Wales can be a prosperous, self sustaining sovereign nation state by printing its own debt free currency annually to match its GDP

by Gruffydd Meredith

The basic message of this article really is stated in the title. That really is the basic point to be made here. Wales can be a sovereign, independent, prosperous, self sustaining nation state through the issuing of its own debt free currency to match its annual GDP (Gross Domestic Product) – which currently stands at around £62,190 billion pounds according to the 2017 GVA (Gross Value Added) balanced figure for Wales by the Office of National Statistics – GVA being a very close indicator of GDP.

In other words, if the current Welsh government declared Welsh sovereignty today, a sovereign Wales could print approximately £62,190 billion pounds debt free right now and, on top of the tax take, spend it on Wales and its people as it sees fit.

The process of sovereignty is a simple matter. Yes, it is to do with love of country, people, nationhood, a sense of place, accountability and the ongoing spiritual and historical link with the past, present and future. But most people seeking to reaffirm sovereignty also know that economics are key to the nuts and bolts of real sovereignty.

Those studying recent and not so recent world history will know that, for many centuries if not millennia, the civilisations and nations of the world have been held to ransom, often literally, by the international bankers, financiers, monopoly/crony capitalists and transnational corporations who care not for the concept of nations, borders or autonomous peoples and countries, and who have been practising their own very special take on the magic money tree for many many years. These are neo-liberal in the sense that they want free unregulated markets and laissez faire economics for markets that they mostly control or monopolise.

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

“The process by which money is created is so simple that the mind is repelled.”

So said Canadian economist John Galbraith. And he was right too.

As can be seen through much of history, whomever controls the money supply of a country is essentially in charge of that country. Sadly and nonsensically, most of the world’s countries are not really in control of their own money supply but are rather controlled or misdirected by state borrowing, by whomever controls their central bank and by the general money supply created via the private high street banks – as mentioned, most of these by now being controlled by a collection of international central bankers and globalists who care little or none for countries or for the concept of countries, nations and definable borders and cultures.

Over the centuries this cabal, or cartel, have been crafting their well honed technique of fractional reserve lending – essentially creating the vast majority of new money out of thin air, or, to put it another way, conjuring up magic money and lending it to people with interest, with no real limit to the amount of new money they can create. A trick that horrifies many by the simplicity of its gall.

And very rarely is this money created for the public or national good but is rather created for the ravenous benefits of private shareholders and for ever increasing increasing private profits. And the way that most of the money is created today is incredibly still not correctly taught on university economics courses, leading many students to leave and teach themselves instead, often positively resulting in a real understanding of how this particular form of twisted money creation currently works.

The belly of this beast (or at least one of its bellies) could be said to be the BIS – the Bank of International Settlements based in Basel, Switzerland – a secretive privately owned central bankers’ central bank made up of the world’s most powerful bankers.

In the present UK state, the private high street banks create 97% of the general money supply in the form of everyday loans created out of nothing and, instead of mostly being directed at the productive economy, are being disproportionately lent as mostly consumer and mortgage lending. This skewed over lending has inevitably helped to create an overinflated economy and a culture of credit bubbles and boom and bust, especially in regards to mortgages and the resulting bloated house price market.

The UK government and state can also be said to be an unwilling host that’s victim to this parasitic force in general. For years, rather than creating its own debt free currency, it has borrowed most of the money it needs to spend on the countries of Britain, by selling gilts or bonds as IOU’s to entities such as insurance companies and pension funds, unknown overseas sources and the Bank of England – money which it has to pay back to these bodies plus the ever rising compound interest.

This incurs a massive and ever increasing debt for the UK government and state – a debt that, by design, it is never able to escape from or properly pay back, eventually allowing the blood sucking parasitic feeder to cripple and suck the state dry until all the wealth is extracted and the state has nothing else to give. This seems to be the nature of this beast – to fleece, drain and strip states and countries of their assets and wealth before moving on to its next host

But all of this debt is all utterly avoidable and unnecessary so why do governments and countries choose to bizarrely accept this present flawed situation? The answer seems to be that crucial elements within these countries have surely been subverted and have acquiesced to these international financial barons, meaning that a great deal of these states and countries are not free or self determining in any real way any more but are, for all intents and purposes, vassal states. This includes the battered old UK state.

I think most people in all the nations of Britain by now sense that the UK state is now a flapping, zombified creature in its final death throes. And whatever your own personal politics it’s fair to state that the UK and the state of politics in general is a corrupt, sinking titanic and that trust in democracy, in accountability and transparency has more or less disappeared, with all of us having to suffer at the whims of the unhinged UK’s doomed economic theatrics and immoral foreign and domestic policies.

But this also brings incredible opportunities for Wales, for all the other nations of the island of Britain and for politics in general. All of this can be changed overnight. It’s time for Wales and the Welsh Britons to show the way once more. How? By a Welsh nation state issuing its own debt free currency, totally free and with no debt attached, that’s how. A system also called Sovereign Money as advocated by groups such as Positive Money and many others from all across the political spectrum.

As Cardiff’s much admired Harry White stated with his usual gusto even when well in to his late eighties; “The banks shouldn’t create money out of thin air and charge interest on it – the state should without interest”. This isn’t a left or right thing, this isn’t a statist, socialist or capitalist thing. No, this is something far more exciting – the creation of debt free currency which would mean being freed from perpetual debt enslavement and having the freedom to prosper as a self sustaining country that can open out to friendship and trade with the rest of the world as it wishes.

The more emotive and righteous case for Welsh sovereignty is being made on a regular basis – and rightly so I’d say. But in my view, the glaring case for economic sovereignty also needs to be pushed and highlighted – an area where all the citizens of Wales can hopefully join in and be part of, whatever their politics or situation. The goal and opportunity for real Welsh sovereignty is staring us right in the face and we should embrace it and grab it by its rosy cheeks.

 

So how will economic sovereignty via a debt free currency work for Wales?

In line with what groups such as Positive Money and others have recommended for a debt free, sovereign money system, in its basic form the Welsh currency, overseen by the government of the day, will be printed /created free with no debt or interest owed to anyone at its point of creation, and this money kept in a state treasury account of the publicly owned Bank of Wales. The new money will simply be placed in the central treasury account every year and would be broadly in line with whatever the GDP figures for Wales are for that year and in line with the inflation target/limit determined by the monetary creation committee described below. Broadly speaking, if the GDP of Wales is approximately £62.1 billion (as GVA was as an indicator in 2017) then £62.1 billion will be created and placed in the account. If the GDP is £100 billion, £100 billion will be placed in the account etc.

A Welsh monetary creation committee would need to be carefully chosen by the Welsh Parliament and by representatives from all Welsh areas of life including SME’s, industry, agriculture etc. The monetary creation committee would discuss and decide on the annual total currency figure to be created each year and to ensure that there isn’t over inflation or credit crunches. And this monetary committee would also be answerable and accountable to the Welsh Parliament at all times and also accountable to the people of Wales, with their meetings and discussions available for all to see and meetings preferably open for the public to attend and observe.

The committee will also need to make sure that the right amount of money goes to the real, productive economy and to SMEs in Wales which will in turn increase GDP, and to ensure that over lending to the speculative financial markets, the property market and on bloated consumer lending is avoided – as mentioned, instead ensuring that the main focus is placed on the real (non-financial) productive economy, on lowering unemployment and on boosting the Welsh GDP.

The debt free money created in line with Welsh GDP would either be granted to the government of the day to spend and circulate in to the Welsh economy as it sees fit or by lending it to the high street banks which would then act as brokers or intermediaries and would then lend this money on to businesses and the productive economy under the committee’s guidelines as stated above. Or a mixture of these two options could be implemented.

 
How this money is spent will also depend a great deal on the government of the day and the democratic mandate given to it of course i.e. a government who believes in limited interference, in a more mixed economy or in having more emphasis on public spending and state involvement. Higher or lower taxes would also be a matter for the government of the day of course although it’s hard to see how taxes, especially income tax, couldn’t be substantially lowered or even possibly eliminated under a successful debt free system.

High street banks and mutuals including co-operatives, community banks and credit unions will also be actively encouraged to flourish and offer competitive and comprehensive services to Welsh citizens, including catering for consumer and mortgage lending. And in the long term, all of these would be left to fend for themselves and to stand on their own two feet as capitalism in its everyday form dictates, and not be bailed out by the state if they get in to trouble.

The Positive Money debt free currency proposals offer that two separate accounts should be on offer to citizens; one transactional account where everyone’s money would be kept untouched, safe and guaranteed by the public (state) Bank of Wales, and one investment account which people could open in any high street bank and where they would know that a small element of risk would be involved in regards to their money as these banks invest the money elsewhere in order to try and provide a decent amount of interest as currently occurs with building societies for example.

The main difference would be that high street banks could only use real money that is in existence and could not create money from thin air when creating new loans as currently occurs. The transition to a debt free system would also mean that there would be a significant fall in household debt and consumer demand for credit in general. And the publicly owned (state) Bank of Wales would always be there to help out and lend money if the high street banks are experiencing a serious shortage of essential credit for its customers – but not to bail them out if they have become bankrupt or have failed as a business.

As mentioned above, the publicly owned state Bank of Wales and its treasury account could also make money from lending to the high street banks, on top of money made from printing coins and notes, in what is called seigniorage – a process where states/treasuries can make money from creating money for others to use. And the drive towards a solely digital and cashless society so beloved of the globalist bankers could be reversed in Wales rather than increased, with the current 3% cash created as actual coins and notes presently in circulation (the rest essentially being digital money )  increased to perhaps 10% or more – allowing more Welsh citizens to buy, sell and trade freely without having to rely on tedious overbearing technology and digital tracking software as the only option available to them.

 
Welsh exports figures are also extremely healthy – worth £16.9 billion in 2017 according to stats Wales. Up to the year 2013 Wales was exporting roughly double the amount it imported although since around 2013 the export/import amount seems to have become more aligned (perhaps this is due to a new statistical model by HMRC but these figures are still healthy none the less).

Wales also exports a great amount of the electricity that’s generated here to the rest of the UK state, and the vast amount of Wales’ waters and other natural resources are currently also given away without any proper Welsh regulation or real economic benefit to Wales as a country as could be the case.

 

What is the current spending on Wales, how much is currently collected here and how will a sovereign Wales be much better off with its own debt free currency?

GVA of Wales as an indicator of GDP:

To get to the basics and the crux of things again – according to ONS (Office of national statistics) figures, the GVA of Wales in 2017 was £62,190 billion (balanced). GDP figures aren’t currently officially produced for Wales by the ONS but they are normally slightly higher than GVA anyhow and GVA gives a very reliable and close estimate of GDP. GVA equates to GDP before accounting for taxes and subsidies on products. (Incidentally, the GERW report by the Wales Governance Centre gives a Welsh GDP figure of £61.5 billion for 2014-2015)

Therefore if a debt free money creation system existed for Wales for 2017, a sum of £62,190 billion would simply be put in the account of the Welsh treasury for the Welsh government of the day to spend in Wales as they see fit, and on top of any tax money collected.

Tax collected in Wales:

Overall tax collected in Wales in 2016-2017 was £18,948 billion (HMRC figures which includes the population split for North sea revenues) but doesn’t include council tax collected by Welsh councils. According to The Welsh Tax Base Report by The Wales Centre for Public Policy, in 2016-2017, £1.4 billion was collected in Wales in council tax and £962 million in business rates.

Therefore, approximately £21,310 tax money was raised in Wales in 2016-2017

This means that, by looking at one year (2017) as an example, together with debt free money creation, the money raised in Wales each year could be at least £83,500 billion each year.

Spending- how much does the UK state currently spend on Wales?

According to ONS figures, total managed spending on Wales in 2016-2017 was £39,334

 

What does this all mean? It means Wales can be a free, prosperous and a far better off nation right now

As noted, by looking at 2016-2017 figures as a guide, a Sovereign Welsh state, can create an estimated £62,190 billion pounds of its own debt free currency which reflects its GDP (or GVA in this case).

By adding to this the current tax money of £21,310 billion presently raised in Wales, this would mean that Wales would have an estimated £83,500 billion each year as basic revenue to spend on this country and its people, compared to the roughly £39,334 billion that’s currently spent on us.

This means that, by looking at 2016-2017 figures, in a sovereign state of Wales issuing its own debt free currency we would have at least £44,166 billion more available to spend on us as a country than we currently have being stuck to the UK government, or to the EU or any other union for that matter. After all, why should any other other nation, union or unions have to keep bailing out and subsidising Wales when we can more than pay for ourselves?

And if the £39,334 billion of current total managed spending on Wales means that spending per head in Wales is presently £12,622 a year, it would follow  that the approximate £83,500 billion available for Wales under a debt free currency system would theoretically mean that approximately £26,796 would be available for spending per head in Wales – over double what is currently spent per head (using 2016-2017  ONS population estimates of 3,116,154 people in Wales).

These figures are just one example from one year. These sums would vary from year to year depending on GDP and on other various smaller factors.

 

A pegged Welsh pound. The options of fixed pegging and a dual or parallel currency

It’s also suggested that, for the foreseeable future the Welsh currency could be pegged to another currency such as sterling. This could be a parallel or dual currency system in that, a ‘Welsh pound’ say, could be de facto pegged to a currency such as sterling at 1:1 parity like the Irish punt was to sterling very successfully from 1928-1978. With all the necessary and proper safeguards in place, both currencies could be accepted and be exchangeable specifically in Wales. A more flexible or free floating currency could also be considered in future of course.

 

Summary of basic estimated figures showing how Wales can be a prosperous, self sustaining sovereign nation state by printing its own debt free currency annually to match its GDP

GVA of Wales = £62,190 billion (2017 figure)

Therefore, from looking at current figures, a free Welsh state will be able to print an estimated £62,190 billion debt free each year for the good of the country.

Tax currently collected in Wales = £21,310 in total (2016-2017 figure)

Present expenditure for Wales = £39,334 (2016-2017 figure)

How much money can a sovereign Welsh state print each year to match the current GVA/GDP = an estimated  £62,190 billion.

Total estimate that a sovereign Wales under a debt free currency would have available to spend on the country and citizens using current annual figures when adding tax money = £83,500 billion.

How much better off we would be in a Sovereign Wales with a debt free Welsh currency creation using current available figures = an estimated £44,166 billion, which would also equate to £26,796 spending per head in Wales – over double what is currently spent per head.

 

Conclusion

Wales can be a rich and prosperous nation. We can throw away the bizarre outlook that has seen elements of the Welsh and British state political class openly promoting a begging cap and bowl mentality for Wales in London, Brussels and elsewhere for the last 400 years.

And we can mostly do away with the long drawn out debates about closing the deficit, balancing the books, of ‘fighting austerity’ and of lower or higher taxation because, as contentious ‘hot issues’, all of these become largely meaningless and redundant when loooking at the option of a debt free currency system. And when another Welsh or UK politician or person disdainfully or genuinely asks ‘how can you afford to be independent’ we can tell them straight – by simply printing our own debt free currency. And the same goes for any other country who might wish to adopt this system.

And this I believe is exactly what Wales will need to do to become the prosperous sovereign state it deserves to be and is rapidly moving towards being. People will inevitably try to find holes in the basic concept, shout and complain that it’s stupid, ignore it or say it can’t be done and that there is some complex convoluted other reason why it can’t be done. But they will be misinformed in my view.

And I’m sure there are many areas mentioned here that can be refined and fine tuned but the fundamental principle of debt free currency in line with GDP remains – for Wales, or for that matter, any other country in the world that feels it’s time to try a different monetary system to the one currently practised so commonly.

In 2016 I registered a non left/right aligned Welsh political party, Cymru Sovereign, which has a Welsh debt free currency and Welsh sovereignty at its core – the first time for a Welsh party to do this as far as I’m aware. But the principle is obviously bigger than any party and also more important than any tired left/right paradigm that the decaying mainstream media is still desperately trying to push on us – debt free currency is a core principle of sovereignty that should underpin any true sovereign nation state.

If there are countries who want to carry on with the present monetary system then that’s their choice and their right of course. And not everyone will support sovereignty for Wales either – again, their choice and their right. But everyone should at least realise that Wales can circumnavigate around this current system of debt enslavement which I believe is robbing all of us of our futures, and can become the prosperous nation state it really deserve to be. The rebirth of hope awaits us all.

(Main photo by Foreign and Commonwealth Office via a CC BY 2.0 licence)

One comment

  1. How a sovereign money supply would be introduced and regulated is a topic that should be publicly debated so creative and new ideas can emerge. Below is a link to a wide ranging discussion on the issue:

    https://internationalmoneyreform.org/news/2019/05/design-options-of-sovereign-money-a-full-overview/

    One debate is how sovereign (debt-free) money should enter the economy – through government spending or Citizens Income, or a combination.

    The Positive Money organisation always maintained a London-centric solution that lacked democratic accountability. They have since taken a turn for the worse working directly with the Bank of England to promote a highly centralised and unaccountable digital currency. The Positive Money boss has also announced that she will be running as a Labour candidate in the next general election. Just saying …

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