Banks and other financial institutions would have to be re-stocked with currency, enough to keep them, or at least some of them, open. There would be an important loss of equity in financial institutions, but the world would be free of debt, and a new World Reserve Bank would manage future lending to banks, but now the banks would only lend what they have on reserve, fractional banking would end. The extra liquidity in the market would have to be compensated with very high initial interest rates, and taxes would be placed on all commodities, an Eco Tax, to promote sustainability and new energy sources. The big trick would be keep the interest rates and new taxes at the right levels so that inflation is kept under control. This would obviously be extremely difficult to calculate, but that is why we have super geeks and super computers.
Big bummer if all you did was lend money, but then again, at
least you are getting 50% back in a new stable currency, and you are helping
For developing countries, this would mean an instant increase in living standards and quality of life. New infrastructure projects, schools, hospitals etc, must be part of the swap. In exchange for no debt, out goes cronyism and corruption. For the first world, the deal must be a significant decrease in military spending, and big sustainability projects to tackle the coming challenges of a world consuming more than it can possibly produce. We must first get our financial house in order before we can take on the challenge of creating a sustainable world.
The cycle of debt and consumption has turned into a modern slavery that now begins as soon as many young folks step on a college campus, and ends with a reverse mortgage when there is nothing left but equity in their house. Debt is slavery to consumption, multinationals, banks, and spiritually bankrupt advertising, media, and Hollywood culture. Its time to lose the chains.