PREFACE
This essay as a sort of part two will tackle a few things. So lets start , dear nobody nowhere. First, a small fun of a detour, for some flavor. The current so called elections in the west, THEY SAY, were rigged or influenced by some social media. Tik Tok made the winner some right tuttifrutti mixed character win in Romania, The Musk X factor made Trump great again, and , THEYSAY, Ruski influenced with trolls the elections in Georgia, etc, etc…. Essentially the people got influenced all over the world by some incredibly stupid theories trolled by all parties involved. That is including the mainstream West propaganda about the current western model of democracy and the obvious right wing plan B of which Witchdoctor has wrote here YEARS ago. The Plan B is the illiberal takeover of the democratic structure in favor of the same old/new Oligarchs to keep the business as usual..
THE CONCLUSION IS: If the people in the west are so stupid, illiterate , idiotic hilly billies to BUY this bullshit, then the western civilization is doomed. Same goes for the illiterate fanatics or people believing in some religious myths on the other non west side which make the chaos in the name of One and Only god or whatever food, fashion or mythical codes they think make the order and so produce constant fear and disorder..But also the current manipulative neoliberal mainstream will go down the drain since the heteregenesis of the ends.-. consequences have always the unpredictable outcomes- will ruin the core system of the West Oligarchic rule, too. At the same time, the rest of the Autocratic regimes which think they are on the safe side, will go down into the death spiral, because all is connected. The Forming of the new war with the extinction outcome as the Death drive push is a classic non rational no win all loose situation. Even the US empire, which modus operandi is in last decades the provoking of CHAOS, murder, death , destruction in different World Theaters as the temporary solution of preventing the counterpart to gain hold, is reaching the limit of self destruction. Disaster shock doctrine capitalism will work No more in any rational way to make gain out of this planned Chaos..
INTRO
As in the previous post about the fake capital accumulation by private corporations, the follow up came after as a prophetic outcome from the car maker Stellantis, a conglomerate of ex Fiat, Peugeot, Chrysler and similar.
The proof of the fake capital accumulation and how the Surplus Value works today was the incredible dividends , incredible Bonuses, Incredible overall surplus money which the Owners and shareholders pocketed out of the Dead body of car making business. Regardless of complete capital formation depletion which results in being unable to invest into the new tech for cars, the Corporation was and is siphoning the surplus value and this surplus value ,through dividends, huge bonuses was redirected into the real core business of the EXXOR- the holding of Stellantis , into the real business- the financilaization which makes more money out of money than any real manufacturing can ever make. Until the debt driven economy is pumping debt into financial sector and all is being covered by the Central Bank, the Casino finances are much more profitable than any dirty car making. The car making IS ONLY A NOMINAL COLLATERAL, needed to keep appearances,where the surplus value is transferred into the casino capitalism.
But, as in the previous post, after this people have drained Italy for decades living on the State subsidies while pocketing the surplus value and paying themselves huge wages which go into hundreds of millions and lately over 30 billion in pocketing dividends from sucking out all possible surplus value of Capital Formation out of car making, THIS IS NOT ENOUGH. The Italian govt is on the verge of giving this people even extra money to keep producing obsolete cars!
The situation is exactly as was depicted in the previous post. They keep doing it. The incredible story is that Governments give this free money without even stepping into the shareholding asset as the guarantee for the money given for free.. Already the Italian State has given ex Fiat now Stellantis sums that are hundred times bigger than is the company worth, so, IT WAS MUCH CHEAPER TO NATIONALIZE IT DECADES AGO. In the meantime Fiat was making the same funny cars with no much added value at all.
But something happened in the meantime which prevents this repeating of the free lunch of constant surplus value extraction and capital formation of the car makers on behalf of the State, low taxes, etc. Cars are still the backbone of the current way of west civilization organization and myth.
The population got older and this oldies do not buy much new cars. The younger population can not afford the current cost / prices of the new cars. The city people do not need cars so much anymore, except yes, IN Slovenia and some other backward mentality nations where the car is still a life myth..
The Chines came, on the cheap. With better.
ENERGY DENSITY AND CAPITAL FORMATION/ACCUMULATION
Witchdoctor has written on this topic already. But Tim Watkins made yesterday a very good if not excellent post- essay- about it and since he also tackled Karl Marx theory of capital accumulation as Witchdoctor has , from a new lens by Tim Watkins,which is excellent, Witchdoctor will add some remarks and fill, in his opinion some holes as Tim Watkins skipped some parts and Karl Marx skipped even more. Ok, Witchdoctor is certainly skipping some, too.
Tim Watkins really finely pointed out that COAL was the trigger of the surplus value and capital accumulation as the first real energy density instrument for a
a capitalist progress and accumulation and as a trigger for the strong surplus value, more than the wages of the workers exploitation., as Karl Marx was thinking.
This made WD think. The result is: Before the Coal, the First energy density accumulation which produced the Capitalist accumulation process was – THE GUN POWDER!
Ssounds silly, eh? Not at all. The Gun Powder as a the real energy density made the Western Conquerors win, take over invade, loot, rob and exploitate the rest of the world! The natives which the west conquered and genocided and enslaved had no gun powder density to counterattack. They lost, all.
The next, yes. Silly, energy density before the coal was: THE SAILS. A LOT OF THEM ON A SINGLE VESSEL.
The Harvesting of the wind on the ships with tens of different sails which made the energy density of moving around the seas quickly and conquering with gun powder cannons, rifles, the world.
The next energy density were THE SLAVES. Almost free capital and surplus value accumulation.
But the energy density of gun powder and sails/wind, and SLAVES made the British Empire. 500 hundred years of exploitation has begun. The world looting, the free slaves energy, the gold, silver, Rubber, coffees, teas, poppies, opium, wheat, spices the raw materials, for almost free capital accumulation of the FEW.
And then Steam, and then Coal.
Yes Coal made industry and manufacturing dense enough for huge surplus value extraction and capital formation as Tim Watkins notes. But, what about the Miners in the coal mines? They were completely exploited for the purpose of energy density. They lived a short life and a very sick and poor one in order to make the Coal cheap enough to make manufacturing viable for the surplus extraction and their shit wages were basis of the manufacturing surplus value and the basis for the wages in the other parts of industry and for the capital accumulation. The miners paid with their lives the energy density and income of others and the demand for goods of the workers in other sectors, which were also exploited . .
And then, the mother of all, The OIL. And then, The nuclear. And now, sun is coming to your door, but this is not so good for the capital density and monopoly. Definitely you want the good all times to be back, huh? Yea , Nobodies.
THE DEBT AND IT DERIVATIVES, THE BANKING
First, the Debt has a nominally aka fake face value in the collateral which in this case is people and their property/taxes as the anchor and this Witchdoctor has written about in last 8 years in all sauces possible. But currently the finances are tenfold, hundredfold bigger than any collateral real stuff. So, it is a house of cards of debt and derivatives.. And as Tim Watkins points, this collateral:
“Most households are in a far worse position, since their only means of repaying debt – or, indeed, paying for life’s essentials – is from their income… mostly wages which have mostly failed to keep up with inflation. Corporations’ need to service their borrowing require them to pass on their increased costs (inflation and new taxes) to consumers (householders) who were already facing a steep decline in prosperity (the income left over once the bills have been paid). Government’s need to service its borrowing requires it to levy additional taxes on taxpayers (households) who have already seen their prosperity plummet. In short, the whole house of cards is founded – in the face of material depletion – upon the incomes of a mass of western householders who are increasingly unable to consume at the rate required to maintain our overburdened debt-based economy… a crisis of under-consumption indeed! “
It sounds like a paradox. In fact, is better to give money for free in a form of Citizen debt free direct from treasury income than to play this game which has only a bad ending.
The banks are the almost only ones who make legally the money out of thin air for the economy and all. They Are mostly all PRIVATE. Even when State issues the debt, it is the Private banks which cover it / buy it in person or on behalf of/ with the new Fiat- money.
Now, how banks make fake accounting when they issue loans is written in this blog for over and over because they do not put the fiat, the typed money out of thin air first in their positive asset ledger-
but instead they account it as a loan directly in the lenders account as a debt to be repaid and then make an accounting mumbo jumbo of how this money is repaid and vanishes..
Marco Saba, the accountant and banking wizard, has proposed this solution to this incredible segnorage happening:
Witchdoctor has copied the Marco Saba proposal and the reader is advised to make a screenshot, you know…
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“Recta Ratio of Money Creation as a Liability
The direct logic of money creation as a liability
1. Recording of Money Creation: When a bank creates money through lending, instead of recording the corresponding deposit as a liability to the customer, it would record it as a liability to the State Treasury. This reflects the recognition that monetary sovereignty belongs to the State.
2. Accounting Changes in the Banks’ Balance Sheet:
◦ Activity: Loans granted would remain unchanged.
◦ Liabilities: The item “Deposits” would be replaced by a new item “Liabilities to the State Treasury”, which would represent the bank’s debt to the State for the money created.
◦ Net Worth: There would be no change in net worth or profits, as interest income on loans would remain unchanged.
3. Registration Example:
◦ Suppose a bank grants a loan of 100,000 euros.
◦ The accounting record would be:
▪ Activity: Loans to customers +100,000
▪ Liabilities: Liabilities to the State Treasury +100,000
Changes in the State Budget
1. Asset Recording: The Treasury would record bank debt as an asset, thereby recognizing an increase in its potential revenue from the seigniorage generated by money creation.
2. Accounting Changes in the State Budget:
◦ Activity: Add “Credit to banks” to the total amount of liabilities created by banks.
◦ Tax Revenue: Potential increase in tax revenue from money creation and interest paid by banks on liabilities.
3. Registration Example:
◦ If the banks have 1,000,000 euros in liabilities towards the Treasury, the State would record:
▪ Activity: Credits to banks +1,000,000
Impact on the State Budget
• This change would lead to a significant increase in assets in the state balance sheet, reflecting a new revenue stream from interest on banks’ liabilities.
• While bank profits would not change, the state would now have a clearer and more detailed view of its financial position and money creation.
If this adjustment had been applied in 2016, it would have generated over a trillion more assets for the state budget at the time.
Provisional and Transitional Measure
• The idea is that this system is temporary until the State Treasury directly takes control of money creation by issuing money and lending it to banks.
• In this scenario, banks would return to being true financial intermediaries, rather than entities that create money “out of thin air”.
Considerations on the proposal
This accounting hypothesis proposes a radical change in the way banks and governments manage money creation and accountability. While it could lead to greater transparency and accountability in money management, it would also require significant regulatory and cultural change in the way financial and government institutions operate.
Implementation
To implement the accounting hypothesis where banks record money creation as a liability to the State Treasury, it is necessary to consider various regulatory, technical and operational aspects. The main steps and considerations for a possible implementation in the existing financial system are outlined below.
Implementation Phases
1. Regulatory and Normative Reform
• Legislative Changes: It is essential to introduce legislative changes that officially recognize the new way of accounting for money creation. This would require approval from the relevant authorities, such as the Ministry of Finance and central banks.
• Accounting Guidelines: Supervisory authorities, such as the Bank of Italy and the EBA (European Banking Authority), should develop specific guidelines for banks, establishing how to record liabilities to the Treasury and manage the related cash flows.
2. Changes to IT Systems
• Accounting Systems Upgrade: Banks should upgrade their IT systems to support the new accounting structure. This may include implementing software that allows for more flexible management of liabilities and assets.
• Staff Training: It is essential to train bank staff on new accounting principles and operating procedures, so that they can properly manage changes in financial statements.
3. Gradual Transition
• Pilot Phase: Start with a pilot program in a few selected banks to test the effectiveness of the new accounting. This would allow any problems to be identified and necessary corrections to be made before a wider rollout.
• Monitoring and Evaluation: During the pilot phase, it is important to monitor the effects on the balance sheets of banks and the State, assessing the impact on liquidity, profits and financial stability
4. Collaboration with the State Treasury
• Cooperation Agreements: Establish clear agreements between banks and the State Treasury to manage the flow of money created. This includes ways of reimbursing seigniorage on the sums created by banks.
• Data Integration: Create an integrated system for monitoring banks’ liabilities to the state, thus facilitating transparency and reporting.
Expected Impacts
Bank Balance Sheet
• The accounting changes would not affect profits immediately, as interest on loans would remain unchanged. However, there would be greater clarity in the representation of liabilities.
State Budget
• Including banks’ liabilities in the state balance sheet would significantly increase recorded assets, improving visibility into future seigniorage revenues.
Further Considerations
Implementing the proposed hypothesis requires a coordinated approach between government authorities, banks and supervisory bodies. It is essential to ensure that all parties involved understand the benefits and challenges associated with this accounting restructuring. With careful planning and gradual execution, it is possible to transform the financial system so that banks become true financial intermediaries, contributing to a more responsible management of money creation.
Online References:
[1] Notes for a sector study on banking activity
[2] The question of seigniorage and its management in Italy
[3] Bill for the return to the State Treasury of the seigniorage of the Commercial Banks
[4] https://www.marcovigorelli.org/cose-rilevante-nel-controllo-di-gestion/
[5] https://www.bancaditalia.it/pubblicazioni/qef/2021-0644/QEF_644_21.pdf
[6] https://www.cooperationpuma.org/chi-siamo/Paper_PUMA.pdf
[7] https://innowise.com/it/blog/core-banking-system-implementation/
[8] https://www.rgs.mef.gov.it/_Documenti/VERSION-I/Comunicazione/Eventi/WORKSHOP–1/I-principali-saldi-di-finanza-pubblica-definizioni-uso-raccordi- .pdf
The Banking Seigniorage Restitution Act: Restoring Wealth to the People
In a world where financial institutions wield unparalleled power, the creation of money—once a sovereign right of governments—has shifted largely into the hands of private commercial banks. Every time a bank issues a loan, it generates money, not from existing reserves, but from thin air. This process, known as money creation through credit issuance, yields a hidden profit: banking seigniorage.
This seigniorage is an unearned privilege that enriches private entities while the American people shoulder the burdens of debt, inflation, and economic inequality. Shouldn’t the value generated by the creation of our nation’s money belong to its citizens, rather than private shareholders?
The Banking Seigniorage Restitution Act proposes a bold but fair solution:
Transparency: For the first time, commercial banks will report and disclose the profits they derive from creating money.
Accountability: These profits will no longer remain in private coffers but will flow back to their rightful owner—the public treasury.
Public Benefit: The billions recovered will be allocated to reduce the national debt and invest in critical infrastructure, healthcare, and education, ensuring a brighter future for all Americans.
This Act is not just a piece of legislation; it is a call to restore fairness and equity to the financial system. It is a challenge to reclaim public wealth from private exploitation. And it is a promise to the American people that their government serves them, not powerful financial interests.
Let us seize this moment to ensure that the wealth generated by our nation’s financial system benefits everyone—not just the privileged few.
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CONCLUSION
There are solutions, there are. At least Witchdoctor knows where he stands. This blog was always about debt free money and social market economy.YOU?
