Some Predictions for the Future: Complete Collapse of the System
Posted By Ben Dyson ~ 11th October 2009
By 2029, fractional reserve banking will be no more. The banking system will have been either replaced (by a system based on the proposals on this site), or it will have completely imploded. The rescue efforts of the UK, US and European governments have been fundamentally pointless – simply postponing the ‘final collapse’ by a few years, but doing absolutely nothing to address the deeper issues.
The predictions below are all derived from data for the last 20-40 years. They are simple projections into the future, making the assumption that the ‘powers that be’ ignore the fact that fractional reserve banking doesn’t work and try to prop up the existing system as long as possible. By 2029, with debt being 5 times greater than it is today, the system is very likely to collapse under its own weight.
Debt & The Money Supply
The fractional reserve banking system is designed so that the majority of money is created as a result of people taking out loans. The end result of this is that all money is debt (with the exception of the 3% of all money which is actually created by the government).
The current (2009) money supply is £2 trillion. By 2029 it will be £9.15 trillion, if not more.
Total debt will also be in the region of £9.15 trillion by 2029.
This is calculated by taking the average increase in the money supply (M4) from 1990 to 2009 – an average growth of 7.9% – and applying it to the money supply going forwards. The average rate of annual growth in the money supply for the last 40 years is actually 11.6% – if this figure is used, the money supply grows to £17.9 trillion!
By 2050 the money supply, and therefore total debt, will be £45 trillion.
Average Debt
Average debt per adult in the UK will be £203,136 (including mortgages).
House Prices
The average house in 2029 will cost over £773,088.
This figure is arrived at by taking the average house price of £160,224 (Nationwide Building Society, August 2009 figures) and assuming this also grows quickly enough to keep up with the money supply.
Minimum Wage
The minimum wage in 2029 will be £26.21 per hour.
Arrived at by taking the 2009 minimum wage of £5.73, and assuming it grows in line with the money supply (so that minimum wage workers get no poorer or richer in real terms).
The Value of Your Savings
Your savings will lose 60% of their value over the next 20 years!
Assuming you put £10,000 in your savings account that pays 3.5% (after tax), by 2029 you will have the (2009) equivalent of £4,201 in real terms.
Hello,
In addition to the suggestions you propose here there is quite a few other sustainable solutions. I can think of Ellen Browns, Richard C. Cook´s the Cook Plan, Michael Rowbotham´s , Huber´s, Robertson´s, Zarlenga´s etc. etc. and then there is a solution based of the ideas of Social Credit á la Douglas.
The question is which is the best proposal. There is quite a few differences between these proposals.
At the time being not that many analysts seem to understand there will not be work for everyone therefore a national dividend seems to be something that has to be included.
The Cook Plan is the only one except Douglas to propose this.
What is your take on this?
Hi Lars,
Firstly, I’m impressed – you’ve really done your research. The proposal on this site is based on the joint work of Robertson and Huber, and follows the same route as Zarlenga’s work (I have worked with Zarlenga and the AMI on legislation for the US system). I would group these proposals together – they all suggest that money should be created debt-free by the government, and spent (not lent) into existence as government spending, and that the banking sector should become merely a ‘money broker’ (matching lenders and borrowers) rather than the main issuer of the money supply. There are other proposals which suggest money should be lent into the economy by the government – these are marginally better than keeping the current system, but in my view, not a solution to the problem.
Regarding the national dividend (the idea that every citizen in the economy should receive a certain basic income whether they work or not), in short I see it as something that can follow fundamental monetary reform. Like any other democratic issue, it can become part of a political party’s election manifesto, and the people are free to vote for or against it. But I prefer not to tie it in with the issues that I discuss here (specifically, the question of whether our money should be created publicly or by private corporations). I see it as a separate issue that requires its own researchers, campaigners and advocates. Monetary reform, along the lines proposed on this site, will work with or without the national dividend or basic income – it won’t solve every problem that we have today, but it will make most problems much easier to deal with.
The national dividend is also a hard sell politically. It takes a bit of mindshift to realise that it is not simply ‘providing welfare for the lazy’. It took me a bit of thought to get my head around it myself. Making the case for a national dividend requires just as much work and campaigning as making the case for reform of the banking sector. With limited resources, tying the two reforms together simply means that neither will ever be achieved. We need to focus on one thing at once if we want to avoid another 70 years of simply discussing these issues.
In short, I’m not for or against a basic income. I think basic monetary reform needs to be done first, and then questions regarding a national dividend or basic income can be addressed in the same way that every other political or social issue is addressed. One thing that I am certain of is that there is zero chance of a ‘national dividend’ being implemented under the current banking system.
Thank you for such a detailed reply. I do understand most of your points.
However, here in the Nordic countries the situation is not the same as we have no history of monetary reform thought such as the USA, Britain, Australia, New Zealand and Canada has through the social credit legacy of C.H. Douglas – not to mention Ezra Pound and all the books that has been written due the efforts of his protége Eustace Mullins. We have no such history, no such high profile individuals bringing light to these matters hence monetary reform has been a total non-issue in all parliaments of the Nordic countries as far as I am aware.
Government revenue has been taken in only by taxes, fees and debt/loans. According to my research the only interesting incidents over here are there was some government IOUS:s monetized by the state owned Bank of Finland still in 1979. (which would be “prohibited” according to the present EU/IMF/OECD/BIS rules)
The citizens dividend is the last stage in the four stage process to economic democracy in one of Robert Anton Wilsons essays printed in book , The Illuminati Papers. The idea is not totally his own but rather Buckminster Fuller´s if I am not very much mistaken. Howeven it all starts with a negative income tax that kind of replaces the immense welfare burocracy that humiliate the citizens. And – over here this concept of a basic income guarantee is already a matter of fact.
And we are in all the Nordiv countries rather close to converting from the social welfare thing to more decent thing – a basic income for everyone. This was an issue in the finnish parliamentary election in 2007 but the Green party dropped the matter as they sold their soul for as place in the sun – the prime minister Matti Vanhanen administration. Next election is in march 2011.
Now as we suffer from an overvalued euro, our production base has decreased 30%, GDP has decreased ast least 8%, exports are down by at least 30%, too. This recession will cause some political party to bell the cat sooner or later. The main problem is almost everyone is totally ignorant on the origins of money and the mechanics of debt based money system, therefore people tend to think the basic income has to be taxed and redistributed – they dont realize it can be issued debt free by the state or delegated to any public authority, city or municipality.
But there will be a change in postitions as soon as people are less ignorant on the flaws of the debt money system or on how all money only enters circulation as monetized debt.
There is many signs that seem promising. A member of parliament, the curling champion Markku Uusipaavalniemi is the first mep to give speaches and interviews that show he is aware of the money as debt problem. As you very well know internet provides excellent channels to spread awareness of these matters. I for one have dedicated almost half of my time for the last two years in order to make way for change in awareness both with blogs and public speaches. I would not do this unless I was optimistic. The depression will be our best friend – it will provide the social unrest that is needed for a political movement like this to succeed.
So to make it short – over here basic income will be the first to be proposed – but the monetary reform issue will be the one that assures concerned citizens they will not be taxed in order for the basic income to be implemented.
Hi Lars, thanks for that reply – it’s interesting to hear about the different situation you have there. Fingers crossed that the basic income proposal goes through then – this will probably create enough pressure for monetary reform to fund it without simply transferring wealth from some people to others.
Lars
I’d just point out, too, that “over here” (ie in Finland) there can be no possibility of monetary reform for quite another reason than those you have cited (public ignorance, no indigenous tradition of debating such issues, etc). Namely, Finland’s membership of the European monetary system whereby its people and their own government forfeited any independent decision-making power in this matter for the sake of a political project conceived in Paris, Berlin, Brussels, and a few other capitals – aimed at “ever-closer union” – viz the single European currency.
That currency – like all others in use under the global monetary system we now have – is entirely debt-based. Hence the agonies now being undergone by the Greek people, as well as the much more modest cutbacks we also see in Finland, Spain, Portugal and (even!) Italy, Germany and France.
Hi Lars:
Now you understand why Social Crediters are wary of working with other monetary reform movements like the AMI.
I think that Ben summarizes it when he states:
“Regarding the national dividend (the idea that every citizen in the economy should receive a certain basic income whether they work or not), in short I see it as something that can follow fundamental monetary reform. Like any other democratic issue, it can become part of a political party’s election manifesto, and the people are free to vote for or against it. But I prefer not to tie it in with the issues that I discuss here (specifically, the question of whether our money should be created publicly or by private corporations). ”
Anyone who has studied the history of Social Credit knows that this issue is NEVER discussed or put forward by other monetary groups, but they use Social Crediters to back their monetary reform proposals.
Communists were “monetary reformers”, but the philosophy of communism is diametrically opposed to Social Credit.
What Ben is proposing will do nothing to alleviate the problem Douglas identified in his A+B theorem, and the suggestion that we continue a policy of full employment violates natural law which suggests that as productivity increases we should be able to increasingly consume leisure. A policy of full employment is quite detrimental to our environment and mankind because it is a violation of natural law.
Hi Socred,
If you want to see CH Douglas’s ideas implemented, you’re essentially asking for a revolution from the current state of affairs. There are countless groups asking for a revolution, and most of them do nothing more than spend decades discussing, writing, but making no progress in actually creating any change in society. That is why I am completely focussed on one issue – getting the exclusive power to create money restored back to the state and taken away from private companies. This is one relatively small reform that can lay the way for many other improvements in the economy and society.
One question that you need to ask yourself: Is there any possibility that a government will implement a basic income / national dividend under the current monetary system (whereby it would simply increase the national debt or act as a transfer payment from the wealthy)? If the answer is no, then you need the reforms that I’m proposing to be implemented before you can get any further in advancing social credit.
(I don’t believe I’ve mentioned full employment or Communism on this site so this might be going off topic).
I don’t have the time or resources to promote social credit – which I would consider to be three or four major reforms. Monetary reform is just one reform, and in the current economic climate, a reform that has a chance of being passed, which is why I will continue to remain focussed on this first essential reform.
This blog post illustrates a fundamental and very simple point: that all exponential growth systems will eventually collapse. This is not a matter of opinion. It has nothing to do with ‘left’ or ‘right’, ‘liberal’ or ‘conservative’. All shades of political opinion are united in ignoring it. It is a scientific and mathematical truth attested by M King Hubbert (of peak oil theory) and Albert Bartlett (physicist) among others.
This is simple mathematics that 16 year olds take in their stride. In a note I sent to my local Parliamentary candidates I made a very similar point: in 24 years’ time the average UK house will cost £1.3m if the 60 year trend of 9% annual increases continues. Wait another 8 years and it will be £2.6m. You don’t need to be a Maths Phd to understand that this is impossible. Eventually the process will go into reverse and house prices will halve every 8 years for 40 years or longer. If you thought it was exciting going up to the top of the bubble, just wait until we start sliding down the other side.