Quantitative easing: Helping people not banks

it was in March 2009, with the opportunity to pitch to an international conference that our founder made the following point about quantitative easing in his presentation on Economics in Transition:

 "We can endlessly debate and discuss opposing Keynesian government interventionist economics/capitalism,  which proved successful except for the times it failed.  That has been an alternating pattern for the past eighty years in Western capitalism.  We can discuss the successes and failures of various flavors of communism and fascism.  At this point, the simple fact is that regarding economic theory, no one knows what to do next.  Possibly this has escaped immediate attention in Ukraine, but, economists in the US as of the end of 2008 openly confessed that they do not know what to do.  So, we invented three trillion dollars, lent it to ourselves, and are trying to salvage a broken system so far by reestablishing the broken system with imaginary money.

Now there are, honestly, no answers.  It is all just guesswork, and not more than that.  What is not guesswork is that the broken – again – capitalist system, be it traditional economics theories in the West or hybrid communism/capitalism in China, is sitting in a world where the existence of human beings is at grave risk, and it's no longer alarmist to say so.

The question at hand is what to do next, and how to do it.  We all get to invent whatever new economics system that comes next, because we must."

Almost as he spoke, we introduced £375 bn of QE to the UK.

13 years earlier in 1996, his paper on People-Centered economics has critiqued the creation of money by the Federal Reserve, pointing out that it allowed wealth  to accumulate in the hands of a minority with the risk that it would eventually lead to uprisings. The core argument from this paper was the subject of his follow up presentation in 2010.

"14. Manipulation of numbers, represented by currency/money, allows writing “new” money as needed.  There is no tangible asset, or anchor.  There are only numbers, managed by whomever might maneuver into position to do so.  Economics came to be based on numbers, rather than real human beings.

15. On that basis, capitalism trumped people and therefore trumped democracy.  Democracy is about people, who since Descartes are considered necessarily real, rather than numbers which are not necessarily real.  An imaginary construct, numbers, rule a real construct, people.  That arrangement allows for disposal of real human beings, in the name of the imaginary construct."

In the wake of the economic crisis, it was some time in 2009, that UK government held a social enterprise summit. At the time, some had been calling for tax relief for social enterprises. I offered another idea. Why not incentivise others to invest in social enterprise. That surely was the way to stimulate a social economy?

Almost immediately, my suggestion was deleted from the discussion forum on which it was posted. Illustrating perhaps, just how social this economy really is. I managed to retrieve it from Google cache.   

As you may see, it refers to US moves to create a social investment fund network which was something put forward several years earlier in our 'Marshall Plan' strategy for Ukraine which stated:

"Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders.

This program provides for near-term social relief for Ukraine’s neediest citizens, most particularly children who normally have least possible influence and no public voice. Over a few years time, the net cost financially is zero. Every component is designed to become financially solvent, through mechanisms of cost-savings and shared revenue with other components. One component, Internet, provides essential communications infrastructure as well as a cash surplus to be used to offset any lingering costs of other components such as childcare, and otherwise goes to a permanent social benefit fund under oversight of the aforementioned independent, citizens-based non-government board of directors.

Any number of other social enterprises can be created. Furthermore, any number of existing for-profit enterprises are entirely free to contribute any percentage of profits they wish to increase the proposed initial $1.5 billion social investment fund. If for example the total fund comes to $3 billion, that amount would generate at least $300 million per year in a hryvnia deposit accounts at any one of several major Ukrainian banks, to provide ongoing funding to continue to create and expand social enterprises.

This strategy places adequate funding for social benefit under control and management independent of government and the very obvious vicissitudes and conflicts inherent therein.

This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way."

At the begiining of 2014, we began to see the consequences of inaction, as social unrest spilled on to Ukraine's streets provoking a response from Russia,

As far as we'd determined "those in greatest need" had been institutionalised and abused children whose future is often one of street life, drugs . and prostitution. As I wrote yesterday, Pope Francis had struggled to answer a 12 year old Filipino girl who asked why God allow children to suffer in this way. Yet it is man's doing and the creation of money has no trivial influence. .