reply to  Walter Sobchak
November 6, 2016 5:47 pm

The government, being a non profit making enterprise of course has no possible way of earning the money to pay off its debts (bonds) let alone any interest on them.
So it ultimately must steal from someone else (taxpayers) to pay those debts.
The US Constitution authorizes the Congress to raise taxes to pay the national debts, and to pay for the common defense ( and welfare) of THE UNITED STATES (not tom, dick and harry).
But it doesn’t say much about what they can spend other than how the bills are paid .
So that creates a loophole that you can drive a Mack truck through. The government can spend anything it wants to write an appropriation for, and that puts it onto the National debt which now they can raise taxes to pay.
So unfortunately Article I, section 8 Clause I does not limit the Congress ability to tax and spend, as it intended.

Non Nomen
Reply to  Walter Sobchak
November 7, 2016 1:14 am

That scheme is flawed from the beginning:

government bonds also count as cash

Hands off these Government-issued bonds, the holders of Argentinian bonds can tell you why.

Reply to  Non Nomen
November 7, 2016 7:40 am

Close but not 100%.
Anything that is AAA rated is considered good as cash when it comes to banks calculating there reserves.\
Investments that are less than AAA are devalued based on how far from AAA they are.
It doesn’t mean that Treasuries are cash, it just means that whether a bank has $10million in cash or $10million in Treasuries, they both count the same for accounting purposes.
One of the big worries is that if the US government ever loses it’s AAA rating, then the billions now being held by banks will have to be discounted, and the banks will have to stop lending until they can rebuild the total accounting value of their reserves.

November 5, 2016 3:40 pm

There is a nihilist thread in both the green movement and socialism, and yes, I know, they overlap. Proposing something unworkable and destructive satisfies their sense that society is inherently unsatisfactory, and deserves to be destroyed.
While they claim to want a just society, they hate the current situation even more. I think that is why doom-mongers like Paul Ehrlich survive making predictions of imminent catastrophe, as there is a market that at some level wants his claims to come to pass.
As to the proposal itself, didn’t Pol Pot try something similar?

John Harmsworth
Reply to  Tom Halla
November 5, 2016 4:09 pm

I believe you have hit the existential nail on the head for the eco-Socialists. I further believe that this mindset derives from their inability to make personal progress in the modern world. They nearly all come from the humanities and feel alienated from the forces of money and technology that are such a massive force in the world. Really, they want a simpler world where everyone eats organically and we all share and omelettes are made without breaking eggs. They’re just confused and scared….and these notions are very dangerous to the billions who just don’t have enough.

Reply to  John Harmsworth
November 6, 2016 5:57 pm

They’re just confused and scared …

No, you said it right the first time, “we all share…”
They see an imperfect World of bell curves and random natural selection through their simplistic and reductionist view, as the endless challenge of re-distribution.

Reply to  John Harmsworth
November 7, 2016 7:42 am

That they aren’t rich, despite the fact that they view themselves as virtuous hard working people justifies to them, their belief that the system itself is corrupt.
After all, if capitalism values engineers more highly than it values eco-warriors like themselves, that’s just proof that capitalism is broken and needs to be replaced.

Non Nomen
Reply to  Tom Halla
November 7, 2016 1:21 am

Seems to me a rehash of certain ideas of Gottfried Feder, who was a proponent of similar ideas. He helped the National-Socialists aka Nazis to come to power.

November 5, 2016 3:44 pm

I like the idea of halting “economic growth”, if that implies halting population growth. I’m not at all worried about climate change though.

D.J. Hawkins
Reply to  GregS
November 5, 2016 4:38 pm

Economic growth does not encourage population growth. Quite the contrary. The lowest birth rates are in the wealthiest nations (per capita basis). Low birth rates are the outcome of rising wealth, not the driver. Even according to the UN we are currently on course to reach a peak population of 11 billion or so somewhere between 2030 and 2050.

Reply to  D.J. Hawkins
November 6, 2016 7:59 am

Based on the UN’s climate predictions, I’m skeptical of any of their predictions.

D.J. Hawkins
Reply to  D.J. Hawkins
November 6, 2016 8:40 am

Their climate predictions serve to advance their political agenda. Their population predictions actually run counter to their interests so I find them more plausible. YMMV.

Reply to  D.J. Hawkins
November 7, 2016 7:47 am

The UN’s population estimates serve to support the UN’s drive to curb human population.
Regardless, there are several fatal flaws built into the UN’s population models.
The two biggest are a belief that any country in which the population growth rate is falling, that rate will stabilize when the rate reaches the replacement level ~2.1 live births per woman.
The second is a belief that any country currently below replacement level will quickly return to that level.
In the real world, neither of these scenarios has ever played out.
That’s why every 10 years when they issue a new forecast, the new date for peak human is earlier and lower than it was 10 years previous.

Reply to  D.J. Hawkins
November 7, 2016 7:53 am

If the population starts to fall, then each person can be responsible for more CO2 without the total amount of CO2 being emitted going up. Crisis delayed if not outright averted. All without government control of energy.
If the population starts to fall, then according to the fixed pie model that most socialists use, there are more resources available for everyone, and less need for government control of the economy to ensure a “fair” division.
I can’t see how pushing a belief that the population is growing faster than it is does anything but help the UN in all of it’s goals.

george e. smith
Reply to  GregS
November 6, 2016 5:49 pm

You go first Greg.

Reply to  GregS
November 7, 2016 7:44 am

Why do you hate people. There is no rational reason why anyone would want to halt population growth?
PS: Even the UN believes the world’s population will top out in another 30 years or so and then start falling.
PPS: The UN as always is wrong, peak population is only 15 to 20 years off.

Anne Ominous
November 5, 2016 3:55 pm

Unless I am mistaken, Eric, you have grossly mis-read the purpose of the Chicago plan.
Unless this “remake” specifically proposes to “nationalize” deposits, you have simply misinterpreted.
The essence of the Chicago plan was to eliminate Fractional Reserve banking. That is, to require banks to only invest money that is actually in their possession… not the “creation” of artificial funds that don’t actually exist, which is the current practice.
Currently banks only need to hold a fraction of their liabilities in actual assets. What that means in practice is: most of the money on the books exists only on the books… and nowhere else.
Let me give you an example. Say the Federally required reserve is 10%. (In practice it’s 0%-10%, depending on several factors.)
You deposit $1000 in the bank. Since the reserve is only required to be 10%, the bank can now loan or otherwise invest $900 of that money. It only has to keep $100 in its vaults.
So the bank loans that $900 to person X. Person X takes that money, and deposits it in another bank. (So now the original $1000 has become $1900 according to the books… one person “has” $1000 in the bank, and X “has” $900 in a different bank.)
So the second bank keeps $90 in the vault, and loans $810 to person Y… who deposits that in a third bank. The “money” supply has now grown to $1900 + $810 = $2710.
Bank 3 keeps $81 in the vault and loans $729 to person Z. And so on.
Now, to people who are not familiar with Fractional Reserve banking, this all sounds like a bunch of BS. But I can assure you it is true. By the time all is said and done, that $1000 has “created” many thousands of dollars… on the books.
Those dollars do not exist in physical form. They have been “created” from nothing. And, if there were a run on the banks, by people wanting “their money” back, it can disappear overnight. Faster than it was created.
Regardless of what this “remake” of the plan proposes, the original Chicago plan did not “nationalize” anything. It simply eliminated Fractional Reserve banking, and would require banks to back up any of their investments with real assets, rather than a fraction of those assets. In other words, money in the economy would no longer be “created” out of thin air, but then nor would it be able to disappear overnight… as it did for example in 2008.
Which brings up: the stock market currently “creates money” if a fairly similar way. It isn’t exactly the same but the basic principle works more-or-less the same way.
All this artificially “created” money leads to bubbles and instability. Especially when markets get unduly inflated due to bad fiscal policies. Thus, events like the 2008 crash in which lots of “money” simply vanished.
Make no mistake: a large part of this is due simply because Fractional Reserve banking, and analogous system within the stock market, and the Federal Reserve all exist. At all.
Nobody — nobody I know at any rate — is proposing to eliminate either banks or the stock market. Instead they would simply require banks and the markets to only invest real assets… actual money or hard assets that are actually on hand.
That would reduce irresponsible, risky investing and the creation of “bubbles”.
What they did propose, and are proposing, is the elimination of the Fed. The existence of which would be far less necessary (if it ever was) if these other proposals were to be implemented.
Another aspect of the Fed, which is mentioned in the Chicago plan, is that every U.S. dollar currently “printed” by the Fed comes with built-in interest due. You heard that right: when the government “creates” money, every dollar it creates comes with a built-in debt to the Fed.
If these systems — I’ll call them “fiscally stupid” systems because that’s what they are — were eliminated, our money supply would be much more sound. But those aren’t proposals to “nationalize” your money. On the contrary: the idea is to give you much more control over your own actual money, and not let others use it to invest irresponsibly or inflate it out of existence.
Systems that let others get rich off of your money while simultaneously reducing its value to you are indeed stupid. It’s time we recognized them for what they are.

Anne Ominous
Reply to  Anne Ominous
November 5, 2016 4:17 pm

Disclaimer: I am not a climate alarmist, and I am about as far from a “Progressive” as one can get.
The Chicago plan was simply a sound plan to establish a more-sound money supply. I am no fan of the IMF but from what I have read so far, the proposal was simply a re-statement of it. I haven’t seen anything in it that “nationalizes” currency, except to return it to a market-valued system rather than a Fed-valued system.
If anyone sees otherwise in the cited document, by all means correct me.

Reply to  Anne Ominous
November 5, 2016 4:47 pm

Great post.
An intermediate proposal that I have seen is to not abolish fractional reserve banking but limit it naturally by making stock holders liable for corporate losses up to 100% of purchase value of their share holdings. Then there would be much greater shareholder assessment of directors, corporate responsibility and proper risk assessment for loans as opposed to the rubber stamping that goes on today.
But getting rid of federal reserve banks and going back to a commodity backed standard is the key to preventing (or at least limiting) bubble economics. The share market bubble is only a reflection of the monetary policies that have been enacted by federal reserve banks. Banks issuing private notes, backed by them with liability against a commodity may slow global trade but that is a small price to pay for fiscal restraint and responsibility.

Reply to  Anne Ominous
November 5, 2016 5:27 pm

“If anyone sees otherwise in the cited document, by all means correct me.”
Um . . you didn’t notice that the whole thing is about fighting climate change?
“With such extreme events becoming more commonplace, few deny climate change any longer. Finally, a consensus is crystallising around one all-important fact: fossil fuels are killing us. We need to switch to clean energy, and fast.”
If you want to argue that the Chicago plan involved basing the value of everything on it’s supposed impact on an arbitrary goal X (like fighting cavities, or “Climate Change”), etc, I’m all ears . . but so far it seems to me you missed the whole boat here, so to speak.

Reply to  Anne Ominous
November 5, 2016 7:50 pm

“The responsibility for money creation would be placed with an independent agency that” is not the IMF.:)

Gunga Din
Reply to  Anne Ominous
November 5, 2016 8:58 pm

lee November 5, 2016 at 7:50 pm
“The responsibility for money creation would be placed with an independent agency that” is not the IMF.:)

And here I thought that “money” was supposed to be a standard of exchange for things or services that were actually worth something.
Aren’t those who actually do the work and produce something and those that exchange their work that produced something for what someone else produced the ones that “create money”?

Phil R
Reply to  Anne Ominous
November 5, 2016 11:03 pm

Anne Ominous,
I am not an economist, nor do I remotely have any connections to the financial sector (if you don’t believe me, ask my wife). But this was an excellent and informative post. For what it’s worth I’ve been reading recently the book, The Monster From Jekyll Island, about how the Federal Reserve was created. It discusses fractional reserves vs. having 100% assets to back their loans. As long as they can create money, I think the bankers are happy. I used to have ethics, but FWIW my oldest son is in college (business and finance) and I’m subtlely pushing him to follow the money.

Samuel C Cogar
Reply to  Anne Ominous
November 6, 2016 7:18 am

Anne Ominous,
I was per se, intrigued, with your commentary on “fractional banking” because it reminded me of a similar subject that I have often pondered about ….. and which, for lack of a name, I will paraphrase you and call it “fractional sales taxing”. (like a 5% or a 6% State Sales Tax on purchased goods)
In your $1k example of “fractional banking”, sooner or later, all of the money ends up in the “hands” of the bankers.
In my $1k example of a (xx%) “fractional sales taxing”, sooner or later, all of the money ($1,000) ends up in the “hands” of State Tax Department.

Reply to  Anne Ominous
November 6, 2016 10:56 am

Anne Ominous
+11 an excellent post, save one item. The fractional reserve is not 90%, but 10%. Run the math with your example and it quickly becomes obvious that this enables banks to lend out many times as much money as they have, driving growth in the good times and quickly collapsing in the bad times:
My I also add, the sub-prime melt down took banks all over the world with it, but Canada’s banks came out clean. Why? They’re run pretty much along the lines of this proposal. It works, governments all of the world have been studying it, including the UN. It doesn’t have the downside that Eric seems concerned about.

Reply to  Anne Ominous
November 6, 2016 11:00 am

Samuel C Coger
sooner or later, all of the money ($1,000) ends up in the “hands” of State Tax Department.
No it doesn’t. The taxes are used to buy goods and services, so they wind up right back in the economy from which they were skimmed. Sometimes the government gets value (roads, bridges, fighter planes) and sometimes the government gets ripped off ( solar fields, windmills, fighter planes). But the money goes back into the economy, just into a different mix of pockets from whence it came.

Reply to  Anne Ominous
November 6, 2016 6:41 pm

Ya know, fighting climate change is also a great way to help the most vulnerable people, according to the UN folks . . and surely you believe if we turn over control to them, that’s what they will do, right? And preserve the environment, bring social justice, and fix the banking system too!! . . and who knows what other wonderful things . . if we just agree to let go of that nasty old sovereign Country idea without a fuss . .

Reply to  JohnKnight
November 6, 2016 8:11 pm

JohnKnight commented: “….. if we just agree to let go of that nasty old sovereign Country idea without a fuss . .”
And that’s why Brexit succeeded.

Samuel C Cogar
Reply to  Anne Ominous
November 7, 2016 5:07 am

No it doesn’t. The taxes are used to buy goods and services, so they wind up right back in the economy from which they were skimmed.

Now what are you telling me, that sooner or later, when all of the money ends up in the “hands” of the Scrooge McDuck bankers, …… that’s where it stays?comment image

D.J. Hawkins
Reply to  Anne Ominous
November 5, 2016 4:45 pm

How on earth can the Chicago plan preserve any semblance of “banking” as we’ve come to know it? If I deposit my $1,000 in the bank and it’s required to keep a reserve of 100%, how do they make any loans? How can they pay me interest if they make none of their own?? It would be no different than stuffing my money in my mattress.

Alan Esworthy
Reply to  D.J. Hawkins
November 5, 2016 5:08 pm

By differentiating between demand deposits and time deposits.
With a demand deposit account, and that’s the term used for normal checking accounts, you can “demand” your cash at any time. But checking accounts are part of the fractional reserve setup, so if all depositors demanded their deposits at the same time, the bank would not be able to perform its contractual obligation. Sound money advocates point out that there’s a simple term for this. That term is “fraud.”
With a time deposit, and that’s the term used for what used to be called savings accounts, the contract with the bank can limit the number and amount of withdrawals over time. If all the savings customers of a bank attempted to withdraw all their money as quickly as contractually allowed, the bank would still be unable to satisfy them, but it would have time to attempt to satisfy the demand to a larger degree.
You implied statement that the Chicago plan would make what we call “banking” impossible is quite true. The banking industry would have to undergo torturous change to shift to what would be more akin to money warehouses and the practice of money lending would take on a totally different nature.

Paul of Alexand
Reply to  D.J. Hawkins
November 5, 2016 6:21 pm

Has anyone else seen “It’s a Wonderful Life”?

Reply to  D.J. Hawkins
November 5, 2016 8:47 pm

there’s this thing called COLLATERAL
in this sense it means something of value that backs a promise to repay a loan.
sometimes collateral can be much more valuable than the loan

Phil R
Reply to  D.J. Hawkins
November 5, 2016 11:08 pm

If you deposit $1,000 in a bank, are you more concerned that the bank can lend your money to someone else, or that you can get your $1,000 back when you go to the bank to withdraw it?

Reply to  D.J. Hawkins
November 6, 2016 3:52 am

Exactly DJ.
Not only that, but you would have to pay the bank to administer you account, as they would have no other revenue
And none of us would be able to take mortgages out to buy homes, or HP for new cars etc.

D.J. Hawkins
Reply to  D.J. Hawkins
November 6, 2016 9:06 am

@ Paul of Alexand
Yes! The finest description of how banking should act to advance the well-being of the community and why fractional reserve banking can be a good thing. And notice that the savings and loan in that case was owned by the depositors.
@Forrest Gardener
First, you are correct in principal regarding the sliding scale that could be adopted. However, in the context of this piece it looks like the green loons are pushing for 100%, so that’s what should be the focus here.
Second, term deposits don’t wall away your money. You can always break the terms and take the penalties, usually around 10% the last time I paid attention. So unless someone changes the penalty level to 90% it means the bank can only lend 10% of my deposit. I’d be lucky not to get a negative interest rate, not even accounting for inflation.
Collateral is almost always ill-liquid. No one will loan you the full value of your collateral because there is always a risk they can’t liquidate it on favorable terms. And suppose everyone is making their payments on time? Will the bank try to seize the home of someone adhering to the terms of their mortgage in order to give me my money?
Personally I’m most concerned that I can withdraw my funds at need. I’m not sure I understand the point of your question.
@Paul Homewood
Yes, I didn’t want to bring up administration fees, mostly because we pay them anyway. My mattress has never charged me a nickel 😉

Joel O’Bryan
Reply to  Anne Ominous
November 5, 2016 6:49 pm

The issue you overlook is whether there is collateral involved, and/or third party insurance in case of default.
But you indirectly point out that our economic system runs on trust. Sometimes that is not enough though and banks runs can happen. That is what happened in the early 1930’s… bank runs based on rumor. The FDIC was created by Congress. FDIC exists Not to protect the depositors, but to protect the bank from the contagion of bank runs by spooked depositors.

old construction worker
Reply to  Joel O’Bryan
November 6, 2016 6:25 am

Bingo, we have a winner

John F. Hultquist
Reply to  Anne Ominous
November 5, 2016 7:45 pm

Go on and explain the creation, distribution, and destruction of wealth via the stock market.
Someone suggested, recently, that George Soros bought shares of coal companies as they crashed, not because he was investing, but because he was covering “short” positions. If so, I wonder how much of his own cash went into that?

Reply to  John F. Hultquist
November 5, 2016 8:48 pm

can you say carbon credit derivatives?

Reply to  John F. Hultquist
November 6, 2016 8:38 am

If GS was covering shorts as the stocks crashed, he made money. He “shorted” (promised to deliver) coal stocks at a market price. If he then bought when the stocks (to deliver) dropped 50%, he doubled his money.
JPMorgan, et. al., have been playing this game with silver and gold for years.

Reply to  Anne Ominous
November 5, 2016 10:52 pm

This has been a gripe of mine for some time. Banks often acted independent of government as they did here in Australia, leading to a free for all of unsecured ‘money’ that saw house prices in Melbourne rise in 1890 to the point houses in that city were priced in the millions – of course none of those promisory notes were backed by anything of value and the whole system collapsed wiping out banks and lives. The government stepped in and said no bank can print money. It all went fine and dandy again until the same thing occurred again in the 1930’s, and again the government stepped in and heavily regulated the banks. In the 80’s the left wing government of Paul Keating deregulated the banking industry to ‘create wealth’ and now we in Aus have a 8 trillion dollar economy backed by 32 billion in printed cash – all backed by a whole 320 million in gold reserves. Tell me how this will end well ??
I did some other calculations too – Pre-deregulation the banks were careful about lending money.. their investments were strictly regulated and meant they could only buy land, develop and sell houses to make a profit. The other control was interest went both ways depositors earned interest and were effectively the banks shareholders, and borrowers paid interest – leading to a two way flow. Post deregulation the banks were sold off, the bank’s ‘shareholder’ (depositor) base were renamed ‘customers’ and they started charging to handle your money. By my conservative estimate based on the number of mortgages and the amounts being borrowed, this meant the banks owned ALL the money inside three years.
If you’re up for it, you can read a presentation by one of the big banks where they quite proudly explain how they inject money into the system by creating money – it’s the same as money printing, when you take out a loan that ‘money’ is invented on the spot.. but this avoids breaking the laws about printing currency. It has the same effect though and is assisted by the new digital banking systems. They then go on to claim this money is secured by the asset it was used to purchase – Looks good on the books and it’s great for jacking up prices.. as long as they always go up.
This also allows them to reduce effective debt. Lend a guy 100 grand today you have 100 grand debt. Lend someone a million the next day for a similar house, that 100 grand debt becomes effectively a ‘smaller’ fraction of debt than it was before – rising house prices are used to shield and protect them from earlier debts.
On another, earlier page I did some calculations about the amount of money versus the house values in play and found that in Oz, selling a mere 6 suburbs worth of houses (not apartments, land or any other building) would take all the cash out of the Australian economy. This was the lightbulb moment that made me realize how flaky and fragile our monetary system is and how precariously balanced it is atop a mountain of non-money.
Finally this isn’t new, Mackay warned about the collapse of finances in his book Popular Delusions and the Madness of Crowds which I think every school kid should read. But go way, way back to Sumerian times and the story goes the banks as a separate entity also ended up a few times owning all the wealth due to interest only flowing one way. It’s all cycles, and without the banks being firmly regulated they WILL always end up owning all the wealth resulting in a population of debt slaves.
The other downside to rampant inflation is, your past deeds are devalued. You work an hour, earn $1 put it away for a rainy day.. inflation means that hour of your life, your labor that you saved is now near worthless. it penalizes sensible savers and devalues the work and effort of the past – and this is wrong.
The alternative is contrary to human nature.. wages and prices consistently go down as the population increases. A fixed money supply means savers and past labors are rewarded. It won’t work though, we’re wired to reject it. To illustrate offer a young kid 1 $100 note or 50 $1 notes and you’ll discover we’re wired to think more is better. they’ll take the 50 $1’s. Imagine a population of 100 people earning $1 a week which they spend – now double the population.. wages drop to half, prices drop to half (the retailer who sticks to high prices goes to the wall) – there’s no depreciation of assets or wealth in any way shape or form. Anyone wo saved money is wealthier than they were before.. it encourages saving, something the banks REALLY hate people doing (they get rich by turning you into an interest paying debt slave).. but it means old folk who are careful are able to truly put aside part of their life hours (in money) to protect them in their dotage. but to truly work, the money needs to be held by the owner – cash in the form of metals, silver and gold.. copper and zinc in hour hand. Sure people argue metals have no true inherent value, but metals are rather damned useful and have the ability to be transformed more than most other materials.
inconvenient to transport and look after though .. Here, take this piece of paper instead say the banks, it’s worth the same amount they tell us. No wait they say, take this pretend money and this plastic card and we’ll take all of that annoying metal from you they promise. And we, en mass hand over our coins and take the convenient plastic and complain when it doesn’t go our way. Mackay was right, but sadly we’ve not learned.

Reply to  Karl
November 5, 2016 11:01 pm

Banking in particular, and economics in general, is every bit as contentious as climate change 🙂

Reply to  Karl
November 6, 2016 5:02 am

I agree people are hardwired to stack precious metal coins as sort of a savings instinct just like squirrels are hardwired to stack acorns, and the transition away from hard money to electronic currency and ZIRP is an attempt by banks to destroy the savings instinct, leaving only speculating and spending instincts behind. The true inherent value of gold and silver is as honest money and savings … very important things and something even the greenies want but can’t quite bring themselves to admit because their lefty friends would lose their welfare and entitlement programs under true honest money.

george e. smith
Reply to  Anne Ominous
November 6, 2016 6:00 pm

Nowhere near correct; it is much worse than that. if the reserve requirement is 10% (I think it is more like 14%) and I deposit $1,000 in the bank, the bank immediately makes a paper entry of $9,000 of “assets”, so they can loan out all $10,000 at 15 or 25% interest, giving them an effective interest rate as much as 250% on the Real $1,000 that was deposited in that bank (for safe keeping).
The FDIC of course guarantees that the taxpayers will pick up the tab if the bank loses the $1,000 you deposited with them (up to some limited amount maybe 100k per depositor or account.)
It’s just flat out fraud.

Reply to  george e. smith
November 7, 2016 8:00 am

It’s not a paper entry, as the loan has value. They deduct the $9000 that they loan from one account, and add $9000 as an investment in another account.

Reply to  Anne Ominous
November 7, 2016 7:55 am

Sigh. All that fractional reserve does is allow banks to lend the money that has been deposited in them.
It never has permitted them to lend money they don’t have.
PS, even allowing banks to buy treasuries only is still fractional reserve banking.

November 5, 2016 4:04 pm

Hey great idea! Central planning and control, by effectively abolishing capitalism , and private ownership and personal incentives, (or as some like to call it “greed”).
So in other words ,total destruction, closely followed be mass starvation, and anarchy. If limited growth is the objective, then it should be a resounding success.

Reply to  qbagwell
November 5, 2016 4:53 pm

If you want interest on your money, you allow the bank to loan your money. You share in the profit (and the risk). Interest becomes less important if your money doesn’t continually lose value, which is the case currently.

Reply to  Philip
November 8, 2016 10:13 am

This is partly true. See Eugene von Baum-Bawerk, Carl Menger, and Ludwig von Mises. Interest arises from the time discount of money. Money in hand right now is the most valuable money (and all economic valuations are personal and subjective … something is worth right now only what someone else is willing to pay for it in trade, right now. Nothing else matters, though other things influence the valuations, for example, manias and panics). Banks in the US are owned by the government, and those under the Federal Reserve hold US Federal Treasury bonds directly and indirectly.
Fractional reserve banking is the kind governments want *because* governments benefit most from the resulting inflation; where inflation is the result of altering the supply of and/ or the demand for money. Credit is a money substitute. Note well that inflation does not require rising prices. There is inflation where economic conditions are such that prices should be falling but aren’t; such as today’s economy. The CPI does not and cannot measure inflation.
As others have said, the key distinction is demand deposits. Fractional reserving allows or compels the banks to lend out parts of the demand deposit assets. This works as long as the day-to-day transactions match asset life to liability life. A fully reserved bank cannot lend against demand deposits. It can lend against its shares or time deposits. Such a bank cannot fail under a bank run on the demand deposits. It may still fail through investment losses. By the way, all investments are speculative, for all economic decisions must be made under uncertainty.
I highly recommend people read Theory of Money and Credit and Human Action.

November 5, 2016 4:06 pm

The problem with these pie-in-the-sky ideas is that they require everyone to be honest and hardworking. That simply is not true. Dangling all the worlds currency in front of a small group of people will quickly result in corruption. Economic growth helps offset the inevitable corruption of the system. Without economic growth, money will quickly be redistributed to those in power and their allies. Since there is no economic growth, those in charge will be richer while everyone gets poorer. And poor people care not about the earth but about surviving until tomorrow. There will be incentive to better yourself because there is no economic growth and thus it would be futile to try. The few special rich individuals will only spend on their own selfish desires.
You don’t have to dig deep in history to find individuals who do horrible things to people. The Nazi holocaust is a recent example, but by no means unique. People were burned at the stake, and those who saw they suffer slept well at night. The Assyrians did terrible things to their captors. The point of all this is that in a world without economic growth, the rich will sleep well at night even though they know the poor are hungry and cold. Their conscience will not be bothered.
The problem with a great number of laws and ideas is that it pretends people are honest and will not look for loopholes. Always think how an idea can be abused, because it will be abused.

Reply to  alexwade
November 6, 2016 9:36 pm

“Always think how an idea can be abused, because it will be abused.”
Most especially to apply to the idea that it is legitimate and necessary for some people – those designated as the State and / or its agents – to do things which, by common moral consent, would be considered criminal acts if anyone else did them.

lower case fred
November 5, 2016 4:06 pm

Lord Acton observed that power corrupts, true enough, but I think it is more important that power draws to it corrupt ambitious men.
This would be guaranteed to end in tyranny.

November 5, 2016 4:11 pm

I can only see one tiny glitch, how do you convince people to deposit their money if it is going to be nationalised?

Reply to  Mjw
November 6, 2016 8:45 am

A starker but more accurate term for nationalized is STOLEN!

Reply to  Mjw
November 6, 2016 8:18 pm

easy – you announce that new currency is to be issued which is red instead of green
you allow exchange for a very limited period.
you severely limit the amount which can be exchanged.
in one swift maneuver you steal 90% of the liquid capital.
90% of all the savings (whether under the mattress or in the bank) vanishes
the remaining 10% is in the bank because hoarding cash just got punished harshly.
(i remember when russia did that)

michael hart
November 5, 2016 4:13 pm

John Lennon mocked these peoples back in 1968. Yet they have made no intellectual progress at all since then.

Science or Fiction
Reply to  michael hart
November 5, 2016 4:29 pm

You say you want a revolution
Well, you know
We all want to change the world
You tell me that it’s evolution
Well, you know
We all want to change the world
But when you talk about destruction
Don’t you know that you can count me out?
Don’t you know it’s gonna be
You say you’ve got a real solution
Well, you know
We’d all love to see the plan
You ask me for a contribution
Well, you know
We are doing what we can
But if you want money for people with minds that hate
All I can tell is, brother, you’ll have to wait
Don’t you know it’s gonna be
You say you’ll change the constitution
Well, you know
We all want to change your head
You tell me it’s the institution
Well, you know
You’d better free your mind instead
But if you go carrying pictures of Chairman Mao
You ain’t gonna make it with anyone anyhow
Don’t you know it’s gonna be
Alright? [Repeat: x6]
Read more: John Lennon – Revolution Lyrics | MetroLyrics

Science or Fiction
November 5, 2016 4:19 pm

Maybe the unit of money should have been: [Joule] – energy
I owe you 1 Giga Joule of work – that kind of currency would be hard to inflate.

Anne Ominous
Reply to  Science or Fiction
November 5, 2016 4:41 pm

It would also re-distribute most of the word’s wealth to China and India.
Don’t be silly.

Science or Fiction
Reply to  Science or Fiction
November 5, 2016 4:42 pm

Or maybe the watermelon version: – I owe you a green certificate.
(Just kidding) #:-) –
“Green certificates represent the environmental value of renewable energy generated.”

Anne Ominous
Reply to  Science or Fiction
November 5, 2016 4:44 pm

While the idea of labor as a unit of currency is not necessarily bad, making it solely based on physical energy would not be workable.
Some work is more valuable than other work. A doctor’s time is more valuable than a ditch-digger’s time… even though the ditch-digger may have expended vastly more energy.

Science or Fiction
Reply to  Anne Ominous
November 5, 2016 4:57 pm

I would dig ditches for a month for an hour of a doctor´s time – if I really needed him
(or her -I´m married to one) #:-)
A doctor would treat patients for a few day´s – to get someone perform a service on his car.
However, I would not promise to dig ditches for a 1000 years for an hour of a doctor’s time.

Paul of Alexand
Reply to  Anne Ominous
November 5, 2016 6:23 pm

Thus money. It’s really nothing more than man-hours normalized for time-worth.

Rhoda R
Reply to  Anne Ominous
November 5, 2016 6:47 pm

We already have labor as a unit of currency – it’s called salaries and wages.

Reply to  Anne Ominous
November 5, 2016 8:54 pm

the standard of value is human life.
we trade it in fragments for everything good.
ppl sell hours of their lives daily,
for some toy to be there somebody had to spend his time making it instead of exhorting neighbors to do it.
money is a token that represents the standard of value
it should be easy to disntinguish
it should be impossible to counterfeit
it should be indestructible
it shoulde be rare

Reply to  Science or Fiction
November 5, 2016 4:51 pm

The Soviet Union tried this in its first few years. They quickly gave it up as unworkable.

Science or Fiction
Reply to  Analitik
November 5, 2016 5:11 pm

Did they? That´s the beauty of a serious mistake – we don´t have to try it again.
Link please. 🙂

Reply to  Analitik
November 6, 2016 9:05 am

Science or Fiction, November 5, 2016 at 5:11 pm
You neglected the caveat, in a rational world.

Reply to  Science or Fiction
November 6, 2016 2:04 pm

Trouble is that energy is a property, not a “thing.” Things have energy, but with lots of variables. The potential energy of a bowling ball depends on how high you can lift it, for example. And every time work is done, energy is lost, the Second Law.
And as we see with renewables, energy is notoriously difficult to manage without storage. So the only thing that make sense is to exchange some form of stored energy – oh, like coal or oil, or natural gas or nuclear fuels. Hey wait – isn’t that what this web site is all about? Forget gold, we should be on the coal standard! /sarc

November 5, 2016 4:22 pm

We would probably wind up with a lot of competing currency alternatives, including digital currencies and things like gold. If you’ve read the science fiction Snow Crash,it brings back thoughts of a rather chaotic world, but maybe a bit more honest.

November 5, 2016 4:28 pm

Why all that trouble? I thought ecosex was saving the planet. LOL. You know, find a log bare the hog and get to it.

November 5, 2016 4:35 pm

The discussion has got sidetracked onto the
creation of money
While There is some merit in those discussions
The interesting issue is the main objective
of stopping economic growth which is the
main objective of far left greenies
The same greenies are also on favour of
Welfare and open borders
How do they think the welfare is going tobe
paid for or how the millions of refugees and immigrants who will flood in are going tofind jobs without economic growth?

Reply to  Thomho
November 5, 2016 4:38 pm

They expect the global population to go down to the “ideal” value of ~850M. Starvation is a tactic. So is warfare / civil war / revolution.

November 5, 2016 4:36 pm

This from the newspaper that wets itself any time the word Brexit comes up because we might not grow as fast as we would have if we’d voted to remain. They should be cheering our imminent impoverishment. Or maybe they fear most it will be a success? It galls them that Brexiteers put their future on the line and voted for a different society, whereas warmist supporters can’t even contemplate a reduction in their air miles to reduce CO2.

November 5, 2016 4:37 pm

It turns out civil servants who don’t face personal consequences if the loan goes bad tend to do a poor job of checking the creditworthiness of applicants. ….
Liberals never think liberals are crooked or worthless.
I suspect what this plan would do, if implemented, is accelerate the ongoing growth of…..socks
…I gotta sock

November 5, 2016 4:44 pm

The whole thing about lending, is lending out the capital with only a fraction held as reserve. If 100% is held as reserves, there’s nothing to lend out.

Russell Johnson
November 5, 2016 4:54 pm

It doesn’t have a damn thing to do with climate. It’s global governance/fascism/dictatorship designed to make everyone poor and dependent on a privileged few.

Science or Fiction
Reply to  Russell Johnson
November 5, 2016 6:05 pm

“The common enemy of humanity is man. In searching for a new enemy to unite us, we came up
with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behaviour that they can be overcome. The real enemy then, is humanity itself.”
– Club of Rome – The first global revolution
The green agenda

November 5, 2016 5:15 pm

I wonder what will transpire when it becomes more widely known that CO2 has no significant effect on climate and much of the warming, now countering global cooling, is from rising water vapor. The rising water vapor is nearly all from irrigation, for food and the water table is declining rapidly, world wide. What happens when the fresh water becomes scarce?

Reply to  Dan Pangburn
November 5, 2016 7:13 pm

Actually H2O is a major coolant in the Earth’s atmosphere as evidenced by the fact that the wet lapse rate in the troposphere is significantly less than the dry lapse rate. There is no real evidence that a radiant greenhouse effect caused by the LWIR absorption properties of so called greenhouse gases exists either in a real greenhouse, in the Earth’s atmosphere, or anywhere in the solar system.
Fresh water is already becoming scares in some areas of the world.

Reply to  willhaas
November 6, 2016 9:36 am

I assume you mean scarce. By fresh water do you mean low salt content, or non-polluted, or something else? With the noted (elsewhere at this site) greening of the world’s deserts it would seem that plant friendly (fresh) water is becoming more available.

Reply to  Dan Pangburn
November 6, 2016 7:42 pm

Fly – It is the approximately 2.5E15 kg/yr being pumped out of the ground for irrigation that is lowering the water table about a foot a year in the Ogallala Aquifer (US) and much more in India (4.6 ft/yr) and the middle east
It costs about 15 times as much to get the salt out compared to removing ordinary pollution.
The arid areas are greening because of increased CO2 which, besides being plant food, decreases their need for water.

November 5, 2016 5:21 pm

Those who believe in GW have a moral duty to stop using gasoline, natural gas, electricity, and anything else created from fossil fuels. They should not have children, and they should stop using our health care system. They should be encouraged to end their own lives early for the good of the planet.

November 5, 2016 6:01 pm

this is a really funny post.

November 5, 2016 6:03 pm

And WE/Skeptics are being called conspiracy theorists?

Terry Warner
November 5, 2016 6:12 pm

The financial crisis in 2008 was wholly due to banks driven by greed and bonuses lending money to other banks without adequate reserves or credit checking. We survived only because central banks printed money to recapitalise the system. It is abundantly clear that trusting banks to operate prudently is simply naive, and more state control over bank regulation and margins in needed.
However using money supply to suppress growth is frankly daft. But changing perceptions of what constitutes success and improvement in well-being has some merit. Gross GDP is a very crude measure which has only a passing relationship with the wealth of human happiness.
For those on low incomes or lacking in basic facilities absolute income may be important. If we can detach ourselves from the somewhat shallow attachment to gross consumption driven by brand advertising, low self esteem and social pressure, those on mid and upper incomes may be happy to trade a little income for longer vacations or 35 rather than 50 hour weeks.

Reg Nelson
Reply to  Terry Warner
November 5, 2016 6:26 pm

In the US, the Housing Bubble was driven by giving loans to people who could not qualify for traditional loans in the name of “Fairness”. This was driven by Progressive politics. The banks just went along for the (very profitable) ride.
Lending standards were relaxed and ultimately eliminated. “No Doc, Subprime” loans became more common, then the norm.
When Obama took office, he punished, blamed and extorted money from the banks who were simply complying with the Progressive agenda.

Reply to  Reg Nelson
November 5, 2016 6:31 pm

Reg Nelson commented: ‘…When Obama took office, he punished, blamed and extorted money from the banks who were simply complying with the Progressive agenda….”
+1 But he also bailed them out. No harm no foul.

Reg Nelson
Reply to  Reg Nelson
November 5, 2016 6:53 pm

markl November 5, 2016 at 6:31 pm
Reg Nelson commented: ‘…When Obama took office, he punished, blamed and extorted money from the banks who were simply complying with the Progressive agenda….”
+1 But he also bailed them out. No harm no foul.
TARP was passed by Bush before Obama took office.
Obama takes credit for it, of course, and blames Bush for the increase in the Federal Debt that resulted. He then bench-marked that year to justify his exponential, exploding deficit spending.

Reply to  Reg Nelson
November 5, 2016 7:00 pm

I didn’t think I needed the /sarc tag. 🙂

Reply to  Reg Nelson
November 6, 2016 5:05 pm

“Lending standards were relaxed and ultimately suspended. . .”
Wall Street-sponsored legislation helped them pull the real estate plug on America and the world and qualify people that a loan shark wouldn’t touch for billions in loans to buy millions of homes they couldn’t afford.
The Street then mixed, bundled, certified, and insured these loans with what buyers thought were reputable ratings past corrupt regulatory agencies and sold and resold this worthless paper to thousands and thousands of banks, trusts, investment funds, retirement funds—you name it—worldwide. Who in turn sliced, diced, and resold the bundles to others. . .
Not only did they do this with worthless mortgages, they did it with all manner of things financial. Called them “derivatives, CDS’s, LBO’s, etc., etc..”
$600 trillion fictitious dollars worth by one estimate. Over a quadrillion by the Bank of International Settlements’ (BIS) estimate.
All “toxic” (worthless) paper backed with no assets brought about by “moral hazard” (theft, greed, fraud, lies).
The world’s GDP is only around $75 trillion.
All the money in the world comes short of $600 trillion.
And they want you and me on the tax hook “loans” to go the financial bail for these lying, thieving, con-artist-criminal-stump-jumping-shuck-and-jive-the-sky-is-falling-paper-money financial scammers? The ones who knowingly and deliberately set this $600 trillion giganticus raticus fornicus loose on the rest of us?
Wall Street insiders who revolved into government financial positions have enriched their executive friends still on Wall Street with tax dollars; enabling their buddies to pay themselves kingly bonuses and their companies largess to purchase other banks and businesses for pennies on the dollar.
America and the world watched in disbelief as these thieves and their confederates and enablers—our elected flim-flammers (through deliberate legislation)—went public with their scam; printing and throwing “bailout” money around the world like confetti at a V-Day parade before stepping into into their limousines and and handing humanity the tab for tens of trillions of QE that their central banks printed and the goyim cannot repay.
So we stand out here with our noses pressed against the bank window and watch a bunch of financial criminals running around inside looting money; pausing, occasionally, to flip us off and let us know they’re doing ‘god’s work’.
Which was the whole idea from the start. Suck the last drop of blood from the financial system, hook it up to QE life support, and jerk the plug whenever they’re ready to crash and spring the New Financial System on humanity with–would you believe?–themselves in charge by virtue of the fact they’ve been doing this for centuries and have stolen the most loot; thus making them the most qualified to run their so-called “new world order”. . .
Pigs fly, too.
Look close. The Internet’s sunlight is beginning to shine in the ship’s hold. See these Marxists bilge rats yet?

Reply to  Reg Nelson
November 7, 2016 8:16 am

Reg, the TARP that was passed under Bush was the same TARP as executed by Obama.

Reply to  Reg Nelson
November 7, 2016 8:17 am

“Wall Street-sponsored legislation”
No matter how badly government messes up, the socialists will always blame the capitalists.

Reply to  Terry Warner
November 6, 2016 4:03 am

I actually don’t know anybody who measures their well being in terms of GDP.

Reply to  Paul Homewood
November 6, 2016 9:46 am

Do you know people who measure their well being by their standard of living? Job creation and retirement income tend to move in the same direction as GDP. I wonder why?

November 5, 2016 6:26 pm

These f*ckwits are not even bothering to pretend anymore that they’re not wanting what they actually want.

Joel O'Bryan
November 5, 2016 6:36 pm

Without growth, economics becomes a Zero Sum Game. Economic wealth creation comes from growth and requires energy. Energy and economuc growth are intimately intwined as Mr Hickel is aware.
Economic growth is what has allowed our standards of living to be better than our grandparents, to have more opportunities for our children to not live in filth and disease, to have access to medical care that our ancestors did not have and costs money (resources).
Jason Hickel is just a human turd who belongs in the same category of Paul Ehrlich…. flushed down the toilet of human waste.

November 5, 2016 7:02 pm

We do not need money at all. We can all just wear uniforms, live in dormitories, and just do what we are told to do. If it is good for North Korea then it should be good for the rest of the world.
Before the private sector learns to do without debt the government sector needs to learn how to stop accumulating debt and instead pay off its existing debts. According to the President’s economic “plan”, the federal government should be in their second fiscal year of posting annual surpluses to be used to reduce the National debt but that is not happening. We are also still waiting for the budget cuts that were suppose to have gone along with the tax hike on the rich and the ACA taxes as part of the President’s balanced approach to deficit reduction. At the very least the federal government needs to stop keeping interest rates artificially low so that middle class savers can again earn real money through interest on savings. The President, as the federal government’s CEO, needs to present to the taxpayers a plan for the federal government to pay off its debts. I estimate that the money the federal government is borrowing today will end up costing the taxpayers more than 12 times the amount borrowed to pay it back over the next 170 years.
But the reality is that the climate change we are experiencing today is caused by the sun and the oceans over which Mankind has no control There is no real evidence that CO2 has any effect on climate. If we removed all the CO2 from the Earth’s atmosphere it would have little effect upon the total greenhouse gases in the atmosphere but it would kill off most of the life as we know it on this planet. Then again, even if we removed all the greenhouse gases from the Earth’s atmosphere, it would have very little effect because there is not detectable radiant greenhouse effect on Earth nor anywhere in the solar system. The AGW conjecture depends on a phenomenon that does not exist.
Mankind does need to control his own population but I believe that there exists a more humane approach then by means of starvation caused by economic calamity. Those that are in favor of economic calamity may also favor thermonuclear war as another approach to fighting climate change.

Reply to  willhaas
November 5, 2016 10:41 pm

“At the very least the federal government needs to stop keeping interest rates artificially low so that middle class savers can again earn real money through interest on savings.”
Interest rates are, in the main, controlled by the Federal Reserve, which is not part of the Federal Government.

Reply to  Retired_Engineer_Jim
November 5, 2016 10:51 pm

The Fed is nominally independent of the federal goverment, and sometimes nonpolitical sort of. As the head of the Federal Reserve is a presidential appointee, the behavior of the appointee in office depends a great deal on the intentions and skill of the President.
Janet Yellen is one of the more political heads, and shows both the skill and intentions of Obama in appointing her. She does not get direct instructions, but knows quite well what the administration wants.

Reply to  Retired_Engineer_Jim
November 8, 2016 10:22 am

That’s the fiction many want you to accept. No. The Federal Reserve is a GSE. It is nominally independent of politics, but in actuality, it isn’t.

November 5, 2016 7:23 pm

This is straight out of the pages of Atlas Shrugged…
What has killed economic prosperity and vastly lowered living standards for the middle/lower classes has been excessive public spending, massive growth of global sovereign debt (now close to $90 Trillion), excessive monetary inflation (US$ has lost 90% of its purchasing power since going off the gold standard in 1972), insane regulation compliance costs ($2 trillion/yr in US) and crazy zero-interest rate polices designed to create economic bubbles that will soon pop…
GDP as calculated now is fatally flawed as it reflects NOMINAL costs and substantially underestimates REAL inflation caused by governments’ excessive money printing.
Increases in productivity and technological advances will cause prices to FALL for everything leading to deflation and fewer required working hours to produce the same amount of goods… Who wants to pay MORE for things and work harder and longer to buy them? It’s insanity…
One person per household should only be working 32 hours a week to provide a very comfortable middle class standard of living. But, alas…now 2 people per household have to collectively work 60~80 hours/week just to make ends meet…
Failed Keynesian economic policies have brainwashed people into believing FALLING prices are dangerous and must be avoided at ALL COSTS, which is stupid.
Total state, local and federal spending should only cost citizens 10% of GDP at most, and governments should only be allowed to spend money on a few enumerated powers: military, passing a few laws, courts, border protection, policemen, firefighters, infrastructure and that’s about it… The private sector can provide all other societal needs at 1/4 the cost.
NOTHING will change until the current insane system collapses and people finally realize Statism/ Leftism is just another form of slavery/indentured servitude.

Reply to  SAMURAI
November 5, 2016 10:48 pm

Everyone should read “The Confidence Game: How Unelected Central Bankers Are Governing the Changed World Economy” by Steven Solomon. A little dated, but the con is still on.

Reply to  SAMURAI
November 6, 2016 1:26 pm

Pretty good Samurai.
I’d leave most infrastructure out of the government hands-probably only sewage/sanitation and and regulation of public watersheds for drinking water and the interstate highway system. Letting that go totally private or state-run would probably ruin it. States are already way behind on their fiscal support.
The rest of the infrastructure did quite well in private hands-just about every road you see labeled XXXX-Pike was originally a privately built toll road, also all the canals, the original interstate transport system, were private businesses. Bridges , too, most water systems. Most of this infrastructure was turned into public during the Progressive era in the late 1880’s-1950 when public infrastructure was mostly entrenched.

Reply to  philohippous
November 6, 2016 6:51 pm

I agree with you that roads and infrastuctire should be privatized, too, however, my argument was based on what Article 1, Section 8 Constitutional powers the federal government actually has, and managing and building roads and infrastructure are part of the 18 federal enumerated powers.
Especially with GPS, it would be very easy to privatize roads with tolls being collected based on actual road usage. Additional revenue could be generated by building utility conduits under roads, which utilities could rent from the transportation companies.

November 5, 2016 7:25 pm

The fundamental problem with fractional reserve banking is that it creates multiple claims (titles) on the same asset, something that violates fundamental legal principles. And on that point I agree with the proposal. But let us ask, to what end was this proposal made? Clearly to a fraudulent and socialistic end, and that is where I part company with them.
If anyone cares to poke around at the web site of the Mises Institute, ( you can find a lot of thoughtful explanations about the nature of money and how dangerous fractional reserve banking is to economic and social freedom. But they will clearly say that money is not something that should be allowed to be created or manipulated by anyone because when the money supply is distorted by government, it always results in some participants in the economy gaining and some having wealth taken away from them.
Creating more money out of thin air by government is a form of embezzlement of private wealth by dilution plain and simple. It is fraud and theft and therefore in violation of the takings clause of our Constitution. Worse, it gives people the false idea that wealth can be created out of thin air to pay for “benefits”, for wars, for programs and for more bureaucrats and enforcement agents at the EPA. In short it hides the full cost of government and makes possible a far larger government than we really can honestly afford.

Reply to  buckwheaton
November 7, 2016 8:22 am

No problem. The dollar is owned by who ever it is lent to last.
Everyone else has a non-performing asset.

November 5, 2016 7:48 pm

MUST WATCH VIDEO: How The Fed Is Purposely Destroying The Economy
Filed in Economy, Videos by SRSrocco on September 17, 2015

November 5, 2016 7:58 pm

“J. W. McCallister, an oil industry insider with House of Saud connections, wrote in The Grim Reaper that information he acquired from Saudi bankers cited 80% ownership of the New York Federal Reserve Bank- by far the most powerful Fed branch- by just eight families, four of which reside in the US. They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York; the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of Paris; and the Israel Moses Seifs of Rome.”

Reply to  jmorpuss
November 7, 2016 11:20 am

Ooooooh! All greedy Jews!
Sadly, I need /sarc, even here.

November 5, 2016 8:21 pm

The odd thing is these fools believe, as being elite master minds, that they will be exempt from the consequences of total socialism for whatever cause. The social “victories” of Cuba,Nicaragua, Albania, Yugoslavia, and Venezuela seem to have totally passed over their collective heads.

Reply to  Pat Ch
November 6, 2016 7:15 am

Whenever Lefties speak fondly of “benevolent dictatorship”, it’s naturally assumed the benevolence will move in their direction.

Tom in Florida
Reply to  drednicolson
November 6, 2016 7:56 am

A benevolent dictator is still a dictator.

Reply to  drednicolson
November 6, 2016 1:29 pm

A “benevolent dictator” is one who actually works for the greater good, not to hand out favors to friends and supporters. They are few and far between, but a few Kings, Queens, and Emperors have done it, at least for awhile.

Reply to  drednicolson
November 7, 2016 8:23 am

A benevolent dictator, while theoretically possible, is not something to be counted on.

November 5, 2016 8:50 pm

The most important thing is who controls the national currency, should it continue to be private central banks, or the government. For all the problems with government control, the private banks use the control of currency to concentrate wealth and reward their friends(especially politicians).

November 5, 2016 8:52 pm

Good post Anne Ominous.
The Chicago Plan was largely the responsibility of economist Irving Fisher who wanted to prevent another Great Depression from happening. Fisher’s paper can be found here – his proposals on Fractional Reserve Banking.

Economics Dude
November 5, 2016 8:52 pm

The proposal suggested here is actually pointed at the Malthus/Ricardo population/wage trap that has concerned economists since the 1800’s. In effect, population growth (labor over-supply) causes wages to decline to subsistence levels, resources become too scarce because of the combination of population growth and the lack of wages to pay for them, leading to societal collapse. The solutions that eventually asserted themselves were that emigration can act as a safety valve, but that economic expansion causes increasing demand for labor, providing a way out of the trap.
Much of the AGW agenda is based on Malthusian (population) theory, and its adherents are not happy with the ecological impact of economic growth. The first 2 paragraphs and the last quoted above make clear that the “solution” is what is being attacked here, and they are not altogether wrong: Find a way to permanently end economic expansion, and the Malthus/Ricardo trap reasserts itself.
As to the GDP issue, proposals to measure “goods” with non-quantifiable values are interesting, but have not gone anywhere for the obvious reason.
Whether requiring a 100% reserve ratio would result in a stable system is an interesting theoretical exercise, but the author clearly states that the goal is to stop economic growth (which would force imposition of the Malthus/Ricardo trap).

November 5, 2016 8:53 pm

This scheme is Marxism is disguise. These systems offer an illusion of success but ultimately fail because they underestimate the power of the invisible hand.

November 5, 2016 8:57 pm

I’m firmly of the mind that climate change is pure crud, a fraud pushed on humanity to scam the public with carbon taxes, credits, cap and trade. A means of concentrating wealth into the hands of the people running the foundations that push the alarmist propaganda. They are the winners of the debt based currency system.
My parents were Social Creditors, not to be confused with Socialists. The Chicago Plan is a far more aggressive Credit based currency scheme than they would have imagined. That said, we have the problem that GOP expansion is currently needed just to pay interest on the ever expanding global debt.
Eliminate public and private debt, and any GDP growth goes to the long suffering public.We can make economic investments based on long term requirements and not short term greed and debt refinancing. The Chicago plan envisages 10% GDP growth per annum as an outcome. Elon Musk was saying just a few days ago that automation would make all employment obsolete within 20 years and we would need a guaranteed minimum income scheme to keep the economy running.
Here’s a few numbers to consider. 100 million working age Americans are not in the workforce. 65% of those not working say they would like to but can’t afford to lose benefits. 50 million employed Americans could have their jobs replaced by existing automation and A.I. Over half the employed work in the public sector.
In almost every other western country, health care accounts for 10% GDP, in America, it’s 18%. That’s a big reason jobs get shipped to China and Mexico, get health care costs in line, you can stop the bleeding. One of the reasons you have Obamacare is because health insurance companies cannot survive in a zero percent interest economy, they need 4% minimum. Obamacare kept them afloat until now, but the collapse is upon us. To prevent it, the debt problem has to be fixed, because you can’t raise interest rates with this much debt in the system.
In America, problems tend to be discussed in isolation from each other, when they all interconnect in an error cascade originating in debt based currency. To solve problems, always look for the most common denominator to all of them.

Reply to  Chris
November 7, 2016 11:18 am

The most common denominator? Stupid belief in simple solutions.

Reply to  charlieskeptic
November 7, 2016 11:04 pm

Sure you’re not charliecynic, a little tale. A man in Missouri took his dog hunting ducks for the first time. He shot a duck and told the dog to fetch it. The dog walked across the surface of the pond, picked up the duck, then walked back and placed it at his masters feet. The man rubbed his eyes, shook his head in disbelief, then decided to shoot another duck and get the dog to fetch it again, just to confirm he was seeing things. Once again, the dog walked across the surface of the water like Jesus, picked up the duck, and delivered it to his master before sitting down like any other retriever. This went several more times before the man drove home with the dog sitting beside him just like any other dog.
The man decided there was only one way he could tell other people and not be told he was crazy. He decided to invite the most skeptical, cynical guy in town duck hunting the next weekend. When the two men were out hunting that next weekend, the man shot a duck and told the dog to go get it. Once again the dog walked across the surface, picked up the duck and walked back. The town cynic showed absolutely no reaction to the dog’s Jesus imitation. Even when the performance was repeated several more times, he didn’t bat an eye.
When the two men were driving back from the hunting trip, the man finally got the nerve to ask the cynic, “You didn’t happen to notice anything unusual about my dog” to which the cynic replied, “yeah, he can’t swim.”

Reply to  Chris
November 8, 2016 1:39 pm

Like I said, Chris: Stupid belief in simple solutions.

Dave O.
November 5, 2016 9:01 pm

The Malthusians will never be right unless they are given the power to restrict growth. A little irony there.

Crispin in Waterloo
November 5, 2016 9:35 pm

” It doesn’t take much to realise that this imperative for exponential growth makes little sense given the limits of our finite planet.”
This analysis was made with the idea in mind that there is no service sector, or a very limited one. The concept is silly from the get-go. The value of goods and services does not consist only of the value of goods. If the Movement of the Left would consider those aspects of the economy that are not ‘things’, i.e. give up their materialist bent, they would quickly realise that the sum of goods and services consists of more and more services as a society develops.
The UK has had a growing economy using less energy total. Service jobs outpace goods production in many countries as goods shrinks relative to services. The use of capital investment per service job is much less than goods production investment per job. It is not simple like they propose.
Basically the argument is simplistic and stale. If they were indeed successful in stalling growth by restricting investment capital, people would simple exchange services without capital as was done in the Great Depression. Who wants to live in a permanent depression?? Further, were capital redistributed more equitably (i.e. rapacity ended and profit share implemented universally) the same amount of capital that is now being used to buy ‘debt notes’ would still be in the financial system. It would just be applied in other ways. You can’t print wealth, you can only print a medium of exchange.
Money can be viewed as a store of energy or a store of labour. Printing money (debt) simply devalues the medium of exchange in relation to goods and services. Ending debt finance doesn’t mean people would stop buying. The effect would only be temporary as they would save for 1/2 a generation then operate in cash as does most of China and a lot of Japan, not to mention Africa. Debt financing is only creates a brief burst of activity. All debt comes home to roost as the US$ will discover eventually.

Reply to  Crispin in Waterloo
November 5, 2016 10:35 pm

There is absolutely nothing in the thesis being promoted by the Guardian that wasn’t generated by the right Reverend Parson Malthus in the eighteenth century

November 5, 2016 10:59 pm

Jason’s boss:

Mr. Hickel, I am curious about your ideas concerning economic growth and prosperity, could you state it succintly?


Economic growth is absolutely not required for prosperity.

Jason’s boss:

Thank you Mr Hickel, your request for a pay raise is denied.

South River Independent
November 5, 2016 11:15 pm

The consumer-driven economy seems to be a Ponzi scheme where ever-increasing demand is necessary to fuel ever-increasing production. That cannot possibly continue indefinitely. What is/are the solution(s)?
The Communist Manifesto had many valid criticisms of capitalism. But it is claimed that capitalism is the best economic system developed by man. Nothing better is possible. Can that be true?
Wilhelm Von Roepke had some other ideas. You are a wage slave if you depend on selling your labor to an employer. You need to develop other income-producing skills or properties in order to become more self-sufficient and less dependent on selling your labor to the highest bidder, especially when robots are performing more of the labor. Somehow we must form an economy that is less labor intensive, one that allows for more self-sufficiency. That would be something worthy of a Nobel Prize.

R. Shearer
Reply to  South River Independent
November 6, 2016 8:27 am

But don’t forget the 50% or so demanded by the taxman.

Reply to  South River Independent
November 6, 2016 4:19 pm

Then give me the Prize. Belief that: Individual people can make a better future for everyone, if simply left to themselves; capitalism/private property, not coercion; entrepreneurship, not envy; an ever-expanding pie, not a scramble for finite resources; light regulatory regimes, not bureaucratic fiat; future wealth and technology beyond current imagination, people then-living can handle their own sets of problems; and our monetary and fiscal systems are what they are, ignorant rants won’t change that fact.
So sayeth Charlie Skeptic

South River Independent
Reply to  charlieskeptic
November 6, 2016 10:09 pm

You have just described the Ponzi scheme that cannot continue. Nothing goes on forever. An ever-expanding pie requires an ever expanding population to eat it, otherwise why would it expand? You apparently assume that everyone has perfect knowledge and equal abilities, which is clearly not true. You have explained nothing with your glittering generalities, charlieskeptic.

Reply to  South River Independent
November 7, 2016 11:09 am

SRI: Future wealth and technology beyond your imagination. Then again, we can put bureaucrats in charge to ensure that dosen’t happen, heh?

Reply to  charlieskeptic
November 7, 2016 8:28 am

South River Socialist, you are completely wrong. Please spend a little time reading actual economists and less time reading Marx.

South River Independent
Reply to  charlieskeptic
November 7, 2016 11:13 pm

MarkW, Actually you should spend a little time reading Wilhelm Von Roepke. You do understand that the Middle Class is declining. The problem is that people do not have equal abilities so even if they have perfect knowledge and equal opportunities, dubious as that is, they may not be able to benefit. That is part of the reason for the ever-increasing disparity in wealth between the rich and poor. If you read the “actual economists” you will see the unrealistic assumptions that make all of their theories unworkable for many real people in the real world. What do you propose to eliminate the disparities that result from Capitalism’s “greedy hand”? (I am not proposing Communism or socialism. You have no idea of what I am talking about.) Read some Von Roepke, then we can have a conversation.

South River Independent
Reply to  charlieskeptic
November 7, 2016 11:22 pm

charlieskeptic – you too should read Von Roepke. Like MarkW, you have no idea of what I am talking about.

Reply to  South River Independent
November 8, 2016 2:27 pm

SRI, why don’t you just pick one of my suggestions and point out where it is weak”
And I do know what I am talking about, twit. You might want to get some practical experience to go with ungrounded theory.

South River Independent
Reply to  charlieskeptic
November 9, 2016 1:34 pm

charlieskeptic – your reliance on an ever expanding pie is wrong. Nothing continues forever. Some people do not share in the ever expanding pie. That is one instance of where you are wrong. If you take my recommendation and research Von Roepke, you will discover that he is an actual economist whose advice helped Germany recover from the devastation of WWII. Again, you have no idea of what I am talking about. You are the twit.

Reply to  South River Independent
November 9, 2016 3:41 pm

Wrong-O, SRI. I am very well aware of the not-Von Roepke story. You ignore cold war history in West Germany’s political and economic developments.

Reply to  South River Independent
November 9, 2016 3:43 pm

Oh, if you don’t believe in an ever-expanding pie, SRI, then you are a Malthusian.

Reply to  South River Independent
November 9, 2016 3:59 pm

I’m weak; I know! I get sucked into trying to imbue thread discussions with fact, reason and sanity.
1. All people share in an ever expanding pie. SRI seems to believe that some people deserve more than they get.
2. Roepke (not Von) was one of many economist is post-war Germany. SRI really should cite some of his recommendations that made it into actual policy and regulation.
3. Referencing biased puff pieces is not proof.

South River Independent
Reply to  charlieskeptic
November 11, 2016 9:11 pm

charlieskeptik – you are ignoring what is happening to the middle class in America, which should be of concern to all of us. The gap between rich and poor is expanding. Some upper-middle class who are capable are getting wealthier, but many more middle class are dropping out of it and the middle class suicide rate is escalating. I do not see any of your solutions alleviating that situation. You theorists continually ignore the people who are not able to achieve economic success in modern capitalistic society, for various reasons beyond their control. You appear to have no compassion for those less capable than you.

South River Independent
Reply to  charlieskeptic
November 11, 2016 10:02 pm

charlieskeptic – forgive me for the “von” before Roepke; it has been a number of years since I read him and incorrectly thought he used “von” like Mises and Hayek. (In other words, I got his name wrong, but not his ideas and significance.) Roepke was more than just another economist in Germany. He was the personal advisor to Adenauer and Erhard and provided the intellectual basis for Germany’s economic recovery. If he were alive today, he would be critical of our current economic system. It is not working for too many Americans. It needs to change. What do you think needs to be done to help your fellow Americans who are struggling now?

Dave Fair
Reply to  South River Independent
November 11, 2016 10:31 pm

Charlie Skeptic went home and resumed his life after helping win the war, just like all those GIs after WWII. They were the ones, under our capitalist economic system, that provided the prosperity necessary to provide the vast sums of U.S. monies that went into helping a post-war West German recovery. Our strong military also protected the West German people during their economic recovery, which recovery was especially noteworthy compared to their socialist East German brothers. Without U.S. money and might, West Germany would not have had an economic recovery.
Charlie Skeptic would probably say that his fellow Americans that are actually struggling will, in the main, do just fine on their own. Federal, State and local governments will continue to take care of the rest.

Reply to  South River Independent
November 7, 2016 8:26 am

Your first mistake was in thinking that there were any valid criticisms of anything in the Communist Manifesto.
Like most socialists, you want to fix everything by eliminating the desire of people to have more.

South River Independent
Reply to  MarkW
November 7, 2016 11:19 pm

MarkW – please explain your theory of wealth discrepancies in the richest nation on the planet. Please do not tell me that all of the poor are lazy or lack motivation.

Reply to  MarkW
November 8, 2016 10:34 am

Ah the conflation of “poor” with “broke”. A “poor” person is not necessarily “broke” and a “broke” person is not necessarily “poor”. Wealth is not the same thing as stuff. Wealth, like value, resides in a person’s mind. A “poor” person blames others for his troubles that were not the results of the actions of others, but the results of his own poor decisions. A “rich” but “broke” person blames himself for being “broke” so he goes to work creating values that others desire and are willing to trade their created values in exchange. Resources are things that exist in the world or are brought into being into the world because they get used to create a better world. All successful life forms on this rock do this to enhance their own survival.

South River Independent
Reply to  MarkW
November 9, 2016 1:40 pm

cdquarles – I agree with you to some extent. However, a certain amount of wealth above subsistence level is necessary to achieve the value residing in a person’s mind. Suggest you read some Joseph Pieper.

Reply to  South River Independent
November 9, 2016 4:05 pm

SRI, please tell us what that “certain amount of wealth above subsistence level” is in your mind. Does it include touch-screen computers?

South River Independent
Reply to  MarkW
November 11, 2016 8:58 pm

Charlieskeptic – enough to allow a person some leisure time. Read Joseph Pieper’s Leisure: the Basis of Culture and his Happiness and Contemplation.

Dave Fair
Reply to  South River Independent
November 11, 2016 9:11 pm

Charlie Skeptic helped win the Climate War; he has retired from the battlefield triumphant (rhymes with Trump, as in The Donald). Even though you and yours lost, Charlie Skeptic feels no need to return to administer coup de grace. You illiberals are doing a good enough job on your own.

November 6, 2016 12:32 am

Mmmm…I liked the picture in the Guardian article of burning tigers….a new take on appropriate fuels , CO2 and global warming for ten year olds…

November 6, 2016 12:38 am

The proposal from the Guardian has as much chance as a snowball in Hell.

Reply to  Perry
November 6, 2016 4:16 am

It’s worse than we thought!!!

November 6, 2016 1:17 am

Typically of the Grauniad this is all about “we”, without saying who “we” is.

November 6, 2016 2:06 am

Funnily enough, global regulators have already made a big step in this direction through two components of the Basle 3 framework, which was designed after the 2008 crisis. The Liquidity Coverage ratio requires banks have liquid liabilities (i.e. deposits) to hold equivalent values of High Quality Liquid Assets (i.e. government debt or assets of equivalent size and credit quality). On the other side of the balance sheet, the Net Stable Funding Ratio requires banks holding long term assets (i.e. loans) to fund them with long term liabilities. Overall effect will be to limit the ability of banks to do maturity transformation and credit creation.
The rationale for this was not to limit growth but to improve financial stability. ( Incidentally, the whole green obsession with growth has things entirely arse about face. Growth is not the “objective” of the economy. Growth occurs either because more resources become available to people (principally human resources because of population growth, but occasionally mineral resources e.g shale oil), or because people work out better ways to use the resources they have, either through research and tenhology or just through better management. This is what economists mean by productivity. It can easily lead to fewer physical resources being required). But whatever the intention, the effects are likely to be far reaching. Banks in London, for example, are extremely reluctant to take deposits from companies for anything less than 95 days. In other words, banking services as traditionally understood, are no longer available to corporate treasuries. The guardian may get its wish sooner than it thinks!

November 6, 2016 2:50 am

This is quite a laugh. Apart from their usual factual errors, the Guardian is invoking a proposition most famously associated with Milton Friedman and the monetarist revival of the 1960s/70s. If you wanted to reduce a British leftist to incoherent rage in the early 1980s, that name would do the trick. From a dusty old banking book, I see it was proposed by Friedman in 1960, well before offshore banking got going. In theory, it would provide tight control over the money supply and therefore (in theory) inflation. First proposed, apparently, by Irving Fisher (Yale) in 1935 as a way (obviously) of stopping bank runs. It is not anti-growth per se (the names involved should tell you that). Quite impractical today, unless you are planning a global central bank presiding over a single currency.

Reply to  basicstats
November 6, 2016 4:19 am

And today, inflation is a word you never hear anymore and interest rates are the lowest they have been in the entire history of mankind and money lending going back 4,000 years.
Friedman’s ideas have been the most successful economic theories in history in terms of achieving a desired result.
For the most part, the Greens and climate science believers were left-wing socialists before they decided to be against CO2.
People can move to Venezuela if they want socialist economies.

Reply to  basicstats
November 6, 2016 11:19 am

Ads –
Most mainstream economists today will tell you that a measure of inflation is necessary to oil the engine of growth. The Bank of England has a target for inflation of 2.5% p.a. – they consider the current ca. 1% too low. (Believe me, they will have their wish, and more, because of what they have done in the past!).
In times of crisis I might go along with an easing of the money supply, but it should be done with the greatest reluctance, and over the longer haul sound money brings its own dividend, as Germany and Switzerland have shown admirably, at least until recently. The error, adopted by most economists, could well be down to a trust in economic MODELS.. The error is to mistake GDP numbers for growth. Measuring it is not easy in the short term, because it is not the same as activity. Wealth comes through an ever more efficient division of labour, largely through technology. Money should only be a means of exchange, not a way of tweaking the growth process.

Patrick MJD
Reply to  mothcatcher
November 6, 2016 6:08 pm

I recall a TV show in the UK in the 80’s called Spitting Image. I don’t recall all details and characters, but did feature a “fiscal” model. The character (He) operating the model had control over several inputs. Basically, he lost control of the inputs to the model and the model went wild, running up the walls etc and generally refusing to cooperate and chaos ensued. I think it was about the time of the big crash in Stirling around about 1985 IIRC. Hilarious, wish I could find a YouTube clip.

Reply to  basicstats
November 7, 2016 8:30 am

If the economy is expanding at 2% per year, then the money supply also needs to expand at 2% per year.
The big problem is that money supply is the total number of dollars in circulation multiplied by the velocity of money (the number of times an individual dollar changes hand during the measuring period).
When the economy is growing, velocity tends to go up, when the economy is shrinking, velocity tends to go down.
Reply to  MarkW
November 7, 2016 8:38 am

Velocity has no bearing on the measure of “money supply.”

Get a clue.

November 6, 2016 3:32 am

If it’s an idea promoted by the Grauniad, then it will always prove to be a bad, impractical and irrational idea.

November 6, 2016 4:19 am

We are all looking at this from a Western Centric viewpoint..
But what about the developing world? Are they to remain in poverty just to satisfy the Guardian?

November 6, 2016 4:31 am

The system is rigged and always has been. Wealth is power and power is control.. That’s why the powerful always wan to disarm the population. The anti-humanist would like about six billion less people on the planet and this is a step in that direction.

November 6, 2016 5:42 am

I get it.
A new official cadre of progressive green banksters will print the dud money instead of the current informal cadre of progressive green banksters.
Instead of underpaid spiralling debt we’ll have unpaid spiralling debt.
Instead of growth, every year will be 2007. There’ll be green jobs (whatever they are) and eco-tourism (whatever that is) to replace all the smelly stuff that merely made money.
The important things won’t change. We’ll still go to war to prop up the petrodollar. (Not sure how you invade and massacre BitCoin, but I’m sure there’s a drone for that.)

November 6, 2016 5:51 am

Government Control of All Bank Deposits is at least in the Netherlands reality. 1984 Big Brother. We now live in a smaller and smaller birdcage. We The people no longer have any power. Not with our money (ECB) not with our vote (unelected Eu commision)
We are now less than slaves because they at least had still the hope to become a free man.
Form 1040 tells you your less than a slave.

November 6, 2016 6:12 am

When extremists demand something be accountable, transparent and democratic, they actually mean the opposite. From history we know that when kooks, like climateers in this case give the talk about reform, the actions are for it to be under their complete control, directly profiting themselves, and to never be accountable. Think of a global Venezuela.

November 6, 2016 6:18 am

whole lot of malthusians commenting there at source.

November 6, 2016 6:28 am

The article is a target-rich environment of nonsense, contradictions, and ideas that have never failed to fail. I’ll limit my observations to one.
“Democratic, accountable, and transparent….” Reads like a Hillary campaign speech (or that of any democrat politician), which is to say “lies.”

Reply to  techgm
November 6, 2016 7:47 am

Every PROGRESSIVE politician , Democrat, Republican or whatever colour.

November 6, 2016 7:59 am

The Pentagon, in the 1970s, had some interesting posters on the walls of individual offices. One I liked was titled: “The Golden Rule”. The text was, “He who has the gold makes the rule”.
Still works that way.

William Astley
November 6, 2016 8:09 am

Excellent post.
There is an urban legend that somehow spending money that we do not have will resolve economic stagnation which is caused by structural problems.
There is a reason why in the US, politicians ‘address’ the increasing accumulated US debt by kicking the can down the road.
How long is the dang road? Can the can kicking go on forever?
The Western countries have started to experience signs of economic stagnation due to structural problems. A structural problem is a problem that is not corrected by borrowing more money or by quantitive easing (printing more money).
High energy costs is a structural problem. The wage difference between China and the US is a structural problem.
We have exported millions and millions and millions of jobs to Asia (particularly China) and are now trying to accelerate the problem by increasing the cost of energy in our countries. China is playing the economic game to win (for China). We are playing the economic game with hidden agendas, ignoring economic reality.
The Western Countries are still borrowing money based on GDP growth of 3 to 5 percent. Unfortunately, due to shipping millions and millions of jobs to Asia, the Western Countries’ GDP growth, is around 1 to 2 percent. and shows signs of shrinking year by year.

When the Money Runs Out: The End of Western Affluence
… economist Stephen D. King warns, and the current stagnation of Western economies threatens to reach crisis proportions in the not-so-distant future. Praised for the “dose of realism” he provided in his book Losing Control, King follows up in this volume with a plain-spoken assessment of where the West stands today. It’s not just the end of an age of affluence, he shows.
We have made promises to ourselves that are only achievable through ongoing economic expansion. The future benefits we expect – pensions, healthcare and social security, for example – may be larger than tomorrow’s resources. And if we reach that point, which promises will be broken and who will lose out?
The lessons of history offer compelling evidence that political and social upheaval are often born of economic stagnation.
The following table is a country by country list of the each countries accumulated debt as a percentage of their GDP. The old recommended maximum debt to GDP level was 70%.
Accumulated Debt by Country, for 2015 (In Percentage of GDP)
Japan 229.20
Greece 176.90
Lebanon 139.00
Italy 132.70
Portugal 129.00
Jamaica 128.40
Cape Verde 123.00
Cyprus 108.90
Belgium 106.00
Singapore 104.70
United States 104.17
Spain 99.20
Bhutan 98.90
France 96.10
Ireland 93.80
Canada 91.50
Euro Area 90.70
Egypt 90.50
United Kingdom 89.20
Jordan 89.00
Croatia 86.70
Austria 86.20
European Union 85.20
China 43.90

Reply to  William Astley
November 6, 2016 2:01 pm

That’s an interesting table. Please tell me – to which country or countries is it owed?

Reply to  Mike Jonas
November 7, 2016 8:43 am

It’s owed to whoever bought the debt. Sometimes countries, sometimes companies, sometimes individuals.

November 6, 2016 9:13 am

I recall an episode of the Rocky and Bullwinkle Show that included a Fractured Fairy Tale concerning a greedy king who taxed his people increasingly until he had all the gold in the kingdom. He thought he was the richest man in the kingdom until he learned that because the people had no money, they adopted a new medium of exchange – the turnip. The king had no turnips, and could not buy anything because the people did not accept his gold. Suddenly he realized he was the poorest man in the kingdom.

November 6, 2016 9:37 am

Has anyone ever postulated an economic model which worked well forever? Not that I’ve been able to find. This is all about allowing competing forces to correct for inevitable imbalances. Handing control to politicians is the very worst possible remedy to naturally occurring flux.
Only the seedy low information types pecking on keyboards at a failing party rag beleive in the goodness of tax eaters.

tom s
November 6, 2016 10:03 am

Luckily ideas like this have no chance of ever being implemented in democracies or Representative Republics. But the idiot, fascist, progressive leftists will try anyways, to which I wish them nothing but ill will.

November 6, 2016 2:37 pm

All your money are belong to us.

November 6, 2016 6:30 pm

“democratic, accountable, and transparent,” is leftist-speak for “we would control it”.

November 6, 2016 7:28 pm

We do not need to do a thing. The exponential growth that ‘The Guardian’ is so concerned about, will not be sustained. At present, the growth rate in the ‘Western’ world is around 1.3 children per couple. In another particular section of our world’s population, representing maybe 20% of the total population at present, and with a firm conviction that we all need to be dragged back to the 7th century, the growth rate is 3.6 children per couple. As they start reproducing in their teens, rather than late twenties/early thirties as in the ‘West’, it will not be long, certainly no more than two generations, before the concept of economic growth is purely academic.

November 6, 2016 10:00 pm

“One way to relieve the pressure for endless growth might be to cancel some of the debt”
Now thats a glib statement if there ever was one.
Where there is a debtor, there is a creditor. So how do you go about cancelling a debt?
The debtor might be your superanuation fund. 🙂
“The responsibility for money creation would be placed with an independent agency that – unlike our banks – would be democratic, accountable, and transparent”
The author of this statement simply does not know what money actually is or represents.
Economic growth is acheived by innovation, hard work and entrepreneurship. Money is not the driver although in history it most certainly has been the limiter.
Suggest the author does some serious economic reading. Starting with Milton Friedman would be a good start.

November 7, 2016 1:03 am

The elimination of uncontrolled debt-based money creation does not require an end to economic growth. The solution is very simple to state, but extraordinarily difficult to implement. If we define a bank as ANY lending institution, including quasi-banks such as venture capital companies, then the “control problem” arises uniquely from inter-bank transactions. The solution merely requires the clear definition of a distinct asset class for all banks (or quasi-banks). This asset class is defined as any “cash” deposited by one lending institution into another or loaned by one lending institution to another. This asset class is included on the balance sheet of (both of) the lending institutions as asset or liability, but needs to be specifically excluded from the calculation of reserves for fractional reserve accounting by BOTH institutions. This stops the same cash being used and reused by multiple lending organisations as (wholly imaginary) reserves.
Let us say that a bank is operating in a financial regulatory system of 10% fractional reserve. You deposit $1000 in the bank. The bank can lend out $900 of your cash to a business which is not a bank, (or quasi bank) supported by normal loan security. This is normal bank business and a good bank will ensure that it has adequate security for the business loan. If however it places $900 on deposit in another bank or loan institution or lends the cash to another bank, then its reserves (for the purpose of calculating lending limits) fall by the same amount, and in effect it can only lend out $90 of your cash to a (non-banking) business. The bank which has received the $900 on deposit is then not permitted to include this cash in its reserve calculation for the purpose of calculating its lending limit.
This system does not solve the problem of any one bank making toxic loans, but it would ensure that the fractional reserve calculation truly sets a limit on lending (which it does not do effectively at the moment). It would also actively discourage interbank lending other than for the purposes of managing short-term liquidity. This latter should prevent the development of a long interconected Ponzi chain of interbank lending ultimately supported by toxic assets which are invisible to the intermediate banks in the chain.

Non Nomen
November 7, 2016 1:28 am

Be content with what you have. Buy only what you really need, do not run into debt.
That helps to stop the “need” for endless growth.

Reply to  Non Nomen
November 7, 2016 11:25 am

“Be content with what you have.” = No human progress.

Non Nomen
Reply to  charlieskeptic
November 8, 2016 4:26 am

I do have a car. Do I need a second one? Nope. I do have a house. Do I need a second one? Nope. I have enough to eat. Can I eat more? Yes, but I’d vomit pretty soon. I am content with what I have.
I do have knowledge and skills. Do I need more? Of course.
It isn’t difficult, is it?

November 7, 2016 2:37 am

This is the Leftist fantasy world view of economics whereby governments create economic wealth by debt fuelled spending. People in the real world call this bubble economics. All bubbles eventually deflate without any assistance from eco extremists.

November 7, 2016 7:26 am

As someone wrote recently.
AGW is just a cover for these socialists have always wanted to do.
PS: Now that they are rich, they want the economy to stop growing. How special.

November 7, 2016 8:35 am

Dear Mr. Worrall:
Here is a citation for the Chicago Plan as revised and presented in 1939 – A Program for Monetary Reform –
An excerpted version of the 1933 version can be found in this article –
Perhaps you can write the author and get the complete set of original memoranda.

Berényi Péter
November 7, 2016 9:17 am

Fractional-reserve banking is certainly a bad idea, in essence it gives the power to commercial banks to create money out of thin air. If anyone else does such a thing, it is called counterfeit money, a criminal offence. The net result is that the money supply grows like crazy. It can’t go on like this forever, obviously: the US dollar has lost 96% of its value in a century.
However, restricting this power to a government agency is even worse.

The responsibility for money creation would be placed with an independent agency that – unlike our banks – would be democratic, accountable, and transparent

– democratic?
– accountable?
– transparent?
The obvious solution is to let money alone and give the power to magically “create” it to no one, that is, to consider it a crime, no matter who does it. Instead, we can use things that need actual effort to create, like gold, silver, bitcoin, whatever. In that case the market would create as much money as needed and exchange rates would be set by the amount of effort needed to create it, while prices by the ratio of money and goods in circulation.
Of course, this system would not prevent economic growth, only create a sane economic environment. And limit government power tremendously.

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