Douthwaite adds:
The neatest solution would be for the European Central Bank to create money and to give it (rather than lend it) to governments in proportion to their populations. This would allow further public spending cuts to be avoided and, in countries with relatively small budget deficits, national debts to be reduced.
Printing Euros and giving them rather than lending them to the member countries would be akin to the "Greenback solution" -" simply allowing governments to issue the money they needed directly, interest-free and debt-free. As Thomas Edison observed:
If the Nation can issue a dollar bond it can issue a dollar bill. The element that makes the bond good makes the bill good also. The difference between the bond and the bill is that the bond lets the money broker collect twice the amount of the bond and an additional 20%. Whereas the currency, the honest sort provided by the Constitution pays nobody but those who contribute in some useful way.
To avoid inflating prices when the economy reaches full employment, the money could be taxed back to the government or returned as user fees for public services.
Restoring Credit with a Publicly-owned Bank:
The Model of the Bank of North Dakota
There is another possible solution to this dilemma. Neither states in the U.S. nor those in the eurozone can print their own money, but they CAN own banks, which can create bank credit on their books just as all banks do. Most of our money is now created by banks in the form of bank credit, lent at interest. Governments could advance their own credit and keep the interest. This would represent a huge savings to the people. Interest has been shown to make up about half the cost of everything we buy.
Only one U.S. state actually owns its own bank -" North Dakota. As of last spring, North Dakota was also the only U.S. state sporting a budget surplus. It has the lowest unemployment rate in the country and the lowest default rate on loans. North Dakota has effectively escaped the credit crisis.
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