WHY WHAT HOW OF GREECE - PART II - A SOLUTION OFFERED BY ETHMOS

Mr. Nobody’s solution : are you brave enough to implement it???

Greece has been receiving the money/cash/financial help from European Union, International Monetary Fund [IMF] and the European Central Bank [ ECB ]. This holy trinity has just now sanctioned a fresh package of 7.45 Billion Euros. This package will be used towards payment of earlier loans sanction by EU and IMF so that fresh line of credit can be sanctioned in the near future.

The holy trinity had been trying their level best to avoid Greece bankruptcy. Why Greece bankruptcy  is such a big issue? We know that this might trigger the economic crisis in other EU member nations as well, but that is not an excuse  for the world fraternity.

Restructuring package has come up at the right time. Henceforth we will be using the term restructuring instead of bailout package because the third bailout is nothing but restructuring of the existing credit facility of Greece (Restructuring is nothing but giving a loan to repay the existing loan or just extending the repayment period of the existing loan). As Greece will not be paying anything, instead Greece has been sanctioned a fresh line of credit so that it might not default in its repayment commitments towards the holy trinity. This is a farce in the face of the world that Greece is paying to its lenders.

But this financial help is not going to solve the problem of Greece in the long run. Germany has been manipulating the EU decision with their pristine presence on the board. However, nobody has come out in the open to accept this elephant in the room situation.

The exports are at all time low, Greece is fighting the worst inflation and unemployment is at all time high. We at ETHMOS are of the view that “Spade is a Spade”. Nobody is going to pay the people for sitting idle. At present, Greece is fighting against natural calamity as well.

We at ETHMOS have come up with a pragmatic approach to the Greece problem.  But before we suggest our solution, just for our layman readers, we would like to simplify the solution a bit.  In our previous article, we had given the analogy that if you feed a person free of cost for 10-15 years and then suddenly tell him that you need to work for your food, there will be resistance from the person to do so.  The same has happened in Greece.  Years and years of free government support in the form of generous pensions and other public facilities without proportionate revenue sources have primarily led to this situation in Greece. Presently Greece is like a small household which is outliving its sources and means of income and has got into a debt trap just to maintain its standard of living.  But now the debt has increased to such a high level that the creditors want their money back but the people in the household are not willing to work to repay the debt.  In such a situation, what is needed is the WILL of the people to work hard towards generating income for repayment of the debt as well as sustaining the family.  Here is where the austerity measures are required.  When you don't have enough money, it is obvious that you need to reduce your unnecessary expenses drastically.  But who will pay the household for its services or work?  First the household has to find out its strengths as to what sort of work it is good at doing and focus on the same to generate revenue.  But whatever money will be generated, a major, say 99% portion will go towards repayment of the debt since becoming debt-free is the primary objective of the household.  Hence, only 1% will be left for consumption for the household.  But in such a situation, in order to avoid collapse of the household, it is incumbent on the creditors to provide minimum sustenance to the family like food and healthcare so that they can focus on their work and repay the debt timely.  This is what we are suggesting for Greece.  So, here goes:

1.  Pay in services – Old is Gold - Use the barter system

Greece can request EU members by offering its  maritime service for international trade and commerce. The payment of these services will be credited to the ESCROW account and the interest will be paid to the creditors first and later the money will be utilized for the general administration. At the same time Greece can offer its services to UN mission where the transportation of cargo is required. However this time it will not be a goodwill gesture.  For oil and other imports Greece will pay in services in the form of maritime services to the importing nations.

2. Mandatory use of public transport

 As an austerity measure the country should make it mandatory that public transport should be used. Other way of travelling such as cycling and walking can be promoted . As this will save the cost on fuel which will be a burden on the exchequer for importing the same. This will serve as saving for the government exchequer which can be used at a more appropriate manner.

3. Implement barter system within the country

As already mentioned - Greece does not have money, i.e. CASH to pay anybody.  So, is printing cash the problem.  NO - because printing more money will only increase the inflation and plus printing has its own humongous costs involved. The best way forward is to utilize the unemployed and jobless people in various areas where skilled/unskilled labour is required to meet the basic necessities of food, shelter, and clothing. Government should use the unemployed people to develop infrastructure, agriculture production, textile production, and any other ancillary services which are required for day-to-day sustenance of the economy but the payment will not be made in the form of cash but in the form of commodity such as food, clothes, and free shelter. The government should be firm that the food shortage should not happen in the country, as the food inflation at this point of time will destroy the whole economy.  A particular amount of ration will be sanctioned to each person [jobless people] depending upon the services they offer like doctors, engineers, teachers, lawyers, plumbers, etc.  but a minimum amount of ration needs to fixed regardless of the services offered and depending upon the members in the family.  Greece should do the MOU with other countries as well whereby these services can be offered by these professionals in other countries at a cheap cost and the much required Euro & Dollar currencies can be generated.

4.  Made in Greece

Government should request its people to use and consume the products manufactured and commodities grown in Greece as far as possible as this will directly increase the Gross Domestic Product (GDP) of the country.  This will also help in strengthening of Made in Greece as a brand.

5.  Restriction on Cash

Last but not the least - absolute and complete control of CASH by the Government.  As we have already explained in our previous article (click here to read why cash is the bane of all problems in the economy and how to solve it)  should encourage the people to use the e-payments, commodities, or services as a tool  to  purchase instead of cash.  This will drastically reduce the pressure on the Central Bank of Greece.

  

At the end, we would like to say that “ Tough time never last; tough people do. “

Happy Ethmos!

A foolproof system to prevent tax evasion and destroy the black money economy - An Ethmos perspective - PART I

REMOVE BLACK CASH CAMPAIGN - ETHMOS

 BLACK MONEY

We will come straight away to the point - black money is nothing but the illegal money that is generated out of illegal means and/or on which the due tax has not been paid to the government and regarding which the government has no knowledge as to the whereabouts of this money - the primary reason being that the black money exists in HARD CASH.

But then why should we or you be concerned?  If some bloke wants to stash up cash in his bathroom or bedroom or bank lockers, why are we getting so worked up?  According to the people who earn black money, they don't want to pay tax since the government is already "looting them" by not providing proper infrastructure and not controlling rampant corruption (The people who think this do not understand that they are the fathers and progenies of this corruption!)  As far as you and we are concerned, we don't actually have any problem if anybody has kept excess cash with him/her but just consider this small "hypothetically real" situation:-  You are a middle-class tax-paying salaried individual.  You want to purchase a house.  You search for the same on the net and with the local builders and zero in on a building.  Now you approach the builder for the purchase.  At the same time, our "innocent black money stashing" bloke also approaches the same builder and incidentally for the same building that you want to purchase.  Now whom will the builder prefer?  The answer is, in majority of the cases, the preference will be given to the person who will help the builder in some "personal tax saving", i.e. by keeping his income UNaccounted to the government.  Say if the building is priced at Rs. 20 lacs, then the "black money bloke" will tell the builder that he will pay Rs. 10 lacs in cash and the rest in cheque (so that both the builder as well as he himself is not put into any trouble by the tax authorities regarding the source of funds).  Now the builder will put a condition before the "tax-paying middle-class salary-earning you" that either you pay Rs. 10 lacs in cash or else the deal is gone.  Now from where are you going to bring this Rs. 10 lacs?  Do you think any bank will finance you for evading tax by paying Rs. 10 lacs as cash?  Banks generally give loans based on the sale deed amount and around 10% to 20% of the loan amount for some furniture or interior work (which brings your loan amount to hardly Rs. 10 to 12 lacs).  Now you are either forced to take a personal loan at say around 15% rate of interest or just dig into your hard-earned savings.  So, in short, this is how the black money affects the common man and this is just a simplified example - because a person who is having excess cash with him will be willing to pay even double for any commodity or service, thereby pushing the prices upwards in the market leading to the high "on-road" inflation. 

So what is the solution?

We are proposing an extremely radical solution to this problem since the problem is extremely deep rooted in the Bhartiya economy and is further complicated with the fake notes racket being run by our neighboring hostile countries aimed at ruining our economy.  Hence, we propose TOTAL ABOLISHING of CASH from our economic system.  Instead of cash, we should use digital currency either in the form of plastic money (like debit cards, ATM cards, etc.) or what we are proposing as the M2 machine

THE M2 MACHINE AS WE IMAGINE!

(the Mobile Money Machine).  The mobile money machine will be a portable device given to each and every individual of the country by which s/he can transfer money from one entity to other (person or company or whatever) just by a few presses of the buttons.  The rationale behind this is that digitization of money will make it impossible for tax evaders to keep black money as cash because after digitization, money will be kept in the digital form in your digital wallet of the M2 machine.  Operation of the M2 machine does not require much knowledge since all the machines will come with a unique ID and all you need to know to transfer the amount to anybody is to know the unique ID of his/her M2 machine and just feed in the required amount to be transferred.  The money can either be stored digitally in the M2 itself or can be deposited in your bank account for which functionality will be given inside the machine.

How to implement this?  Many of you will be thinking that we are giving imaginative ideas straight from "Ethmos in Wonderland" but this is what we suggest for implementation of this scheme:-  You may be knowing that it is the RBI that issues the currency notes in the country and the coins are issued by the Ministry of Finance.  Let's just keep aside the coins and focus on the cash.  Every note that RBI prints has a unique serial number printed on it and we hope that RBI has kept a record of the number of notes issued with respect to a particular series.  What the people who duplicate our currency and make fake currency do is to print duplicate notes with imaginary or copied serial numbers which either do not exist or exist in duplicate form.  Hence, all we need to do is to convert this data with RBI into digitized form and keep the data safely in at least 3 to 4 data centers so that appropriate backup and data integrity is maintained.  Once the data regarding the total amount of money in our country along with the serial numbers (serial number is the most important link in this which you will understand shortly as to why) is entered, then the government can start issuing the M2 machine to the public.  The same can be done through banks as was the case with PMJBY and PMJDY schemes.

Now, say you want to purchase an item worth Rs. 20 from a grocery store.  You will pay using your M2 machine and the payment will be transferred from your machine to that of the grocery store owner's machine.  The Rs. 20/- can be either transferred as two Rs. 10/- notes, a single Rs. 20/- note, or four Rs. 5/- notes, etc. Whatever mode of payment you choose depending on the currency stored in your machine, the payment will be transferred to the other party's machine along with the serial numbers, which will enable the RBI to track each and every currency ever issued by it and to know where the total money of the country is lying.  In short, linking of serial numbers with currencies in this machine will  make it virtually impossible to duplicate the "digital currencies" since no two currencies can have the same serial number and no new serial numbers can be created by anybody except the government.  This will give the government the ultimate and absolute control over the money within the country as to how, where, and when to issue, utilize, or take away the money from the economic system.  There are a hell lot of other benefits and options available and the permutations and combinations are unlimited for this technology.

And yes, one more thing regarding the implementation - since the government has made it so easy for everyone to open a bank account, it has become easier to digitize the currency.  The public should be given 6 months' time to deposit whatever cash they have with them into their bank accounts and the cash should be deposited by the banks along with the data entry of the serial numbers into their database so that RBI can know which "serial numbers" are circulating in the market as "hard cash".  After the time line of 6 months' is complete, another extension of say 3 months can be given to the "defaulters" in order to make sure that "all the serially numbered currencies" are pumped back into the digital currency system.  Once all the deadlines are over, there should be complete ban imposed on the "hard cash" currency and no transactions whatsoever should be allowed using the same.  This will make the "hard cash" currency no more valuable than a tissue paper thus rendering all our "cash-stashing blokes" poorer by a good fortune and this cancer of black money can be removed from the system completely.

In our next article, we will focus on how black money is generated by the government departments and how to curb and destroy the same.

Till then, wishing you a very happy Ethmos.