AG Geldordnung und Finanzpolitik/Interviews der AG
Vorlage:Navigationsleiste AG Geldordnung
Mit freiewelt.de vom 24.4.2012: "ESM verstößt gegen Grundgesetz"
http://www.freiewelt.net/nachricht-9727/%BBesm-verst%F6%DFt-gegen-grundgesetz%AB.html
Englische Übersetzung:
The workgroup monetary system criticises the ESM as an unsuitable measure to solve the international debt crisis in Europe. The group demands that Federal President Joachim Gauck refuses to sign the bailout laws. In Greece the measures of the ESM are considered to have caused a massive societal split. As a consequence former resentments within Europe run the risk of being reignited.
At the same time, the workgroup monetary system advocates a fundamental reform of the monetary system. The workgroup monetary system points out that the suggestions made in the second part of this interview are not necessarily majority opinions of the Pirate Party.
Freie Welt: According to the workgroup monetary system, the ESM agreement contradicts democratic principles. In what way?
Workgroup monetary system: The Pirates disapprove of legal constructs that do not display sufficient democratic legitimation and transparency. The ESM infringes the fundamental democratic and legal principles as laid down in the German constitution such as parliamentary reservation, the principle of equality, the rule of law, the separation of powers and the requirement for transparency. Furthermore, the ESM effectively curtails the power of the purse of the national parliament as confirmed by rule of the German Constitutional Court on September 7th, 2011. Therefore we consider the ESM an unsuitable means to overcome the Euro-crisis. The potential unconstitutionality of the agreement carries the risk of escalating the crisis in Europe even more.
Freie Welt: The workgroup monetary system asks the Federal President Joachim Gauck to refuse to sign the ESM agreement. Do you think Gauck could go against such a momentous decision and how could he be convinced?
Workgroup monetary system: It is worth trying, especially because the ESM is a legitimate subject for debate with regard to »Freedom and responsibility«. Mr. Gauck likes to refer to himself as a teacher of democracy. The ESM could fit well into his curriculum as a relevant example on the topic »Dangers for our Democracy«.
Freie Welt: The German Constitutional Court ruled the appointment of a board of 9 from the Budget Committee for decision making about payments to the EFSF illegal. But only in the event that the appointment is justified by the requirement for immediate action. If nondisclosure is necessary the board will still be appointed. How do you judge this?
Workgroup monetary system: if that is the case, the common practice would likely be an immune board making decisions without the German Federal Parliament (Bundestag) or any other supervisory authority. Higher levels in politics and administration will use the EMS to acquire a new license to print money. It will not change the core problem of debt accumulation.
Freie Welt: In a statement to the press the workgroup monetary system claims that the ESM in its current design carries the potential of exacerbating the crisis in Europe. What could such a scenario look like?
Workgroup monetary system: The population of paying countries will not benefit from these proceedings nor will the population of receiving countries benefit, because they will have to carry the costs. As we can see, the measures taken in Greece have already led to a deep societal split in a very short time. A further intensification of the social conflicts could reignite former resentments within Europe. The ESM bleeds the population of the stronger as well as the weaker countries for the benefit of institutional investors. At the same time the trade balances of the countries to one another have to be taken into account.
You could say that due to its surplus in exports, Germany has to pay off debts of the countries with a deficit. However, the population benefits the least from this system. Someone makes profit and the general population pays the price. We cannot hope to find a solution in Europe without real transparency in the current monetary system. Therefore, the most important thing Europe needs is an open, honest and unsparing debate about existing problems in our monetary system and possible solutions. This is what we hope to achieve.
Freie Welt: What would be the consequences for the people in Europe?
Workgroup monetary system: A positive outcome would be a preservation of the monetary assets that correlate with the debts. Monetary assets make up the main part of government-funded pension schemes. Therefore, private pension schemes require a thorough analysis. Because monetary assets (savings) correspond with debts, any encouragement of saving, or even the generation of legal regulations that encourage private pension schemes, requires the acceptance of additional debts. The ESM only spreads the debts in order to preserve monetary assets. This strategy gained more time but it did not resolve the problem. A final resolution would require far-reaching structural reforms as well as a paradigm shift.
There is a risk of taking drastic measures to support the system as long as possible (including the ESM) due to the system’s inherent flaws. In this context Europe could mutate into a tyranny with a practically centralised government extorting agreement from the EU countries. This could easily swing to the opposite extreme and fuel nationalistic tendencies as well as radical forces within Europe. It is the prominent role of Germany in the realisation of the ESM that demands questioning.
Freie Welt: Joseph Huber has inspired the workgroup monetary systems in many ways. The sociologist favours a concept that disables the creation of money by banks. How does money creation work and what are the consequences?
Workgroup monetary system: Most people think that banks grant credits from savings. Although this belief is wrong it is well ingrained in people’s minds, which makes it much harder to accept the reality of money creation. Every time a bank grants a credit it actually creates the money for the credit. This money did not exist before and will disappear again as soon as the credit is redeemed. Thus, money has been created via a credit note. It really is that simple: the amount is credited to one account without the necessity of debiting another account. This mechanism has multiple disadvantages: 1. The money created through this process can get lost in the event of a bank failure, something banks like to take advantage of during times of crisis. 2. If only the central bank had the power to create money, it could contribute to gains on a double-digit scale. 3. In times of crisis, bank lending is too restrictive and in times of economic prosperity, bank lending is too optimistic, which exacerbates ups and downs of economic cycles. 4. The central bank’s only means to control the volume of money in circulation is indirectly, via the base interest rate.
Freie Welt: Possible reforms of the monetary system form a major area of interest for the workgroup monetary system. What are the weaknesses of our monetary system and how could they be overcome?
Workgroup monetary system: We are discussing several aspects. The most serious weaknesses are considered to be money creation, interest rate and savings. The main part of money in circulation is not created by the central bank but by commercial banks. This leads to an almost uncontrollable amount of money in circulation in conjunction with speculative bubbles and inflation. Therefore, the power of money creation should lie only with the central bank. This would enable the central bank to control the money in circulation directly instead of indirectly via the base interest rate. Another problem are the interest rates on assets. These are essentially income that does not result from work performed, and thus enforce the disproportionate allocation of capital bottom up. Additionally, interest rates on assets raise interest rates on credits, thus impeding reasonable investment decisions.
Through long-term saving the money in circulation decreases, leading to an overall economic accumulation of debts. For this reason, we generally prefer a pay-as-you-go pension system to private pension schemes. Additionally, we are thinking about the benefits of regional complementary currencies. These could noticeably reduce the terrible consequences in the event of a breakdown of the financial system. Complementary currency initiatives make a valuable contribution to questions of money creation and the regulation of money in circulation through impulses to circulation. However, the biggest problem of all is the lack of political openness to discuss these topics. We don’t rule the money but we are ruled by it. Today’s society lacks the awareness of the problems as well as the necessary basic knowledge. Therefore, our goal is to spread information and to encourage a public debate.
Freie Welt: What is your position regarding state-run money creation?
Workgroup monetary system: More than hundred years ago, money had still been issued by private banks. This right was then transferred to the states, in 1844in England for example through the Bank Charter Act under Prime Minister Robert Peel. By now, banks have regained the power to create the greatest part of the money supply for the real economy, because the most common payment practice is the money transfer from account to account. It is time for politics to recognize the problem and once more take away the power of money creation from private banks. Especially in the light of the current financial crisis, this would be the next logical step. Private banks should continue to finance the economy, that is, granting credits. But the supply of money for economical activities is a matter of constitutional status and thus belongs in the hands of the state. We demand a regulatory framework that grants free and self-determined action to the state as well as the population while at the same time providing the highest possible stability.
Freie Welt: The workgroup monetary system is part of the Pirate Party. To which degree does the rest of the party agree with the workgroup?
Workgroup monetary system: That is hard to determine. At the last federal party convent we had put forward two motions regarding the ESM, one of which has been accepted. The motion criticises the undemocratic realisation of the ESM. The additional, more detailed motion however has been rejected. Our workgroup could not yet agree on a final motion regarding the monetary system. Therefore we can only guess at the majority support within the party. We will continue to spread information on the topic and hope that our suggestions will be incorporated into the election programme before the elections of the federal parliament.
Freie Welt: Thank you very much for the interview.