How to save the British Banking System
I was discussing the British economy with my colleague Andy the other night, and we both agreed that something needs to be done about it. But just moan in fear isn’t our style, so we came up with a very simple plan on how to save the UK from a complete collapse, while each of us citizens will draw the better end of the stick.
The trouble at its root is that banks have lent THREE TIMES the amount of money that actually EXISTS in the system. That’s right, out of every £3 I have spent with my credit card, only £1 actually exists in real life. Where did the other £2 come from? How can I have been given them, if my bank didn’t own them in the first place?
Now my house bank is asking the Bank of England, “Can you lend me another couple of quid I’ve already given to Jay (and I’m charging him for those)?” Of course it’s not only MY bank, and it’s not merely about £2, it’s about MANY banks and MANY British Pounds; in fact it’s a total of two trillion I think is the latest figure. Grandma will have to knit very many scarves for that!
I personally can’t see how this faux pas could have happened in the first place. Say my neighbour asks me for a hammer; I can only give him one if I have it. If my other neighbour comes running at the same time, I can’t just give him ANOTER hammer, because I haven’t got another one. Easy as that.
But with numbers on a piece of paper it appears to be different, especially when everything is a virtual thought construct (like the popular Japanese 75 year mortgage agreement). Theoretically, I can easily add a few zeros to the end of my Nat West Online Statement – statement now says I’m a Gazillionaire it doesn’t mean I that I am. So Andy and I think we should all put in a phone call to our bank and tell them the following:
Say I have a £90.000 mortgage on my flat. That would mean that when my bank agreed to lend me that amount of money, they only really had £30.000 in their pot. They lied to me through their teeth and pretended they had an extra £60.000 spare, and that they were happy to give me that as well. This makes me feel a lot better when I in turn lied to them about my INCOME! But it also means that I never really had the other £60.000 (because they didn’t exist at the time of lending) – so why should I ever pay them back? I wish there were more credit repair company with money-back guarantee, these days, it is all fly by night.
If we’d all tell our banks that we’re only going to pay off ONE THIRD of what we owe them, from overdrafts to mortgages to credit cards and loans, we’d ALL be better off. Apart from the unfortunate ones with money in their savings accounts of course. The banks in turn would have to face responsibilities, like any other business that ill trades and go into liquidation. And then we’d all start with a clean slate. The Bank of England wouldn’t have to borrow money from other countries and could raise interest rates to about 12% to reduce lending and encourage savers to put their money away again.
The alternative of course is that do not divide our debt by three, we could instead TRIPLE the price of all the goods being sold. That way, our debt and savings stay the same, but a loaf of bread will now rise from £1 to £3. A new Polo wouldn’t be £10.000 anymore, it would cost £30.000. You get the picture. But in order for us to afford these steep new prices, our employers would have to pay us THREE TIMES our salary and in turn charge their customers three times of what they used to charge. Quite frankly, I can’t see this working.
What we’re suggesting here is of course INFLATION in its purest form, which has happened many times before in economic history. A sure fire way out of this crisis is to “press the reset button”, and our system would work out well for both Britain and the People of Britain.
Or, we could just sit back, lower VAT to 0%, cut down interest rates to 0%, and if that doesn’t help we can always print more money (in line with the government’s current back-up plan).
“But Jay, doesn’t that ALSO cause inflation? Wouldn’t that devalue our currency just as much?” I hear you ask. Andy and I were discussing this too. Although we’re no experts, but we think it sure as hell will.
The difference is that the government’s money-printing-plan is most certainly going to SCREW somewhere along the line. Our suggestion of “33% Payback” will give us a real break, while punishing those who are truly responsible.
Are you in? Sign the petition today!