money

GETTING THE ECONOMY GOING

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BRITAIN’S FINANCIAL PROBLEMS SOLVED AT A STROKE

As the financial crisis affects everyone in the organic industry here's my take on the situation.  Trust me, I have an economics degree. Every year HM Treasury collects our taxes and lends it to the banks. The banks don’t lend it on because of their precarious position.  Every £1000 that they lend should be backed up by real money in their reserves of £100 - that's fractional reserve banking and a magic way to make money.  Unfortunately for the banks, It cuts both ways.  When banks are bust, they need to borrow £1000 from the government to cover every£100 of cash that they are short if people decide to take out their deposits.

We can’t let the banks go down because they’d drag us all down with them.  If a bank goes bust, you will still owe the money to whoever takes over your debt from the receiver.  Inescapably. But all your deposits will be lost.  Irretrievably.  That’s how we could all go bust. And why we have to save the buggers.

So how on earth can we rebuild the economy and put our banks on a solid footing?  I have 2 ideas: short-dated cash and green jobs

SHORT DATED MONEY

Instead of giving the banks the estimated £800 billion that they need to stay afloat - just put the money into the public domain.  There are 50 million adults in the UK.  If the Treasury had given every adult £16000 over the course of 16 months that would be equivalent to what they did by creating money out of thin air to bail out the banks by‘quantitative easing.’  Forget electronics, just print the stuff on paper and get it into circulation where it counts, among the spending population.  Banks don't shop. People do.

Give every adult in Britain £1000 every month for 16 months.  Give it out in short dated£50 notes that expire 1 month from the date of issue.  That would force every person in the UK to go out and spend money before the notes expire.  It would be like a rush of adrenalin to the economy.  Every time £1000 changes hands it adds another £1000 to our GDP and people’s income and profits, which means more tax take for the Government in the end.  The money would still end up converted to 'real' money in the banks on the day they expire, but at least on the way it would have made a lot of businesses profitable and helped people buy organic muesli and pay off their mortgages.

GREEN JOBS

Another way to pump money into the economy is to create green jobs.  Take the unemployed, double their benefit and set them to work making the world a better place.  It’s been done before and it works

In 1933 the US had terrible unemployment during the Great Depression.  Talk of revolution was in the air.  Then President Roosevelt created the Civilian Conservation Corps.  3 million men, dispersed to camps in the countryside, planted 10 billion trees in what had been the Dust Bowl.  They created the National Parks system of which Americans are now so proud and they build huge hydroelectric projects in the Tennessee Valley that still generate zero carbon electricity.

Why not create a Green Army and pay the unemployed to plant forests on moorland? Then pay farmers to look after trees instead of overgrazing with uneconomic sheep.  The carbon offset value of the trees would make it pay for itself.   The Green Soldiers could help out on organic farms, too, helping to restore biodiversity and reverse soil degradation.

The Civilian Conservation Corps taught a generation to enjoy the outdoor life and the satisfaction of doing meaningful work of enduring value.  The Green Army could do the same for people in Britain who deserve a better future than flipping burgers, waiting for the next wedge of 'social'  and being bored in front of a TV.