Friday, December 15, 2017

Re-nationalisation at Zero Cost - No Debt, No Interest

For years the owners of Thames Water were able to skim off annual returns above 15% and eventually sell up leaving a £2bn debt with Thames Water. Nationally the private owners of the UK's water companies have taken £18bn in dividends and left consumers with debt of £42bn.  The Spectator article about this comments that this situation is of monopolies 'working as conspiracies against the public interest' (definition by Adam Smith).

So why not take them back into public ownership? At least we would have elected officials responsible to prevent more spilt sewage into the rivers and the mending of wasteful water systems. But add to public debt through a buy-back? No need at all.  As a top official at the Bank of England confirmed to me, the Bank of England could create debt-free, repayment-free money to buy up private utility firms such as these, with QE-type money creation at zero cost to the public purse. Price to be paid hopefully adjusted to take account of the huge profit rake-off of recent years. 

The lesson of QE money creation* is as follows... 

QE money definition:

  • Money created out-of-nothing-with-no-debt-to-pay-or-interest-to-pay-back 

Use of QE money over the last decade:
  • To buy assets such as Government debt held by pension funds, etc.

Proposed use of QE type money:

  • To buy assets such as the shares of water companies, railway companies, etc. 

We assume that the government is not ignorant of its powers to arrange for QE money for the above purchases. Thus we can only assume that they wish to protect the monopoly rights of banks to create money as debt. Every time a loan is created it is manufactured out of thin air by a bank. This means that the banking industry will continue to thrive, whilst burdening the taxpayer with decades of debt repayment. Will the idea of common good uses of money creation ever see the light of day?  
*George Osborne admitted the above knowledge in 2013.
Posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom

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