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Pictured above: Carlos on the show and my copy of his new book, “Fiat Socialism”.
Sixteen years on the streets, living and working with the people of China, Jeff
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Introduction
I learned so much from Carlos’ book and our interview! I was pleasure to have him on the show.
Carlos García Hernández…46 years old, philosopher, historian, publisher and translator from Madrid (Spain) living in Berlin (Germany) since 2002. Director of the publishing house Lola Books.
Website: www.lolabooks.eu
Book: https://www.lolabooks.eu/products/fiat-socialism or https://www.amazon.com/Fiat-Socialism-Carlos-Garc%C3%ADa-Hern%C3%A1ndez/dp/394420350X/
X: @Carlos_G_H_
WeChat: wxid_Iv4pojb1mkcy12
Email:
ca***********@lo*******.eu
Transcript
Jeff J Brown: Good evening, everybody. This is Jeff J. Brown China Rising Radio Sinoland and we are now back in China, hopefully, moved back for the last time and I’m going back to Europe to a good friend, Carlos Hernandez. How are you doing?
Carlos Hernandez: Hello, everybody. Thank you very much, Jeff, for being here with you. It’s a huge pleasure.
Jeff: Yeah. Let me just tell you a little bit about Carlos and why we’re together for the show. Carlos Garcia Hernandez, he’s 46 years old. He’s a philosopher, historian, publisher, and translator from Madrid, Spain, living in Berlin, Germany, since 2002. Wow, that’s 22 years. Director of the publishing house Lola Books. And he reached out to me, I think we first met in the China Rising Radio Sinoland WeChat group, I think.
Carlos: That’s right.
Jeff: And then reached out to me and you published your recent book about fiat socialism and you sent me a hard copy, which I really appreciated. And I read the whole thing and I learned so much. And it’s just a really fascinating book. And I would have the book with me here, but I just could not bring a book in my baggage that I had already read. So I left it in France, but I do have the book. Do you have a copy to show the fans? There you go. Show it. That’s right.
Carlos: That’s the book.
Jeff: Modern Monetary Theory. And then that’s Marx and Engels on the front. But I do have it and I did read it. I took lots of notes and I will have all the information about how to contact Carlos and where to buy the book, his social media, WeChat, email, website, and where to buy the book, either on Amazon or on his publishing website. So anyway, let’s go ahead and get started. First, as a Spanish guy, living in Germany, you told me you’re married and have a family and she’s Danish. So you all are quite the cosmopolitan family. Tell us a little bit about yourself.
Carlos: Well, actually Lola Books. Lola is my child my oldest daughter. So that’s why Lola books. Yeah, I have been living in Spain for all my life, half of my life, more or less. And yeah, I just studied philosophy and history at the Humboldt University of Berlin. Now I am studying also economics but I am not finished yet. And yeah, I, with time, developed this idea of fiat socialism as a way of merging socialism with modern monetary theory, which I think is a mind to explore. I think it’s a way forward on the path to socialism. And I think that is very, very important to be explored.
Jeff: Yeah, yeah. It seems like the only possibility really, for it to probably work. So yeah, I think we’ll talk about some of maybe some possible models of countries that have gotten into it. Well, what experiences brought you to adopt socialism? Was your arc of awareness a long process, or was there an epiphany that made you see the light?
Carlos: An epiphany. It’s funny that you asked me that question because there is a story that it’s a true story, but I think I have never told it. I have been an Orthodox Marxist all my life. Very devoted. I have studied Marx and Lenin very carefully all my life. So, I have been a socialist or communist member of the Communist Party that I don’t belong to anymore but I used to, since a very early time in my life. And I came to after all the readings, there was one question that really bothered me and was very problematic: Why hasn’t capitalism collapsed?
Because it’s not that from the Marxist point of view, the socialist transformation is not something that is necessary because more or less, we can live in a capitalist world, better or worse but it is inevitable. And when you read Marx, that inevitability is very much present in his work. And yet the Soviet Union collapsed, the whole block collapsed and capitalism didn’t collapse. So this is very bothering. I mean, this question became, for me, very, very important. And yes, there was a kind of epiphany if we want to use that word when in 2014, I saw a video the video. The video was from 2013, in Thom Hartmann’s show. I don’t know if you know the show.
Jeff: Yeah, yeah, I know Thom Hartmann. I don’t read his stuff, but I see him on the internet all the time.
Carlos: Yeah, sometimes I see his stuff.
Jeff: He wrote good stuff.
Carlos: I think back then he was very interesting. And he did an interview with Stephanie Kelton. Back then (this is 2014), I had no idea what Modern Monetary Theory was. So I just was watching the show and then Stephanie Kelton was there and she was presenting Modern Monetary Theory.
Jeff: How do you spell her last name?
Carlos: Kelton.
Jeff: Okay. Stephanie Kelton, okay. Thank you.
Carlos: She has written a book called The Deficit Myth.
Jeff: Okay, okay.
Carlos: Lola Books has published that in German. Well, she was presenting Modern Monetary theory. I didn’t know what that was. And then she said, well, the fact is that the government cannot run out of money. Boom, I say, “Say what?” The government cannot run out of money because the government creates the money it spends. And all of a sudden, I really felt like a kind of an epiphany. I had to go back with a video and watch it again. And then she explained that actually, public deficits are private savings.
If the government doesn’t spend first, the private sector cannot save money because the only place where the money comes from is the government. So taxes don’t fund the public spending is the other way around. Public spending comes first and then you can collect taxes, and the government cannot run out of money. So the government can buy everything that is being sold in its currency including the manpower that is unemployed. And these couple of sentences created an earthquake inside of me.
I watched the video again and it was kind of an epiphany. And then all of a sudden, I knew I had to look into this. That’s why through Lola Books, we introduce a Modern Monetary Theory in Spanish language and in the German language. We have also published in English because we also have distribution in English. And that is how everything started. I knew immediately or I had a hunch that okay, this is important. And that’s how everything started.
Jeff: That is really interesting. All right. 2014 and your life was transformed or at least the philosophy of your life was transformed. Well, speaking of fiat socialism is based on Modern Monetary Theory, please give us an introduction to both and how it differs from neoliberalism.
Carlos: Well, Modern Monetary Theory can be understood as a method to achieve full employment without inflation. Modern Monetary Theory is a school of thought that studies what sovereign countries, monetarily sovereign countries can do with their own currency. What does it mean to have monetary sovereignty? What does it imply to your economy? What does it imply to your politics, etc.? This school of thought is a method to achieve full employment without creating inflation, which is a contradiction with respect to neoliberalism.
Neoliberals always tell you, you have to choose. You either have a lot of employment, but then you have inflation. But if you want to fight inflation, you have to create unemployment. And Modern Monetary Theory breaks that. And they say, no, we have developed a method so you can have full employment. Everybody who wants and can work will have a proper job that they can live on. And at the same time, full price stability will be a consequence.
So, when neoliberals tell you, you have to choose between employment and or inflation, what Modern Monetary Theory tells you is no, we have developed a way to make both things compatible. You can have full employment and price stability at the same time. And you can reach that level that in my book, I call the Lerner Point, where you have 0% unemployment and 0% inflation through the job guarantee based on employment buffer stocks. I go into it in the book extensively.
Jeff: Yeah, yeah, yeah. And that’s an economist named Lerner for the fans out there. So well, I think we’ll get more into it. And so how does fiat socialism benefit from Modern Monetary Theory?
Carlos: Well, fiat socialism comes from the word fiat and fiat money. The nature of money, nowadays, we don’t have the gold standard or anything like that, now we have a fiat system, which means that the money has value, not because it is backed by gold or any other material, any other material thing but because it is what you need to pay taxes, that is what fiat money is. I mean money is not a commodity. Money is actually an informative entry in the Central Bank and it has value.
This accountability has value because that is what you need to pay taxes; Meaning taxes don’t fund public spending at all. It is impossible such a thing but taxes do three things. First of all, they give value to money. Second of all, they can modulate inflationary pressures if you go up or down with the level of taxation. And number three, they promote or contrary to the different economic activities. If you lower taxes on an economic activity, that activity will grow, and if you go up with taxes on that economic activity, that activity will get smaller. So, these are the three things that taxes do, but by no means do they fund public spending.
Jeff: Yeah. I hope everybody reads the book because it’s really fascinating. And it just Modern Monetary Theory just turns everything upside down and it’s definitely worth learning about and understanding. Next question: Many of us have heard the names Immanuel Kant and George Hegel. Please compare, contrast, and explain why they are important in today’s world.
Carlos: Well, this is a very important question from a philosophical point of view in socialism. Obviously, Karl Marx was very, very influenced by Hegel. And in a way, you always have to choose at the end. You either choose Hegel or you choose Kant. If we say that in a very primitive way, you can always say that. And in my opinion, it was a big mistake to choose Hegel. Actually, in my book I negate Hegel. I think that Hegel is basically the problem, and I adopt a more Kantian way of looking at the question of socialism.
Why is this relevant? This is relevant because for Hegel, the goals of society whether it doesn’t matter really what society what goals are, he was, of course, a nationalist and for him, Prussia was the big thing and his goal was to make Prussia the biggest superpower in the world because he was a supremacist. But it doesn’t matter, whatever goals you have, the consequence of a historical law that drives history and society toward those goals.
So the goals are consequences of historical laws that of course, Hegel thought that he was smart enough to know what those historical laws are. So he says there are historical laws and I can know what these historical laws are. And I want to develop a method to use those historical laws to achieve the goals of humanity. Well, believe it or not, this is what many people think and Marx adopted this way of thinking.
He thought that as I said at the beginning, the socialist transformation of the economy was inevitable. It was inevitable that capitalism understood as a system with private enterprise would collapse. And then it will something better will come out of it called socialism and then communism. So the goals of society are at the end of a historical process. In the case of Kant, we find the opposite. And I agree with Kant. I think and Kant thinks that there are no historical laws. There are natural laws, but there are no historical laws.
And if there are we cannot know them. Because in order to know what those historical laws are, you have to put yourself out of the wall and look at the wall from the outside and see where the wall is going. And you cannot do that. You cannot do that. So there are natural laws, but there are no historical laws. And if there are historical lows, we cannot know them. So in that scheme, what Kant does, and in my opinion, he is right, he starts from the goals.
First, you set your goals, and from those goals, you do whatever you have to do in the rest of society. So you say, okay, what I want to achieve is this and I’m going to do it and this is what I want to achieve, this is my starting point and you change whatever you have to change in order to make that thing possible. I, in my opinion, think that is the right way to focus on socialism; Meaning socialism, and I, at the end of the book talk about David Graeber.
The main question of socialism is who has access to what and under what conditions; Meaning that access to services and products is what defines whether a society is socialist or not. Do you have full employment? Yes or no? Do you have universal health care? Yes or no? Do you have universal housing? Yes or no? These are the main questions, the main goals that define if a society is in fact socialist, not the ownership of the production of means.
That is not the main question of socialism. In my opinion, the existence of private enterprises doesn’t mean that the system is going to collapse. And in my opinion, the size of the private sector can be decided democratically. There will be societies where they say what they say, well, we want the private sector to make many things, and in other societies they will say, well, no, we want the government to do most of the stuff.
Well, that is for the people to decide. The most important thing is that the goals of socialism and I talk about five are always achievable and they are always universal. That is what defines a socialist society, not the ownership of the means of production and a historical law that tells you that if you are allowed to have private enterprise, your system is going to collapse. That is something I think is not true. And I think that history has proven it’s not true.
Jeff: Well, it sounds to me like, communist, socialist China is very Kantian because that’s what they do. They just set goal after goal after goal after goal, and they do what they need to do to get it done. They tweak this, they change that, they try this, they try that, they stop this, they stop that. But the goal is always there and they’re always trying to achieve it. They just haven’t had a brand new one that they’re constantly. By the year 2035, by the year 2049, by the year 20 whatever, or by the year 2020, we are going to get rid of extreme poverty. And they did. You know, it’s just unbelievable. So I think China is very, very Kantian.
Carlos: So it’s definitely the way to go.
Jeff: You write a lot about two economists, Michel Kalecki and Aba Lerner. We talked about the Lerner point. Please explain how they play a role in fiat socialism.
Carlos: Well, first of all, the learner’s role in Modern Monetary Theory and fiat socialism is very important because he established the first law of functional finance. You know, the neoliberals always talk about label finance or level leveling the budget or balancing the budget. Well, it is not balancing the finances, it’s about making the finances functional.
So he talks about the laws of functional finance and his first law establishes that the government must have a spending policy that allows everybody to have a job, everybody that wants and can have a job so full employment without creating inflation; Meaning that you can adjust the public spending in order for everybody to have a job and you have full employment of natural resources and human resources. And once you have achieved that level, you stop spending.
Because if you go beyond that level of full employment of real resources, then you will create inflation, but you will not create any output, you will only create inflation. So you have to bring your economy to a point where all the resources, human and natural and material, are in use and everything is being fully employed. And once you achieve that point, you have to stop. So what is the right level of deficit in a society, the right level of public spending and public deficit is the level that allows you to have full employment.
Once you have full employment, you stop. Because if you keep on spending, you will only create inflation. That is the first law of functional finance by Aba Lerner. So based on this law, I established what I call the Lerner point. The Lerner point, of course, is an imaginary point because you will never achieve it and it is a point in which unemployment is 0%, thanks to the job guarantee and inflation is also 0%. Of course, exactly 0%, and in both cases is very difficult and never will be achieved.
But this is a regulatory idea, you have to attend. You have to have a job guarantee. So everybody that wants and can have a job will have one and you have to have zero inflation adjusting your level of spending. And then you have a point in the economy called what I call, the Lerner Point. That is the first issue, Aba Lerner and the second one is Kalecki. Kalecki was a Polish Marxist economist. In my opinion, he is the most important economist from the socialist bloc together with Rosa Luxemburg.
And he establishes a Profit Equation. I talk about the book about Kalecki’s Profit Equation, and I studied it in the book, the Profit Equation says that net profits are equal to investment in fixed capital plus capitalist consumption plus public deficit minus worker savings plus the position of trade balance. And Marx in the capital studies all these factors but one – the public deficit. The big novelty that we find in Kalecki’s equation is that he introduces the variable of Public Deficit.
That is something that Marx never did. For him, everything was a dialectic, a fight between workers and capitalists, and everything had to do with that fight. And then you can have like a segment. But Kalecki introduces Public Deficit; Meaning that there is a third point and then you have a triangle, you have the workers, you have the owners of the production of means, the capitalists and then you also have the government. So this third factor defines a triangle. And in my opinion, that is why a system with a private enterprise doesn’t collapse.
If you only take into consideration workers and capitalists, it is true that you sooner or later will have a crisis that will make the whole building collapse. But if you take into consideration the government that can create everything or can buy everything that is for sale in its currency, and it can also invest whatever is needed in its own currency in order to achieve full employment and well-being in society, the system doesn’t have to collapse. So that is what resolves this big question that for me as a Marxist, has always been very important.
Why doesn’t capitalism collapse? Well, because there is a third factor. There are not only workers and capitalists. It is also the government that creates the money that the workers and the capitalists use. That is what they want because they have to pay taxes. That is what they want and that is what they use. So If the government is, of course, capable of doing this can avoid the collapse of the system in which there is private enterprise. And that is why in my book, Kalecki is very important.
Jeff: And you said Kalecki. And who was the other Luxemburg? What was the first name?
Carlos: Rosa Luxemburg.
Jeff: Okay. I didn’t know she was an economist. That’s really interesting.
Carlos: Well, yeah.
Jeff: Okay, interesting. Well, I told you my economics is not strong. That’s why I loved your book so much because I learned so much.
Carlos: In my opinion, they are the two economies, the two most important economies in the socialist field.
Jeff: All right. Next question: The five goals of fiat socialism are: full employment using buffers; the full and prudent use of material resources; guarantees of the five essentials—food, housing, clothing, health services, and education; social security for old age, sickness, accident, unemployment, and childbearing; and labor standards. And so then you write that this cannot happen unless the country has monetary and fiscal sovereignty in order to have effective beneficial fiat money. And can you please explain this I did point out the Central Bank. Well, we’ll get to that next. Go ahead.
Carlos: Well once we understand modern monetary theory, we can see that the real limitation to the economy is not the financial resources, but the material resources, the physical resources. And that is what really gives you a limitation. So in your own currency, you have potentially endless resources in your own currency. So once you understand this, and you also take into consideration the real limitations which are the material limitations, you can establish a system in which you can make variables endogenous or exogenous to the economic cycle; Meaning that some variables will always be part of the economic cycle if you make them endogenous, and some other variables will depend on the economic cycle itself.
They will not always be guaranteed because it depends on how the economy is doing. Very, very easy example: In all countries no matter how good or bad the economic situation is, you will always have police. You will always have an army. You will always have judges or jails. That means that these things are endogenous variables of the economic cycle. And the rest of the things are left for the economic situation to be decided. The level of unemployment depends on how good or how bad the economy is doing.
The level of housing is the same. If you have an economic crisis, homelessness will go up. If you have an economic boom, homelessness will go down. That means that these are exogenous variables that depend on how the economy is doing. So once we understand this dialectic, in my opinion, the key point of socialism is choosing which variables to make endogenous and permanent within the economic cycle, no matter what the situation in the economic cycle is. And if we look at Western societies, we see that some of the very socialist variables have already been made into endogenous variables.
For example, in Europe, not in the United States, but in Europe and in Japan, we have universal health care, no matter how good or how bad the economy is, you have universal health care. And that is a very socialist variable. You have universal education. You will always be able to go to school. You have pensions if you are above 65. These are socialist variables that even in capitalism, they have been made into the economic cycle. They have become endogenous variables. So if we have this game, if we have this dialectic, that is what we have as the main problem of socialism.
And I say that any society that guarantees universal access without making you go into debt for these five things that you have read can be considered a socialist society. So a society with full employment, with full and prudent use of material resources, with a guarantee of food, housing, clothing, health services, and education, with social security for old age, sickness, accident, unemployment, childbearing, and labor standards that guarantee that everybody has a decent job. If you have these five variables made into the economic cycle, if you have these variables as endogenous variables, you have a socialist society period.
Again, I am not talking about the size of the private sector. You can have a private sector or not. There will be societies saying, okay, in order to achieve these five goals, I will not have a private sector at all. Only families will be in the private sector but not private enterprises. Fine. And other societies will say no, well, we will allow to have a private sector and private enterprise. It is also fine. The most important thing for socialism is that these five goals are universal for everybody without having to go into debt. And that is what I think is what a socialist society is. Most important is, of course, full employment.
Even in the most developed capitalist societies, for example, in the Nordic countries, there has not been a job guarantee. If you want to find a job guarantee, you have to go to the Soviet Union and to the Socialist bloc. Even in the most developed capitalist societies, the level of unemployment has always been put in the hands of the private sector. What I say is that if we read Marx in The Capital, he says that capitalism cannot exist with full employment. Capitalism needs always a reserve army of unemployed.
So what I do is exactly doing that. We take the level of unemployment away from the private sector and we put it in the hands of the public sector. The public sector decides that everybody who wants to work and can work will have a job through the job guarantee; Meaning that in this way we get rid of capitalism and if we also achieve the other four goals of socialism we achieve a situation that I understand is a socialist situation.
Jeff: Yeah, really interesting. I guess that the only country I know of right now that has guaranteed jobs is North Korea. I don’t know any others not even China. That’s why I wanted to ask you. Because you talk about monetary and sovereignty and that’s why I’d like for you to clarify the Central Banks Of China, North Korea, and I guess Vietnam, and probably Cuba and some other socialist countries, and maybe Eritrea in Africa do not borrow minted printed currency back from private banks like the Federal Reserve and the United States.
The last Western country I know of which did this was Canada. Up until about 1975, they didn’t pay interest on their national debt. And this seems to be a prerequisite to having monetary sovereignty. What do you think? Is the United States a sovereign country? Because they’re now paying some ungodly amount of money every billions and billions and billions of dollars a month in interest back to private banks on their national debt. What do you think?
Carlos: That is an extremely important question. It’s not only Canada, and it’s not only the United States, the European Union does. The European Union doesn’t allow the governments to finance its operations through the primary sector but they have to go to the secondary. They have to go to private banking which is absolutely nonsense. It’s absolutely nonsense. This is a way of giving public money in huge amounts to the private banking system which makes absolutely no sense. That’s why I talk. In the European Union, this happens all the time also, like in the United States.
This is a consequence of what I call in the book, The Washington Consensus from the 80s and the 90s. It didn’t used to be that way. That’s why I talk in the book about Overt Monetary Financing; Meaning that the government can spend absolutely at no 0% rate just by the coordination between the Treasury and the Central Bank. No interest rates, no debt, no issuing of debt at all. The government through the Treasury can spend in national currency, through transfers from the Central Bank with absolutely no issuing of debt. So that is what I promote instead of the Washington Consensus, I propose overt monetary financing.
So what is monetary sovereignty? Well, monetary sovereignty can be defined in five points. First of all, you have to issue a national currency. You have to decide what currency your country inside of your borders is going to use and people are going to have to pay taxes. Second of all, you have to have proper coordination between the Treasury and Central Bank and the Central Bank. Nowadays there is a very interesting proposal by the father of Modern Monetary Theory, Bill Mitchell, that says that the Treasury and the Central Bank should be should be melted in only one institution. I do think that he’s right.
I think that the Treasury and the Central Bank shouldn’t be in two different institutions. I think there should be only one. But if you have a Treasury and a Central Bank, you have to have proper coordination between both institutions. Number three, you have to have a functional tax collection because that is what gives value to your currency. So that is the third point of monetary sovereignty. And you have to have floating exchange rates. You have to get rid of fixed exchange rates. So it will be the international market of currencies that will tell you what is the worth of your currency compared to others.
But you will not make a promise of paying a certain amount of foreign currency for your currency, you have to let the exchange rate float and you have to have a permanent interest rate of 0%. What is called? Zirp. Permanent interest rates of 0%. You don’t need to have positive interest rates at all. That is another way of giving money for free to the people who already have a lot of money in the private sector. The government doesn’t need to pay interest rates at all. So you have to have a permanent interest rate of 0%.
If you have these five points, you can say that you are fully sovereign. You have full monetary sovereignty, and it gives you the biggest policy space possible in order to achieve your goals. That is what this means. Once you have this monetary sovereignty, you can go back to this game of making variables endogenous and exogenous. Then you are in the best position to choose what you want to make endogenous and exogenous of your economic cycle. I talk about the five points. If you don’t have the material resources, in order to achieve these five points, well, you can always import them.
You can always use your currency to import from the outside what you need in order to have these five goals. And this is also important because nowadays everybody is crazy about export, export, export, export. In Europe, it is very clear. In the United States, it is also very clear. And this is, in my opinion, a mistake. If we look at the question from the material point of view, exports are spending and imports are income. You are getting things, material things that you are going to use for the well-being of your population from people who have worked a lot to produce these things.
And in exchange, what you are doing is typing some numbers in bank accounts that let them have credit in your cards. So who is winning? Obviously, the country that is receiving all that material things. Imagine that we export everything that we produce. Then we don’t have anything, then we don’t have anything. Exports are spending and imports are income. So the five points of socialism are what you have to provide and if you don’t have those material things in your country, you have to import them. The best way of doing of making the five points, the five goals of socialism endogenous variables is through monetary sovereignty and the six points, I just said.
Jeff: You mentioned an acronym about zero interest rates. What was it? You had an acronym Pirp or what was it called?
Carlos: ZIRP. Zero Interest rate policy.
Jeff: Okay, got it. Very, very interesting.
Carlos: And one more thing. One thing I want to clarify. You ask what country? What country is close to what I am proposing? You said, well, China is using kind of this method, but the five goals of socialism are not provided to everybody. And you said the, maybe the DPRK. Well, yeah, in my opinion, there is one country that is extremely close to doing what I propose, and that is Belarus.
Jeff: Belarus?
Carlos: Yeah, Belarus is very, very, very close to fiat socialism. They have practically full employment. The last time I checked they had a 0.5 unemployment. So that is full employment. And they have floating exchange rates, which is very important and the only thing that they don’t have is a permanent interest rate of 0%. They have very high interest rates of 9.5. And in my opinion, they should go down to 0% because interest rates really don’t fight inflation. Actually, in the last book written by Bill Mitchell and Warren Mosler which is called “MMT Excellent Adventure”, they show that positive interest rates create inflation many times. They don’t fight inflation.
So it’s it is much better to have the interest at 0%. So if Belarus had a 0% exchange rate and they would have a job guarantee, in my opinion, they would already be a fiat socialist country. You say, well, yeah, they have 0. 5% of unemployment. That is full employment. Yeah I know, but, the job guarantee is not only a job program, I would say it is only secondary a job program. What the job guarantee is, is an automatic stabilizer to achieve the Lerner Point. So if you have a job guarantee, it would also help you to have price stability.
And the last time I checked, they had a pretty high inflation. In Belarus, they had 10.4% inflation, which is pretty far away from the Lerner Point. I think that in order to bring the situation to Lerner Point, they should have a 0% interest rate, which is not 9.5, and they should establish a job guarantee even though they are practically in full employment. If they did these two very easy changes, inflation would go down and they would get very close to the Lerner Point. And in my opinion, the country that is the closest to what I propose in fiat socialism is Belarus. No doubt.
Jeff: That’s really interesting. All right. Well, I know in DPRK, they have free housing, guaranteed jobs, and guaranteed education, including early child care, all the way up to post-doctoral. They have free medical and labor standards but I don’t know, and obviously, they’re not paying interest. Both China and DPRK, don’t really have a Treasury. They just have a Central Bank as far as I understand it. Or as you say, they’re merged. I still have a lot to learn. But anyway, that’s really interesting about Belarus. Being a French citizen, I appreciate your explanation of how the dysfunctional and corrupt European Union is destroying its people, especially how countries like Spain were chosen to be de-industrialized. There seems to be a north-south divide. Tell us about that. And where does France fit into this plan?
Carlos: Well, one of the main political points I do in the book, in fiat socialism, is that the biggest enemy in order to propose any socialist transformation in Europe, fiat socialism or whatever socialist transformation you want to introduce is the euro. It is the euro and the European Union. So the last chapter of the book is called Euro Delenda est. The euro has to be destroyed. That’s where I introduce most of my articles because fiat socialism has also been created through a lot of press articles that I find very important.
I talk about China a whole lot in those. So in my opinion, the biggest obstacle to socialist transformation in Europe is the euro. The euro does exactly the opposite of what we have been talking about. It introduces deficit limits. Nowadays, the 3% and the debt limits to GDP that now are 60%. So all the countries can only have those levels of debt and deficit. The rest they have to finance through export. It’s an export LED system, what we call a model Deutschland, the German model. So they put the German model of development in place in all the countries of Europe, which is absolutely crazy.
Because in the North, you have countries that export a lot and in the South, you have countries that don’t export that much or sometimes import more than they export. This creates a terrible disparity in the level of public spending and it only helps the North, the net exporters. Not only that, the euro is an artifact in order to destroy the economies of South Europe so they will never compete against the North. In Spain, we had a huge deindustrialization. Spain, when I was a child, used to be a middle-sized industrialized country. Now most of the industries are gone.
We only have low-cost tourism where all the rich people from the North go to get drunk and, for prostitution and for cocaine. That is what Spain is. Spain is the bordello the whorehouse of Europe. That is what Spain is. And the same thing with the rest of the South. In the case of Italy, for example, it was even more painful because it was a very industrialized country. It still is. It still is. And they have been deindustrializing it the hard way. So, the level of punishment in Italy, Portugal, and Greece, is immense. So what I talk about in the book is that this is a very supremacist, German supremacist, Northern European supremacist model.
Because if we were true Europeans, if there were European demos which don’t exist. We would only have one private sector and one public sector. And in that case, we would have the United States of Europe. But we don’t have that. What we have is one private sector and 23 public sectors and there is not a central authority for fiscal. There is no central fiscal authority, which means that every public sector has the ability to expand according to the private sector of its own country. Of course, this is crazy.
This is crazy because if you have this Disparity in the industrial base of all the countries but they all have the same deficit limit and the same debt limit, this is only a way to destroy the countries that are not net exporters. And to make sure that the South will never compete with the North, which is what is all about. So it is a crime against humanity. We saw what they did with Greece. It was a crime against humanity and we have to get rid of it altogether.
What I propose in the book is that Spain should leave the European Union, should leave the Euro, should leave NATO and they should join BRICS. Spain should join BRICS because BRICS is an organization based on the monetary sovereignty of its members, where the trade terms are not based on one side winning and the other side losing. The trade inside of BRICS is a trade where both sides win. It’s a win-win situation. So what I propose for Spain is to leave the Euro, leave NATO, leave the European Union, and join BRICS. And France.
Jeff: Yeah, it’s also heavily industrialized but it’s kind of half South and half North. What do you how what happened to France?
Carlos: Well, there is this big coalition between France and Germany. But even though they never got along too well. But let’s look at the numbers. They have an unemployment that is extremely high 7.5%. It is not as high as in Spain, but it’s still extremely high. They have an inflation of 1.2, which is not bad, but they are very, very far away from the European Union rules. The debt to GDP ratio is 112,2%. And in the European Union, you have to have 60%. So it’s double and they have a deficit of 5.5%. And in the European Union, you have to have a 3%.
This means that if France wants to accomplish the limits of the European Union, they are going to have to go back to austerity big time. They are going to have to cut spending big time. So the 5.5% of deficit goes back down to 2%. That is huge austerity. And same thing with the debt to GDP, which means that the only solution that the European Union proposes for France is austerity. So it doesn’t help France to be part of the European Union at all. And in my opinion, after the victory of Russia in Ukraine, the European Union is going to collapse because NATO is going to collapse.
This situation is not tenable. We have seen huge, huge uprisings, in France through, for example, the Yellow Vests. And once they try to accomplish these limits of deficit and debt and the heart of austerity comes back, we are going to see more of that. We are going to see more of that. The economic crisis in the European Union has no end. And look at the world. Where are the European Google the European Xiaomi or the European Apple? There is nowhere. Europe is absolutely insignificant.
We are the shoe cleaners of our masters in the United States. And that means, for example, in Germany, the place where I come from, where I live, that they make all kinds of things to deindustrialized Europe. They make terrorist attacks, like for example, in North Street One and North Street Two, and nothing happens. Europe is getting the industrialized France two, and inside of the European Union, the crisis will have no end. For countries like Spain, the solution would be to join BRICS.
Carlos: I wish France would leave too. The European community, the European Union is an absolute abomination.
Carlos: It’s an abomination.
Jeff: Because it was all created by England, the United States, and the CIA, and they did it in order to have centralized control over Europe and to make sure that Europe is a puppet to Washington.
Carlos: Yes, yes.
Jeff: Well, listen, Carlos, this has been really wonderful. Before we leave, what’s your next writing project? What have you got in the pipeline?
Carlos: Well, I am preparing the German version of fiat socialism that will come out very soon. We have fiat socialism in Spanish and in English languages. Now we are going to publish it through Lola Books in German. I am trying to promote fiat socialism in other languages, for example in Italian, and Russian, and in my opinion, I think that the message of fiat socialism would be very useful in China. One of my biggest priorities now is to try to introduce fiat socialism in Chinese because as you said, the way of focusing on the socialist question that they have in China is very much the correct way of doing things. And the most important is the goal. And once you have the goal, everything will come into place. And I think that is very much in line with the way of looking at things from fiat socialism. Now my biggest dream would be for the Chinese people to get to know about fiat socialism.
Jeff: Unfortunately, I couldn’t bring the book, but I do know publishers here and I do know publishers in Hong Kong and Taiwan. So maybe somehow I don’t want you to spend a lot of money to send a book over here to Taiwan. But if I had a couple of copies I could send them to the publishers I know in Hong Kong and Taiwan. Well, listen, this has been fun. I really enjoyed reading your book. I learned a lot. It really expanded my horizons. The English translation from Spanish is outstanding. I have no quibbles with it. It was really, really good. And I think you’re doing wonderful work, and I think you’ve got a very persuasive story to tell. And I want to thank you for being on the show, Carlos.
Carlos: I thank you very much. It’s a great honor to be with you. And I appreciate very much all the help and being in your program has been a huge honor. Thank you very much.
Jeff: And I will give you a Buddhist bow from China and take care.
Carlos: You too.
Jeff: Bye-bye.
Carlos: Bye-bye.
###
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JEFF J. BROWN, Editor, China Rising, and Senior Editor & China Correspondent, Dispatch from Beijing, The Greanville Post
Jeff J. Brown is a geopolitical analyst, journalist, lecturer and the author of The China Trilogy. It consists of 44 Days Backpacking in China – The Middle Kingdom in the 21st Century, with the United States, Europe and the Fate of the World in Its Looking Glass (2013); Punto Press released China Rising – Capitalist Roads, Socialist Destinations (2016); and BIG Red Book on China (2020). As well, he published a textbook, Doctor WriteRead’s Treasure Trove to Great English (2015). Jeff is a Senior Editor & China Correspondent for The Greanville Post, where he keeps a column, Dispatch from Beijing and is a Global Opinion Leader at 21st Century. He also writes a column for The Saker, called the Moscow-Beijing Express. Jeff writes, interviews and podcasts on his own program, China Rising Radio Sinoland, which is also available on YouTube, Stitcher Radio, iTunes, Ivoox and RUvid. Guests have included Ramsey Clark, James Bradley, Moti Nissani, Godfree Roberts, Hiroyuki Hamada, The Saker and many others. [/su_spoiler]
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