In extant financial-economic system Banks keep “bailing out” Governments and Governments keep “bailing out” Banks, and in both cases the 99% of us – the Taxpayers – have to pay £ / € / $ trillions. Meanwhile the elites of each country, the “top 1%”, are getting richer by actually grabbing these £ / € / $ trillions.
At the very core of the global Crisis and Debt-trap, we find a series of fictitious transactions, both behind Government-Loans and Bank-bailouts, which result in the many £ / € / $ trillions of odious (illegitimate) Public Debts – also called Sovereign or National Debts – as well as in the increasing Tax-burden and intensifying Austerity and Cuts for the 99%.
In order to understand the far-reaching implications of Government Loans and the subsequent national/public Debts they create, first we need to examine the micro-level transaction via which Banks extend loans to their clients.
- The Loan-transaction does NOT involve Banks giving away funds from pre-existing savings, borrowings or reserves; it involves new money-creation by Banks [1a, 1b]. In reality the act of Banks extending Loans is nothing but a mere exchange of two promissory notes – IOU (‘I owe you’) – whereby the Bank’s promise to pay (IOU) is arbitrarily classified as ‘money’ – digital new money entered on the Bank’s computer [1/a] – whereas the client’s promise to “repay” the loan (IOU) needs to be fulfilled by cash or cach-equivalent money earned by actual work.
The same transactions are behind Loans provided to Governments; the only difference is in the monetary volumes between Government and personal Loans.
Loaned Money is just IOU, Debt is a phantom, Austerity is planned poverty
The sequence of the above described fictitious (phony) transactions between Governments and Banks – via mediating private agencies like IMF and WB – generate the ever-increasing Odious Public Debts. These transactions are nothing but giant empty promises (IOUs) exchanged by Banks and Governments [1d]:
- 1) The Bank ‘buys’ Bonds from the Government – lends money to the Government – from the NEW money that the Bank creates out of thin air for the transaction; that is, the Bank ‘pays/lends’ funds by merely issuing an empty payment promise/IOU to the Government; which means, the Bank promises to pay X amount to the Government.
- 2) The Government ‘sells’ Bonds to the Bank – borrows money from the Bank – that is, the Government issues an IOU to the Bank in exchange for the Bank’s IOU; which means, the Government promises to pay X amount + y interests to the Bank, in exchange for the Bank’s promise to pay X to the Government.
No risks, No losses, No reason for “bail-outs”, No reason for “Euro-crisis”
One of the main questions arising from above presented fact: how come that Banks need to be “bailed out” by Taxpayer money if the very same Banks are the very source of creating – out of thin air – ca. 97% of all money circulating in the economy? [1, 2] In current monetary system, private Banks create NEW money (in the form of mere IOUs/promises) every time they make loans, which implies, inter alia, that these transactions between Banks and Governments are responsible for issuing a large percentage of the money circulating in the economy.
- What follows from above proven fact is yet another shocking implication: Banks can NEVER go bankrupt, since they never possess money per se to begin with. When Banks create money, it is merely in the form of computer digits entered in their accounting system. When a Crisis sets in, or the illusion thereof appears, it is merely due to the very act of fear-mongering, panic-generating and to the crowds’ consequent intensified rush into the Banks, which then seems to run of out cash. The Bank-crises create the appearance that money is cash – ‘of which the public used too much’ – even though the cash circulating in modern economies is only 3% .
And apparently this trick is used by Banks and Governments as the most effective means to blackmail all countries – a primary case in point is Greece – thus force them to surrender to described phony Debt-creating transactions and to the consequent Austerity-dictates by the financial oligarchy.
- Another relevant angle of private banking: whenever Banks “lend” money, they do NOT take any risks, since they do NOT draw funds from any pre-existing money-base. Again: Banks newly create money upon lending by simply entering the respective monetary units on the borrower’s bank account on a bank-server. Since no risks are involved in these transactions, no real creditors/stakeholders are behind them, who suffer NO LOSSES whatsoever in case of the borrower defaulting on the loan.
The way the Guardian article  puts it: “Just consider what might happen if mortgage holders realised the money the bank lent them is not, really, the life savings of some thrifty pensioner, but something the bank just whisked into existence through its possession of a magic wand which we, the public, handed over to it.”
- By above consideration, another extra dimension of the ongoing hoax called “modern banking system” or “private banking” is to be seen in the fact that the same Banks that are allowed to create new money out of thin air upon giving loans to their clients, when are supposed to pay out deposits to their clients, they “run out of money” and “must” be bailed out by the very bank-account money of the Banks’ clients – which does NOT even exist as real cash – and by the Tax-money of the country’s citizens.
No reason for Austerity, and even less reason for more Debt
Guardian: “The Bank of England’s dose of honesty throws the theoretical basis for austerity out the window” [1, 2]
Another equally shocking implication of the fact that NO real money is involved in the act of giving loans: the “borrowed” funds that enter the economy as Government-loans are newly created upon the transactions exchanging two fictitious IOUs [1, 2] yet, the Government Deficit arising from the Debts these transactions generate is referred to as the very “reason” for the subsequent Austerity and Government spending Cuts.
The neoliberal Austerity-policy is imposed on all affected countries as the “necessary” measures to compensate for the “monetary sacrifice” to be made in order to enable Governments and countries to properly function. These fictitious Government-loans are to deceive the citizens of affected countries that the “inevitable consequences” of these transactions that our societies must suffer are increasing Taxation for the 99%, Cuts of essential public services, severe Austerity-measures, Privatisations, loss of jobs, decreasing salaries and lower Government Spending.
In other words, these transactions are illegitimate, because they are empty / fictitious / no-value / phantom-transactions; they do NOT represent any pre-existing priorly earned/borrowed funds; yet the astronomical amounts of Odious Public Debts created via such transactions are cited by Governments as the ‘reason’ to keep their countries entrapped in the unresolvable vicious cycle of increasing Public Debt, Deficit, intensifying Austerity, Poverty and Crisis . Even if the cause of the Government Deficit and its alleged consequences were legitimate (they aren’t) the very policies via which the collaborating Governments attempt to “handle” the deficit-problem, further signify the lack of legitimacy of these Governments.
For all experts in Finance and Economics – and even for those with a minimal sense of logic – it is evident that:
- The fact that Austerity only contracts any Economy, thus worsens any recession is a fact recognised by Nobel Prize winner economist and New Your Time columnist Paul Krugman [16, 18]. Austerity triggers recession even in a healthy economy, as it is demonstrated on the Crisis side of flowcharts . Constantly increasing Debt/Deficit will obviously yield the exact opposite effect of what is “expected”; it will obviously increase the Deficit, obviously increase the Debt and will keep the Crisis in a downward spiral – even more so when an economy is further burdened with Austerity. A genuinely democratic, legitimate and responsible Government would implement policies as shown on the Recovery side of flowcharts .
Why Banks and Governments all over the world inflict this scheme upon the 99% of us: the hidden reasons
All Governments that keep accumulating the Odious Public Debt/Deficit and keep imposing the “consequent” Austerity measures – under the disguise of “attempting to treat the Crisis” – are either fatally ignorant (lacking even basic common sense) or are deceiving their voters and deliberately keep them in planned poverty via the Crisis-Debt-Austerity vicious cycle. The net result of the Odious Public Debts and the ‘subsequently’ enforced Austerity and Privatisations is the accelerating process of transferring all lands, resources, values, strategic organisations such as the NHS, ie., all wealth, power and control, into the private ownership of the global elites: banks, corporations and richest individuals. (With the notable exception of Iceland [5, 6, 7, 8] who rejected the conditions of the IMF, suffered the first and WORST hit by the sinister revenge of the financial oligarchy, yet was first to recover and start economic growth, even outside the EU.)
As far as the principles of macroeconomics are concerned, recognition of the fact that Austerity only worsens economic recession and pushes an economy into a downward spiral, requires no more than basic knowledge of economics, and it is safe to assume that the respective decision-makers who still keep imposing these measures possess an advanced knowledge in economics and related field(s), hence we should indeed look for a more plausible explanation behind the idea of their attempting to “fix” the economy in a way – via Austerity – that would actually kill even a healthy economy, than entertaining the assumption of mere “honest mistake” on their behalf.
The actual answer is hidden somewhere else than in the elites’ mere ignorance or mistakes. The elites deliberately keep the 99% in Crisis because they gain £ / € / $ trillions on the ‘Crisis business‘ [10, 11]. They keep us locked into this scheme because this way the global elites can grab real tangible values – lands, companies, utilities, buildings, natural resources, etc, of all countries and continents – in exchange for empty computer digits. The most profitable business that one ever had or can ever imagine: buying continents by mere keystrokes on computers. This is the ultimate explanation behind the historically unprecedented inequality between the globally richest class and the rest of mankind.
This is why Banks were so willing to extend subprime loans to those countries and individuals who were certain to be unable to repay hence default on the loan . This is why central banks, even though were aware of the increasing amounts of subprime loans, chose to allow the process to continue; they merely pretend to have committed “mistakes”  They impose a system of Debt and Austerity on us in order to maintain the vicious cycle of Crisis so that they could continue grabbing these assets [10, 11].
An issue of constitutional democracy, democratic rule of law and national sovereignty
When loans are given to countries via their collaborating Governments, the demonstrated phony financial transactions entered by these Governments are the very cause of the Odious Public Debts accumulated in many £ / € / $ trillions on behalf of the 99%.
- The most relevant implication of the Public Debts is this consideration: Rather than exchanging empty IOUs thus accepting the burden of Debt on behalf of their citizens upon the act of financing a country, responsible and real democratic Governments could – and should – create the money-supply in the very amount that is necessary to be invested into the economy and they should make these necessary direct investments – via Public Banking and without the burden of Public Debt – into constructive projects, creating jobs, fostering green energy and human-centered economies, infrastructure, affordable healthcare, children-care, education, housing, etc.
One just can’t avoid arriving at the blatant conclusion: the acts of those Governments who choose not to finance their own citizens, and rather keep collaborating with the global financial oligarchy, come down to being complicit in the deliberate destruction of their own countries and sheer robbery of their countries’ values.
LEGAL ISSUE: Financial world-war led by the richest 1% against the 99% across all countries.
Even though this financial world-war appears to be a class-war, as one waged by the rich against the poor, it is not (*). It is neither a class-war nor an aspect of “left” or “right” party-politics. It is not even a question of finance and economics, since finance and economics in this regard are mere means to wage the war.
It is not a question of ethics and morality either. It is a constitutional, hence legal issue. All Governments who surrender their sovereign right to devise and control their respective country’s economic and monetary system and as elected bodies surrender their decision-making powers in fiscal and monetary policies to unelected bodies such as Banks, give up constitutional democracy in their country. Who surrender their country to the financial crime described herein, give up democratic rule of law. In addition, those Governments who surrender their own electorate-given rights to unelected international lobbies, give up their country’s sovereignty and surrender their country as a whole to foreign interests.
– why we should reject Austerity and demand cancelling all Public Debts
1) All Public Debts that have been accumulated on behalf of respective countries’ citizenry without their knowledge and/or consent, are odious debts. The transaction of borrowing/lending and the consequent public they generate, are illegal, due the fact that the borrowed funds are not used to service economic growth in given country. These Loans are embezzled: channeled to private accounts of government officials and/or are channelled back to creditor banks [12, 13] In the case of Greece, government Loans were “agreed upon” via continuous coercion, blackmail, threats by Troika via all forms of violation of international law. 
2) The way Loans are issued in extant global monetary system – including the Loans given to Governments – is illegal as well; the “creditors” who make Loans do so by mere accounting entries on bank servers increasing the borrower’s account by the respective “loaned” £ / € / $ billions. To make these Loans appear legitimate, the “creditor” banks, and their agents acting as supranational state (Troika: EC, IMF, ECB), falsely claim that these funds are withdrawn from existing stakeholders/taxpayers. [1, 2, 3, 4]
3) The neoliberal austerity economic policy attached with government Loans as mandatory package-deal requirement: Privatisations, Cuts and Austerity – as proven by both theory  and practice [9, 14] – worsens the Crisis, exponentially shrinks economy  and includes massive-scale transfer of public property into private hands. All these are illegal acts with effects equivalent with those of overt forms of genocide [9, 14] and war  Troika’s consistent aim to eliminate pensions – as they did now in Greece – signifies a clearly fascist goal of cutting the older generations, which falls into the category of eugenics, the central goal used to be pursued by the Nazi powers during the 2nd World War.
4) Countries indebted to foreign “creditors”, with resources and the countries’ all values sold out to foreign ownership, are effectively losing their sovereign status, which violates international law and the constitutional rights of the citizenry of respective countries.
With special regard to the tragedy of Greece, of a country which we can now refer to as Palestine of Europe, a final note. (See Update July 13, 2015 in post) From the facts and implications analysed in this and referred post, it is evident: it is not Greece – or any of the other affected countries who supposedly “owe” € billions, or even trillions, to Troika – it is the way around. The ongoing financial CRIME of unprecedented scope and magnitude presented herein should be investigated, ended and prevented with utmost urgency, which however requires reinstating the democratic rule of law in all affected countries. The citizens of Greece – and of all countries subjected to this financial crime – should be compensated for the astronomical financial, economic and defamatory damages they suffered and still suffer.
Update: where there is a will, there is a way
With view of the facts revealed in this post, we can answer the questions raised in the context of the current refugee crisis in Europe:
- How come that the European Union, which was “unable” to provide funds for Greek debt relief , has access to endless financial resources to trigger and finance the ever deepening migrant crisis in Europe? The same authorities who claim that living wages and paying earned pensions to the Greek are a sort of “free lunch” that will make the Eurozone collapse – and upon such claim these authorities let millions of the Greek to sink into abject poverty, commit suicide or emigrate from their country [9, 16, 21] – have no problem whatsoever in providing endless amounts of free lunch to further the project of transferring the Mideast population into Europe?
- The answer to above questions is again the elites will behind Agenda 21 . For whatever projects the elites choose to finance, they always issue the necessary monetary billions/trillions out of thin air, but they do so only for projects fostering their long-term agenda, which includes their own personal luxuries, wars, eliminating nations, erasing national identities, with the final goal to reduce the earth’s population to a controllable size and ethnic mix.
- We are all Greece by now. By maintaining this global scheme that has pushed all countries into unrecoverable public debt [22, 23, 24], the elites’ are working towards claiming ownership over all countries, in order to create a culture-less one-country globe, with helpless slaves to be subdued under the Western capitalist elites’ totalitarian control .
(*) On this point I have revised my stance in the meantime – see Addendum at the end of post:
Pt2 – Rethinking the future beyond Left and Right: #Socialism, the Actual Road to Freedom
The World Debt Crisis, as it is happening now: a system too rigged to fail
The citizens of all indebted countries should reject Austerity and odious Public Debts
The story of how we are being conned by Banks and Governments
[1/a] Richard A. Werner: “Can banks individually create money out of nothing? — The theories and the empirical evidence”
[1/b] Richard A. Werner: “A lost century in economics: Three theories of banking and the conclusive evidence”
[1/c] Bank of England: “Money creation in the modern economy”
[1/d] Austerity: Why and for Whom? – by Harvard-Stanford-Yale educated economics professor Richard D. Wolff:
“Who are these lenders demanding austerity? The globally active financial enterprises — mostly banks that collapsed in the crisis and were rescued by their home governments — are, together, also major lenders to those governments. Banks own their own governments’ debts but also other governments’ debts. For example, major banks in France and Germany are among the Greek government’s chief creditors. US banks and related financial enterprises hold significant amounts of other governments’ debts and other nations’ banks own much US government debt.“
[1/e] How money is created and destroyed in the Eurozone monetary system:
 Guardian: “The truth is out: money is just an IOU, and the banks are rolling in it”
 GlobalResearch: “The Moral Hazard of Modern Banking: How Banks Create and Destroy Money”
 Century of Enslavement: The History of The Federal Reserve
 How to break free from the Debt-trap – explained by distinguished economics professor “Peoples of countries indebted without their consent should refuse to repay Odious Debts” – like Iceland did: http://www.youtube.com/watch?v=TjyuPRIoCeE
 2008–11 Icelandic financial crisis
 Max Keiser: Icelandic people on economic terrorist bankers
 Top Economists: “Iceland Did It Right … And Everyone Else Is Doing It Wrong”
 Guardian: “Austerity in Greece caused more than 500 male suicides, say researchers”
 ‘In a crisis assets return to their rightful owners’ (i.e. him) ~ Andrew Mellon (US banker, Secretary of the Treasury 1921-32)
 Global Financial Meltdown – One Of The Best Financial Crisis Documentary Film
 Icelandic People Said No – “Michael Hudson, distinguished professor of economics: “Peoples of countries indebted without their consent should refuse to repay odious debts”
 The Legal Basis to Reject Odious Debt
 The Genocidal Global Politics and Neoliberalism
 The Financial Attack on Greece: Where Do We Go From Here?
 The Trail of the Troika (HD 720p) | A must-see to understand the situation in Greece
 My own demonstration: Crisis versus Recovery flowcharts (Neoliberal Austerity-policy vs Social Democratic Recovery-policy)
 New York Times: Paul Krugman: Austerity Europe
 The World Debt Crisis, as it is happening now: a system too rigged to fail
 Pt4 – The truth behind the #refugeescrisis: mass-migration as part of a ‘greater’ agenda
 Young Greeks See Emigration as Only Answer to Crisis, Poll Shows
 The 21st century Enclosures have begun
 List of National Debt by Country
 Greece is not a special case. Debt-to-GDP is skyrocketing in all of Europe [Charts]