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Debt Annihilation

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Published on May 27, 2012

In this 12 minute presentation I argue that there is a way to get out of the debt crisis by using the commercial banks' money creation trick to generate enough money to cancel out debt. To generate a given sum, the Basel III rules require that a bank has about 8.7% of the sum in deposits. Thus, Greece's national debt of €350 billion could be generated by a special Debt Annihilation Bank if it had an account containing the threshold value of €30.4 billion. Once that threshold has been reached, the account could be frozen and the bank could generate €350 billion out of thin air which could be used to pay off the entire national debt. The Greek government would agree to pay the entire sum after (say) 1000 years with interest at 0%. The €30.4 billion mainly come from Greek citizens who could be given tax rebates to recover their costs over the next two years. This would be possible because the government would save at least €15 billion in interest charges every year (the amount paid to the banking sector in 2011).

The same mechanism can be used at all levels, from the national level, to regional and city council levels. It can also be used to save companies and universities from the debt trap, as well as helping individuals who are locked into debt.

While money creation by commercial banks is pure folly (all money creation should be in the hands of publicly banks in the interest of citizens), in the meantime we can use the banks' own insane mechanism to clear up the mess left by decades of totally irresponsible lending.

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