So Europe has an arithmetic problem. Either the creditors lose their money and Greece writes off its debt in national bankruptcy and revives the drachma as its own internal currency -- followed by all the other overly indebted euro nations -- and the euro banking and money system collapses (the free market, laissez faire solution). Or some agency with the power to tax and redistribute euros -- the European Parliament -- takes German euros and gives them to Greece -- who uses the euros to pay its debts to Germany (the fiscal union solution). Or some agency with the power to issue debt-free euros -- the ECB -- creates euros, gives them to Greece, and Greece uses the euros to pay out its presently unpayable debt (the monetary reform solution).
The first solution involves a reduction in both money and debt: the creditors' uncollectable money is extinguished along with the unpayable debt that is 'owed' to them. The second solution involves a redistribution of the money (with no change to the quantity of the money supply), which enables debtors to repay some of their debts, with money that was taken from the creditors as "taxes": creditors get repaid with their own money. The third solution involves a net addition of money to balance the debt: the creditors get paid and Greece gets out of debt.
I would pick Door #3.
But the bankster religion of "sound money" considers the addition of debt-free money a mortal sin: "unthinkable". And as long as banksters retain their absolute monopoly control of money issuance, the arithmetic problem cannot be solved, other than by Germans losing their money and Greece going bankrupt. In righteous indignation, wars of conquest and occupation are waged to seize ownership of nations who didn't "pay up".
Austrian School economists call this "creative destruction". Lending money to Greece was a "mal-investment". Mal-investors lose their money. When sh*t meets fan the Ponzi is exposed. Debts are wiped off the balance sheets along with the money the mal-investors expected to recover. When uncollectable credit is reunited with unpayable debt, the numbers cancel each other out, leaving $0 credit money and $0 debt owed. Prices, and the money supply, are reduced to "sound footings".
But there's nothing creative about financial collapse and economic Depression -- and War. Destruction is destructive. Creation is something else. Money could be created to solve the arithmetic problem. But to the Austrian "sound money" school, creation is unthinkable. Only destruction is thinkable. We must preserve the purchasing power of the existing stock of money at all costs, any cost of death, depravity and destruction. Anything is better than risking money inflation that might 'devalue' our sacred Money.
Money is numbers that work by accounting arithmetic: adding and subtracting numbers in equations. Money numbers are not produced by work. Money is simply created out of nothing. If humanity controls Money, then we can juggle the arithmetic however we choose. We can add numbers, allocate them to whoever we choose, to activate whatever economic purpose we choose. We can create money and give it to debtors to pay out their unpayable debts, for example. The creditors get all their money back. It's a debt Jubilee that does not require the creditors losing all their money.
We still have a lot of ground to cover and this article is already too long. So I'll stop here and call this article Part 1, and continue with Part 2. In this article I tried to show why government money issuance is arithmetically necessary to the financial sustainability of the capitalist "for profit" banking and industrial system. Part 2 focuses on specific proposals by which to implement the needed monetary reform.
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