Whilst sitting here watching the market blow it's brains out, I had an idea.

It is my belief that the present financial system is no longer viable and the time has come to implement unprecedented change. It is time to scrap the currencies that have been relied on for so long and move to a completely new way of trading and saving. I am sure that the system I have in mind has been put forward previously and I am equally sure that it will have been dismissed out of hand without further thought, however I sincerely hope that some thought will be given to the idea at this time and that it will be considered as a real and viable solution to the present ills of our world. Any suggestions (of a constructive nature!), will be welcomed.

The idea is simplicity itself, the implementation feasible and if acted upon, the effect would be life transforming for the worlds population. I firmly believe that any problem brought up by the plan could be quickly solved.

The new system would replace the existing money with a credit system divided into 3 categories:-

1) Work credits.
2) Community credits.
3) Green credits

1) Work credits. To be given for all types of work, the number to be based on existing money payments. Credit payment scales to be set for new jobs created by the system.

2) Community credits. To be given for all work within individuals local community covering everything form care of the elderly, disabled and mentally impaired to general care such as litter picking, keeping the environment tidy. This would ensure that there would be no reason for any able bodied person not to work.

3) Green credits. To be given for all green achievements from recycling and energy saving to car sharing etc.

Overseers would be required to control each section, and to promote motivation they would be paid in credits equal to the top credit earner in their section. A central computer system would be set up, with multiple back up, for storing credits information.

All outlets would be equipped with fingerprint and eye recognition equipment to recognise the credit holder for exchange of credits for goods. Goods to be priced in units of a credit.

At the point of changeover from the present monetary system existing wealth to be converted to credits. Creditors to be paid in credits equal to the amount owing to them: debtors to have their debts eliminated without penalty.

Existing stocks, shares and dividends to be converted to the credit system, otherwise operating as at present.


Under the new system there would be no limits to expenditure on education, hospitals, medical research and anything of benefit to the population. There would be careful monitoring of such expenditure by selected governing bodies.

The new system would allow us to abolish income tax; there would be free expenditure by government and local government on a level to be decided by the public.

Every member of the population to be given an equal number of starter credits, followed by annual bonus number of credits, regardless of their contribution to the workforce.

Easy to obtain credit. Stringent vetting of applicants. Simple method of repayment over predetermined but flexible term, income from weekly/monthly credits reduced to ensure repayment of loan. It would be possible to implement a permanent fixing of interest rates.

Existing financial and revenue bodies to oversee the running of all accounts and investigate any irregularities and unusual transactions.

The advantages of the new system would be the immediate elimination of world debt and poverty. No fund raising is necessary as a credits system would be self financing. It would bring out new technologies, new medicines, new thinking, all of which have previously been stifled by the financial system. With careful monitoring there should be no reason why the Earths resources should be put in jeopardy. I also believe that the system would drastically reduce crime.

Obviously this is a very brief outline of what could be achieved by such a system and what would be required to implement it: however, if a view can be taken outside the present financial one, remembering that it would cost nothing to start it and ensure that it works, then I am confident that it could be adopted world-wide.

Please give the matter some thought; a change is needed, is inevitable and with this system, workable and would create a debt free society.


Yes, ok it's a joke but who knows, it could work and if you think it will not work give your reasons and the problems you envisage would occur; maybe they could be solved?!

So, you are all afraid of change?! ;o)

Old hat, Kim.

This system has been tried in many places, as an alternative to currency within communities. The issue is that taxes become obsolete (no problem to me but governments appear not to like it).

I think we may need to see something radical, and I wonder if the direct loans to banks is the right idea.
Seems to me that we the people are lending to banks so the banks can lend back to us. Is this not the same as the market in debt that has blown up in all but name? Perhaps the answer was to offer the same money, but not as a loan, as a repayment of a % of the publics debt.

Work with me on this. If the government (us) are giving loans to the bank equivalent to (say) 20% of the amount owed by us in mortgages / loans / credit cards, then why not insist the money is simply a repayment and that the condition is that all debts are reduced by 20%. The banks would instantly have their balance sheets repaired, the public would suddenly have more disposable income to spend and the wheels would be back on the economy double quick. Call it a tax rebate. The government would also just about guarantee its own re-election to boot.
To prevent a slide back into bad lending, rates could rise which would reduce inflation and civil servants would not need to strike for more money to pay their mortgage.
Never happen, but I can dream.

Alan

A nice idea Alan but the problem with it is that there are still a lot of people with no debt at all who, in fairness, should not have to give their money to bale out the banks; in fact it is their money that was already helping to prop up a dying dinosaur ie the banking/monetary system. Does anyone really know who is borrowing from who and where the money is coming from now? A is borrowing money from B so that A can lend it to C in order that C can lend it to B to enable B to lend it to A, which in turn would mean that none of them could actually lay claim to the money! (I'm putting in a claim tomorrow, so you'd better hurry!)

You say my idea is old hat, well yes it is, but probably a lot of different old hats that have never been tried as just one new hat! I would argue that the present monetary system is strangling our world. It beggars belief that the human race just stands by and lets millions of people die through starvation, disease, lack of hospital funding etc etc solely because of situations caused by the monetary system. Of course, the other side of the coin in that respect is that it keeps the population of the world in check!

I do not tend to worry much about anything, though I do not bury my head in the sand either. I confess that I am worried now though. I have my doubts that the modern day society has the ability to cope with the present crisis; our standard of living generally has never been higher and society has come to expect a better way of life, on a standard not previously seen, as normal. So what is likely to happen? Quite possibly the worst level of worldwide unemployment ever, the consequences of which I will leave to your imagination: that is if we are getting the full picture. The media spreads bad news far quicker than good news; maybe the situation is not as bad as we are being led to believe? Or perhaps it is worse, far worse than anyone realizes. I sincerely hope not.

Gordon Brown has decided that to get out of debt we must borrow more money, Um..er......hmmm, er, no, sorry I don't quite get that.

Oh gawd, I sound like I'm standing on a soap box now. I'm not really; I'm just trying to shake the apathy out of our trusting population! No, I don't want civil war, or any sort of revolution, just a few more better ideas than Gordon's!

I dug this out for you kimmo, an article written earlier this month by Mick Phoenix, whose stuff is invariably an interesting read.

Bailout plan continuation of a corrupt banking system

Here is the beginning of an idea of how the economy should be run in the future:

All mortgage and secured debt should be centralised and interest accrual suspended for the life of the loan. This would ensure that all underlying derivatives would also be secured. Payment should be made direct from the wages/income of the borrower.

Unsecured debt, including credit cards must be frozen and interest accumulation halted. The capital will be paid down by small payments direct from wages or pensions to the lender or whoever owns the debt if it has been re-packaged and sold on.

Lenders can offset outstanding debt against taxes at a set ratio.

Those who become unable to work or find work should have payments maintained from a Government funded insurance scheme. In exchange the claimant will donate time and effort to government volunteer projects.

If the lender funded the loan by "the borrow short/lend long" model then tangible assets and reserves should be used to pay off the short term borrowing. The long term debt will be serviced by a payment stream from the centralised mortgage pool. Banks would receive staged monthly payments to replace the centralised assets. (debt owed to a bank is an asset) If those mortgages have been sold on in MBS packages then the owner of the MBS receives the payment. If the bank does not have the capability to pay their short term borrowings then the income stream from the centralised fund will be used to make payment. During this period the Bank will be granted a protected status until their borrowings are paid off. During this period the Bank will not be allowed to accept deposits of make loans.

The Federal Reserve will have a remit to ensure that the dollar remains strong by use of deflationary measures. The Federal Reserve will use the reduction in the supply of money, not interest rates to control the dollars strength.

Interest rates will be abolished. The use of credit and leverage will be outlawed. Expansion will only be enabled from the use of savers long term deposits, lending using instant access accounts as collateral will not be allowed. Any lending using deposits must mature at the same time as the lock out to the deposit savings passes. Profits can be used for expansion but 10% of all pre-tax profit made using a loan must be placed in the reserves of the Bank or Corporation. Borrowers of such funds will pay 50% of the pre-tax profit made back to the Bank. If a loss is made then the assets of the company will be liable to recover the outstanding debt.

Depositors will be given a proportional share of the 50% profit made by the Bank on the loan. Taxes on profits will be structured to reward low risk returns for depositors, banks and borrowers. If a company uses profit from previous investment for expansion then tax breaks will be allowed on any further profit made.

What though of those who wish to purchase a home after such changes? With lending severely curtailed houses will have to re-price lower to a level where affordability is within the new lending regimes and the ability of potential buyers to save for and service. These prices will be much lower than current levels.

However the Government holding the centralised mortgages could reduce the outstanding debt, re-pricing it lower in lockstep with the falling prices in the market. This would reduce the income stream to those who previously held the mortgage debt but with the dollar strengthening both domestically and internationally the reduced back payments would have a stronger purchasing power, offsetting the loss of the number of dollars received.

What of exports? Well without the need to constantly expand wage bills and costs of materials exporters will be able to re-adjust prices lower in dollar terms. Wages and costs can be allowed to fall as the purchasing power of each dollar grows. Think of it this way, I would rather have $10 that could purchase Eu30 than $10 that bought Eu10. Of course imports will be cheaper using high value dollars, reducing energy and material costs. It would also attract inward investment.

Remember constant expansion of GDP in the current regime is only required because of inflationary effects. In a deflationary environment such expansion is no longer required, instead wise investment of savings into profitable enterprises would allow a grown of true wealth, measured by appreciation of the currency, the lack of debt and the strength of Government revenues.

Would this cause mass unemployment? I would point out that current levels of unemployment are rising and increasing month on month. This is not due to wise investment and the lack of the use of credit in an economy. Unemployment is rising because business is attempting to save cash and cut costs or the business has failed. This has happened in an inflationary environment. We may be heading for deflation but deflation did not cause this rise in unemployment.

Using deflation to control monetary supply allows current savings to appreciate and allows the dollar to have higher purchasing power. A Corporation would rather have the ability to invest and expand without having to allow for interest payments on debt or inflation affecting its income. Profitable enterprise will be rewarded and expansion will be because of demand for product. Success will attract expansion and increase employment.

This is just an idea based on the premise that to remove credit from an economy (and the leverage it needs in the form of inflation) requires a re-pricing lower of assets and a reduction of currency in circulation. It probably has holes in it as a plan but as I said the current situation requires a radical rethink and a solution that does not include the reasons for the failure of the current financial system.

Whilst the amount required from central funds (and foreign investment) would be far higher than the current $700Bn it would be used to change the way the economy functions, rather than attempting to allow a failed system to stagger forward for another few weeks or months.

Many will read these proto-ideas and dismiss them as unworkable. Whilst the plan is embryonic it cannot be criticised by applying current economic thinking. Keynes, Friedman et al belong in the dustbin of history, their theories are refuted by the results of the experiment.

What we do know and can demonstrate throughout history is that a strong currency and a lack of inflationary expansion does not result in a destruction of wealth. Such conditions encourage savings, investment and responsible expansion to meet a true demand. Profits are achieved through successful business models; investment in such business is rewarded by a share of the profits. However if the business fails then the risk is spread evenly amongst investors and the banks.

Banks must no longer have the ability to falsely inflate monetary supply through leverage; they must once again become custodians of savings and the steady hand on the tiller of investment. All banks must be subject to constant Federal oversight.

Eventually as debt incurred during the inflationary era is paid down or written off the system will stand on it's own without the need for Government intervention. Oversight will become the new buzzword, investment opportunities will be examined in detail with full transparency and excessive risk will be actively discouraged. The study of the financial disasters of the past 400 years will become a mandatory part of the education curriculum, students will be taught why inflation devalues savings and that paying interest on debt enslaves individuals.

If you want intervention then it must be in recognition that the system doesn't work, repeated intervention shows that the system cannot be repaired if it is based on false theories. Intervention can only be justified to change the system, not repair it. A move away from the current credit reliant financial system needs support during the transition; it has to allow time for the new "non credit" system to be set up and the re-education of the public, government and business in the new way money is used.

It is time for change but not the "change" politicians talk about. The world can and will prosper and improve the life of its inhabitants without the use of credit and leverage. Capitalism can function without credit, it is not a requirement of capitalism to have unbounded leverage. However capitalism does require savings, investment and a sharing of profits. It also requires failure and the results of such failure to function, clearing out poor business models and allowing others to try by applying new approaches and true innovation.

Finally and most importantly the public must ensure that those they elect to govern them and the appointees they make are answerable at all times for the good governance of the Country. To aid this all forms of paid lobbying must be outlawed and all the investments of public officials must be placed in a blind trust whilst they hold office.

Old credit system.....www.zeitgeistmovie.com

Thanks for that Choccie! Another different angle. I see a change as eventually being inevitable but for now of course, we will battle on virtually as normal: especially as the IMF has come up with the brilliant idea that, if they can't tap tax payers for more cash, they'll just print some more! Now, where's my John Bull printing set?..........

Tabby, is the link correct? I can't open it.

Cut and past the link kim.I dont know the problemprobably me.I have watched a couple of times slow but persevere..

Sorry to put a spanner in your works kim, but I think you've fallen for the old trap with your system of credits. What you propose is to use credits as a means to barter for goods and to reward individuals for their services. Seems OK. Now substitute the word 'credit' for 'pound' or 'dollar' or 'euro' - see where I'm going here - your system is simply a monetary system with a new name for the fundamental unit of currency: the credit. So nothing has changed, and all the (perceived) evils associated with our current monetary systems would materialise in this new one too.

Think of some of the other associations between the systems - each individual would need some form of record of their current holding of credits (a bank account) and a means to purchase or sell goods (ironically here, a 'credit' card associates to a debit card). The large computer (which we assume is hacker proof, noting of course that nothing is, and has its own source of energy just in case of the inevitable power cut or disruption) that stores all the records is simply a bank.

As for the idea that you could eliminate poverty (etc) simply by issuing more credits, this is nonsense. For the same reasons, you can not just print more pounds, dollars and euros. Think about it - if the government just churns out more credits to pay for a new hospital (say) then that instantly devalues all credits currently in issue - you ultimately end up in a state of hyperinflation.

And why should anybody who is in debt have that eliminated prior to switching over to your new system. An awful lot of people are in debt through their own fault - why should the rest of us pay for that? And if we decided that we would eliminate individuals debt as some form of altruistic gesture, don't you think that there would be mayhem (though fun) in the run-up to the change-over as every Tom, Dick and Harriet frivolously flitters away what cash they have on those luxuries in life they had until then only dreamed about but resisted the temptation to buy, just so they could also have their debts eliminated. On second thoughts, sign me up for it!! LOL ;-)

StarFrog

The new system would not be a monetary one as such but admittedly is initially quite complex. There would be no inflation/deflation as there would be no necessity to adjust prices: the argument that prices fluctuate through supply and demand is a flawed one. Prices fluctuate through greed, to charge more for an item because it is in short supply quite frankly is crap; when it's gone, it's gone - as simple as that.

Pounds, dollars , euros etc have to be printed, and can be printed at will as the IMF seem to be doing; a computer controlled system needs no printing, it would work just the same as internet banking. There would be no need for credit/debit cards, a simple computer terminal would do the work more efficiently. The new generation 'cloud' computer system would be ideally suited to the purpose and, provided the sun keeps shining!, could be solar powered.

"An awful lot of people are in debt through their own fault - why should the rest of us pay for that?"
That is the beauty of a new system, nobody would be paying for it, it would simply erase all debt. Nice though it would be for every Tom, Dick and Harriet to go on a spending spree, sadly, but necessarily, there would have to be a period of strict control to prevent them. As Big Brother is already watching us closely, or so it would appear, that would not be difficult!

I'm afraid I have rushed this a bit as I am away out for the night. A new system would be a complex and time consuming thing to put in place, but with universal thinking it certainly could be achieved.

Tabasco, managed to open the link; thought provoking and a lot of truth in it.

That BUY note i promised in
full 34 pages.........

http://www.berenberg.de/cgi-bin/content/content.cgi?rm=show_doc&session_id=3b45d89c528a9cd5ba328dff5ae03eeb&sb_userid=0&sb_eventid=0

BUY
Rating system
Current price
GBp 208
Relative
Price target
GBp 265p
22/11/2012 London Close
Market cap GBP 1,988 m
Reuters TALK.L
Bloomberg TALK LN
Changes made in this note
Rating Buy (Hold)
Price target GBp 265 (180.00)

27 Nov TalkTalk Telecom... TALK UBS Buy 212.00 211.40 200.00 240.00 Retains

TARGET SP 240p

Nov TalkTalk Telecom... TALK Nomura Buy 0.00 213.00 190.00 275.00 Reiterates

275p SP Target.

TalkTalk Telecom Group plc (Telecommunications – Buy (from
Hold); PT GBp 265 (from GBp 180)) – Gross margin accretion
should drive momentum: TalkTalk is a structural gross margin growth
story and will continue to benefit from trends in price inflation,
subscriber mix and falling ULL rates. We upgrade to Buy.

TALK Talk Talk

Suprised this one is still
priced so cheaply. A present P/E of
just 8.5 and a PEG of 0.37

far far too cheap.

Priced for growth imo

TalkTalk Telecom Group Share Price Information

Name TalkTalk Telecom Group Epic TALK

Activites Provides fixed line voice and broadband telecommunications
Reuters TALK.L ISIN GB00B4YCDF59 Google Finance LON:TALK

Share Price (p) 222.95 Prev. Share Price (p) 223.30
Shares in Issue (m) 914 Market Cap (£m) 2,041
PE Ratio (x) 8.75 Div per share (p) 6.40
Div yield (%) 4.49 Div cover (x) 2.38
EPS (p) 15.60 PEG 0.37


NORWICH & PETERBOROUGH BUILDING SOCIETY

TALK

Breakout.......