Rebooting economy ================= Soft touch approach ------------------- When things start to get screwed up and/or imbalanced beyond repair: run a reboot process. Proposed checklist: http://www.socialism.nl/post/000/135 See also: http://www.socialism.nl/~joshb/aksie/virtual-reboot-sim.txt which is a scenario where banks play no role. When the banks are still standing, while people still have a checking account with a bank, at some realistic real world value, rebooting the economy is much easier then having to build a banking system from scratch. The easiest way is to get into contact with the retail-banks, ask whether they want to continue as retail banks offering account services only. If they say no: the bank is seized without compensation, and its assets can be administered by people from other banks who said yes. Pass laws that make it impossible for banks to make loans with other people's money: the money in a bank account stays exactly there. Then there are a number of options: (1.) - Leave all the money in all the accounts as it is, under the names of the people they were in. - Set up a bank account for each retail-bank with the Central bank if it does not already have that, make its value equal to the total in all accounts of the retail bank. - Ask that the bank splits itself in a consumption/mortgage debt division, a business credit division, and a bank-account services division. - Privatize the bank-account services division, redeem its outstanding debt, sell it its operation assets (machines, offices) against a collateral-value loan. There is a high potential for fraud in this soft-touch option, as people create fictitious accounts and get them rolled over into the new system, and as dirty money gets ratified as money. - The mortgage/consumption-credit division can either be privatized or be nationalized. If privatized: its capital can be turned into a loan that the Government is extending to this business as a tool to work with. This means the Government keeps leverage over this business: the loan can be recalled when the Government decides to do so collapsing this business, the Government can suck out profits by partially recalling this loan like a punitive action. (Note the proposed Constitution ( http://www.socialism.nl/law ) has a law with which you can prohibit a type of business to have more then N amount of total wealth (8.2.a-10, Company Capital Limit.)) The consumption credit and mortgage collateral in the non-business credit group can be left in its running loan situation, if none exists it can be sold. The outstanding sum minus reasonable profit would be added to the loan the Government extends to the credit/mortgage business if that becomes privatized. If the credit/mortgage group is nationalized the loans can continue. It may be a good idea to cut all loans back to actual collateral value, so that the loans at least are realistic loans. - The business credit division will have to be "socialized." This means at least it will have to apply with Government for a permit to be allowed to make investments, which should only be extended based on what kind of companies will get funding. Its capital can also be extended to it as a Government loan. The other option is to nationalize it, make it become directly subordinate to the political Government, who will set the policies of this new business investment services group, and/or direct each and every investment. The goal of this is to fund the type of business that people want to work in, shy capital away from the highly profitable megalomaniac and abusive business bosses. At that point the retail-banks have become sound. They are ready to start their life as a service industry business. They make no loans or any investments: they service accounts, and that is it. At this point one has a working money system, and there is the option to leave it at that for the time being. Not to shock the economy more then necessary, potentially doing more harm then good, it may be a good idea - the situation permitting - to at least introduce a pause here. Going further: The Government could end up with the gambling certificates, debt and collateral, etc. These can be dealt with: the company stock/shares can be declared illegal or turned into "normal" capital loans for the business credit group. The companies that have issued stock can be democratized, as they sold their ownership and are thus without legal owners. Ownership then reverts to its normal entity: the workers (the original entrepreneur has sold, thus stepping down.) At that point a new currency could be declared for areas that are in a supra-national currency (like the EU and dollar). Cash can be switched when the new cash is ready, and bank accounts are assumed in the new currency. A problem with a legacy inflated old currency can be handled by issuing the new currency at a much higher value per unit, for instance 25 times more valuable. A bank account having 2500 on it, would end up having 100 on it, and 25,- old currency becomes 1,-. The drawback of this option is that the wealth-disparity fostered by the old system is transported into the new system 1:1. Each nation will issue its own currency, otherwise it is not a Nation but a province in a larger entity. Since it is unwise to have countries be too large (leads to unstoppable corruption pressure, because the distance top/people becomes too large) the "big empires" have to be cut up into pieces, particularly: EU (back to all the old countries), USA (make up a hand full of new countries), China (make up a dozen new countries at least!), India (make up a dozen new countries at least!). Each of these countries will issue its own currency. From that point on these currencies should be kept at a rock-solid value from century to century (ideally), thus making international payments lots more predictable. The varies central banks can through diplomacy and trade work out a effortless exchange system between all these currencies, so that normal people and businesses can trade across the border with each other as if they are using normal bank transfers within the same currency. It is possible especially for the neighboring countries to not prohibit businesses to do trade in (selected) foreign cash currencies and even pay taxes in a foreign currency, thus vacuuming out toward Government/banks the foreign cash that made it into the economy, presumably from tourism and border crossing trade. No doubt this system can be made as effortless as one wants to, while maintaining the sovereignty of the Nation in controlling its own unique money system. The variety of sovereign nations brings stability to the financial world, corruption in one nation only sinks that nation, not the whole world, power remains distributed preventing global tyranny. A more proactive method of dealing with banks & investment groups: ------------------------------------------------------------------ (2.) - Ask the banks to locate one primary bank account for each person, have the records cross referenced so that one person does not have a primary account with multiple banks. - Remove all currency in all accounts to zero and declare a new currency, cash becomes worthless. - Credit each account with the same sum of money. - ... the rest the same as 1.: make a Central bank account for each bank, credit it with the total in the bank, and take over the gambling positions. The benefit of this is that at least vast differences in wealth in the bank-accounts has been deleted. The wealth differences that remain in the real world possessions is, of course, not solved by this yet. To solve that a person would need to go house to house (harbor to harbor), and deal with excessive wealth in order to get the economy in starting positions (if that is desired). I suppose that solving real world possessions is done best by first targeting the very wealthiest person, offering it to buy back what it has more then average on a loan. If its not accepted, the Government takes the goods not bought again for sale. Then go to the next wealthiest person/groups, and so on, until one reaches a point where it isn't worth the effort anymore because either political will is sapped and/or because one reaches averagely wealthy people. From the other end one would seek out the very poorest person, and offer it the ownership of goods up to average wealth. If accepted the poor person gets the wealth for free, in the form of money this would be most practical obviously. This process can also go up the poverty levels until one reaches average wealth. With this done everyone is at starting positions in the economy, and the old imbalances have been deleted from the system. From then on it is a matter of: work, trade, and keep the law. A method in-between these two: ------------------------------ (3.) - Find a primary account same as under #2. option, and then don't delete all funds but delete everything above a certain level. The benefit of that is that there is more continuity between the old and new situation, which can be fair if the old situation had significant resemblance between actually worked effort and wealth. One can decide to declare all cash worthless, declare that cash can be exchanged for a new currency at Government switch points, at a maximum per person or unlimited. One can leave the old currency and cash going on, until new bills are ready, and then make the currency switch. Another more involved method is to try to find out what work a person was in: did the person have stocks and was a money gambler and thus not working, or was it a working person. One can then decide under options that zap all money to give the working person an initial sum X + Y, while the gambler is only getting a sum X. Under the options that transport the old currency one can make the the maximum allowed sum for working people X + Y, and for gamblers only X. The deleting all money and redistributing wealth at starting positions is the cleanest way to break with the old injustices. The transporting the old cash more or less method is potentially least of an upheaval. A solution that has a bit of everything: transporting all accounts up to a maximum per account; slashing accounts of known professional money gamblers down; don't accept any cash at all to hurt crime syndicates who use cash; use a high value for the new currency during bank account transition so that numerical value in accounts is low; and then use the slack in the currency (created by the bank-account turn into a high value new currency) by giving the poor significant initial money to compensate it for its poverty, level the initial starting positions; while only tackling the real world possessions of the top N% most wealthy directly by offering a re-sale or repossession by the Government (includes homes, lands, everything, except what amounts to about average wealth). It is a matter of political will and how much the situation has degraded or not, what option is best. If nothing is yet wrong with the real economy the soft touch option is probably best to start with. Changes can later be prosecuted with greater determination. One way or the other eventually the financial situation should end up as a unique local currency, a retail account services industry, and a politically controlled business investment system. The optimum way to get there is weighing the cost of the process itself as a cost to the People, against maintaining for longer the injustice of the imbalance in wealth distribution to the People. More issue: ----------- Business accounts: Business accounts can be handled in the same way as person accounts. What to do with business to business or costumer debts ? The simplest way is to destroy all money and debts, the Government comes to own everything and offers all businesses to buy their assets back at a collateral value non-profit loan. The loan can run with the same speed with which the object degrades, thus the outstanding sum follows the remaining collateral value. This ensures a level playing field between all businesses, and none would go bankrupt since debts have been destroyed and they are not forced to buy their assets back. If they do not buy then the Government can sell the objects. A more complicated idea is to leave an extend of the currency, and the business to business/costumer debts. That might work in an economy that is not significantly unjust/degraded, and does not present too many problem cases to deal with. The debt can be cut down to the portion for which there is still actual collateral value. If a person has taken a loan for an object that has degraded or been destroyed (not by its fault,) then there is no collateral and therefore the person paying the loan, pays it for nothing. From the perspective of that paying person this reduces its economic starting position. A person having taken lessons but failed them miserably so that no useful marketable skill was learned, but is paying a loan for the lessons, is paying without possessing the collateral value (in an economy where the politics decide learning becomes free or even payed for as a job by Government, the old education loans can be destroyed for the sake of equalizing the position of the old and new people). When the money is zapped, when debts are destroyed and nothing is done with the ownership of the valuable objects (machines, factories, etc), a business unfairness can come back: businesses that have just bought new things are at an advantage compared to other businesses that would in the near future need to replace things. The buy-assets-back on collateral value evens out this problem, also with respect to new upstarts in the sector, which is the goal. I suppose one could make an estimate of the total value a company has in objects, deduct some percentage for fairness, and make a loan with the company for that. When someone starts a new company and has to buy objects to start the work, then all companies would be on a level playing field as they are all buying back their objects. If some companies get to keep large factories for no money then they might end up on an advantage that might last decades, thus unfairly crushing the competition. Having companies pay for their objects prevents a mad rush to attain ownership of objects just prior to a money and debt destruction process. Work, elderly, unemployed, crippled, sick: Note that for people who have actual job skills the reboot and resale is not that bad a problem, because presumably they will be able to market their skills again and get a good price for their work, thus being able to afford the same level of wealth. This is more of a problem with people too old to work. One idea is to leave them where they are unless their wealth is extreme and/or clearly unjustly earned (for instance through speculation or using cheap labor.) The unemployed could be given a Government job security in one of the nationalized monopolized sectors, until the unemployed person finds a regular job. The work should be useful to the common interest. If none can be found then the job reverts to a hand out. The parameters of the job and/or hand out can be politically adjusted to reach goals. One of the jobs an unemployed person can do is getting an education, thus becoming a more valuable asset to the community and being more able to find work. The crippled and sick will have to get an adequate hand out, and where possible it can be found out what work they can still do even if at a vastly reduced amount. The point of a (mild) work pressure on the sick and crippled would be particularly to improve the quality of the lives of the sick and crippled because working is a good thing. Not to squeeze them until they are as productive as a not sick person, or force them into jobs that they don't want but where they can be maximum productive. The social political process can adjust the parameters until the situation is satisfying. How would an average person like to be handled if he got sick and/or permanently crippled, and see its options reduced. These things would have to be put into action immediately if the old system stops working or did not work to begin with, otherwise the people who can not work are in big trouble immediately and would in principle start starving. See also -------- More change ideas/script: http://www.socialism.nl/post/000/147