7 Reasons Why We Need a Global Default

May 24, 2010

Last month the IMF released a series of policy papers recommending austerity measures for all Western countries, including the USA. The recommendations were reviewed by Howard Schneider at The Washington Post and summarized with the headline “For nations living the good life, the party’s over, IMF says.” The papers predictably called for things like the depression of wages, increasing taxes, and pushing back the retirement age. They also called upon the Western nations to devalue their currencies, including the US dollar. The IMF papers frankly implied that we all have been enjoying a standard of living that we didn’t deserve, thus the “party” headline. These sentiments were echoed by New York Times columnist Thomas Friedman, who denounced us all for eating through our post-World War II economic abundance “like hungry locusts”, and believing that the “tooth fairy” would somehow keep it all coming.

Friedman is not the only figure in the mainstream media and politics that has been pimping the idea of austerity measures to Americans, and implying that, through our laziness and greed, we have all brought this financial crisis on ourselves. Despite the fact that Americans are now working longer hours than any time in the last 40 years, with greatly increased productivity and ever-decreasing inflation-adjusted wages, and a steadily-declining standard of living, going without health care and forestalling retirement at unprecedented rates, people like Glenn Beck frequently state that we’re going to have to “tighten our belts” to save our children’s future prosperity. This has become the Republican co-opted version of the Tea Party’s new message of fiscal responsibility. In their world-view, it’s “conservative” to go along with austerity measures imposed by a privately-owned international corporate government entity, to accept higher taxes and the theft of your pensions and entitlements so that your government can make higher interest payments on an unpayable debt to banks.

But in fact, adopting these measures will condemn our children to a life of complete serfdom. The new taxes are never going to go away, the retirement age will never be lowered back down, and the pension money is never coming back. It will just be lost forever into the black hole that is the global banking system. The banks don’t need any more of our money. They make our money. What they need is more control over their slaves. The belt that is being tightened around us right now is one of bondage to corporate overlords through a debt that can never be paid.

What really needs to happen is that every country, every corporation, and every man and woman on Earth need to default on their debts to the banks. We need a global default. You know it, and I know it. But in case there’s anyone out there who doesn’t know it, allow me to give you the 7 main reasons why we must have a global default.

1. All debts were based on loans extended by private banks with money created out of nothing by fractional reserve lending, which is fraud.

2. The banks will not be losing anything, since they never had any money to begin with. They will only be losing the hope of ever collecting on the fraudulent debts they’ve created, which is all they ever lost in the first place. Think about it: the entire “credit crisis” that started in 2008 was a bunch of bankers having a hissy fit because they were unable to get people to pay off the fraudulent debts they created, even though any reasonable person, looking at the underlying debts, would have concluded from the very beginning that they were never going to be paid. It would be like if I ran up a bunch of debts on credit, with the expectation that I was going to be able to pay it back by winning the lottery. And when I didn’t win, I went crying to the government, demanding they pay me the lottery winnings I was expecting so that I can pay my bills. In this scenario, I didn’t anything. I just had an unrealistic expectation that I would win.

3. As Ellen Brown explains in my recent interview with her, countries do not need banks in order to create money. Therefore it is possible to create a solution wherein governments do not need to borrow from them in the future, and therefore we would then not need to worry about what they consider our government’s credit rating to be. Indeed, what does a “credit rating” mean coming from a banking cartel that has had to borrow trillions from taxpayers over the last 2 years just to stay in business?

4.The countries and banks that are bailing out other countries and banks are themselves bankrupt and in need of a bailout. In other words, the people of every nation on Earth, and indeed almost all corporations on Earth, would actually benefit immediately from a global default, even factoring in the lost revenue they would suffer because of their debtors defaulting on them. The end result would still be a net gain for almost everyone.

5. It is not possible to “tighten your belt” around a $700 trillion hole in the global credit markets caused by toxic derivatives that were created and sold through fraud. There is not enough wealth on Earth to pay for it all, nor will we ever be able to pay for it with the slave labor of our descendants, because compound interest will always make the debt larger.

6. We can cancel out most personal and corporate debts as well, since most of them were created in the same fraudulent manner as the sovereign debt. Since everyone’s now in debt and nobody has good credit, it’s only reasonable to level out the playing field by hitting the reset button, hopefully for the last and only time, to allow us all to begin building good credit again, and ideally, relying much less on credit at all in the future.

7. We can start almost from scratch right now to create national systems of finance and international trade mechanisms that are fair, functional, and sustainable, built on 21st century understandings of economics, built to function within 21st-century nation states. Ideally, this “system” would be much less “systematic” than the present one, much less centralized, and thus with much less risk of systematic failure.

There are a lot of different ideas about how to reform the system. We have explored some of them on this website and on our podcast already. We will continue to explore more ideas in the coming weeks. These ideas come from people with different economic philosophies and political persuasions, but the things they all agree on are that the current system is built on fraud, is responsible for creating many of our societal problems, and is doomed to catastrophic failure. So the idea here is, if the system is going to collapse, why let human civilization go down with it? Why not let the system of make-believe money and crushing debt collapse into its own footprint, while we create a parallel system that will prosper and carry on long after the former system is a dusty memory? There’s no need to allow real wealth, real assets, and real human labor to be tied any longer to the fate of fictional debt instruments.

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