2013/03/08 Minutes Economics Working Group
Debt, Debt Audit and Jubilee considerations – Papers presented by Dave
What money is? – not addressed. In so far as Graeber says debt came before money, we can address in time. Debt is pseudo money. FIAT currency is on another level not synonymous.
Four domains of debt: sovereign, personal, between financial institutions, non-financial companies. UK public debt c. £1.145 = 70% of GDP rising to £1.5trn (2016) – much lower than post second world war. Has been higher for most of the period since the establishment of BoE. Third of debt held overseas, third in pension and other funds, and third in QE. Without QE, debt would be much lower. Debt interest £44.8Bn pa. Foreign buyers will continue to support the market as long as there are no better opportunities around. Debt to GDP 35% in 2007 caused directly by the banks. Pension and other liabilities £5bn according to Institute of Economic Affairs. Deficit v debt. Annual shortfall of income to meet expenditure. If interest rates rise the interest burden will become unsustainable.
Personal debt: £1.422trn (Jan 13) £23K per capita. Land – house prices driven by liquidity. Housing underpins the financial system. Wealth skewed – driven into tax havens. Student debt. Again rising interest rates will have a catastrophic effect on those heavily in debt.
Financial Debt £6.7trn but foreigners owe us c. £6.4trn. No real idea of the real assets and liabilities of the banks.
Debt Jubilee – not a permanent solution. Ecuador – debt jubilee commission – to be extended to US, UK and Europe. Debt audit will facilitate categorisation, graduating debt in terms of fairness. Government level or by citizens? Caution is required. EFSF is another factor as is the IMF.
Third world debt is insignificant in the context of developed economies. Debt is possible because of the notion of ownership. Debt is a form of social control. Debtor always servant to the creditor (proverbs) – usually rather than always. Productive debt v for consumption (out of need).
The community alone as the sole possible lender? 1545 Act In restraint of Usury enacted by Henry VIII should be repealed. Debt has no solid foundation (City of London) – indulging in £70bn tax avoidance. “Treason doth never prosper for if it doth none dare call it treason.” Money is the seat of sovereignty in the modern age.
EWG Methodology – need papers much earlier so that people are well prepared in advance – attempting to cover too much in the paper. External debt v internal debt – External debt is the most important. Developed world debt v developing world debt. Centralised control of debt is fraught with its own danger.
Debt based economic system is too complicated, over complicated. Hydra multiplying useless heads. Emergence and creation of money. Master/servant relationship. Multiple currencies of exchange – is not equal. Productive debt positive sum game; consumptive debt – zero sum game. Debt is a product of the imagination. Money is conceived by man and is unstable.
Paper on Labour is unresolved but Debt Audit is a good stepping stone to make a global contribution. Philosophical backing from intellectual heavy weights eg. Badiou. Everything is being done with love. Undermined by Daily Mail. London is a global city. EWG in UK is potentially a global force. Austerity, gentrification for the benefit of the global rich. Real democracy alternative.
Interest: impact, suspension, audit. While moving step by step makes sense we need to have an ultimate objective in sight – debt/creditor power dynamic – if you owe a bank £5bn, you hold the balance of power. Where to learn about debt? Www.kahnacademy.org – finance, maths and more. Community lending? Debt: Personal (families etc.), corporate (including public bodies) and national. Debt audit v progressive issues around debt. Communities as lender. Tied into citizens income and other initiatives. GIRO bank costs covered – library model. Interest is not necessary. Alternative Sharia’a – also usury? How to do a debt audit? Need to open the eyes of the beneficiaries.
Debt audit group before EWG? – get external people involved with the help of Haldane. Inequality destabilises – equality stabilises. Call for Debt Audit at next week’s Debt Assembly – approved.