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THE RICH

One of the critical questions which is always asked
by people who begin to understand the effectiveness of
the hidden redistribution mechanism in our present
money system is: Will those 10% of the population who
profit from this mechanism at present allow any change
which might eliminate their chances to extract a
work-free income from the large majority of people?
The historic answer is: Of course not, unless they are
forced by those who pay. The new answer is: Of course
they will, if they become aware of the fact that "the
branch on which they are sitting grows on a sick tree"
and that there is a "healthy alternative tree" which is not
going to collapse sooner or later. The second means
social evolution, the soft path. The first means social
revolution, the hard path.
The soft path offers rich people the chance of
keeping the money they have gained through interest.
The hard path will invariably lead to sizable losses.
The soft path means no accusation because of profits
from interest, until we introduce the new money system,
since their behaviour has been totally within their legal
rights. The hard path of social revolution may well be
more painful.
The soft path means no more interest earning money
but a stable currency, lower prices and, possibly, lower
taxes. The hard path means growing insecurity,
instability, higher inflation, higher prices, and higher
taxes.
So far my experience with people in the "richest 10%
category" has been that they are neither fully aware of
how the interest system really operates, nor that there
are any practical alternatives. With few exceptions, they
would tend to opt for security rather than more money,
since they mostly have enough for themselves and
sometimes for many generations to come.
The second question is: What happens if the rich
transfer their money to other countries where they get
interest, instead of putting it into their savings account
where it retains its value but it does not accumulate
interest?
The answer is that within a very short period after the
introduction of the reform, they may do just the
opposite. Because the margin of profit between what
people gain in other countries from interest after they
deduct inflation would most likely be about the same as
the increase in value of the new money in their own
country which is not subject to inflation.
In fact, the danger may be precisely the other way
around. What we may create is a "Super-Switzerland"
with a stable currency and a booming economy. For
several years in Switzerland, investors even had to pay
interest in order to leave their money in a bank account.
In contrast, the U.S.A. offered the highest interest rates
in the early Reagan era and attracted surplus money from
all over the world and soon had to devalue the dollar
drastically in order to meet its obligations to creditors
abroad. At 15 % interest, the U.S.A. would have had to
repay about twice the amount invested by foreign lenders
after 5 years. There was no way in which this could have
been achieved had the dollar been kept at its original
value. One further consequence of this policy was that
the U.S.A. changed from being the largest creditor to
being the largest debtor nation in the world within a time
span of only eight years.
The huge amount of speculative money which is
estimated to be as high as $50 billion - circulating the
world from one banking center to the next in search of
profitable investment - shows that there is a shortage of
sensible investment opportunities rather than a shortage
of money. This would change, in any region or country,
which by introducing interest-free money created a
booming, and finally stable and diversified economy.
Chances are that surplus money from outside would be invested here
rather than that surplus money from inside would leave
the region.
In many ways, it would be more profitable for rich
people to help monetary reform to happen and to
support a stable system rather than to support growing
instability and risk the inevitable crash.
A third question concerning the richest 10% of the
population relates to those who live on their capital and
are too old to work. What happens to them if interest is
abolished?
An example taken from Germany (in terms of average
interest and inflation rates) shows that those who can
live off their interest now can live off their capital at
least for one, if not for two or more, generations. If we
assume capital assets of 1,000,000 DMarks, an average
interest rate of 7 % and an average rate of inflation of 3
%, the gross income amounts to 40,000 DMarks per
year, without depleting the capital.
In the new money system we abolish interest and
inflation, thereby reducing the prices of all goods and
services as well as taxes by about 40%. This means that
this person needs a gross income of 24,000 DMarks per
year in order to keep the same standard of living as in
the present system. If we divide 1,000,000 by 24,000,
we see that this person could live for 40 years off her or
his capital.
The point of this example is that almost anybody who
can at present live off their own capital will also be able
to live off their capital if we change the monetary
system.
Among the richest 10% of the population in terms of
wealth are those with assets over one million DMarks.
But there are some who gain more than one million DMarks
from their interest every day. According to official
sources, (24) the daily income of the Queen of England,
the richest woman in the world, was 700,000 pounds
(roughly two million DMarks) in 1982. Although neither
the Queen nor firms like Siemens, Daimler-Benz and
General Motors have much official power, their
ownership of money is, in fact, unofficial power.
Scandals concerning the pay-offs by leading industries
financing political parties in Germany, the U.S.A. and
other western countries have demonstrated that all
democracies are endangered where the monetary
re-distribution mechanism is allowed to proliferate. As
time goes on, those who think that they live in
democracies will live at best, in oligarchies or at worst,
under fascist regimes. In medieval times, people thought
they were badly off when they paid tithes: a tenth of their
income or produce to the feudal landlord. In this respect,
they were better off than we are nowadays. Today, more
than one third of each DM or dollar goes to service
capital. Those who gain most are the super rich,
multinationals, big insurance companies and banks.
The question is whether we are finally willing to
comprehend the social injustice that is caused by our
present money system and change it or whether we wait
until a major world-wide economic or ecological
breakdown, war or social revolution occurs. As there is
no way in which single individuals or small groups alone
can change the monetary system, we must try to bring
together those who understand how it can be changed
with those who have the power to change it. It should be
clear that:
- there can be no accusation of those who, at present,
profit from the interest system as this is totally within
their legal rights;
- what can be stopped, however, is the continual ongoing
extraction out of a without work;
- there should be no given economy of money regulation as to where or how
money may be invested in the future by those who have
more than they need. If they are intelligent, they will
keep it in the country anyway, which would create a
new economic boom by abolishing the interest system.

Figure 11THE POOR

Would the poor also benefit from a new money system? If
resources were averaged, every German household in 1986
would have a private fortune of 90,000 DMarks. This would
have been a splendid proof of our prosperity if it were evenly
distributed. The ugly reality is that one half of the population
owned 4% of that wealth and the other half, 96% (Figure 11).
More exactly, the wealth of 10% of the population grows
continually at the cost of all others.

This explains why, for instance, lower middle-class families
in Germany increasingly seek financial support from social
welfare agencies. Unemployment and poverty are growing in
spite of a sizable welfare system set up to overcome both.
The largest factor in the redistribution of wealth is
interest which transfers daily millions of DMarks from
those who work to those who own capital. Although most
governments try to rectify the resulting imbalance through taxation, the
result is nowhere near a balance. In addition, the costs
of growing bureaucracies are affecting everybody
through increased taxes. The human costs in terms of
time and energy, plus the humiliation involved in getting
through the "red tape," are seldom if ever taken into
account.
The absurdity of a monetary system which robs
people first of their fair share in the "free market
economy" and then - through some of the most
inefficient procedures imaginable - returns some of this
money in the form of welfare payments to the same
people, has rarely been exposed by the "experts" nor
been discussed in public. As long as those 80% of the
people who pay don't understand how they pay, could it
be otherwise?


Figure 12

A practical comparison of rising interest rates and
increasing bankruptcies in business and industry, as well
as unemployment rates following with a time-lag of
about two years (Figure 12) provides another compelling
argument for the introduction of an interest-free
monetary system. Also, social costs like alcoholism,
families breaking up and increases in criminal behaviour
are additional costs which are not taken into account in
the above statistics but could be effectively reduced by
the monetary reform.

Figure 13

If we look at the dilemma of Third World countries
(Figure 13), we see our own situation through a
magnifying glass. It is like a caricature of what happens
in industrially developed countries, due to the same
structural fault in the monetary system. However, the
difference is that industrially developed countries as a
whole, profit while the developing countries pay. Every
day we receive $300 million in interest payments from
Third World countries: that is, twice the amount of the "development aid"
which we give them.

Figure 14

Of the Third World countries' total debt of one
trillion dollars in 1986, about one third was lent in order
to repay interest on previous loans. There is no hope that
these countries will ever be able to pull out of the
situation without a major crisis or fundamental policy
change. If war means hunger, starvation and death, social
and human misery, we are right in the middle of the
"Third World War" (Figure 14). It is an undeclared war. It
is a war fought with usurious interest rates, manipulated
prices and unfair trade conditions. It is a war which
forces people into unemployment, sickness and criminal
behaviour. Do we have to tolerate this indefinitely?
There is no doubt that those who are at present worse
off in the monetary system we have created account for
more than half of the world's population. The situation in
the Third World would change momentarily if their
debts were to be written off partially or totally by lender
nations and banks. This is often advocated by progressive
economists and, in fact, is already happening. However,
unless the basic flaw in the money system is abolished,
the next crisis is pre-programmed. Therefore, one of the
important steps for a more stable economic system on a
world-wide scale is to make known among those who
would undoubtedly gain most - the poor and the
developing countries - that an alternative system could
be chosen.