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It’s the Economy Stupid

The title of this article was a slogan in the 1992 Clinton campaign. Have you ever wondered why you continually see changes in democratically elected governments from right to left and from left to right and then switching back again? You see this on a global basis not just in the USA. Were those leaders so incompetent that the electorate had to change back and forth? In the UK, they elected a conservative party and then skipped over the liberal party to the ultra liberal party to form a government. In Egypt they kicked out a right leaning dictator voted in a left leaning Muslim and were so unhappy with the economy and his governance they forced him out too. What is going on here?

The general population always wants to see a thriving economy and a quality standard of living or at least an improving one with opportunities for advancement. Why are those leaders not delivering? Why can’t they govern? The reason is the leaders are not in control of the major influence on the economy regarding the amount of money in circulation or the money supply. Money in circulation is the life blood of any economy. You can reduce it too much and/or over concentrate it in the hands of a few and you will see a recession/ depression. A quality economy needs to have money flowing and diversified in many different hands. (Also, monetary sovereign governments should not be charged interest to create their own money!)

Therefore, monetary reform should be on top of the agenda for debate. It is not even on the agenda or even discussed in the campaigns. Why isn’t monetary reform the major economy issue? The first reason is the hidden nature of what money is and how it is created. Another reason is ignorance and the failure of our leaders to read or research. Another major reason is the amount of money the banking sector contributes to campaigns and lobbying. Also, the fear of change, any change, always hinders any debate and implementation. Therefore any reform proposals have to have a Win-Win scenario or the powerful banking industry will stop it in its tracks. Most of the current proposals are too far left to get the time of day by the right. Also the “business right” still evaluates the entire economy the same way it considers an individual business or industry. It is almost the complete opposite.

The goal of individual business or industry is to maximize profits either over the short run or the long run. Therefore, one of its major objectives is to reduce costs of which labor is one of them. The “right” considers the fast global labor pool as another market or commodity, subject to supply and demand. It can’t be because a quality economy needs to have a substantial amount of well paid customers-clients so they can buy the goods and services that industry produces. Labor-employees are the customers and clients. (See Henry Ford-Model T in 1907)

Therefore, the answer to a quality economy is to get these employees/customers enough money to spend and save. There are two ways: increase their pay and/or provide government provide benefits and/or provide money to these customers. If you have enough government subsidies and/or straight money, you do not have the wage cost pressure on businesses. If you have basic quality customer minimum wages you can reduce the competition on wages. This creates a quality customer/client/consumer/citizen which in turn creates more demand which creates more employment. A businessman will almost always expand to meet his sales demand!

Money does not get into circulation unless someone goes into debt. Then the interest charges on this debt which costs almost nothing to create goes to the commercial banking sector. This is the process that competes for capital for other investing and stifles the rest of the economy. Also, this process does not create the interest on this debt causing unnecessary scarcity, conflicts and hardships.

It is not written that you have to create money using debt. It takes a simple push of a computer button to create it. It can be distributed by debt, equity or direct currency issue. What is important is that it is created by government with checks and balances and has a significant amount of distribution systems (private & public) to overcome human error, greed and excess inflation that come with this operation. This does not stifle the private financial system-it expands it!

Complete monetary reform will provide enough capital to solve our problems like the environment, inequality and crony capitalism. Please review the “Monetary Reform Section –The Big One”.

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