IMF ECONOMISTS: ‘WE WERE WRONG.’

FAB / IMF – WE WERE WRONG

Two economists at the International Monetary Fund published a paper (The Chicago Plan Revisited) saying that fractional reserve banking causes most of our economic woes and that removing it would increase our GDP by 10%. This is according to the mathematical models the IMF has of our economy. The Chicago Plan was first published on March 16, 1933 by 8 economists including Irving Fisher. Its main proposals were to end fractional reserve banking and to dramatically reduce government debt.

Instead of listening to Fisher President Roosevelt confiscated gold which handed bankers an immediate 75% profit. FDR did meet with John Maynard Keynes but was not intellectually equipped to understand a word he said. Keynes wanted FDR to spend more on public works and less in direct relief because of the multiplier affect of investment as opposed to transfer payments. FDR chose to spend more in swing states like Pennsylvania and California accounting for the mass starvation in the solidly Democratic states. FDR also chose to listen to Bernard Baruch and Hans Morgenthau. For example, he paid cotton farmers to not plant cotton to drive the price up. The land owners pocketed the federal money and kicked the sharecroppers off the land. This in part created the Dust Bowl and led to the death by starvation of many of the displaced Okies (Oklahoma sharecroppers). The demographer Borisov says between 3 and 7 million Americans died of starvation while Roosevelt was in office. The worst part of the Depression did not start until the British devalued the pound on September 21, 1931.

Under a fractional reserve banking system, a privately owned bank can lend out ten, twenty or even thirty dollars for every dollar on deposit. If Mrs Smith deposits $1,000 in her account, her banker can loan out $10,000 or more dollars. This adds $10,000 to total demand for goods and services thus distorting the economy on the way up in a credit or business cycle. We get a lot of malinvestment in the boom years as businessmen and home buyers do not see the underlying problem of the fractional reserve credit cycle. When the man who borrowed $10,000 pays the money back plus the $1,000 interest, the banker subtracts $10,000 from the Money Supply and adds $1,000 to his profits ledger. The problems are that paying back debts (also known as deleveraging) destroys money and in sufficient numbers first leads to a recession and then to a Depression. And finally there is the problem of the 11th marble. The borrower was loaned ten dollars but had to pay back 11. That extra dollar had to come from someone else getting a loan to create the money he needed to pay back his loan plus interest.

Professor Steve Keen has proven that an increasing level of public and private debt leads to higher unemployment and lower wages. This perfectly describes America for the past 40 years.

Irving Fisher’s plan was to reduce government debt and to eliminate fractional reserve banking. In the Notes below I explain my plans to make government debt at the federal, state and local levels illegal and to cancel a lot of private debt as well. Professor Keen wants to cut $20,000 from every adult’s debts. I agree but would limit it to citizens. And I have much better funding sources. I also would credit $20,000 to retirement for those without debts, And allow it to be used as a down payment for first time home buyers.

Those two IMF economists listed the following as proven benefits from ending fractional reserve banking.

1) It would reduce business cycle fluctuations.

2) It would completely eliminate bank runs.

3) It would dramatically reduce government debt. (Please note the works of Rogoff and Reinhard who proves that all governments default after debt to GDP reaches 90%.)

4) It would dramatically reduce private debt as money creation no longer requires simultaneous debt creation. (As I said, Professor Keen and I both want to cancel a lot of private debt as well. But I would take it from the tens of trillions of dollars stolen from us by the bankers.

Notes: I would like to suggest the following as the most feasible means of seizing the tens of trillions of dollars stolen from us by the bankers:

Memo To Pentagon: Compare The Invasion Of Lichtenstein And The Cayman Islands To War With Iran And Syria

http://vidrebel.wordpress.com/2012/08/06/memo-to-pentagon-compare-the-invasion-of-lichtenstein-and-the-cayman-islands-to-war-with-iran-and-syria/

This next article tells you something of the evil nature of bankers:

Catherine Austin Fitts: The Black Budget And The Leveraged Buyout Of The World Using Stolen Money

http://vidrebel.wordpress.com/2011/11/10/catherine-austin-fitts-the-black-budget-and-the-leveraged-buyout-of-the-world-using-stolen-money/

For the less technically minded this next article explained what Debt Cancellation would look like though some object to the race of the persons involved.

Eddie Reborn Into A World With Debt Cancellation.

http://vidrebel.wordpress.com/2012/07/10/eddie-reborn-into-a-world-with-debt-cancellation/

The next article explains how Debt Cancellation, pension reform and healthcare reform could work:

What Real Debt Cancellation Combined With Pension And Health Care Reform Looks Like Part II

http://vidrebel.wordpress.com/2012/07/12/what-real-debt-cancellation-combined-with-pension-and-health-care-reform-looks-like-part-ii/

I first heard of the above IMF paper in this video.

The article referenced in the above video is here:

The paper mentioned in the above video is here:
http://www.positivemoney.org.uk/2012/08/imf-working-paper-offers-supports-full-reserve-banking/

https://vidrebel.wordpress.com/2012/08/19/imf-economists-we-were-wrong-will-someone-please-tell-the-press-and-the-politicians/

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