viernes, 7 de octubre de 2011

Financial crisis: the solution is to issue more money and not reducing the public spending

I would like to express in too few words the essence of the works that I have written in the last weeks, 
regarding the current financial crisis.

1. The economic and financial crisis has its origin in four facts, essentially: a) the growth of the world economy, b) the corruption of the bankers that employed the resources of the clients for their own benefits, c) the bailout given by the governments to the bankers, d) the high price reached by the petroleum in the year 2008, which provoked panic between the main economic actors.

2. It is necessary to realize that the world economy operates in a new scale; in consequence, it is necessary to adjust the financial resources to that new scale. Reducing the public spending is a mistake; for example, if you augment your weight the solution cannot be to reduce the size of your clothes: your trousers, shirts, jackets, etc; on the contrary, the solution should be to acquire new clothes according to your new weight; well, the same is applicable to the economy.

3. The nations can issue the amount of money (in national currency) that need without limitations: money is metal and paper without intrinsic value http://pablorafaelgonzalez.blogspot.com The unique financial restriction for the countries is the availability of international means of payments, in other words, the U.S. dollars which is the international currency of interchange.

4. It is logic and natural that the United States has a big debt because of a simple reason: the U.S. dollar is the international currency of interchange.

5. The solution for the current financial and economic crisis is: a) to issue more money according to the new scale of the world economy, b) restituting the purchasing-capacity of the workers in the nations affected by the recession, c) to increase the public spending in health and education, d) to increase the public and private jobs, e) reducing and maintaining the interest rates, f) avoiding the privatization of the public services g)  forgiving a part of the countries debt and developing a new world financial policy and  h) to establish severe punishments for the banks frauds. 

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