My continuing debate with Professor Yanis Varoufakis

A Modest Proposal for Overcoming the Euro Crisis, Version 3.0 – Policy 3 significantly amended

When Yanis Varoufakis and Stuart Holland proposed in March 2011 A Modest Proposal for Overcoming the Euro Crisis I criticised the role they proposed for the European Investment Bank. Now it would seem they have modified their proposal. On May 19th I placed a detailed comment on his web site. When you link to the web page you will discover the substantial debate my comment sparked which I closed with this crucially important; central principle:

What everyone has missed is that if you only use conventional banking, then ALWAYS, the banking system becomes more and more prosperous, while the wider nation becomes more and more drained of prosperity. Every penny depositied becomes a much larger loan which in turn again, has to be fully repaid, with interest.

The lost understanding of the use of equity capital is that the investor NEVER gets their money back. It always becomes a part of the increasing prosperity of the wider community into which it is invested. Yes, you may buy or sell your “shares”; but that original investment remains in circulation.

The house you build remains. If it is not quite up to standard, its intrinsic value will decrease, yes, but the money spent on the build remains in circulation. The butcher, the baker, the candlestick maker; all have prospered just a little bit from the overall transaction.

Without a well understood set of rules for the long term investment of a substantial part of the peoples savings, as equity capital, back into the adventurous individuals who will step forward to try and increase their own prosperity, and thus by their efforts; the ongoing prosperity of the nation; without that input, the economy OF ANY NATION will, continuously, decline in direct relationship to the systematic removal of prosperity by the short term banking system.

You simply cannot have any form of long term prosperity for the nation without the use of equity capital to create the foundations for the growing small business community, right down at the grass roots of the nation.

By leaving the initial investment in place, the input of the additional prosperity remains in circulation.

Of even more importance, if you believe in the freedom of the people; the investment MUST be made under the rules for free enterprise. The founder of the new business must be both the manager of the business and the owner of the business. You must leave them free to make their own decisions as to how the business grows.

When you invest equity capital, you are saying; I believe in the long term prosperity of the nation and the ability of the industrious and adventurous who are trying to improve their community; to create new employment, to add new jobs for the young people coming out of education.

Equity capital is YOUR commitment to the long term prosperity of the wider nation, YOUR NATION!

Please, think about that.

A Modest Proposal for Overcoming the Euro Crisis, Version 3.0 – Policy 3 significantly amended

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