Time for a Gold-backed Welsh Pound?

Solution One: Gold-backed Welsh currency

austerity measures protesterThe Welsh economy is receding, hard times are here. Worse is coming, (as with the rest of the UK and the EU). We are in a recession – which means the volume and circulation of money is shrinking.

The Westminster government is doing its part by cutting the budget and shrinking the money supply further. Why be a little sick when we can be easily made even sicker? !#-*(“!!

The Welsh Assembly needs to actually DO something to turn the Welsh economy around – which is not so hard to accomplish when you start messing around with the money supply.

Don’t be alarmed at that suggestion. The money supply has always been messed around with in the UK, at least since 1695 when the Bank of England was established and the National Debt began (and grown ever since).

And even before that, English monarchs used to call in the silver pennies, melt them down, mix in cheaper metal like copper, and then print a whole lot more coins – and keep the “new money” as additional revenue :D.

Money and fiddling the monetary system are two sides of the same coin.

Or to put it in another way:

if you’re not doing the fiddling – you’re the one being fiddled!

We all know that the banks are screwing us (with the support of the Westminster government bailouts). It has been calculated that interest charges woven into the system (essentially a private banker’s tax) increase the prices of goods and services on average by 35% to 40%.

Isn’t it time we democratically turned the tables here in Wales?

There is a wide range of measures the Assembly could take to get the Welsh economy rolling by massaging the money supply, but for the purpose of simplicity I’m going to focus on only one solution today –  a way of fiddling the money supply that is both simple, legal and foolproof – establishing a gold-backed currency for Wales.

And no, it won’t cost Wales a penny. On the contrary it would increase our money stock substantially. It makes us money. Lots of it. Money for nothing – just like the bankers.

Wels gold-backed moneyEstablishing a gold-backed Welsh pound could be easily accomplished by converting the annual block grant (the tax money the Assembly gets back each year from London) of around £15 billion into physical gold, stored in a ‘Welsh Fort Knox’. Then the Assembly simply deposits £15 billion gold-backed Welsh pounds into the Assembly’s bank account as its yearly budget.

In a sense we’ve just doubled our money. A portion of the gold-backed Welsh pounds may leave Wales, but the £15 billion in physical gold bullion will remain :).

Bank of Scotland and Bank of Clydesdale poundsThe Assembly could use it to pay for their services as they normally would with English pounds. Of course, sufficient amounts of paper Welsh pounds would need to meet local demand and use, like the Bank of Scotland and Clydesdale Bank pounds in Scotland.

Okay, that’s interesting, you may say – but how is that going to help the Welsh economy?

I’m glad you asked.

A gold-backed Welsh currency would be the only currency in the EU that is not just backed by toxic bank debt and fabricated, false confidence. It would quickly establish itself as a currency of substance in stark distinction to debt-based fiat currencies that represent liabilities, not assets. (This worthless debt-based fiat money now rules the world as the Euro, the US dollar and Sterling pound – the rot at the centre of our economic system.)

The stature of gold-backed Welsh pounds would give Welsh business the upper hand in business dealings worldwide. After all, would you rather be paid in gold-backed money, or worthless paper representing toxic debt?

Most importantly, a gold-backed Welsh pound would not be prone to a continual devaluing through inflation – a chronic and unavoidable symptom of debt-based currencies like Sterling and the Euro.

If pegged to the Sterling like the Bank of Scotland and the Clydesdale Bank pounds, the volume of Welsh pounds would grow without cost. If floated on the open market, the value of the Welsh pound in relation to Sterling and other world currencies would rise, as would the Welsh economy in general.

However you look at it, establishing a gold-backed currency would immediately place Wales on a sounder economic footing than our two nearest neighbours, England and Ireland.

The only real debate worth having is whether we let the gold-backed Welsh pound float on the open market, or peg it to the English pound. There’s are benefits to both approaches.

Those who would feel obliged through tradition or pressure to oppose a gold-backed Welsh currency would probably repeat the worn-out mantra:

“Mainstream economists don’t agree to returning to the gold standard.”

Given the state of the economy these days there is a good argument for dismissing anything the “mainstream economists” might advise. Mainstream economics have brought us oppressive debt and now austerity misery while stressing out the ecosystem of the planet. Mainstream economics has been thoroughly discredited.

(If you still have any doubts about the credibility of mainstream economics and government fiscal policies, click here for some education.)

I have floated the idea of a gold-backed Welsh currency to a number of ‘non-mainstream’ economists and the only argument against it was from HW, a dyed-in-the-wool British nationalist, who complained it might undermine the sovereignty of the English pound. (Yes, that’s the same HW who once disclosed his fantasy of blowing up the Welsh Assembly so we could go back to direct rule from London.) In short, there are no credible arguments against a gold-backed Welsh currency.

So how much would Wales gain if it started a gold-backed currency?

5 yeqar gold price increase

Over 5 years the price of gold has risen 168% from £399 per ounce to £1,050 per ounce today. Given the increasingly dire state of debt-based economies, the black-hole of swelling debt, and the continuing march to collapse, reason would say that the price of gold will rise exponentially over the next 5 years. Speculators are predicting a 300% to 1000% increase over the next few years.

But just to be very conservative, let’s say that gold slows in price growth to only a 20% increase per annum over the next 5 years. So 15 billion times 3 billion per annum increase equals 45 billion. So even with a conservative estimate an additional £45,000,000,000 (45 billion) would be created for the Welsh economy over 5 years. Or to put it another way, an additional £15,000 for every Welsh man, woman and child.

Mind you, the fact that China along with International Banks world over have been buying and stockpiling gold like crazy over the past year clearly shows that confidence in debt-based money is crumbling and the world economy will continue to collapse. This means we are quickly approaching a spike in gold prices.  Rises to a 1000% or more over the next 5 years is very likely.

How much would a Welsh gold-backed currency gain in this probable event? – an extra £750 billion pounds, or  £250,000 per woman, man and child – or around 1 million pounds  per two child family!

Seems too incredible to believe? You do the sums. It’s not Rocket Science!

That additional funding could be sent directly to all Welsh residents as a Citizen’s Basic Income (without means testing), along with the elimination of council tax.  The effect would be a super-charged Welsh economy.

The unambitious could retire early and live off the interest. Others could go into business on their own. The bottom line is financial freedom for everyone. No debts. Money in the bank.  Good money –  backed by gold.

The  weakest point to adopting a gold-backed currency for Wales would be our lack of border control; our powerlessness to stem a highly probable flood of economic migrants from England and Ireland. To solve that problem we would need an independent Wales, independent of London and Brussels – step two :).

The bottom line is this: given the perilous state of the world economy with chronic recession and inflation, and another six years of ‘austerity’ in the pipeline pushing us towards an impending economic collapse – what have we got to lose? It’s time to think outside of the box. It’s time to do new things.

Albert Einstein once said that the definition of stupidity is doing the same thing over and over expecting different results. That pretty much sums up the Welsh Assembly’s approach to our economy so far. Isn’t it time we stopped being pig-stubborn and stupid? Isn’t it time we did something different? A gold-backed Welsh currency would be a good start!

Leanne’s proposals – re-arranging deck chairs on the Titanic

leanne wood plaid cymruLeanne Wood, newly elected Leader of Plaid Cymru The Party Of Wales, has outlined a programme to revive the Welsh economy see: Plan C. As is usual for virtually all mainstream political parties these days, it boils down to “re-arranging deck chairs on the Titanic” rather than exposing the underlying causes and proposing necessary radical changes to the system.

Unsurprisingly, she starts with the standard put-down of Wales with the usual labour-like-lefty moaning refrain: “we’re sooo poor – it’s not fair!, etc. etc.”.

She then calls for “the devolution of borrowing powers and responsibility over macro-economic levers” and a change in public procurement policy.

Regarding procurement policy, the way it works these days is through competitive bidding – with the ‘best value for money’ (lowest bid) almost invariably winning. Yes, that means that outside corporate interests can usually win these bidding wars ensuring that tax money returned to Wales quickly disappears again, keeping the economy short on cash.

Leanne Wood is absolutely correct in questioning this ‘best value’ approach to public procurement but her proposals to change it is just hot air and would never fly – because it directly conflicts with one of Plaid Cymru’s most cherished goals – to become another vassal state of the European Union.

The EU is all about protecting the interests of the financial elites and corporate power. It is the EU that forces competitive tendering and ‘best value’ procurement ensuring that money always moves up, and the growing divide between the uber-rich and the rest of us is maintained and strengthened. You only have to see the current brutalisation of the Greek, Spanish and Irish people by the EU troika’s* austerity demands if you have any doubts what membership in the EU really means.

“Progressive procurement” as Leanne calls it is good idea, but impossible in Plaid Cymru’s larger vision for Wales.

As for the devolution of “borrowing powers” – that’s a no starter. In fact it’s a very narrow-minded approach to reviving the Welsh economy. Wales, like the rest of the Western world, is already suffering under crippling debt levels. The UK government has allowed commercial banks to take control of 97.3% (and growing) of the entire UK money stock – meaning that debt-slavery, relentless crippling inflation. and austerity measures are built into the system.

We don’t need more debt. We need LESS debt – and more real (debt-free) money.

On that vein, it’s ironic that two speakers were invited to the Assembly in this Spring (arranged and hosted by a Labour and Conservative AM). One speaker was Ben Dyson of Positive Money. The other was a researcher from the New Economics Foundation who made an argument for the creation of a debt-free Welsh pound spent into the economy which would rapidly make Wales the most solvent and vibrant economy in Western Europe. (That’s not rocket science. It’s just basic mathematics, simple and straightforward – once you understand how the money system and economy actually work in the real world.)

What’s ironic about these monetary reform proposals made to Assembly Members and members of the public was that not one single Plaid Cymru AM bothered to come and listen – even though I personally invited (virtually insisted) that Plaid’s shadow minister for economics, Alun Ffred Jones, come to the talk!

Leanne then goes on to propose an “unconventional fiscal policy [which] involves shifting the balance from revenue spending to capital expenditure. On a macro level, the proposal is for the government to control and manipulate the economy through its enormous fiscal clout. That makes perfect sense if you adhere to an overbearing government bureaucracy controlling almost every aspect of our lives. They tried it in the USSR. Didn’t work. They are now trying it in the EU. Won’t work. It will just lead to more stagnation and collapse.

We need a Welsh government that says NO MORE! to the international financiers and corporate interests controlling people and governments around the world. Simply “window dressing politics” will no longer cut the cake. Until Leanne and Plaid Cymru are willing to admit that the financial Emperor (the City of London and the EU troika) has no clothes, and accept that we need a commonsense and radical shift away from an economy based on debt and concentration of power, they can not offer the Welsh nation annibyniaeth go iawn – real freedom or independence.

If you are a Plaid Cymru member, please tell your party bosses to pay attention to the short video below, and do some thinking.

*The troika is a slang term (Russian for triad) for for the three organizations which have the most power over member state’s financial future – or at least that future as it is defined within the European Union. The three groups are the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).