New Age Solution to Global Debt Crisis

With the world in a new once in a century economic dire new solutions need to be forged to put the world back onto a path of growth and prosperity. When I was a young teenager knowing zero about economics, not even knowing that central banks existed and printed money. I recall saying to an old friend, why don't banks just print money and give everyone free money. Well fast forward to today and with the knowledge I now have of finance and economics, which is only a little bit more than then but I still can think outside the box. So this is my new idea / solution to the crises:

New Solution to Global Debt Crisis
The simple solution would be Private Peer to Peer Central Banking. So how would this solution to the global debt crisis work.

- National Central Banks still retain money creation control.
- Private individuals must have a minimum of £100k cash to start a Private Central Bank.
- Private individuals allowed to leverage their own cash capital 100:1 with lowest cost funding provided from the Central Bank.
- Central Banks fully back the >£100k collateral from loss to individuals Private Central Banks, Central Banks effectively replace losses with new printed money.
- Small loans of >£2.5k <£5k from the multiple Private Central Banks to individuals, small businesses and banks.
- IT system for operation provided and run by the National Central Bank which maybe delegated to a next level down strong traditional bank, say HSBC or similar, run at small overall cost say 0.1% per loan.

What would be the further economic benefits of this?
New Private Central Banks would deliver job growth on 3 fronts.
1. The individual running the new Private Central Bank would give up the day job, effectively creating a new job.
2. The new much needed loan growth would stimulate jobs and inflation in turn reducing the deficits quicker which would in turn create a cycle of growth.
3. The individual running the new Private Central Bank would have a new found wealth and thus start stimulating the economy from spending more money than normal from profits, or further investing which also increases GDP / stimulation.

In addition to this:
- Traditional banks get a new source of funding which is leveraged existing cash M(1-6)-whatever, 100 fold increase, which can compound up as stable growth in the economy filters through.
- Governments and central banks MUST control the rate of growth at <4%.
- Loans given by Private Central Banks must be secured against assets.

A significant amount of Private Central Banks can co-exist globally and potentially allow money creation of any currency linked to whichever Central Banks join this new innovative solution. Will Mervin and Tim go for this?

UPDATE: After my comments the BOE & Conservative government are to provide £100bln in loans via banks starting Q3 2012. This has parallels to my calls for stimulation and has impressed the USA FED who may implement a similar scheme. They should pay me a consultancy fee, circa £1 million would do, cheaper than Goldman Sachs advice.

Germany Under Pressure

I fully back the German stance for requirement of european wide fiscal policies, I would never expect the UK to back a whole region with it's money without fiscal discipline policies to rein in the renegades like Greece and it's fellow country followers. The statments from other people of loan now sort it out later is not acceptable, as evidence of austerity has been week and thus the risk of loss increases significantly. This is why the Germans are now taking a hard line, promises have not been kept, no policy no loan, as they say the market would not trust the EFSF fund, it in itself would become the biggest toxic bazooka within a year if policies are not created and not met. Of course the policies could be created and not met, but you wouldn't know this to be the case for some time, just like the Greek trojan sent into europe. Im glad to see the Germans are not accepting large brown envelopes and sending their country into the pit of rabbid dogs (european clingons).

USA Deficit Debt in 2021

Ten years of deficits at $1.3 trillion per year is $13 trillion in total new deficits. Add that to the $14.8 trillion outstanding today, divide by 97 million above poverty line households, and we get about $286,000 per household, as shown in this next graph.

USA Debt Per Household Income


USA Debt Going Up


USA Debt Total Per Household


USA Nationa Debt Summary...Oh My God


How will this be paid. Simple answer inflation over time, 20 - 30 years US $ will be worth a fraction it is worth now compared to assets. This will be in the region of 5c to current $1. May as well quit your job and go back to work in 20 years because anything you save for retirement will be washed away. Yes simply give up, buy gold, oil & food stocks / ETF's is my recomendation.

Corruption in Europe to Consider Suspending Rating Agency Ratings

Under one of the most contentious proposals, European regulators would be given powers to suspend credit ratings of countries undergoing bailouts. I'm ringing the corruption bell high and loud here, this is a distortion of markets and free speech. It's like banning a doctors opinion in his own surgery, leaving the patient to be pumped full of the wrong drug, maybe killing the patient. Does this mean the European union will 100% guarantee bond holders who are unable to gather specific guidance on buying a countries bond issuance, investors would be buying blind, potentially throwing money away. NOT Acceptable.

Germany Tax Payers to Underwrite Europe & France Debt

I'd just like to fortell everyone how under mounting pressure over the coming weeks will see Angela Merkel back Europe & Frances debt from their own tax payers pockets. I thought it was bad in the UK with the QE parties but I'm feeling rather grateful to be a UK taxpayer compared to a German taxpayer. They'll be bailing out other countries who don't even speak the same language and in Greece's case, it's like they're raping the Germans for free money and have got away with it for years. I guess some people where given large brown envelopes, Goldman Sachs being one that springs to mind.

Apple Shares Drop 7%

Apple miss in quarterly results, Apple shares dumped dropping 7% to below $395. Fourth-fiscal-quarter earnings jumped 54% to $6.62 billion which is equal to $7.05 a share, from the year ago period. Revenue climbed 39% to $28.27 billion. Apple’s results in part reflected lower-than-expected sales of the iPhone.

France and Germany Agree €2tn Rescue Fund

So the Guardian say. But is the Guardian just rehashing already known news from an EU official who is out of touch. Or maybe they want to ramp shares for some reason, maybe for government favours? Who knows, but Americans have took the gamble on their own stocks based on 1 report. The Guardian goes on to say:

Quote: France and Germany have reached agreement to boost the eurozone's rescue fund to €2tn (£1.75tn) as part of a "comprehensive plan" to resolve the sovereign debt crisis, which this weekend's summit should endorse, EU diplomats said.

I suspect this maybe a bit of pressure being used from circles outside of Europe, the UK / USA government are keen on seeing the EU print lots of money to save the banks from their ludicrous gamble on Greek debt. In fact only reading the second paragraph goes on to say:

Quote: The leaders of France and Germany hope to agree a deal.

Yes the second paragraph says hope and the first paragraph says will endorse. It's a contradictory article, simple used to as an attention seeking article. Lets hope the journalists are abusing their powers to trade the markets, "they wouldn't be greedy corrupt cheaters now would they", he said sarcastically.

Apparently Berlin are playing down prospects of a full-scale deal. So who do we trust, the Guardian or the Politicians........However there is strong signals being made that some agreements will be made this weekend.