March 20, 2014
ATTN: INTERNATIONAL ORGANIZATION OF SUPREME AUDIT INSTITUTIONS
TO: CHAIRS
From: Marco Saba, Head of Research at the Italian Center of Monetary Studies
A question to INTOSAI: what is an "irredeemable liability" ?
Dear Sirs/Madams,
what is an "irredeemable liability" ? It is a masked profit, isn't it ?
What happens if you consider a gain as a liability in a corporate balance sheet? You don't pay taxes on it, you don't give shareholders a fair share at the end of the year AND you must fill the fake loss in the balance sheet with REAL PROFITS. I.E. : 2 + 2 = - 4 (minus four) instead of 2 + 2 = 4 (plus four). The difference is easy to spot: it is the double of the SUM INVOLVED, it is 8 in this case.
You must work very hard to cover for the false liabilities, but, in the case of banking, you can insist that the government of the state where your banking business is done must provide for filling the gap...taxing citizens to pay for the BIGGEST PRIVATE TAX AT ALL called banking SEIGNIORAGE, twice !
Banking "irredeemable liabilities" are morphing the black hole that is engulfing all the EURO-ZONE (and many others occidental countries).
"The solvency constraint of the Central Bank only requires that the present discounted value of its net non-monetary liabilities be non-positive in the long run. Its monetary liabilities are liabilities only in name, as they are irredeemable" - Willem H. Buiter, Seigniorage, Discussion Paper 2007-8, page 20, March 1, 2007
The same happens when commercial banks write the credit lines created as a liability in their balance.
My message here is just a plain question: how and when do you think to expose this biggest fraud before your High Institution risk to be marginalized or even ridiculed by other agents pointing at it?
Thank you for an answer, in the mean time this email is published here awaiting for your reply (which will be published as soon as possible:
Best regards,
Marco Saba
Centro Studi Monetari
P.S. IN THE FOLLOWING CHART YOU SEE THE SEIGNIORAGE DISTRIBUTION IN ITALY WHERE THE STATE GET SEIGNIORAGE ONLY FROM COINS, THE CENTRAL BANK GET THE SEIGNIORAGE ON BANKNOTES WHILE COMMERCIAL BANKS GET THE SEIGNIORAGE FROM CREDIT CREATION. IT IS EASY TO SPOT THAT THE ITALIAN GOVERNMENT GET JUST A 1:35,000 SHARE OF TOTAL SEIGNIORAGE (furthermore, the italian central bank is a privately owned corporation):
What if the Italian state could tax the banking seigniorage revenues on credit creation that exceed 50 times the official public debt ?
More reading:
The truth is out: money is just an IOU, and the banks are rolling in it
The Bank of England's dose of honesty throws the theoretical basis for austerity out the window
David Graeber
theguardian.com, Tuesday 18 March 2014
Definitions:
DEFICIT:"...An accumulated deficit over several years (or centuries) is referred to as the government debt. Often, a certain part of spending is dedicated to paying of debt with certain maturity, which can be refinanced by issuing new government bonds. That is, a fiscal deficit leads to an increase in an entity's debt to others. A deficit is a flow. And a debt is a stock. Debt is essentially an accumulated flow of deficits. Any deficit must, ultimately, be repaid, either through taxation, or seignorage."
MEANING OF SEIGNIORAGE (SEIGNORAGE, SEIGNEURIAGE): THE GAIN THAT ARISE FROM THE COST OF CREATING THE MONETARY MEDIUM (COINS, BANKNOTES, CREDIT LINES) AND ITS OFFICIAL MARKET VALUE.
I.E. IN THE EURO-ZONE, AN EURO-BANKNOTE COSTS 0.12 EUROS + V.A.T. WHILE ITS BUYING POWER DEPENDS ON THE NUMBER WRITTEN ON THE SAME BANKNOTE (FACE VALUE). IN THE CASE OF A 100 EURO BANKNOTE, THE GAIN IS MORE THAN 99 EUROS.
IN THE CASE OF A CREDIT LINE, THE SEIGNIORAGE IS THE DIFFERENCE FROM THE BANKING PAPERWORK NEEDED TO CREATE THE LINE AND THE NOMINAL AMOUNT OF THE CREDIT LINE.
WE ASSUME THAT THOSE COSTS ARE ZERO BECAUSE ANY BANK CAN PAY THOSE COSTS WITH CASHIER CHECKS THAT CREATE NEW MONEY EX NIHILO.
SEIGNIORAGE MISLEADING DEFINITION RE-ARRANGED BY BANKING INTERESTS:
"Seigniorage derived from notes is more indirect, being the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes." Bank of Canada "Backgrounders: Seigniorage". Retrieved 2 January 2013
The craziness of this last definition is evident if you consider the case of a counterfeiter: the gain of spending the counterfeited money is the difference between interest earned on securities acquired in exchange for counterfeited money OR the WHOLE face value of the money counterfeited ? It must be told that the usual counterfeiter don't double seigniorage revenues by writing them AS A LOSS in a balance sheet...
WIKIPEDIA DEFINITION: Seigniorage (/ˈseɪnjərɪdʒ/, also spelled seignorage or seigneurage) is the difference between the value of money and the cost to produce and distribute it.
From: INTOSAI - 24/03/2014
RispondiEliminaDear Mr(s) Marco Saba
The present e-mail is to advice the estate of your consult, received and registered for this Superior Control Institution, with the Registration Number: XXXXXX and with password XXXXXXXX (omissis)
Document Management Department
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