The solution to Wales’ economic woes is mind-bogglingly simple

Cryptocurrencies exist outside the world of banking

Simon Gruffydd Foster

Politicians can’t solve Wales’ economic problems because they don’t understand how the economy works.

Over 97% of our current money supply is fabricated by private banks as a debt – to be paid back with compounding interest.

This results in us (governments and people) owning far more money than even exists.

To keep up to the demands of debt repayments we been thrown into a treadmill of mindless “economic growth” causing environmental destruction, social disharmony, a growing gap in wealth distribution, and poverty – just to name a few of its many negative repercussions.

The solution is mind-bogglingly simple. We need to switch from a destructive private debt-based money supply to Social Credit.

Social Credit is money created by a government as a common good for the smooth functioning of a national economy. It is sometimes called National Credit, or Real Money.

It has been done in the UK once before, and by a Welshman. In 1914 David Lloyd George as UK Chancellor oversaw the introduction of the Bradbury Pound to avoid banking collapse.

Moving from a debt-based to a credit-based economy is just a matter of changing the accounting rules that govern the creation and distribution of money.

Any government could do it tomorrow – if they understood the stupidity of basing a national money supply on debt – and the benefits of shifting to a ‘real money’ system.

Leech

Some might like to dismiss the idea out of hand with the quip that Wales does not have the power to enact such a change.

But there would be nothing preventing us from running a parallel currency (like big corporations such as Tesco already do, with their reward points) as a stepping stone.

Once the burden of compound interest is removed, a nation would be propelled into relative prosperity. The cost of goods and services would drop while working wages would rise.

Taxes could be reduced and programmes like a Universal Basic Income could not just be viable but would be economically beneficial.

It would be like removing a life-depleting financial leech from the system so we can breathe freely again.

Why Wales?

To make significant changes to the world it makes sense to start at home. Our home is a country of three million people – small enough to make the kind of changes we need.

If we created a credit-based (real money) economy in Wales, the changes would be so compelling it would only be a matter of time before other nations followed suit.

They would follow suit not necessarily out of admiration, but out of simple economic necessity. No nation mired in a debt-based economy could compete with a Social Credit-based economy, just in terms of price alone – even with our higher wages.

That’s because the largest cost to debt-based economies is servicing the debt – a burden that grows larger every year.

Free of this burden, Wales would fly. Other nations would have to switch to a Social Credit-based system of money just to catch up.

So let’s plant a seed of change in Wales that will lead to change across the world.

The alternative is doing nothing and watching the world slip ever deeper into debt-dependency, recession, and poverty. It is not an option I want to contemplate.

Bubble

I believe 2017 will be known as the year cryptocurrencies got a foot in the global economic door. An essential difference between cryptocurrencies and UK pounds is that cryptocurrencies exist outside the world of banking and are not based on debt.

With a market cap (the amount of money put into it) approaching a trillion dollars, they can no longer be ignored.

Any nation could adopt a cryptocurrecy as a Social Credit monetary base. Cryptocurrencies provide more privacy and security than traditional bank-created money.

As economist Professor Steve Keen pointed out the other day: “Blockchain technology [the basis of cryptocurrency] could be used by a trusted party like a central bank to produce digital money which could be then given to everybody in the country.

“At the moment central banks only interact with the banking system and some non-bank financial institutions. And suddenly, central banks could interact with us directly.

“And that to me would be a means by which we could use the digital currencies to cancel the excessive level of credit [debt] created money which has been caused in the private debt bubbles.

“That’s probably the major innovation; central banks taking on blockchain technology producing digital currency and giving us all a bank account at the central bank which could be used as a way of bringing about the people’s quantitative easing.”

The future is here. An independent Central Bank of Wales providing the Welsh economy with sufficient liquidity to get us out of debt and back on our feet is all the medicine we need.

All we have to do is see the opportunity and grab it with both hands. First Wales. Then the world.

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Gareth Tuen
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Gareth Tuen

NAWR TE!

Jonathan Edwards Sir Benfro
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Jonathan Edwards Sir Benfro

Here’s a few reactions 1. Not sure I get all this first time, because its arcane. But strikes me that Wales could rustle up enough smart economists like SGJ. Valuable asset 2. Same with me and my obsession with Constitutions. Wales has the lawyers to do this – Public Law Wales, Legal Wales and the Wales Governance Centre. Arcane perhaps but a valuable asset in the long run. 3. And see possible new Wales network of local Bank branches to replace/merge those closed by the big banks. We need to think about the new Development Bank of Wales. Got to… Read more »

ERNEST
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ERNEST

Why blockchain? Simply base money units on the representation of a quantity of gold (or silver) or else something that is real.
We hear how the price of oil has risen over the last 40 years against fiat currencies, but against the gold price oil been stable, on average for the last 50 years! Physical Gold is real money.

Eos Pengwern
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Eos Pengwern

There were sound reasons why the Gold Standard was abandoned in the first place. If the total amount of money available to circulate in the economy is fixed, because it is tied to the amount of gold in the Central Bank’s basement, then problems ensue if the economy itself grows – whether as a result of government stimulus, or from honest-to-goodness organic economic growth. EIther way, if the amounts of goods and services available to be purchased exceed the amount of money available to purchase them, then the laws of supply-and-demand lead to money becoming more valuable relative to the… Read more »

Daniel Cavanagh
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Daniel Cavanagh

diolch am y esboniad, eos. defnyddiol iawn. dw i’n meddwl bod y erthygl ‘ma angen mwy manylion fel hwn

i can only agree with your enthusiasm that it’s a very exciting time!

Fireraiser
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Fireraiser

Interesting idea, but I’m dubious of blockchain technology. I dipped my toein by buying £25 worth of Bitcoin. It took half an hour for the transaction to process and cost me £9 in fees. I don’t know if this is because of the nature of Blockchain or Bitcoin’s implementation. There’s certainly no reason why Wales couldn’t have a parallel currency, but it would need to be convertable to Sterling and HMG aren’t going to accept it for taxes, vehicle duty, TV Licences etc

sibrydionmawr
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But I guess we could have something along the lines of a local parallel currency similar to the Cardiff Pound or more famously, the Bristol Pound which can be used for such things as paying council tax. The advantage of currencies like these is that they are fully convertible to legal tender money but used as parallel currency they boost the local economy immensely. I see no reason why something similar could not be rolled out at a national level, backed by a Welsh government.

Paul Hoskins
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Paul Hoskins

I may be the only one, but I am not sure that I understood any of the above article!

Simon G F
Guest

This article was not meant to promote Bitcoin, or Blockchain technology as the answer to all our problems. Far from it. But for some reason it has been edited to appear so. The mention of crypto currencies such as Bitcoin was point to the fact that the world of Finance is going through a shift and we should educate ourselves to take advantage of these changes rather than watch them pass us by. The comment above about gold-backed money is an interesting one. Almost a decade ago I published a proposal for the Welsh government to convert its annual block… Read more »

Tame Frontiersman
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Tame Frontiersman

As you say, 10 years’ ago would have been a good time to buy gold. I’m sure everyone remembers Gordon Brown’s much mocked sale of UK gold reserves at the bottom of the international market in 1999!

Might now be a good time for a Welsh sovereign wealth fund to invest in lithium, neodymium and terbium?

You’ll note section A of Schedule 1 of the Wales Act 2017 would seem to reserve the creation of currency to Westminster

Siobhan
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Siobhan

FYI Iceland already attempted a national crypto currency with Aurora. It fell pretty hard, and quickly. Not because it was necessarily and intrinsically a bad use case, but because citizens didn’t perceive value in Aurora at the initial coin offering. In other words, they didn’t understand it or it’s potential uses so it couldn’t accrue any real value. I think it was also an immediate coin drop, not a slow release.

Aurora may get a relaunch soon. Regardless, it’s certainly an example worth studying.

Tellyesin
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Tellyesin

I am mo expert. Not even a passable apprentice. However……: All money is now digital- created by computers owned by banks- and is in itself credit. In the same way that a fiver promises to pay the bearer, a fiver in the bank is a promise to pay. If this is so, there is nothing to stop us trading in dollars, Euros, Francs or any other curremcy we choose. So it’s a matter of will rather than anything else. We inly use Sterlng because we can’t be bothered to trade in Yen. That means that central banks can only justify… Read more »

jim humphreys
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jim humphreys

I hope the New Party looks at this!

Gwilym ab Ioan
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Rest assured ‘Jim’ we’re on the case!

If you want to follow our discussions on economic policies, and other topics, you can register your support here:

http://sccambria.com/NewParty/RegisterInterest/

You will then have access to our private supporters Forum.

Jonathan Edwards Sir Benfro
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Jonathan Edwards Sir Benfro

The problem with (us) Welsh Nationalists is that we have got into the habit of treating ideas as if this were a University Seminar – you get points for devising an even cleverer version of the idea – you end up with a dozen takes on, say, social credit or Constitutions And you do not get any political traction at all. So, thanks to Plaid Newydd and Gwilym for trying. Even so, the danger is that Plaid Newydd will fall into the seminar habit of Yr Hen Blaid. They do these things better in another part of the English-speaking world.… Read more »

Gwilym ab Ioan
Guest

An interesting point Jonathan. Definitely noted for future reference. Diolch.