The most critical case is Greece, which currently owes €340 billion and is being charged 21.14% interest to borrow money. They can't even get the money to pay the interest on their debts, let alone pay the money off.
But if there was only someone bright enough to use the next ECB open day on the 29th Feburary to borrow the 340 billion, and lend it to the Greeks so that they could pay off their debts, the problem could be solved.
So, let's suppose that the Greeks now effectively owe the ECB 340 billion euros. How could they pay off the money. Well, I really believe that this is where my proposition for an automatically varying FTT would be a great idea.
Suppose that the ECB wants to be paid back over 10 years at around €35 billion a year. Well, the ECB's own figures shows that if you add up all the visible transactions in the Greek economy, you get a total of nearly €12.5 trillion, as shown in the following table.
This means that the €35 billion needed to repay the ECB could be generated with an flat-rate FTT of less than 0.3%! Surely, any Greek citizen would be more than happy to have 0.3% taken off any money paid into his or her bank account and a further 0.3% taken for each payment made?
Importantly, the rate that would be applied could be varied automatically to ensure that the 35 billion is generated every year. You would need roughly 3 billion a month. So, if the revenue in the first month was only 2 billion, the rate would be increased to around 0.45% in the following month. But of course, if the revenue was above the 3 billion value, the rate could be decreased.
That way, everyone is contributing - not least the bankers. And if there are people cheating the system, then this will automatically increase the rate for the others. This would make it much less socially acceptable to defraud the government of revenue.
Even if we add all the taxes together, they only generated €85 billion in 2010. Thus, for example, if we take the 16 billion that were generated by VAT, it would be possible to replace all of that with an FTT of 0.12%. A similar value could cancel out the €17.5 billion in direct taxes.
In fact, an FTT of less than 1% would allow ALL Greek taxes to be eliminated AND repay all the countries debts over 10 years.
Let's do it. Let's show that using central bank money to break the stranglehood of the banks and using a variable rate fixed rate FTT provide a totally convincing alternative to the current insanity.