|Balancing Government Books and Banking Books|
Governments must balance the books for the country to remain solvent within the accepted framework of the international government bond lending markets. The international open market by which governments obtain enough bank notes to run the country by effectively borrowing the money by selling government bonds on a continual basis requires that the government books are balanced.
Financial organisations and banks and institutions do not need to balance their books because company law is manipulated in such a way that it precludes and elliminates these responsiblities. Books are balanced by accountants who take advantage of aspects of company law which allows them to evade and circumvent financial legislation such that profits can be seen to exist on paper at least. This apparent profitability, that maintains financial stability in the banking sector, is then used by banks to borrow more money to lend to customers to prop up future profits, so at least on paper, the banks are doing fine. Banks make profit from future economic activity that has yet to happen, when there is a problem within the system, the contagion cycle takes over and the economy takes a downturn.
Governments must balance the books whilst they are able to print new money. Banks do not have to balance their books whilst they are able to borrow to keep their businesses viable and therefore continue to lend out. Their balancing of the books is in future interest payments taken from future economic activity. The more money they lend, the more money is owed to them in future interest payments, which is used to balance the accounts.
Banks mandated under legislation to support enterprise funds alongside regular business lending, while governments supply and support business grants, consultancy services and support mandatory credit lending criteria to excellerate business growth. This would manipulate banks to take part in the economic process after a recession. Governments should not support continual underwriting of losses and not support inefficient outdated uncompetitive businesses.
The purpose of banks from the perspective of the population is to make credit available for business growth and to end recessions when they are cyclical. In a recession, banks do not support businesses as they do not gain any benefit from this or consider it their responsibility. The banks see the economy as their market place to make financial profit from people and business, this is not possible during a recession. When the economy and businesses have grown out of recession, without financial assisstance from the banks, then the banks take part and join in and gain benefit and take a share of the upward cycle.
Business lending can be used primarily to promote economic growth and employment. Unemployment can be diminished by governments supplying grants and loans, thus cutting out the banks control of the economy. The use of government grants and loans could be considered undesirable as governments will be competing against other governments for businesses and companies to locate within their country. Competition between governments can lead to trade barriers and introduce the limitations of trade agreements, except that the requirement to do business will supercede these aspects. Government grants are presently doing this without loss of good will between governing authorities of nation countries. Zero interest corporate subsidies are doing this with government business grants without the reporting of any problems.
Austerity should be equalled with investment. It is important to spend less money when there is less available for services. It is important to invest in employment when a recessive downturn requires it. The government needs to save money by cutting services and their associated costs to allow money to be available to enable investment in employment. This will in turn increase future central government income and so assist in catching up with payments sooner for exisitng commitments to core services. An economic austerity rescue plan must be accompanied in parallel with an economic motivational plan. Increased productivity for greater efficiency takes investment, when capital is not available, it must be borrowed to invest and increase job security. Call it borrowing. Call it investment.
The answer is government investment in employment which would therefore increase national debt. National debt will be inhibited with the assistance of a bank enterprise mandate and a legislated level of fractional cash from the banks at minuscule negliable interest rates
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