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The main focus is on a novel analysis, a first-time exposure of the true causes and a sensational immediate solution (which I rightly call a "trick") to our economic, monetary and financial problems, a solution that can not only be implemented in a sensationally short time, but is also made sustainable and lasting by accompanying measures. This sustainability of the solution, which goes hand in hand with the immediate effect of the trick, does not apply to the commercial banks, because they were only deliberately made into superficial scapegoats, the main evil being the algorithms used by the central banks to create so-called primary money creation. Within EMU, the "trick" involves the introduction of country-specific parallel currencies to the EURO. In detail, this is designed to create parallel economic areas, which, however, do not overlap the euro economic area, but rather fit exactly into the gaps that have been torn open within the euro economic area by undesirable developments. These incredibly important details are explained in detail in the book. With the implementation of such a basic solution (trick plus novel money creation at the central banks), the prerequisite would be created to also approach and solve other political problem areas, which have also been celebrated up to now "without alternatives", in the same "alternative" way of thinking, and therefore they are also taken up in the book, e.g: Pension policy, family policy, parliamentary reform, tax reform, reform of the electoral law, reform of care for the elderly, school policy, securing the European energy supply. However, these other political problem areas that I have taken up are to be regarded as secondary; they are merely suggestions, in contrast to the two main points of the basic solution, without which nothing at all can be done, and which I am calling for in the long term because no other promising alternative is known at present. Although my book naturally focuses on the German way out of the crisis, I would like to emphasize that I would like to see a European solution (at least for all countries of the European Monetary Union) and that a German solo effort is hardly feasible and also not desirable. The solutions I propose can be transferred practically 1:1 to all EMU countries, and I often point this out in my remarks. Even the non-EMU countries Great Britain and the USA could immediately adopt my concepts; for they face identical problems!
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© 2024 Frank Lesser
Printed and distributed on behalf of the author:
tredition GmbH, Heinz-Beusen-Stieg 5, 22926 Ahrensburg, Germany
This work, including its parts, is protected by copyright. The author is responsible for the content. Any utilisation is not permitted without the author's consent. Publication and distribution are authorized by the author, who can be contacted at Frank Lesser, Calle de las Encinas, Parcela 1730, 29649 La Cala de Mijas, Spain.
German eBook original edition:
• Eine Alternative zu „alternativlos“
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Published by: tredition.
ISBN: 978-3-384-15682-2
English eBook edition:
• An alternative to "alternativeless"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL.
Published by: tredition.
ISBN: 978-3-384-17065-1
Spanish eBook edition:
• Una alternativa a la "sin alternativa"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL.
Published by: tredition.
ISBN: 978-3-384-17279-2
French eBook edition
• Une alternative à "sans alternative"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL.
Published by: tredition.
ISBN: 978-3-384-17272-3
German paperback original edition:
• Eine Alternative zu „alternativlos“
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Pressure from: tredition.
ISBN: 978-3-384-15681-5
English paperback edition:
• An alternative to "alternativeless"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL.
Pressure from: tredition.
ISBN: 978-3-384-17064-4
Spanish paperback edition
• Una alternativa a la "sin alternativa"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL. Pressure from: tredition.
ISBN: 978-3-384-17278-5
French paperback edition
• Une alternative à "sans alternative"
Frank Lesser
Copyright: © 2024 Frank Lesser All rights reserved.
Translated from German by Google and DeepL. Pressure from: tredition.
ISBN: 978-3-384-17271-6
The book was first published in German in 2013. In the meantime, the content has been constantly adapted to current requirements and is now so mature that it can be presented to an even broader international public in line with its global significance.
Since my personal language skills are not universal and I do not have the resources to produce and proofread professional translations on such a large scale, I had to make use of digital online translation tools. Some editors advised me against them, others advised me to use the "GoogleTranslator" and more recently "DeepL Pro". I followed these recommendations and am very satisfied with the results. Therefore, non-German readers will please forgive me for the inevitable mistakes, especially if technical terms from the financial and business world were not translated correctly. Nevertheless, I have every reason to hope that when reading such weak points, readers will still fully understand the content. And as for the names of some specific German authorities contained in the text, such as "Arbeitsagenturen" (employment agencies), please transform these names into those of the corresponding authorities in your home country, if such institutions exist there. In the chapter "Reform of elderly care" some very special aspects are taken up, which concern Germany in particular; the non-German reader please regard this chapter as information.
The book also contains a number of internet links to German texts. The non-German reader should not be put off by this, because nowadays you can easily translate almost any website into other languages online, for example with the already mentioned GoogleTranslator.
With regard to the content, it should also be mentioned that the problems explained and the solutions proposed, taking the ECB as an example, are generally also applicable to the British and American central banks and are therefore transferable to them, i.e. to the Bank of England and the Federal Reserve Bank of the USA; for example, also to the country-specific parallel currencies I have proposed, i.e. to an imaginary British pound-2or US dollar-2 .
In principle, the working methods of all the central banks of the world can be changed to the algorithms of a new kind of money creation and to the trick with a parallel currency that I have proposed! I would like to refer especially to the Reserve Bank of India (RBI), which is modelled on the Bank of England. If India would follow my advice and the RBI would change its monetary policy, then within a year there would be a fabulous change for the better in India as well!
A system was devised in which an institution had the right to produce money and then to lend that money….and the foundations were laid to dominate the modern world!
Frank Lesser
An alternative to “alternativeless”
Subtitle: Alternative solutions to the current political problems in Germany and Europe, with special regard to the current economic, currency and financial crisis!
Table of Contents
Cover
Copyright
The Author
Foreword and Exposé
Some of the Currently Leading Theories of Modern Economics
Analysis of the Current Situation and Resulting Findings and Basic Requirements
Solution Concept: Work for All When Applying This 23-Point "Recipe", "Squaring the Financial Circle", the Politically Neutral Economic, Monetary and Financial Artifice
The Simple Explanation of the Main Cause of the Current Crisis and a Serious Proposal for a Solution
The False Money Creation Policy of the Central Banks
Law on Automatic and All-Inclusive Inflation Compensation
Parliamentary Reform, Tax Reform and Reform of the Electoral Code
Globalization
Pension Reform in Germany and Europe
Parental Allowances, Birth Rates and New Divorce Law, Reform of Family Law
Reform of Care for the Elderly
Reform of School Education
Security of European Energy Supply with the Involvement of All Mediterraneancountries
Satirical Supplement
Index
An alternative to “alternativeless”
Cover
Copyright
The Author
Index
Index
An alternative to “alternativeless”
Cover
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The author
Frank Lesser was born in Erfurt. He studied education, and after completing his state exams in mathematics and physics, he first spent two years teaching at a grammar school and then switched to data processing.
Later he managed an adventurous escape from the GDR to the Federal Republic. He continued to work in data processing as a specialist for organization and programming in the mainframe computer environment. After a few years he became self-employed and from then on worked for banks, large industry and insurance companies. Especially at banks he gained a lot of insider knowledge during 12 years of work in different projects.
For many years, he has been studying the role of central banks and the introduction of the EURO, and in the face of the worsening global economic and financial crisis, he finally decided to write this book. He often travels to Andalusia. His favourite hobby is racing cycling.
Favorite sayings:
You never create change, by fighting the existing. To make a difference, you build new models, that make the old superfluous.
R. Buckminster Fuller
Many have made a business out of deceptions and false miracles and are deceiving the foolish crowd.
Leonardo Da Vinci
Ignorance blinds us and leads us astray. Oh, wretched mortals, open your eyes. Leonardo Da Vinci
Foreword and Exposé
I would like to start with a well-known anecdote: The American Robert Fulton offered Napoleon, at the height of his power (about 1805), to build steamships for the French fleet in order to end the siege of the French ports by Great Britain's navy and then to beat them devastatingly. Napoleon arrogantly refused, but when he saw one of the first British steamships on the high seas about 10 years later, he bitterly regretted it.
In many years of painstaking work, demonstrably since the end of 1993, when there was a brief recession in response to the overheated boom following reunification in Germany, and when the cancer of the current crisis began to become visible to me, I succeeded in developing an economic, monetary and financial artifice, with the help of which one could eliminate mass unemployment in Germany and other European countries within only one year and within only 20 years not only achieve balanced national budgets, but also completely pay off all old debts in the national debt, which now amount to 2 trillion EURO in Germany, with interest and compound interest! And all this not at hunger and slave wages, not by any austerity measures and other instruments of torture, just a trick that lives up to its name!
Since that time, however, I have also compiled analyses and resulting alternative solutions to many other important and highly topical political problems. With special consideration of the current economic, monetary and financial crisis, the result of the long term thinking process is fully in line with the spirit of the times. I also have an alternative for the most recent financial crisis resulting from the Coronapandemic, see chapter after next "Analysis of the …".
Although a non-fiction book on a relatively "dry" subject has been created, I have tried to find a dramaturgy that mitigates this effect as much as possible. The first two chapters after this preface serve as an introduction and form an ascending arc of tension, similar to an approaching thunderstorm, which culminates in a thought experiment at the end of the second chapter. These two chapters mercilessly show the whole confused theory and hopelessness of the efforts currently being made by economists and financial scientists as well as by official decision-makers to get the financial and economic crisis under control in any way. Politicians as well as experts have been trying for years, claiming again and again (to calm the outraged public soul) that the breakthrough has finally been achieved, that the cause has been recognized, but the opposite is the case, the cart is burrowing deeper and deeper into the mud!
The tension is then kept high from the third to the sixth chapter after this preface, and at the same time is released by "the lightning discharges of alternative thoughts". In these chapters the "thunderstorm" is, so to speak, directly above the reader. The remaining chapters are comparable to the departure of the thunderstorm with decreasing rain, refreshing dust-free air and clear skies.
The main focus is on a new type of analysis, on the first discovery of the real causes and on a sensational immediate solution (which I rightly call a 'trick') to our economic, monetary and financial problems, a solution which is not only possible in a sensationally short time, but which is also made sustainable and lasting by accompanying measures. This sustainability of the solution, which goes hand in hand with the immediate effect of the trick, does not apply to the commercial banks, because they were only deliberately made into superficial scapegoats, the main problem being the algorithms used by the central banks to create so-called primary money.
Within EMU, the "trick" involves the introduction of country-specific parallel currencies to the EURO. In detail, this is designed to create parallel economic areas, which, however, do not overlap the euro economic area, but rather fit exactly into the gaps that have been torn open within the euro economic area by undesirable developments. These incredibly important details are explained in detail in the book.
With the implementation of such a basic solution (trick plus a new type of money creation at the central banks), the prerequisite would be created for tackling and solving other political problem areas, which up to now have also been celebrated "without alternatives", in the same "alternative" way of thinking: Pension policy, family policy, parliamentary reform, tax reform, reform of the electoral law, reform of care for the elderly, school policy, securing Europe's energy supply. These other political problem areas that I have taken up, however, are to be regarded as secondary; they are merely suggestions, in contrast to the two focal points of the basic solution, without which nothing at all can be achieved, and which I am calling for in the long term because there is currently no other, in this scope promising alternative is known.
Moreover, the book contains a tremendously important message to politicians: Turn around on your way to drive the democracies of this world through the present and allegedly alternative-free economic, monetary and financial policies into a modern, forcedly imposed debt slavery of the people, with anonymous "high finance slave owners", the big creditors of the national debt, and ironically by law guaranteed "free choice" of the (slave) job!
The term "high finance" is often used in the book. With this term I include a relatively small number of people worldwide, about whom I too can say nothing more than that they exist, that they have unimaginable financial wealth that is widely dispersed throughout the world, and that they have dominated the financial and economic system of the Western world and thus of course also politics for several generations. The high finance has also absolutely nothing to do with the so-called "rich" in the vernacular, or with the upper bank management or financial jugglers, such people are at best used as a cover. No, the high finance plays in a completely different league, it hardly appears in public, acts from the background! But I do not regard these people as enemies at all; for they have certainly had their historical justification in the past and have also achieved a lot of positive things, e.g. the replacement of feudal society. I also see behind the existence of high finance by no means a so-called "world conspiracy". However, I do see now finally the point where the spirit of the time requires another worldwide solution in order to decisively advance the development of mankind. In my book, I reveal the instruments with which high finance has so far been able to use central banks and commercial banks for its purposes. After this unmasking, the now visible instruments are dull and useless anyway. Throughout my book there is a suggestion that the high finance, without grudges and without revolutions that would only destroy painstakingly created values, should reach out its hand for an honourable and peaceful transition to a new society, with all outstanding contracts concerning the national debt still to be repaid being fully honoured. My alternative solutions make it possible to achieve this goal with sensational ease, without all the coercive measures that are currently squeezing the people, but with simultaneous prosperity of the lower and middle classes of the people rising to previously unimaginable heights, while at the same time the upper classes are still profiting; because the method I have developed can be transferred to all industrially developed countries of the world.
Although my book naturally focuses on the German way out of the crisis, I would like to emphasize that I would like to see a European solution (at least for all countries of the European Monetary Union) and that a German solo effort is hardly feasible and also not desirable. The solutions I propose can be transferred practically 1:1 to all EMU countries, and I often point this out in my remarks. Even the non-EMU countries Great Britain and the USA could immediately adopt my concepts; for they face identical problems! The path offered in the book is still open, as it was with Robert Fulton , with the help of an alternative strategy and other urgent measures to sweep the current economic, financial and monetary crisis in Germany and Europe off the table in record time, and that (one cannot emphasize this often enough) without war, monetary reform or inflation, without senseless austerity programs, without low wages, without savings in social benefits and also without revolutionary redistribution programs!
In order to implement this alternative policy, which is so important for the peoples of Europe, it is a prerequisite that the general public be made familiar with these alternatives in the first place, and in a form that the public can understand. Only then can the people formulate their demands and put pressure on the politicians. Only a broad public discussion can lead to implementation in current politics. This is why the book is written in a form that is easy to understand for experts as well as for laymen.
As a trained pedagogue, I know that you have to repeat a certain material more often in order to memorize it better. That is why, in addition to repeating other passages that are important for laypeople to understand, especially the term 'money creation', which plays a central role in my book, I have endeavoured to repeat them, but I have made them all as interesting as possible by approaching these topics and concepts from a slightly different angle each time.
The book is addressed to the general public as well as to responsible politicians and scientific experts in the fields of economics, finance and currency. The political decision-makers and the relevant experts are called upon to lead the people and become public opinion leaders, of course only to the extent that they adopt the content of the book. And they too must first be made aware of the alternative solutions, because so far there are no scientific publications which offer such absolutely novel solutions.
When reading it, you will notice that neither the public
Statements of leading representatives of all parties represented in Germany nor the corresponding party programs, no matter from which corner, such thoughts in this, encrustations breaking up form contain! Since the proposed solutions are in this respect party-politically neutral, even the German President could take up these issues without exceeding his powers and initiate public debates on them.
Although the content of the book could be practically a complete party program, I do not want to suggest the foundation of a new party ("The Alternatives"). By the time it came to implementation in practice, Germany and Europe would have long since collapsed in crisis and sunk into insignificance. No, my alternative solutions must be discussed publicly and implemented as soon as possible by the current decision-makers, otherwise it will be too late!
And of course I have tried to get in touch with decision makers; there have been many attempts on my part since 1993 to get several German presidents, federal ministers (especially for labour, economy and finance), members of the Bundestag, prime ministers, party chairmen, leading bankers, TV magazines, TV polit-talks etc. etc. to discuss my completely alternative analyses and solutions, in vain, a fight against the windmill wings! Fortunately, all these contact attempts, as far as they were made by email, are stored in my Microsoft Outlook, I can prove it anytime with name, address, date and time.
In order to increase the general interest in this book, I have written a supplement (attached at the back of the book), which is a popularly performed satire, especially to promote the very important comprehensibility of the "trick" in an artistically relaxed way. This satire is at the same time an illustrative functional model for the practical implementation of the theory presented. It is, after all, an old wisdom that the highest form of mastery of things is expressed in playfully elevating the handling of them to art. Should it at some point be possible and seem to make sense, then with the help of some amateur actors or drama students one could make a little film out of it, which would serve as a supplement to the written word as a guide to even better understanding.
Some of the editors to whom I submitted the manuscript for this book were surprised that apart from a few quotations marked directly in the text, a bibliography was missing, and did not want to believe me that I had written the whole book myself. All these new ideas without copying other people's work, especially in these days when so many plagiarisms are exposed by celebrities?! Unfortunately, I was often met with dismissive suspicion. My answer did not sound very convincing to these people: My brain has the ability, when taking over new "projects", to suck itself full of all kinds of facts, to filter them immediately and to sort out all non-significant ones and to ignore them to a large extent. The important facts are linked together as logically error-free as possible, just like a chess player. This is where my real strength lies, both in the large number of such units and the small number of errors. When in the end the "project" is complete to my satisfaction, then "the child is born" and I deliberately forget all the facts and details, my brain is erased and formatted like a computer memory to make room for the next project and the next logical units. But of course, keywords are enough to bring the forgotten back to consciousness, if necessary, but this takes time.
So my strength is not in a photographic long-term memory of all the things I have ever done in my life, but in storing with infinite patience all the relevant facts only of the problem I am interested in in my short-term memory, in constantly refining and grinding the ideas and conclusions. That's why I am not the type of person who answers a complicated question in a flash, because with me everything is first questioned and slept over in peace, but the answers are then correspondingly profound. Consequently, it is difficult for someone who doubts or attacks the views and solutions I have found with so much effort. Not because I am stubborn, but because all my views and convictions have deep-rooted foundations.
When I set out to find the causes of the current global financial and economic crisis, it was also completely irrelevant to me to read all the many books written by the leading experts in this field, because if the causes and solutions had already been convincingly described in these books, there would not have been a crisis. It is quite sufficient to take a closer look at a few "sample copies". In addition, these experts, including the relevant decisionmakers in business and politics, can be observed every day in the public media and their theories, arguments and evidence can be followed. So if groundbreaking news were hidden in the many books of these authors, in their personal appearances in the media they would definitely present it to the public.
If you want to create something new, you must not burden the brain too much with already known things! Keywords and summaries are enough, so I would also like to commend the Internet search engine Google in this context.
And one more anecdote to finish:
At the beginning of 1999, I even wanted to apply for the "trick" (at that time still in the DM1 and DM2/Euro version) at the European Patent Office in Munich (what audacity!), but I was very kindly instructed ("idiots" like me have to be turned away!) that the European Patent Office is not responsible for patents to eliminate European mass unemployment and to pay off the gigantic national debt in record time, but only for technical patents! Ingenious inventions in the field of economic and financial policy are simply not rewarded with a future prize or a patent!
Frank Lesser, February 2024
Some of the currently leading theories of modern economics
Before I come to my alternative trains of thought, I would like to briefly present some of the current theories established in the Western world to solve the great financial and economic crisis, in order to illustrate the difference. In the German-speaking world, for example, these modern theories are to be found among the representatives of the so-called 'Austrian school of economics' , apart from the modern socialist and communist theories, which are absolutely useless.
Many of these modern economists are concerned with a transformation of the liberal economic policy embodied in the free, liberal market economy, which is why they call themselves "libertarians" for distinction. The theses of these modern, libertarian economists can also be read on the Internet, and I quote:
• The first mortal sin of real existing liberalism is the insufficient intellectual appropriation of liberal basic principles.
• The second mortal sin of real existing liberalism consists in shrinking back from communicating the results of liberal thinking unambiguously and representing them offensively.
• The "libertarian" message contains above all a ban and outlawing of the initial use and threat of violence as well as the protection of life, freedom and property in the sense of elementary rights of defence.
• The libertarian message is: Let your fellow men live undisturbed and in peace, and leave each of them to seek their own happiness and choose their own means, as long as they are non-violent. Whoever seriously adopts this slogan is already moving in libertarian ways.
• A currency initiative of interest to these modern economists was launched in Switzerland. Under the title "Project Gold Franc", the Swiss Thomas Jakob is attempting to use a constitutional initiative to provide the already existing Swiss franc with a gold-backed alternative.
• Especially against the background of the eroding euro and the hardly less endangered US dollar, the initiative could trigger discussions not only in Switzerland about the possibilities of gold-backed currencies.
• The current monetary order is based on uncovered paper money, which at irregular intervals causes severe economic crises and inflation. Libertarian economists have long warned of the recent crash. In their view, the current financial and economic crisis is by no means the result of the free market economy. In fact, the causes lie in the abuse of the state's paper money monopoly.
• According to modern economics, the causes of the crisis are
There is no alternative to the free market. Every form of intervention by the state, banks and companies associated with the state leads to disruptions of the extremely effective market. These disturbances are answered by those who cause them, usually the state, by new interventions, since it is mistakenly believed that the laws of the market can be manipulated. Each new intervention makes the situation worse. In desperation, the state finally resorts to the last resort: it nationalises production and thus leads it even more quickly to ruin. The current global economic crisis began years before this catastrophe.
Through their central banks, the states, above all the USA, could pump unlimited amounts of money, which is actually "counterfeit money", into the market. This meant that trillions of trillions of dollars were misinvested. One boom chased the next. Necessary market adjustments were repeatedly postponed by "counterfeit money loans".
From 2002 to 2007, a huge real estate bubble emerged as banks used cheap paper money from central banks to throw real estate loans at customers without checking their creditworthiness. The madness of the money producers encouraged the recklessness of the mortgage holders, who extended their mad consumption with new loans to apparent increases in the value of their real estate. This "mortgage game", which was not new in either America or Europe, was accompanied by the gambling games of the banks on both continents - the Chinese and Indians were virtually unaffected. Whereas futures, puts, calls and other derivatives were previously used to hedge commodity futures and trading risks, these now degenerated into pure roulette games. Instead of profits of 10 - 20 %, the stakes increased a thousand times and the fact that the losses could be just as high was pushed aside. There are currently contracts worldwide in unimaginable multiples of trillions. The bursting of these contracts would exceed the financial strength of even the largest states, such as the USA.
• Not only smaller states are acutely threatened, but also the No. 1 economic power, the USA, which is currently in an economic nosedive. It is the global expansion of fiat money and the huge derivative bubbles that make this crisis even more devastating than that of 1929. It will last a long time, make states disappear - the US and the EU will dissolve like the Soviet Union, and destroy values on all inhabited continents on an unprecedented scale.
• The hope is that new, solid currencies will emerge on a private basis.
• A digital gold currency, such as the gold dinar of the Emirates and Malaysia, the Mexican silver peso and similar currencies, has good medium-term prospects.
• Savers who bet on gold and silver and do not speculate with them are given the best chance of getting through these times well. End of quotes.
My comment on that:
These modern economists have undoubtedly pointed out a huge amount of flaws in the current economic and financial system, including the huge amount of things going wrong with central banks, but they have not realized what the real flaw in the so-called money creation of central banks is, namely not the uninhibited printing of money ("counterfeit money"), but the lending of this money in the form of key interest rate loans, see my remarks below in the chapters "The simple explanation of the main cause of the current crisis and a serious proposal for a solution" and "The false money creation policy of the central banks".
And private and gold currencies will not solve the crisis at all, at best they will fight for a time delay with the ideas of modern economists, see my explanations in the chapter "Solution concept: …" below.
As you can read in the following chapters of this book, I too assume that in Germany the problems of national debt, unemployment, low wages and the reduction of social benefits must be tackled with a parallel currency (or, in the case of EMU, with country-specific parallel currencies), but not with a "gold-backed" currency, but with a currency backed by goods and services, which is also "constructed" by a trick in such a way that the problems can be solved in record time. These immensely important details in the "laying of the foundation stone" of new currencies are also the difference to the parallel currencies recently proposed by Professor Dr. Dirk Meyer and other experts. As long as the main evil at the central banks (i.e. in Europe the ECB) has not been eliminated, these parallel currencies will be of little use, and as long as the parallel currencies are only "poor or people's currencies", the problem of national debt, mass unemployment, mass impoverishment and the ever widening gap between rich and poor will not be solved permanently. In my concept, the country-specific parallel currencies are constructed in such a way that very strong new currencies are created, which do not need to be devalued, but which will take their place from day one on the international currency markets in the free play of forces. And, as already mentioned, in order to solve the problems in the long term, I am calling for completely new algorithms in the primary money creation of the central banks in parallel.
Modern economics succumbs to the error of confusing the symptoms with the actual causes. I do, however, pay great personal tribute to these modern economists; for the step alone towards massive criticism of the liberal market economy, which is not only taught at all western universities but has also successfully asserted itself in international comparison, requires not only intelligence and specialist knowledge but also the courage to swim against the current.
But I don't want to hide the fact that all these people, from my alternative point of view, didn't "dig" deep enough, they somehow got stuck in their completely correct criticism of things. These modern economists have, so to speak, taken the reins in public appearances in the media in recent years, which naturally leads to the fact that only the same theories that do not go beyond certain limits are disseminated in public discussions.
As I have already said, in my view all these deserving scientists have done an outstanding job, but only in the merciless exposure of symptoms and at best secondary causes; the primary causes, the basic evils, have remained hidden from them. Their view of the connections is undeniably completely correct, they have uncovered systemic weaknesses that are the cause of further weaknesses, but in my view the causes named are again only the symptoms of even deeper causes.
Of course I have tried to get in contact with these people several times in the last years, I can prove it with the emails stored in my computer. However, it always failed because of the obvious overload of the addressees and their secretariats due to their public position. In the best case scenario, I received a reply in the form of meaningless text from the relevant offices.
Nevertheless, I do not want to miss to mention some of these highly appreciated personalities in my book, representing the whole guild:
Prof. Dr. Hans-Peter Burghof,
Prof. Dr. Wolfgang Gerke,
Prof. Dr. Wilhelm Hankel
Prof. Dr. Rudolf Hickel,
Prof. Dr. Andreas Oehler,
Prof. Dr. Max Otte,
Prof. Dr. Stephan Paul,
Prof. Dr. Bert Rürup,
Prof. Dr. Ekkehard Wenger.
If you would like to find out more about the theses of these professors, please refer to their own websites, the websites of their universities and institutes or to Google.
Recently there have even been very recent efforts to solve financial and currency problems with the help of physics, for example at the Ludwig-Maximilians-Universität in Munich. Scientists there are developing a new model of economy based on particle theory, see the following links:
http://www.deutschlandfunk.de/mit-antigeld-gegen-die-bankenkrise.676.de.html?dram: article_id=29387
https://de.sott.net/article/7164-Antigeld-und-Geld-wie-die-Physik-das-Bankensystem-andern-wurde
http://www.heise.de/tp/artikel/41/41465/1.html
Such new and supposedly scientifically based approaches (matter and antimatter are used as models of money and anti-money) are of course very interesting and popular, but they are not a practical solution, but a scientific theory of people who have not yet fully understood the current monetary system.
Money is not created in nature, so it cannot be explained by models from the nature of physics or chemistry. Anyone who thinks like that obscures the origin of money, and that does not benefit the peoples of this world. Money is an ancient human invention, originally very useful, which in the course of time was more and more transformed into an instrument of power. This function must first be understood in all details and then changed with a simple trick, as I propose in this book.
And there is another group of economic and financial experts who aggressively argue that the so-called "girl money creation" of the commercial banks is absolutely the same as the primary money creation at the central banks, that is, that new money is actually created (that is wrong) and put into circulation (that is right) at the commercial banks. So here apples are mixed with pears. The proponents of this theory even believe that the creation of money in girls is the cause of all the crises that have occurred in the economic and financial world so far, and they present their arguments with missionary zeal, and they are obviously successful, as the growing number of their followers proves. The reader is invited to watch a video on the Internet, written by the American reporter Bill Still, based on a book written by Frank Baum in 1899 ("The Secret of Oz", "The Wizard of Oz"), which presents the opinions of American financial experts such as Dr. Quentin Tailor, Joseph Farah, Peter Schiff, Prof. Dr. Michael Hudson and Byron Dale. The links (German, English) are:
https://www.youtube.com/watch?v=5Jm0yrWEdgk https://www.youtube.com/watch?v=2VauMFaHJT0
I think these theories are very dangerous because they are one of the main reasons why many people focus on commercial banks instead of going "at the throat" of central bank policy. That is why I am taking the trouble here to first look at these theories in a little more detail and thus explain all the contradictions that are inherent in these theories in as understandable a way as possible, even to the layman reader, in order to then provide comprehensive counterevidence at the end. Without eliminating these theories, one cannot clear one's head for the only promising direction of attack, namely an offensive against the central banks.
First of all, the term 'giral' should be examined. In the banking sector, this is understood to mean cashless transfer, i.e. cashless payments, transfers and bookings. A current account is used for cashless payment transactions. The advocates of so-called "giral money creation" are of the dubious opinion that the original money supply would actually increase uncontrollably as a result of cashless transactions at commercial banks, which would then of course lead to all kinds of negative consequences and be one of the main causes of the current financial and economic crisis. Instead of giral money creation one could also say "cashless money creation" or "increase of non-cash" at the commercial banks.
Personally, I have nothing against using the term 'giral money creation' as long as you know that it is not actually a 'creation' . But a whole range of financial experts and self-appointed gurus, such as Professors Bernd Senf and Franz Hörmann, who has since been suspended, are succumbing to this error and spreading their theories to a whole host of followers.
My answer is that the money for lending, whether cash or non-cash, is largely borrowed by the banks themselves from the central banks, because that iswhere the "primary money creation' takes place. That is also where the rub is in the cake! If the central banks are no longer allowed to regard the money they themselves "printed" as their own property like a counterfeiter (this is where politics comes in), then they are also no longer allowed to lend it, then no more money created is circulated as "interest-bearing credit" (interestbearing promissory note) "primarily" at the central banks and "giral" in circulation at the commercial banks. The source would have dried up, see also my proposed solutions in the following chapters! However, new money must of course continue to be created, if only for the reason that there is an increase in value (growth) in the goods (goods and services) to be purchased in the currency area. As far as I am concerned, the central banks can and should continue to do this. But the central banks must put the money into circulation "without credit" (see the following chapters), i.e. they must give birth in a totally different way than at present, and then people will immediately look at the so-called giral money creation with different eyes.
Contrary to the theories of Professors Senf and Hörmann, it is absolutely certain that commercial banks cannot pull money out of a hat under any circumstances. In addition to the money that the normal depositor gives them, and in addition to their repayment and interest income and in addition to borrowing from other banks, they can only borrow from the central banks the money they need.
Nor do I deny that in statistical comparison the so-called (so-called defined) girl money creations at the commercial banks are now much higher than the real primary money creations of the central banks in relation to the same period. But this cannot be used as proof that money creation must therefore take place here. This is because, in addition to the above-mentioned possibilities, the commercial banks can also borrow money from the central banks that is not exactly freshly created. After all, the central banks have been doing their business not just since yesterday. In addition to the money that they are actually allowed to conjure up out of their hats, the central banks have mountains of money flowing back from the key interest rate loans, which means that it has to be brought back among the people! Money borrowed from the central banks therefore comes only to a certain extent directly from primary money creation.
A commercial bank only has to prove that it complies with the legal framework regarding minimum reserves, but the lending that then takes place must be properly offset, against money borrowed or lent from somewhere, and not against hot air, as the central banks are allowed to do thanks to their monopoly position.
If the commercial banks could create money out of nothing, then we would no longer need the central banks at all. Why would a commercial bank still borrow money from a central bank when it could conjure up the money itself? How should it then offset and tax such money, self-gift? Nonsense, a commercial bank can only circulate already existing money or borrowed money by credit. Otherwise we would have an inflation against all previous peanuts.
The term "money creation" is much better explained in the "small banking encyclopaedia" (Verlag Wirtschaft und Finanzen) by Professor Dr. Hans E. Büschgen, where you can also read up on the terms "Giralgeld" (book money), "Giralgeldschöpfung" and "Kreditschöpfung". Büschgen explains very well that the extent of "girl money creation" at the commercial banks is directly dependent on the extent of the actual money creation of the central banks. This is also my opinion: The central banks produce the money (and always in the form of a credit transaction, e.g. as a key interest credit), and the commercial banks put it into circulation, whereby they can supposedly "giral" (cashless) it, which is not a real money creation out of nothing, but only a clever redistribution of the existing money for the purpose of a maximum bank profit.
But let us take the trouble to also quote the following definitions which are often used in discussions:
Quote: "The money supply is increased through the banking system's asset and liability operations, i.e. the creation of additional money. End of quote.
My comment: Note: "the banking system", i.e. including the central banks as a whole.
Quote: "The main source of money creation today is the granting of loans by commercial banks (active money creation): the borrower is granted a sight deposit in the amount of the loan taken out, which directly increases the overall economic money supply. End of quote.
My comment: "Active money creation" is merely nothing more than the above-mentioned "girl money creation". When a commercial bank gives money to a borrower, it can only do so if it takes the money internally from an account that is available for such purposes. No real money supply has increased at all, but the money has simply moved from the commercial bank to the borrower. By definition, the so-called "girl money supply" has actually increased as a result of credit creation. But that is nothing more than: To add up all the money supply lent plus all the credit balances in current accounts and then falsely claim that this sum is a genuine increase (new creation) of central bank money. What is concealed is the fact that the commercial banks partially lend the balances of the current accounts, i.e. these balances temporarily exist only virtually on paper because they are now in the hands of the borrowers in real terms (cash or non-cash).
If all holders of current account balances at a particular commercial bank were to demand this money at the same time in cash at the cash desk or transfer it cashlessly to accounts outside the commercial bank, the commercial bank would be insolvent because the real money supply has not increased. The total real money supply, the money issued in cash or non-cash (in the form of sight deposits) by the central bank to the commercial bank, the so-called 'central bank money' , does not increase even if the commercial bank does not have enough money in its current accounts or otherwise to lend it out, i.e. it has to borrow it itself, either from other banks or from the central bank. And if the central bank should actually offer the commercial bank inquiring about the money just created (the central banks also have other money at their disposal), then and only then does the real money supply increase. Under no circumstances can a commercial bank grant a credit balance to a borrower if it has no real (central bank) money (whether cash or cashless) at all!
See also http://www.finanz-lexikon.de/geldschoepfung_2825.html
Quote: "If non-banks shift bank deposits that do not belong to the money supply (money capital) into forms of deposit that are part of the money supply, new money is created in this way as well (passive money creation). As the banks create money, their need for central bank money also increases: on the one hand, as a rule a certain proportion of the newly created bank money is exchanged for cash and, on the other, the minimum reserve obligations of the money and credit institutions increase along with the bank deposits. By setting the interest rate conditions and other conditions on which the central bank continuously provides central bank money, it can indirectly influence the macroeconomic money creation process. End of quote.
My comment: Aha, there we have it: the central bank must satisfy the banks' needs and thus influence the money creation process. This has been wonderfully twisted (and not everyone should understand it right away) and must be formulated in a more understandable way as follows: Only if the central banks offer the commercial banks freshly created real money (in the form of cash or cashless) (central bank money), can they "get it out" in the money cycle, i.e. refinance it, and thus the real money supply in circulation increases overall. But the actual creation (central bank money) takes place at the central banks. Even the "passive money creation" mentioned at the beginning of the quotation is practically nothing more than a "girl money creation"! And the monetary capital deposits of the "non-banks" (companies, institutions, private customers) with the commercial banks (e.g. credit balances on current accounts) are, as already mentioned, lent by the banks to a certain extent anyway, subject to the reserve requirements, even without the special consent of the "non-banks depositing their capital".
And with the formulation "bank deposits that do not belong to the money supply" are of course not meant in this context to be part of the so-called "money supply".
In fact, one can find the official and completely correct definitions of the Deutsche Bundesbank:
https://www.bundesbank.de/action/de/747716/bbksearch?query=Geldmenge+and+Giralgeld+and+Geldsch%C3%B6pfung+and+Geldmenge&tfi-722704=&dateFrom=&month=4&year=2020&dateTo=&month=4&year=2020&hitsPerPageString=10&sort=relevance
Example 1: Money creation
The creation of money is called money creation, in the opposite case it is called money destruction. The commercial banks can only create fiat money, only the central bank can create central bank money. Therefore only central banks are entitled to put banknotes and coins - the legal tender - into circulation. By using its monetary policy instruments, the Eurosystem can influence and control the money creation of commercial banks.
Example 2: Giral money
Giral money (book money) is understood to be credit balances at banks which the bank customer can dispose of on a daily basis. They are therefore only available to the bank "at sight", hence the term "demand deposits". Although bank deposits are not legal tender, they are generally accepted as means of payment. You pay with bank deposits using instruments of cashless payment transactions such as transfers, direct debits or cheques. Fiat money can be converted into cash at any time.
Example 3: Money supply
The money supply is defined as the economic stock of money in the hands of non-banks. Due to the vagueness of the concept of money, there are various definitions of money supply. The Eurosystem distinguishes between three monetary aggregates: M1 (sight deposits + currency), M2 (M1 + short-term time deposits and savings deposits) and M3 (M2 + short-term bank bonds + money market fund shares/units + repos). The monitoring of monetary developments plays an important role in the monetary policy strategy of the Eurosystem.
Example 4: Central bank money
Central bank money is the money created by the central bank. It comprises the total stock of banknotes and coins in circulation and the sight deposits of commercial banks with the central bank (central bank deposits).
To make it even more understandable using a real example: Let's take the 1948 currency reform in Germany. The commercial banks received all new money from the central bank (Bundeszentralbank). Where else could they get it from, no commercial bank was allowed to create money itself? After that the money went into circulation, then the gross domestic product increased, so there was pressure on the goods and services that were opposite to these increased goods and services and not with the increased money supply, the money supply had to be increased. The commercial banks had an increased demand for credit, but only when the commercial banks received freshly created money from the central bank, only at that moment could they increase the money supply in circulation in real terms.
If the real money supply in circulation between commercial banks and consumers increases, then this real new money is not created the moment it comes into circulation, the act of creation of real money is monopoly of the central banks!
I can also explain why the term 'creation of money' is currently being defined in such a veiled way that, on cursory reading, it is believed to take place in commercial banks:
The main cause of the current global financial crisis is the misguided money creation policy of central banks. The responsibility lies solely with the central banks and not with the commercial banks, now condemned to the sacrificial lamb, and this should be concealed! And of course no central bank in the world can operate without government backing, so in the end it is the responsible economic and financial politicians who are to blame. And now think about when a politician admits his guilt and what he does to cover up his guilt?
Secondary Giral money creation is completely irrelevant in the analysis of the current system. If the primary money creation of the central banks were to be changed according to my proposals, the commercial banks would have no more play money at all for their current, publicly criticized "virtual air numbers" in the matter of girl money creation with all the dubious financial transactions. The swamp would dry up and a ban on any financial products would then be superfluous! Such dubious financial products are the result of the fact that the normal banks have for some time now, and especially in times of crisis, no longer been able to distribute the huge sums of money that the central banks are constantly offering at key interest rates in a meaningful way, and such financial products in particular will automatically dry up when the pressure on the commercial banks caused by the lending of key interest rates by the central banks ceases to exist in the future.
One often hears the opinion that, even at the central banks, money is only created when notes or coins are actually in play. This is a widespread misconception that central banks only in primeval times created money by printing banknotes (hence the name) or minting coins. Nowadays, they do this on a large scale without cash via credit sides of accounts, which they open out of nowhere and then offer the commercial banks cashlessly in the form of sight accounts as key interest credit. This could then quite rightly be described as "genuine primary creation of fiat money at the central banks" (genuine primary, cashless increase in the available money supply), in reference to the confusing and actually inadmissible use of this term in connection with the "false secondary creation of fiat money" at the commercial banks. Where would we also be if trucks full of money had to drive from the ECB to the commercial banks every time they took out a key interest credit from the central bank? The quantity of banknotes in circulation is based on the probability that, overall, they will actually be demanded as cash. But of course a borrower of key interest rate credit, like any other borrower, has the right to have the credit paid out in full or in part in notes or coins at any time.
Some people use the argument for the alleged existence of a giral creation of new money in the commercial banks that the amount of money in circulation far exceeds the amount of goods. I also think that the "money supply in circulation" far exceeds the quantity of goods, but this has nothing to do with the real creation of money on current accounts with commercial banks. It is because, on the one hand, the central banks have primarily created more than the increase in value of the goods (goods and services) that can be purchased in the respective currency zone and, on the other hand, the amount of money in circulation is wrongly calculated by simply adding up (as mentioned above) all the amounts of all current accounts, whether they are special credit accounts, savings accounts or normal deposit accounts. However, it would be correct to subtract the debts from the amount of money in circulation.
In this context, I would like to make a
few observations on the term 'money' , which has been
used more often recently. The advocates of this idea would like to create a new state authority, the so-called monetary authority (compare, for example, the executive and legislative branches), which would be used to control the monetary system. I recommend "googling" the term "Monetative" and quote from the Monetative initiative declarationhttp://www.monetative.de/?page_id=61 , quotes from the keyword articles found there:
"Everyone uses money, but the functioning of the monetary system remains as nebulous as the terms 'fractional reserve system' or 'multiple money creation'. This is in the interest of the banks. They have taken money creation out of the hands of the central banks. The central banks essentially only put cash into circulation, which accounts for only 5-20 percent of the money supply. The lion's share, 80-95 percent, now circulates cashless and is put into circulation by the banks: by credit as credit on customers' current accounts".
"Around 80% of the money supply in circulation in the European Monetary Union is now created by the banks in the form of sight deposits by means of loans (95% in Great Britain, 70% in the USA). The central bank only provides the rest of about 20% cash, of which 1-2% is coins and the rest banknotes. The central bank has thus lost control over the money supply. Money supply policy therefore no longer takes place. Interest rate policy, which is intended to indirectly influence the banks' money creation, is a largely ineffective substitute for it."
"This monetary system exists as a fractional reserve system in which multiple money creation takes place. This means that the creation of credit money and other bank turnover is based on payment reserves which represent only a fraction of the sums in question. Or, to put it the other way round, a given sum of payment reserves is used to grant credits in the amount of a multiple thereof".
"The root of the current banking and sovereign debt crisis lies in the monetary system. The financial causes of the crisis have a common monetary cause: the so-called multiple giral money creation by the banks. Today, it serves above all to lever out financial investments and thus promotes speculative bubbles as well as inflation and the over-indebtedness of many participants, not least of all the […]".
End of quotes.
The "fractional reserve lending system" is denounced as the cause of the financial crisis, see also the above-mentioned video by Bill Still: a commercial
