October 29, 2007

Denmark: Almost two generations of taxfinanced welfare

Almost two generations of welfare

Deutsches version, click here:

In every western nation you find a welfare state today. The basic foundations of these arrangements are very different. Some are organized by principles of insurance, some are financed entirely by taxation. This implies substantial differences in respect to total consumption of welfare, re-distribution and equalization among individuals and over time, and not at least in respect to the vulnerability of the welfare now and in the future, regardless if the degree of preparedness or the willingness to face reality among the decision-makers is taken in to consideration.

Three years of low growth rates or negative growth rates at least in Germany, France and Italy tells us that unemployment or mass-expulsion from the labour force have to originate from more than the traditional and clearly public outspoken or ditto theoretical reasons [1]. Theories may or may not help you to understand some patterns, but experience shows reality. Regardless which type of welfare system was chosen, the welfare state is being threatened by the so-called globalization or by its preparedness for international competition, the low western fertility, therefore the ageing of the populations, the weight of the welfare system compared with GNP, and the still increasing state-debt in all the western countries.

The starting point for all civilized communities has been production, sale, export and import in a suitable mix since the end of the Mercantilism and the Napoleonic Wars with young Industrialism and the start of organization of international trade. Demand for labour and other resources as a prerequisite for production is a starting point for growth of production, earnings, consumption (private and public) and employment. If the decision-makers of a nation seriously take the needs of citizens into account, they must also concentrate on economic stability that includes the dynamics of capital formation, securing the investment process, securing economic growth, research and new technology, competences and high productivity. Those considerations and responsibilities are the plain basic of transforming resources/wealth into welfare.

Welfare includes a variety of payments and services to replace your income and to help you when certain events occurs:
Unemployment, absence, leave, invalidity, expulsion, early retirement, pension, health care, nursing homes, nursing at home and alike.

The way the welfare programmes have been financed implies plenty of differences as mentioned. Often differences between ambitions and reality are caused not simply by the willingness to realize, but also by the decision-maker’s trained way of thinking. Systems entirely financed by taxation have the characteristics and even inclines to grow according to the public budget, often decided by both an explicit and an implicit steady growing-mechanism of the taxation. Systems entirely financed by individual payments to private or public security-funds on the other hand are based on insurance principles, and they often meant to make considerations entirely of individual lifetime-distribution of purchasing-power without any built-in re-distribution or even equalization for example between different levels of incomes or between payers and receivers of transfers and service unlike many taxbased systems.

Taxbased systems were often inspired by promoters far from production and sales. The welfare theorists’ way of thinking at best have recently presented the alarming results to the public and the politicians in Denmark[2]:

”Does it make sense to increase the supply of work? Will there be a need for “all this work”? There is. There is a need for labour in a lot of areas. For example are lot of hands needed to do the jobs of the welfare service in the future, care to a growing number of elderly people. There plenty of opportunities in the international economy, if we remain competitive. As we have seen high employment is fundamentally the prerequisite of a high level of service and transfers in Denmark. It is wrong to believe that the amount of work always remains constant. That we have to divide the existing amount of work.”

The central argument and the starting point all the way through is: ”a larger labour force implies larger employment”. The labour force is the part of the population who supplies their work on the labour market. Pensioners, children and young ones in education are typical not included in the labour force. The whole way of thinking is built on Say’s Law, Keynes and Karl Marx: “Supply creates demand” and traditional welfare theoretical discourses.

Take some results of the Danish system/model described by a few key figures as a training-example and forget that the population in Denmark is just 72 p.c. of that of London’s 7,4 mill:

Gross National Product (GNP):

1960: 384,6 bill. 1995-dkr., 2001: 1.188 bill. 1995-dkr.


1960: 26 p.c. of GNP or 100 bill. 1995-kr., 2001 51,5 p.c. of GNP or 612 mia. 1995-kr.[3]

Employed by the public:

1960: c. 406.000, 2001 c. 850.000.

The total employment increased by:

600.000 in the period 1960-2001, of which 450.000 publicly and 150.000 went to saleable production.

Number of receivers of public/taxbased transfers :

1960: 600.000, 2001 1.822.000, of which 1.100.000 in the working ages, of which 700.000-800.000 unemployed or ”on sideline” (a new official expression), i.e. as receivers of unemployment benefits, social security, early retirement payment or another public transferred income (the numbers are accounted in the year round employment).

Public transfers and service:

20 p.c. of GNP in 1960, 2001 44 p.c. of GNP [4].

Public service:

14 p.c. of GNP in 1960, 2001 28 p.c. of GNP. [5]

Public transfers:

6 p.c. of GNP in 1960, 2001 16 p.c. of GNP. [6]

Danish State-debt:

59,3 bill. 1995-kr. in 1960, 2002 573 bill. 1995-kr.

Changes briefly in the period 1960-2001:

All in all GNP: 3 times more

Tax-payments: 2 times more plus 63,7 p.c. of the GNP-growth

Service-employees: more than 2 times more.

Individuals to support: more than 3 times more

Population: 4,585 mill. in 1960, 1983 5,116 mill. and 2001 5,349 mill.

State-debt: 9,7 times larger

Please, email a corresponding short but documented account dealing with the welfare in your country or inspire some able individual to do so.

The results in Denmark, continued:

63-65 p.c. of the GNP-increase, and more than the doubled part of the wealth in the starting point has been confiscated by the public and transformed to public consume included transferred purchasing-power and public welfare service in the period, and about 28 p.c. of the labour force is not offered work in 2001. Now the income taxes cannot be increased further. In the same period (1960-2001) the state-debt has been multiplied by almost 10. A striking disproportion between the monopolized sector with compulsory payments and the production sector on the other hand. The need is not just more hands to make more service of care and nursing, as it is proposed in the source mentioned in footnote no.1. There is something else.

The purchasing power creator – the production in contrast to public consume and public compulsory monopoly-supply – has simply been reduced relatively to what might be possible in order to simply change the negative unbalance of payments to the opposite with the result that more than one quarter of the labour force has been expelled and put on welfare transfers while the production has been sent on pilot light.

In the areas ‘education’, ‘health care’, and ‘social care’ more than 25 p.c. of the labour force (or 630,000) is employed. It is impossible to find the distribution of labour between or within the three sectors caused by the lacking public statistics. Number of patients, clients, pupils and students to throw light on productivity (product divided with resources) and efficiency (aims divided with resources) are not available either. It is a fact that the number of employees has more than doubled since 1960. The explanation may be a doubling even though you then account on the part of a three times bigger total GNP.

A few examples:

Primo April 2005 DR-Text-tv reports that 30 p.c. of teachers’s working hours are used on teaching the children. April 11th 2005 TV2-News reports: 57 p.c. of the all schoolteachers teaching Danish in the Folkschool have not chosen the Danish, when they qualified via education to teach in Danish, and the same with 97 p.c. of those teaching Natural Science and Technology. A big international approved investigation showed that 9 years old Dutch school children got two times more teaching-hours in 1996 at half the cost. 10 p.c. of the students drop out from the more advanced studies. The yearly intake of students on the MSc in Engineering has fallen by 50 p.c. from 1985 to 1995. The worst is we were not informed before the system broke down.

We have 200,000 more in the labour force than outside the labour force, and this disproportion is getting more and more fateful in the future with an growing part of the population in the ages 65 years or more, and an imported group of immigrants who join the labour force less than half as often as the Danish, and therefore consume 40 p.c. (until now) of the social security transfers. To this must be added that 35 p.c. of the immigrants are 25 years or less and therefore very dependent on public transfers and service.

The Danish model has never been claimed by the voters. On the contrary, our language had to be filled with new words and new concepts to replace the old ones, and some of the old ones had to be emptied for substance and filled new substance. Continuously and obstinately it continued for almost one generation in advance in order to succeed. Perhaps the leading figures then also got an easy start with a large postwar-generation employed in the labour force, and perhaps the weaker followers of the Postmodernists and some politicians had imagined that some kind of equalization of the payments was actual, and perhaps also a imagination of some division of those payments with the welfare over some kind lifetime-consideration. Almost nobody will draw wrong conclusions when the results are shown to them after almost two generations with the Postmodernists’ welfare system financed almost entirely by taxation.

Regardless which so-called model of welfare is chosen or chosen to do without, there are some fateful false arrangements of the Danish society, that certainly cannot remain unchanged, but cannot be removed without a large power-displacements and an information programme of considerable dimensions.

The Danish Welfare Commission finds it difficult to increase the employment more than today:

“The employment is already rather high in Denmark compared with other countries.”

And we have to add this: “…with 700,000-800,000 unemployed and expelled of total 2.7 mill. in the labour force”.

On this background both the Welfare Commission and especially EU proposes an accelerated inrush of immigrants as an obvious possibility. The Welfare Commission asks: “Does increased immigration solve the providing problem?” After this some thoughts of experiment that obvious tries to illustrate if 30,000 extra immigrants from more developed countries were invited to Denmark every year in eternity – besides the inrush from less development countries right now – and provided that they were employed and paid taxes, then the financing problem would have been solve for the Welfare Commission. “And if the moon was made of green cheese”.

According to Hans Kornø Rasmussen
[7] and EU [8]
the immigration to EU must be increased by an even increasing factor 8-14 times compared with 1996, i.e. 8 times more in 2007 and 14 times more in 2024. In 1996 525,000 (net, new) immigrated to EU. The number per year should be 4.5 mio. in 2007 and after this increase gradually to 7 mio. in 2024. At the same background the new appointed EU-Commissioner Vladimir Spidla Marts 18 2005 announced a gradually 12-doubled intake of non-western immigrants towards 2024.

We have to add that Hans Kornø Rasmussen reduced his proposal concerning the inrush of foreigners to Denmark to twice the actual number (the number was about 18,000 in 2000). Perhaps he has had some personal experiences. Nothing else in his former premisses has changed.

One way out of the morass:

The Keynesian way of thinking turns things upside down. The earth is actually turning the other way round of what the Keynesian imagine. You does not start e.g. with the labour force and the employment, you actually start in the market for economic goods. Thereafter you turn to the division of labour, and continues with planning of production and the consumption of resources, and you end with the labour force and the employment.

Businesses do not invest when their expected margins of profit do not condition the production or an altered production. The difference between the costs and the expected revenue (price multiplied by the amount of sales) that these costs demand per produced unit by unit, is too small. If it is possible to make an adequate difference or margin be realized at a lower level of production, it will perhaps be carried through at this lower level, also what concerns employment, if the best of other alternatives is worse. It is not, if you look at Danish relations. That is the reason why the purchasing-power is canalised into private capital outside the production or out of the country: Capitalization

Business investments are not based on price-margins, but entirely on a basis of profit-yielding price/cost-margins. The problem is not one-dimensional but at least two, or more often multi-dimensional. It has been said that Keynesians are not able to think in more than one dimension. If it is true, you may not wonder that the economic reporters abroad are rather one-dimensional. There does not exist any Danish anymore.

The economic reality is the producers who drive the economy forward, savings must be looked upon as the fuel in this process.

What the consumers demand and buy does not start the economy, but it just maintains the production machinery. An increased consumption, e.g. a public initiated increase of consumption neither has and never will kick-start any economy, as it usually and very often has been expressed by the Keynesian for the last 70 years. Sometimes you hear the economic reporters say that the expenditures for private consumption amount to some percent of the total demand. You also hear some nonsense about consumer expectations. To give the reader an expression of the reality that is quite different, rather opposite: In the late 1920s private US-consumption was accounted to about 8.5 p.c. of the producers’ expenditures on factors of production and other producer goods. This means that the consumption of capital goods was about 12 times larger than the private consumption.

The production process consists of a vast number of complex stages. It follows from this that the total combined expenditures on all those stages have to exceed the expenditures on consumption rather considerable. As an illustration you can imagine the total invested capital turned to final consumption. This must take some years; here 12. What is being used on consumption originates certainly from production, while production originates from the capital (included factors of production) that in the first link originates from savings. Therefore, the more savings the more real capital are created and accumulated. The result is that production rises, and the consumption can be risen too.

You could accept the following facts: government expenditures and private consumption do not stimulate, but they drain the economy. This is the truth, even though you find these expenditures just.

In Denmark you find the following needed changes :

Wages have to be reduced by a least 30 p.c. The income taxation must be altered to the kind-of-source-taxation, i.e. wages must be taxed directly, proportional and final at the source, primarily to avoid the taxation control. The yield of the wage-tax has to be reduced by an amount

at least corresponding that the disposable wage actually increases by 2-3 p.c. The company taxation has to be reduced to the Irish level.

The different contributions at the wage pay slip are to be gathered after a reduction of at least 50 p.c. into one single contribution to the education-fund, entirely used for education, directly and individually.

The result is a 2-3 times larger saleable production that will draw the labour force into employment and create the purchasing-power for so-called welfare to quite a reduced number of receivers. By following the way the earth is turning in space that will be the outcome per automatic.

Knowledge and competences in front:

If Denmark should take a chance in these years of outsourcing, we have to invest whole-hearted, relevant and consequent in knowledge and competences that can bring us in front. The labour force to do the jobs of welfare service caused by an increasing part of elderly will never become a problem. The second most dangerous development we have experienced for almost two generations now is the reproduction of the gymnasium-teachers’ own irrelevant competences. Most of these competences are certainly not business-relevant, if we have to survive as a civilized nation. The Folkschool is certainly not better. Here we have to invest in Danish, English, German, Match, Biology, Economics, Data and History, and we have to realize that we cannot replace a great deal of teachers, and at the same time find an exchange that carry the development towards new aims I such a way that it will break the mould. Some known kind management to achieve the new aims have to be established.

The means to correct the course within 2-3 years we have to follow our comparative advantages that should have been followed from the start in 1960 instead of letting young ignorant people decide for themselves with help from the teachers in the gymnasiums, where we all were meant to go on the account of others[9]. We have to import education systems and textbooks (eventually translated) from Ireland, Holland, England, Germany and USA, and eventually get some teacher from those nations to work in key positions in Denmark for some time.

USA started to tackle the globalization-competition questions action-oriented already primo the 1980s: Dollar-Fall. England did the same. Ireland produced half the Danish production in 1970, today Ireland produces 10 p.c. more per inhabitant than Denmark.

The universities are a greater matter; they have to handled within the same 2-3 years.

The Muddling through continues to the end:

How a country with 67 p.c. of voters employed by government or sent on transfer payments meet its finale in latest 15 years is difficult to imagine. It shall certainly not be a nice view.

Recommend: Two generation of welfare

Ebbe Vig
M. Sc. (Economics)
Information of Denmark


[1] That taxes e.g. may rise wages, even wages in realterms, and at last stop private initiatives, not entirely based on monopoly in the last link of production-sales-chain.

[2] The Danish government’s Commission of Welfare: The welfare of the future does come from itself. Page 24. And we could add: It is created entirely out of wealth.

[3] Notice, that growing percent is accounted from an even growing basic. In this case it was made possible, because both men and women was drawn into labour market as taxes rose further.

[4] Notice, a growing percent is accounted from an even growing basic. You could explain in this way: 14 p.c. of 384,6 bill. and 44 p.c. of 384,6 bill. plus 65 p.c. of the growth from 384,6 bill. 1995-dkr. to 1.188 bill. 1995-dkr.

[5] Notice, a growing percent is accounted from an even growing basic.

[6] Notice, a growing percent is accounted from an even growing basic.

[7] A member of the one of Danish government’s think tanks.

[8] The period ’Social Forskning’ no. 1 1998 and EUROSTAT no. 6 1996.

[9] Almost all UN-members gave this comment to the ambigitious U-90 (Education 1990) in the 1970s: You must certainly be able to afford it.

Other English files: http://danmark.wordpress.com/category/english-versions/

Immigrant load in Denmark

The Economic Price of Foreign Immigration

Link to almost all English versions of non-Economic files: http://danmark.wordpress.com/category/english-versions/

Link to almost all English versions of Economic files:

http://lilliput-information.blogspot.com and

Deutsches version, click here:

As an opponent of public lies, I made a charge-budget like those earlier used in the public health sector, when the amount of yield and the charge have to be accounted in lack of a better foundation.

This charge-budget is based on the information about anything what so ever from the authorities, and then it is placed together with the greatest care. Unfortunately the account of the immigration-policy is 10 times larger, than those permissions of the state that were shown to the public till 1993.

Now the lie can not be used any longer. This certainly does not mean that the truth then is accepted, and presented by the authorized who’s duty it is to make a honest budget, and to inform truthfully. For the time being you just seek to hold a lower profile – as it is called in the language of signalizing – the critics must be effective prevented then from access to the media and anything else.

That is very easy. In 1995 from 70 to 90 bill. ddK., in 1998 more than 100 bill. ddk. out of 650 bill. ddk. totally in public expenses was used on the presence on the immigrants in Denmark. Our former Prime Minister Poul Schlüter, who is a member of the EU-Parliament, he now and then occurs with the Carnegie Foundation (more about this under ‘The New Man’), decided that the Danes should not know the bill of the binge, which has not been contemplated to stop.

In 2001 150 billions of 750 bill. ddk.


Carefully and very simple accountings show that more than half of what the Dane is paying in personal income tax is used for interest payments on a debt that the Dane has not contracted, or it is used on the foreigners in Denmark. 74 p.c. – perhaps 79 p.c. – of the immigrants are on social security/welfare – the authorities mention the figure 40 p.c., but they forget the receivers of social welfare. These are the real figures in the period 1995-1997.

We cannot reach the true result further. Without proper information it is were difficult. In 2000 84 p.c. of the foreigners are living on public welfare. We had to clean the statement for camouflage. Included in the 74 p.c. are children less 18 years and people in retirement not counted in. They just told that I am a racist. I am not. In 1998 our Minister of Economy maintained that the group of foreigners has much smaller part that supply themselves on the labor market. We asked what the others outside the workforce then received – social security, early retirement benefits?


They did not answer. And OECD had even to correct our former Minister of Economics when she told in the media that the foreigners were 3½ times more unemployed than the Danes (it was not meant to be known). I can added that the newest information from Danish Rockwool Foundation shows that second and third generation are even more unemployed than their pararents. And the manager at the bureau of Statistics i Copenhagen Claus Woll reporet 25 January 2004 that the femal second and third generation of immigrants gave birth to 10 p.c. more children compared with their parents – accounted for in a 6 year period.


The Minister of Social Affaires alarms Morgenavisen Jyllands-Posten, September 10th 1999. Every third on social security is a foreignerIn 2002 40 p.c.


An extract:

30 p.c. of the group which received social security were immigrants (1999). While the Danish unemployed is offered work, more of the immigrant are becoming receivers of social security. The municipalities have to develop more targetoriented offers, says socialminister Karen Jespersen. ‘Immigrants only amount to 6 p.c. of the population, but 30 p. c. of the receivers of social security’ – in 2004 read 13 p.c. receive 40 p.c. That was one of the central statements in the article

* * *

Information of Denmark

Lecture of Danish Economics of Immigration

No. 1

In the extraction of the article mentioned above we will concentrate on:”The immigrants make up only 6 p.c. of the population, but 30 p.c. of those who receive long term social security. “Can this information be explaned better?

1th Immigrants as a group have a larger share of those who receive social security than the Danish have.

2th Immigrants have a larger share in their group who concerning f.e. age are potential members of the group of clients on social security. The distribution of age is very different from the distribution among the Danish.

If 1th and/or 2th were not actual, the 6 p.c. foreigners living in Denmark (13 p.c. in 2006)would also have 6 p.c. (13 p.c.in 2006) of all social security clients. You may say that these 6 p.c. are receivers of longterm social security, as if they made up 30 p.c. of the population.

In 1993 a corresponding official picture was drawn:

Information of the foreigner’s load on number posts can required from Department of Social Security. One of its investigations shows that 87 p.c. of the refugies remain lasting klient of social security, and among the rest 13 p.c. a great number is trying to take an public financed education, if they do not receive another category of public subvention. An accounting from the town Aarhus also shows that the expenses concerning refugies receiving social security have been doubled in a period of five years, and in 1993 these expenses amounted 19 p.c. of the total sum of expenditures spend on social security (cf.The Weekly Newsletter Monday Morning no. 4/1993). This information is of another type. Now you are concentrating on the share of indiduals in the group of receivers of social security. You are contrating on the share of the total expenditures.About the same time the media informed that the 6 p.c that was the share of the foreigners made up then (officially) in Aarhus, received 30 p.c. of the social security. But notice that this problem is not necessarily the same as the mentioned in the extract of the article above.If it had been this this information the Minister of Social Security had given about Denmark another element of explanation should have been added:


3. Foreigners receive in average larger or smaller expenditures of social security the the average Danish receiver of social security.

If we concentrate on the possible explanations 1, 2 og 3, and at the same time we take the total public expenditures, it is possible to make a rough estimate, and draw a picture of the load of the foreigners. (The responsibles could have used the citizens number, but they refused.) Here you have to remember that the expenditures include not only the payment, but also the expenditures concerning service by civilian servants. We are so lucky that we have such an account called the functional distribution of public expenditures of the nation. Repayment and reimbursement of payment do not disturbe the account.It has the be underlined that the mentioned 6 p.c. (1999) immigrants refered by the minister do match with the corrected account made by IoD. The naturalized and their children have to be included among others. The article did not succeed with defining a Danish refering to our Constitution.

A Danish is a Danish citizen, when a least one of parents is a Danish citizen, and also born in Denmark.


The share of immigrants is not smaller than 10 p.c. in Denmark (1999), possibly a great deal larger.This was also indirectly confirmed by the account of criminality (1994) from commissioner of police. If the 6 p.c. had been correct asylumapplicants would have been 15-18 times more criminal than the Danish, and would have made 84% of all shopliftings, for example. This a wild exaggeration amd they should done much more without time to do it.. If you will read the total documentation in Danish now after 6 years read the article on: http://www.geocities.com/informationomdanmark112/kria.html (calculating)http://www.geocities.com/informationomdanmark112/kraka.html (text) You get back by closing when you finished your reading.

It has also been totally documented in the Danish link: http://www.lilliput-information.com/krim/krim.html and in http://www.lilliput-information.com/krim/krim.html Danish version, only.

You get back by closing when you finished your reading.By the accounting of the foreigners load you have account not just the cost which directly can connected to the target group. They are a burden on all entries like the Danish with a few exceptions.It the special cost that means all the costs which would not had been without the immigrants. Earlier we have seen calculations of the burdens of the students, the our older citizens and of the children. The loadbudget have also been used within the hospital service. Share of the target group, frequency, resource burden is central concepts here.

A couple of examples:

If the target group amounts to 12 p.c. and ressource burden is 1.75 while the frequency is the same (1), you get the proportional 12 p.c. multiplied with 1.75 or 21 p.c.The target group may well amount to 18 p.c. even though the whole group only amount to 10 p.c.Immigrants have a much larger share of the group of children, for example. In October 1998 Aarhus Town Counsel informed that 2 third of all swindle with social security were connected to immigrants. This means 67 p.c. of the swindle was done by 10 p.c. of the citizens. This means the burden is 6.7. If the immigrant receive social security 4 times as frequent as the Danish you can make conclu-sion: The immigrant do this crime with frequency of 1.7 (67/40) in relation to the Danish In this way we will continue through all entries on the public budget.

Statistical Ten years survey 1999 from Denmark’s Statistics include the following table of expenditures (an extract):

Functional distribution. Expenditures in publ. sectors and service


(mio.ddk.) by function and year



Year 1993 1995 1997 1998
Total 549836 603283 637683 652709
Functional distr. expend. total, subtotal 484796 537169 573308 591157
Superior public duties, subtotal 65485 71571 77505 82625
General public duties, subtotal 39436 43456 47743 52544
General administration 16831 18525 19844 21330
The relation to foreign countries 20986 23002 25460 28912
Other 1619 1929 2439 2302
Defence a.o. 17789 18309 19410 19124
Public order and security 8260 9805 10352 10957
Society and social, subtotal 371127 415357 441775 454740
Education, subtotal 68752 73616 83432 88492
The Schools 28756 30922 35279 37796
The youtheducations 13328 16206 18288 19243
Higher educations 13993 15302 16009 16823
Grown up education special educ. 10144 8229 10718 11795
Services related to education 733 651 681 688
Administration 1758 2226 2386 2071
Other 40 79 71 76
Health service, subtotal 50310 52743 57480 59965
Hospitals a.o. 36083 38576 42390 45044
Individual health service 13142 13131 14269 13840
Administration 708 771 793 902
Other 378 266 28 179
Social safety and security, subtal 229277 264128 273839 278843
Safety service 166672 194920 196315 197826
Welfare service 55081 60628 68075 71196
Administration 7501 8522 9376 9722
Other 23 58 73 98
Home a.o. 9310 8877 9469 9770
Relation to home 6994 5674 5721 5857
Society planning 440 887 922 846
Sanitary services 1416 1822 2313 2555
Other 460 495 513 511
Religious, recreative og culturel services
Subtotal 13478 15992 17555 17670
Religious services 3450 4527 5038 5201
Recreative services 4378 4782 5194 5258
culturel services 5509 6506 7076 6937
Other 141 176 248 273
Businesseconomic relations, subtotal 48183 50242 54028 53793
Energy supply 1262 2338 2738 3034
Agriculture, forestry and fishing a.o. 3661 2443 3563 3640
Raw material extraction, industry, entrepreneers
construction 2447 2012 2514 2067
Traffic and communication, subtotal 21666 25584 25309 24842
Roads and transportation 14428 16256 15601 15172
Waterways og harbors 314 423 428 456
Collektiv transport 6917 8884 9257 9193
Other 7 21 23 21
Trade and service plus general
Business development, subtotal 19147 17864 19903 20210
General business development 2019 2515 2233 1327
Trade and service a.o. 17121 15340 17659 18873
Other 8 9 11 11
Nonfunctional distributed, subtotal 65040 66114 64375 61552



The expenditures above have defrayed all in all. Now we shall try to estimate, how many of these expenditures which are caused by the immigrants. Of the 52 entries of the functional distribution we could take out one single in the year 1998:

Safety service: 197.826 mio ddk. It has got italic and accentuated in the table from Danmark’s Statistics.

If we assume that the foreigners receive the same payment in average as the Danish the result following the Minister of Social Affaires and the information from Danmark’s Statistics…. (but take good care, the entries in the functionel distribution are specified alike in the Ten Years Review every year that secure the camouflage):0.30 * 197.826 mio ddk.= 59.347,8 mio ddk eller 59,3 mia. ddk. or should we use another percent than 30 p.c. You also have to remember that the foreigners do not a very large share of the group in ages of the pensioners.The minister of economy hav had to admit that foreigners are 3½ times as often unemployed than the Danish in average. Do I then calculate (with 6 p.c.?) 3½ * 0.06 * 71.196 mio. ddk. = 15 bill. or should I rather calculate 3½ * 0.10 * 71.196 mio. ddk. =24.9 billions?The unemployment is also accounted and presented in very missleading way in Denmark. Click: http://www.lilliput-information.com/led/index.html to get the documentation in a Danish version.Click back, when you are finish.

The rest of entries could be treated in the same way with consideration of relevance, invariability according to the receivers, to groupshare, frequence and ressourceload for both Danish and immigrants. For example we know that foreigners are represented 3 times as often in the prisons than according to their share of the population. At worst places in the prisons 30-40 p.c. a immigrants.

This means 3*0.06, when we use immigrantshare chosen by the Minister of social Affaires.If the burden – related to the resources – is also larger when account for a immigrant you have to take this into your account too. Another example:In Aarhus they used 1,75 times more on children of the immigrants (ch. the public budget in kindergartens 1989)If we assume that just something like this applyes to the prisons, in the police and in the rest of the juridical system the share of the expenditures will be: 1.75*3*0.06 = 31.5 p.c. Or should I rather calculate: 1.75**3*0.10 = 52.5 p.c.If doubt that there is used so much energy on the foreigners i juridical system, you click:http://www.lilliput-information.com/domv.html (in Danish)Click back, when you are finished. Shall we say 10,957 mio. ddk * 0.315= 3.45 billion dddk. or rather 52.5% * 10,597 mio.ddk.If this calculation is made serious and with precaution you reach the result, the immigrantload in 1998 was more 100 billion dddk.

You will perhaps subtract the taxpayment of the immigrant. That is fine if we just know what we are talking about. 84 p.c. of the immigrant are unemployed. The authorities in Denmark told us in 1995 that the load was 10.3 billions dddk, and fameous Børsens Nyhedsmagasin told us that we earn a lot of money by having them here.



One of so-called critical parties in our parliament calculated the result to 30 billions ddk. Let us take the last mentioned sum. 30 billions is less than 5 p.c. of the total budget (cf. above). The share of the immigrants are officially in 1999 7.4 p.c. This mean that the Danish is much more expensive to the state. But this is not true. You have just learned that the immigrants are 3½ times more unemployed and 3 times more in prison.


Ergo, it is another camouflage lie.



In period 1993-1998 the public expenditures increased by more than 100 billions.



Ask the Danes if they agree with you that the Danish in same period have experienced an according rise in service and necessary care.

But take good care, and do ask politely!

When members of Norwegian Stortinget (the Norwegian Parliament) wanted to know more about the immigrant load in Norway they contacted Information on Denmark in the beginning of the 1990s

This report was uploaded for the first time in 2002 to try to informe abroad.

Petro-Euro signaled a short new era of New Mercantilism for a few

Three Steps Forwards Two Backwards
Petroeuro In The World Economy, And What We Really Need

“So-called hard euro is lighter than oil, that is the reason why it floats”
Choose a German version


From monetary system via dollar-dominans to floating nominal currencies

The domain of dollar extends

The dollar seceded from the gold


IMF – debt-crises

How USA dealt with its debts-increase

The US-world-reserve-role changing

Japan in debitor’s trap

Euro and European Union

Euro and its primery objectives

Fear of competition narrows the rationality

Euro-Union and globalization

Two suppliers of internaitonal monetary means

The need for introduction of real currency rates

Recommend this file

More English files characterised by more contents than of form

From monetary system via dollar dominans to floating nominal currency rates:
The international system of payments after WW2 that USA and Britain actual decided, while the war was going on, in 1944 in Bretton Woods, New Hampshire, USA, tranformed the dollar to a so-called reserve currency; most of the worldtrade was agreed upon in dollars. Central banks all over the world kept a considerable reserve amount of dollars in order to be able to protect the national currency when too much imbalance in foreign trade occurred, and other currencies were expected to be measured secured in terms of the dollarvalue. The value of dollar was connected directly to the goldprice, $35 per ounce fine gold. The dollar dominans in the world trade alone implied even larger dollar reserves in the central banks all over the world. The Marshall Plan after the war secured the rebuilding of Europe; but it actually did not cost USA a cent, because the dollars (-bills) obviously are much cheaper to provide than other goods and services. When dollars returned by the accounting for goods and services in USA they made trade impacts on the American economy, otherwise they did not. But almost none of them returned. At the same time USA could import almost unlimited and pay with more dollars that did not return either. Large amounts of dollars that piled up for example in consequence of the positive result of the balances of trade were invested in interest-bearing and currency secured American government bonds and other assets. With this system the leading economic power was tempted to accept large deficits on balance of trade equalized by missuse of the means of payment via this issuing of money. The result was that US received the foreign goods for free. This arrangement simply could not continue in the long run or could it? Without going into details, inflation and state-debt was introduced as an obvious possebility among the professional politicians, who did not worry particularily about nation and tradition, and certainly did not know the hard conditions. Devaluations on behalf of the nation, and the initiatives of the state itself were also included in this dismantling, and devaluations in cooperation with IMF came like af thief in the night in a row of cases, because the really needed of necessity had to be done in time to prevent this vicious spiral to continue in the nations: Finance crisis upon finance crisis around the globe.
It was certainly not new phenomenons that were introduced by the Bretton Woods System. At the peace conference, the Wienna Congress in 1815 and the bankructcy of Denmark 1813 followed a devaluation of 90%. The collapsed monetary system from 1944 that has not yet been replaced by a new one actually had some bad temptation for the politicians built in depending on the character of the leading figures. Of other decicing impacts in the long run the following have to be mentioned:

  • Dollar and petrodollar dominans in international trade with artificial values at home and abroad – totally independent ofthe real domestic economy
  • Competing European euro-system based upon an official approved politician-phantacy on the former German stability and growth, now among indebted nations with adjustment turned downwards via wage rates and minimum standards of ecology and of social level.
  • The way to real economic recovery of Europe was prevented, in addition the unlimitation of the markets was encouraged without any self-regulating mechanism of competition directed out of the euro-zone, and combined with a clossusish lack of competition in the other markets except for the market for disguised subsidies to a too expensive structure
  • Indebted nations around the globe after two generations

An explosion of the amount of means of payment and speculation that would not be possible without the built in defects originating the from birth of the Bretton Woods System, to such a degree that the real economies in the nations are totally secluded from the system of international payments, that they were meant to protect in order to protect the nation

The domain of the dollar extends:
On the other hand the arrangement was binding for USA, externally, in the world of realities characterized by practical rebuilding of production-capacity, markets and defending efforts under the Cold War. And the rest of the world could redeem dollars at the goldsprice as required, granted that USA as an economic superpower was able to secure the dollar-value settled in gold. USA was the only country to guarantee and carry out the redemption of dollars for gold as it had the largest gold-reserves. Western Europa quickly recovered, and the growth lead to large European export surpluses that at the same time created an dollar-accummulation in the export countries. As early as in the 1960s France began to redeem dollars for gold, and others followed. At same time USA was engaged in the Vietnam War and elsewhere. This brought the deficits on the public finances in an uninflated heavenward flight of the time. In 1967 the drain of the gold-reserves in USA and Bank of in England in Britain to a critical point. That France and other Eruopean countries definitely according to the agreement increased the redemtion of dollars for gold brought the dollar under pressure, given that the goldprice measured in dollars continuing was kept unchanged. It was expected that USA would devaluate the price of the dollar in relatively to gold with a continuous bigger and bigger pressure from the demand for gold, and also from USA’s deficit on the balance of trade plus the still unfinanced war-deficits on the domestic public budget. At the same time most of European countries gradually “dyed their money issuing in dollar-green”, and they also began the inflationary growth that went into stagnating production and employment with still higher inflation to end up with a rate of short interest of 21%. This was indeed the characteristic economic consequences of the welfare that substituted wealth in Scandinavia in the 1970s.

Dollar seceded from gold:
In 1971 Britain also began side by side with France to order redemtion of dollar for gold. Instead of contnuing towards a predictable collapse of the market USA left the redemtion of gold in august 1971. That actually meant that the international monetary system built up a little on gold but much more on dollars dismantled as forseen by almost everybody (among others the Norwegian negociators in Bretton Woods), and the world changed to the system with floating nominal rates of currency[1].You may also call this international financial anarchy, if you have understood that the grocer of that time could not sell the scales, and still claim to supply his freshly ground weighed coffee.

OPEC is a cartel that agrees upon a common oil price and distribute quotes of production-capacity among each other. OPEC was founded by Iran, Irak, Saudi Arabia, and Venezuela September 1960 (later on more countries joined) with the clear objective to “coordinate and unite” the oil policy in the member countries. After the Teheran Conference 1971 (where the price-settle-initiative was tranfered from the oil companies to the exporting governments) the buyer’s market for oil closed down. Now the need for a floating dollar rate emerged, if the economic worldpower USA – still with trade deficits – should not lose ground. October 1973 OPEC sent price on the oil to the sky with rise of 400%, and at the same time imposed an embargo that forbid shipping of oil to every country that had supported Israel in the “Yom Kippur War” against Egypt, and OPEC reduced the production with 25%. USA had previous reached an informal agreement with Saudi Arabia that the country could invest in USA, if USA assisted Saudi Arabia develop its economy. Apart from the tremendous oil prices-rises – there was another smaller one in 1979 – there was nothing catastrophic in the oil countries requiering more for their oil, when the reserves were limited. The profits earned by sale of oil accounted in dollars floated into bank accounts in Britain and USA, when the OPEC-countries simply could not find a better investment for the petrodollars right away. The problem arising was to allocate the money back into the productive circulation – recycle petrodollars -, now that the West rode on wave of combined stagnation and inflation at the same time. This new phenomenon – the Philip-Curve moved, but not until reality gave inspiration to loosen the premises of the theory – was caused by issuing of money-units, irreversible increases in wage rates and deficit on the public budget. [The reason why was not the oilprice rises even though that was persistently claimed (for 10-15 years) – if not it could be claimed that so-called crisis followed from the heavenward fligt of the oil prices had to be renamed to the normal state. So-called euro-dollar-bonds were issued and became the guarantee foundation for private lending from private banks to the Third World with the Bretton Woods organizations – IMF and the World Bank – in a the role as mediators. The developing countries could not provide money to the more expensive oil from other sources[2].
Petrodollar were the foundation of a huge number of hopeless lending-arrangements, and thereby also the propellant for at lot of debt-crises in the 1980s, and in the 1990s also among more developed nations in Latin America, Asia and Europe. Who created the risks, and who transferred these risks, and who had to bear the resposibility in the end?
In February 1945 USA made an agreement with the Saudi king about military protection of Saudi Arabia, if USA was given priority to the oil sources of the country. Even though the oil occurences were nationalized in 1976 ARAMCO (an association of Arabic and American companies) was controlling the production and the markets for oil outside Saudi Arabia. Surplus of petrodollars was invested in American government bonds. This market is obviously a power potentiale in the hands of the world’s leading millitary power. An example: In 1980 Iran’s and Libya’s assets in USA was confiscated, and recently organzations dealing with international terrorism suffered the same fate.

IMF – Debt Crises:
With the organization of IMF – International Monetary Fonds – a link in the international monetary- and ledingsystem, it often was a merciless fight of debt collection against weak founded states in the Third World. It was underlined from a few sources that the yearly new borrowing in Western Europe actually was bigger that the total debt of the developing countries in the 1970s. If we take the question of creditworthiness: the single states that decided the agreement of the Bretton Woods System paid in money, but most were given guarantees[3] in the foundations of IMF on behalf of the nations’ taxpayers, and in accordance to how large an economy the nations represented, so the responsibility for the many lending-dispositions in private banks, particulary to the states in the developing countries was rather often in quite another place than the initiative. How these lending-arrangements and other international arrangement was established, you can among others read in Frederick K. Listers ‘Decisi­on-Making Strategies for international Organisations: The IMF Model’, Denver, USA 1984.

How USA dealt with its debts-increase:
About 70% of world trade is contracted in dollars. Oil is the most important good in the world, all countries have to get oil, and if they do not have oil they have to buy it, for dollars. That has been the reality for the last 40 years. Recycling of petrodollars have simply been the price that USA have requiered of the oil producing countries for having USA to tolerate an oil exporting supplying-cartel OPEC since 1973. For about two decades USA’s deficit on balance of foreign trade has increased most of the time. Today it amounts to about 25% of the American Gross Net Production (GNP) or about $2.5 (European) billions or $2.5 (American) trillions. In 1988 the balance of trade was in balance, and at this time USA was a creditor nation. Since 2002 the yearly public deficit has been $450-600 (American) billions, or 4.5-6.0% of GNP compared with 1.3% of GNP in 2000, when both federal and the states’ deficits are incounted. Russia and Asiatic central banks in China, South Corea and Japan have bought American government bonds and other assets in accordance with more than 60% of the total public domestic deficit, for more than 1 trillion the last three years to keep up the dollar against Asiatic currencies that actually reduces the domestic issuing of monetary means substantial compared with what it must have been without the Asiatic demand and everything equal. It also appears from the fact that inflation is apparently still under control (in spite of the fact that inflation has a delay before it reach full strenght), and the employment is rising substantial in the fall of 2004. November 24th 2004 the dollar hit the lowest point compared with Yen for the last 9 years and the lowest point compared with Swiss francs for the last 4 years. China began selling dollars of a substantial amount November 27th 2004.
In the first half of 2004 more than $201 billions assets were bought up by foreign central banks. Of these are $180 billions American government bonds. In Japan are large parts of the bonds placed as security for Japanese banks that otherwise would have gone bankruptcy, more below. In the case China, it is the result of a large new export of price-competing goods to USA, for example outsourced American, and also Chinese productions that result in the large accumulation of dollars. They are invested in American government bonds and real investments outside China. The currency rate of Chinese yuan is linked to the dollar rate – and this is not just an implication of the buy up of government bonds. This means that the yuan without the US-bonds perhaps would have been in the same boat as USA, when the dollar may fall further. A still continuing fall of about 20% or more of the dollar would lead to a fall in the stock market prices, and also lead to higher dividends, when foreign entries move investments away. 40% of the American government bonds are owned by foreigners, like 25% of the business bonds, and 13% of the US ordinary shares. Behind the placement of the US-debt you also have to take into consideration that China’s demand for energy for the industrial sector is expected to be dubbled in the next 15 years, and the Chinese demand for electricity is expected to dubble in the next 10 year, and to be multipied with four before 2019. Until now USA has been the only country that can increase its purchasing-power on the world market by issuing more dollar-notes. The US-import is about 50% or in dollar-terms or $310 billions more produced produkts than USA export (yearly). That put the country in a special situation, characterized by both power and vulnerability. Without this central, very peculiar status of the dollar and a consequent and constant flow of capital-investments from the whole world, the country would quickly heel over in a catastrophic crisis of balance of payments.

The US-world-reserve-role changing:
From November 2000 Iraque began to settle its oil sale in euro, and at the same time it converted the reserve-foundation “Oil for Food” with $10 billions to euro after an agreement with UN. Between 2001 and February 2003 almost the entier Iraqi oil export was paid in euro, about $30 billions. In the same period the euro increased relatively compared with dollars with 30%. Saddam Hussein had already offered concessions of oil extration to France, China, Russia, Brasil, Italy and Malaysia. Saddam Hussein had until then only used Eruopean banks to the limited sanction program, “Food For Oil”. He awarded the Palestinians with 1 billion euros in 2000. A short time later EU awarded the Palestinians with 90 million euros as a subsidy to show its friendship with the Arabic World, if Israel canceled its payments at that time. A few days later the European Investment Bank made an agreement to lent Syria 75 million euros after eight year with sanctions of have been shut out from making businesses with this country. A little earlier, August 2000, EU donated 1.7 million euros as a subsidy to Eritreans, Etiopeans, Somalis and repatriated asylum seekers from Yemen after the war with Etiopia and famine. Subsidy from EU in euros again: not long ago the Italian Prime Minister Berlusconi proposed an European version of the “Marshall Plan” which he characterized as a generous act to rebuild Europe. He proposed to give the Palestinians a help of a value of 6.2 billion euros in a period of five years.[These last things are included to characterize the motives and the understanding of the situation among the promoters.] From November 2000 to November 19th 2004 dollars decreased relatively to euro with 34.5%, from December 1st 2002 to November 19th 2004 with about 23.5%. A lower rate of dollar made the dubbled result, by lowering the enormous deficit on the balance of payments (an improved balance of trade and an improved balance of the flow of investments), and improve the competitiveness of the exporters that would result in higher investment, and higher employment in these exporting businesses. I addition a lot is pointing in the direction that the petrodollar adventure has ended caused by the increasing import in the oil producing countries, and the reduction of the relative share of OPEC in the total oil export.
Iraque has the second-largest known reserves of oil among the nations of the world. 45% of EU’s oil import comes from oil sources of the Middle East, 80% of Japan’s comes from the Middle East, that has 60% of the world’s known reserves. USA is not dependent on those oil sources. The shift to petroeuro that is mentioned by few is predicted to have huge effect only if Great Britain and Norweigh introduce euro that would result in North See “Brent” and the Norwegian oil supply being settled in euro. Shortly after Iraque’s move, Jordan began bilateral agreements with Iraque. August 2002 Iran converted more than the half of its currency reserves in Forex Reserve Fund to euros, and China also began to convert some of its currency reserves from dollar to euro. At the same time Russia dubbled the stock the Russian Central Bank of euro to 20% of the total $48 billions. An Iranian senior speaker of the oil industry Javad Yarjani noticed in a speech to the Spanish Ministry of Finance that “it was possible with a increasing trade between the Middle East and the European Union, and that it could be suitable to settle prices in euro. This would create more ties between these blocs of trade with an increasing trade, and at the same time promote a very needed European investment in the Middle East.”
The British Empire was brought on even keel via the need for Britain to import food, when the domestic agriculture was driven out by the industri. The American Empire may be brought on an even keel via the need for USA to import manufactured goods, when the domestic production was driven out by the financial services.
While the dollar has decreased since 2000 the price of oil settled in dollars has increased. The euro-price of crude oil remained almost the same in the four years period. It just don’t seem logic that this result should occur of simple by chance, and it does not seem to be a surprise either that others could begin supplying a dominant reserve currency. The money plans of EU has not been held entirely top secrete. It is most likely to be a result of considerations of thoroughly planning and design. It also seems as if OPEC react to the dollar depreciation in a most natural way; by increasing the oil price precisely to the point in accordance with the lost they would had to bear is removed.

Japan in debitors trap:
The rate of Japanese yen has decreased 5-7% a year compared with euro from 2001 to 2004, notice, a relative decrease to dollar of about the half. This means a yearly depreciation that makes Japanese products more expensive in Japan, and the country is far from being selfsufficient with food and energy. Japan has stagflation and did not get through the last stockshare-bubble-crash in Asia in 1997, because the banks in Japan continued to throw new money after bad money with guarantee of the government, mostly based on American government bonds. February 10th 2002, Observer notes: Japanese consumers flock round the banks to convert the quickly depreciating yen to gold bars. There is fear for the banksystem to collapse, when the deposit guarantee of the government is being removed in Mars. We wrote in 1999 that Japan-government tried to reuse the Japanese economic policy from 1920-1927: to issue billions of yennotes and new credits with which the banks bad loans could be bought up, the assets then had to be overestimated much like in the Weimar Republic in Germany. Now it unfortunately was I the period 1920-1927, where Japan handled precisely the same problem just as wrongly as now in the late 1990s that it would have the one to refer to, if we had to learn from experience. It is not true that history repete without further. But if leading figures use the same false way thinking on the same problem (for example as an act of bad faith), then the superstitious are tempted to believe that history repete.[And it is not totally false, apart from the fact that ignorance’s blind fate must be classified in categories of belonging to an earlier or the coming middle age.] Such a incomprehensible policy was really carried out, also concentrating at negative rates of interests and guarantee of the state for the banks to get the prices to rise “by stimulating the production in this way” in the misunderstood Keynesian way. The falling yen has really got helplessly stuck in a debt trap. The public debt is $5 trillions, a little less than the debt of USA that November 19th 2004 got its borrow-limits increased to $6.4 trillions. More state-debt is continuing contacted at still higher settled prices, even though it just increases the debt. The debt trap is closed, and there is no easy way out. Japan which regardless is an important industrial nation is also a substantial importer of oil. Japan’s surplus of trade from sails of cars and other products was used to import oil settled in dollars. The surplus was invested in American interest bearing government bond and other assets. The government of Japan owns 15% of the American Treasury assets. G-7 was founded to secure Japan and Western Europe within the dollar system. From time to time in 1980s statements about the three currencies – dollar German mark and yen – emerged from different Japanese sources that they should divide the world’s role of reserve under the floating nominal currencies. Until now the dollar remained the dominating.

Euro and European Union:
European Union with common compulsory money units, and a constitution is being established among EU’s 25 member-states now. That it is difficult to obtain adequate consensus among the Europeans about the common compulsory money unit is perhaps unnecessary to state. To establish an European monetary union right now, where all European countries are indebted more than ever – apart from perhaps two European countries outside EU -, dominated by unsatisfactory activity and employment anywhere in EU, and even negative growth in the three leading countries, France, Germany and Italy for the second, perhaps for a third year is more than a feat; it is an artificial, ideological construction. The national currency sovereignity has been abolished in the eurozone. The objective is obviously price stability and growth in the eurozone. For years we were lead to understand – in the open – that the currency reform guaranteed price-stable growth, even though the rules about the new currency in the Maastricht-treaty (for example: article 104C) tells something quite different; particulary concerning the newinvented, partly inconsistent and irrelevant so-called claims of convergency that can be overruled, if the Council of Ministers does not estimate the offence to been substantial. The countries – France and Germany – that put these claims into the treaty were the first to offence the rules about deficits, and the relative magnitude of state-debt compared with GNP – they did not even honor this selfchosen claim either without several manipulations with the respective budgets (redemtion of gold and seeling of pension duties) in both the countries, Germany and France, when they invite other countries to qualify for joining the monetary union on the same conditions. In 2004 it continues in Germany with selling of the pension duties of the civile mail-servants.

Euro and its primery objectives:
To assume the common compulsory money unit in any way should reflect the real economic in EU, and serve the union we obvious have misunderstood. Corresponding to Spain’s fatal administration of the gold extracted in Latin America in 1500s it looks as if the euro in the best Mercantilistic way via trade settled in euro for example oil from the Middle East is meant to generate the moment that created change in a Europe with not less than 20% unemployed (official 9%) or expelled, and an enormous state-debt that you no longer can make an unambiguous sketch of. Jean Monnet – one of the founding fathers of project – exactly claimed in the 1950s that the compulsory monetary unit would be used to make the union real in full scale. It was the form, before the contents that counted, we can conclude. If for example one of the Maastricht claims of convergence about the magnitude of the state-debt that must not exeed 60% of GNP should have meant anything serious, between the half and two thirds of countries could not have met this claim without to accept crises of stability. So much can be extracted of those real informations that are released time after time. Apart from Mercantilism that according to history ended with the Napoleonic wars stability and development cannot be measured as an index of prices or some procent-figure. Or when some quantitative standards have been registered, then you can talk about a stable currency (with reference to the five Maastricht-claims of convergence). Stability include the dynamics of the capital formation, security of the investment process, economic growth, education and new technology and high productitiy in a state to claim that its leaders have taken the voters and the nation seriously. All this cannot be obtained or be calculated as some simple static concept. France and the most of the other countries were against the so-called stability pact that could have secured that the central bank acted like the old German Bundesbank, and kept the reins tight, but from quite another starting point. It was decided at the summit of Dublin in December 1998 to drop the stability pact, and France made too large deficits on the public finances in both 2002 and 2003 compared with the Maastricht provisions. The struggle about who should point out the president of ECB (European Central Bank) ended with France. The German Bundesbank was out of step with the German political, financial and industrial elite. But the bank was very popular in the German public opinion. Therefore the politician Helmuth Kohl was very hard pressed between the German and the French Establisment. The French socialists had built in their claims to the subsequent treaties. Now Kohl has gone, and the new German kanzler is a centralist himself. EU has in return recommended a German as leader of IMF. Kohl also had to eat that there were no more talk about pure automatic sanction against a country that makes continuing deficits. Now the claims is activated (according to Maastricht-treaty) when 2/3 of the weighed votes in the actively participating EMU – countries vote for sanctions. France also got approved that a so-called stability-council, and at the same time a directly political rolle built into the monetary policy so that for example guiding lines for the euro currency have to be fomulated politically now.
In addition to introduce the pure (economic) stability pact without order in the member-states’ economies would lead to real political instability. If the amount of money and credit cannot be debated in the whole eurozone, because it has to be decided by a hard ECB, the consequences would be so terrifying hard in some parts the union that political instability would inevitable be the result. Italy and Greece are obvious examples.
To defect this you can then introduce the more well-going countries to hand over “some surplus” from the public finances or “commit themselves to this in advance” (but the problem is that no state can or will do so) to the bad-going Italy, Belgium, Greece, Portugal and Poland. This means on plain English that the public expenditures have to be controled euro by euro in the whole eurozone. This is common financial policy. On that assumption every extravagant expenditure, and a lot more will certainly be stoped.
If you should judge by the falling D-Mark and the rising Italian lira in 1997-1998, the markets had to have the impression that a soft euro was being established. There was a completely unknown but collosal amount of lira that should have an eternal determined rate in euro in July 1998. How this could happen without a soft euro, would be intereting to have explained, and there were lots of other problems pointing in the same direction.
Already in 1996 you could foresee that the euro would be a so-called junk-currency – that was what the speculators called it -, if Germany, France and Britain should take over the Italian enormous mountain of debt. This would lead to result that ECB had to guarantee the solvence of both Italia, Belgium, and all the other heavily indebted member countries, for example Greece, and the countries that could be expected to join EU in the Eastern Europe at that time. In this way an alliance would be created that would press ECB, and get it to act as if it still controled the monetary policy without really doing this. That was what happened. Real EMU-stringency after the book multiplied by three or four is what should be expected, if we assume economic stability should succeed in the present situation – without a strong lever from outside. But this would imply the lost of political stability as the relations are and may be expected to develop, and the disappointment with the whole project would lead to even more resistance against the project. That is the reason why they still act as if.

Fear of competition narrows the rationality:
Globalization means the unlimited mobility of markets included the capital market. The globalization will destroy the democratic society and the welfare state, many maintain. The only reason why is lack of an international monetary system that would have prevented the worst. The total mobility of capital undermine the abilities of the states to regulate. Especially the concern for the labor market: Untercuting and cutbacks have to absorbe what threats to disappear of jobs, among other things by outsourcing. The globale markets of financing are not subject to a regulating mechanism of competition, and they causes crisis upon crisis – Asia, Mexico, Russia and Latin America. The crises will become deeper caused by the paper-mountain of the state-debt that widening the difference between nominal and real values in every community in the long run. And because you have chosen to sell the tape measure instead of using the tape to measure with according to its purpose. It gets worser when all the leaders of the states continues to borrow net more and more. The crises tighten the social pressure with requirements of cutbacks. The pressure of the crises either lead to the dismantling of the welfare states or change them into linked defending blocs (currency blocs like euro, dollar, yen or renminbi-zones) or relapse to the old enemy-pictures that characterized the national states earlier, perhaps a combination of both scenaries. With the dismantling of the democratic founded national- and social state the globalization releases itself at last, because the politicians cannot stand for that the populations/the voters of their countries have to bear heavier and heavier burdens just to offset the worst.
Euro-Union is the prototype of this development. Its bad hidden dubble-motive is a) fear of the dollar-dominans and –competition and b) fear of the united Germany with matching D-Mark-regime.
Fear always build on a false analysis. The US-dollar does not threaten the European market shares of the world trade, but Europe’s lack of knowledge, technique and initiative, especially Europe’s inertia when comes to reforms and renewels. The hardness and the strenght of the D-mark did not prevent the development and the integration of Europe, but the since “Maastricht” the aim was abolishment of the D-mark, and that has then happened. The explanation was that D-mark should have driven the countries in the eurozone (now) into a tight negative development against reforms and with social limitations. Alone these fallacies and false assumption do not allow any realistic expectations about a hard euro. The inflation was programmed in advance. It is perhaps possible to blow more air into it by leting it float in oil at the beginning, but the collapse is then going to be even bigger. All member countries are deeply indebted, and all of them run with deficits.
The national governments lost their instruments of management right at the beginning of the euro (currency rate, interest rate, amount of money and flexible budget). They can no longer secure the values of the money, and regulate the labor market, and the social- and ecological standards that the same policians had introduced. Differences of structure and of competition will with governmental suspension be equalized by the market. The battlefield number one is the labor market now, and the social and ecological systems. The labor market suffers from the diminishing of the middle class, the wage rate and social cost competition originate from the workers in the southern and eastern EU-povety-zones, and an inevitable liquidation of the decided national union-wage rates and the minimumstandards of the social level till now. The market sweeps them away, the employers uses more and more their potential of threat that is to move their productions to especially favourable (wage rate, social- and ecologic cheap) EU-zones. Wage rates, social standards and claims of environment in Euroland have to be harmonized downwards. It is the naive imagination of socialdemocrats, the folk socialists and unions that these things must be better after they have signed the Maastricht-treaty. In Euro-Union the social policy has resigned forever – and it is happening with full accept of the socialdemocrats, the folksocialists and unions.

Euro-Union and globalization:
Euro-Union is not the remedy against the employment crisis of globalization. There is nothing special about this globalization; that is an apophthegm; international competition is the right word. Euro-Union strengthens the power of the capital, and helplessness of the state in the role where nothing real can be done to the unemployment without to have the needed instruments. It is a progress towards the 19th century (here the instrument of ruling were searched too), not towards the 21st century. Euro-Union is not even a counterbalance against the unsocial tendenses in the globalization, as the incompetent analysers from the left maintain; it strengthens them further. It simply forces the working life towards the monetary commandos. The European Central Bank (ECB) has to pursue the totally same policy in the 12 different structure countries, without the possebility to resort to the equalizing of the nominal currency rates. To prevent the capital from leaving the eurozone the central bank will have to increase til interest rate; but this decreases the activity and rises the unemployment further. Such an union must end in the conflicts among the states, from which there is no no help to find – if the euro-union is not rebuilt to a transferunion or an federal state with public equalizing between old and new member states, something like the patchwork USA or the German Federal Republic, but without the D-mark. When the transmission of these models show themselves impossible or they meet resistance the question arises: Are there alternative models that can save the world peace? As it runs now: Europe and Arabic world has already begun to cooperate economical, as it was forecasted in North-South-Dialog from 1968 and the European-Arabic Dialog from the midd 1970s. Egypt, Jordan, Marocco and Tunesia decided last year to establish a zone of free trade[4], and Algeria, Libanon, Mauretanien, the Palestinian authority and Syria are being invited to join this big zone of free trade. Egypt is expected fully admited in this group of free trade. However EU has negociated with 12 Miditerranean countries as a part of the so-called Barcelona-Process about cooperation between EU and its neighbors around the Miditerranean towards south. The aim in the long run with this Barcelona Process is to establish tighter bond of trade and social questions as well as of political kind. This will lead to the creation of the Euro-Miditerranean-Freetrade-Zone consisting of 27 countries in 2010.
It is possible that the European productions in future may be transferred to North Africa, the Middle East and Eastern Europe, until they come up, and we are put totally down. It is a question if the populations submit to that.

Two suppliers of internationale monetary means:
With the last European-monetary move – if it is an experiment of establishing of the euro as a possible reserve currency or currency for price-settling to some extent in line of the American dollar – no real lift of Euro-Union will happen. “If the occasion should arise there would be to ice cream booths on almost the same bathing beach. The difference to the metaphor is that the booths are supplying monetary means to be able to live on the products of other countries instead of supplying more ice creams, and employ its own working force to produce more products and more services. The climate of investment is far better in the dollarzone of the beach, and the other products and services are far more competitive in the dollarzone. The European Central Bank is organized to prevent euro from falling; it has no means to prevent euro from rising. If ECB are going to issue more subsidy-euros that are covered by the real economy, the economy is further twisted. The deficits on the public finances in the two leading countries of euro-union are of the same magnitude, when compared relatively with GNP, like the corresponding in USA, about 4% against 4,5-6%. But here you have to take into consideration that the whole here is threathened by deflation, if the euro increases 20% further, because the growth in the three leading countries in the eurozone is close to zero. The dollarzone can expect a tremendous improvement of its tradebalance. If this zone is perhaps going towards a more sound value of the dollar, it tempting to propose the single lacking arrangement. A common instrument to prevent crisis upon crisis, deeper and deeper, and at the same time secure that the monetary means are used to what truly is their only useful aim. The classical economists, for example David Hume and John Stuart Mill proved in the 1700s that without order in the monetary relations, there will not be any order in the markets of products. Without an international order of money and credits that is in the interest of the big trading countries, it will go wrong.

The need for introducing of real currency rates:
The ruling monetary system until 1971 was not the agreement that the chief-negociator of England maintained for a long time was best to be chosen. To protect against crises and inflation J. M. Keynes showed an internationalt emission-agency with an international monetary unit that was not fully negotiable. It could be bought for gold, but not the other way round. Only if the states of their free will stop the inflation-orgies and the state-borrowing or devaluate (by compulsory) or let the money amount and the credit be ruled by others, it is possible bring harmony into the international system of payment, Keynes maintained. The incitament to speculation is removed at the same time. A monetary measuring instrument without banknotes to determine real currency rates, and it is certanly not suitable to force out national currencies.
Real currency rates are the present nominal currency rates corrected for inflation. We have seen in the last half of 1900s that inflation is a distinctly harmful phenomenon. If inflation had made a country’s products lesser competitive, the country could just devaluate the nominal currency rate relatively to all other countries, and in this way benefit by the lower price of its export products, and higher prices of the import products; the exhange-relations to other countries has then been changed. Regardless if this trafic had to be repeated to have any effect – except for inflation – it was the way countries used to go not long time after The Second World War and the reparation.
There must a possibility for countries to make inflation for limited periods, caused by some structural or developing matters that have to be arranged. Such a possibility must excist, but in such way that other countries are not harmed by this inflation. The country that need inflation have to devaluate at once in advance. It is easy to incount inflation into the currency rate. By this are all other countries protected against inflation, and also against deflation, where the negative growth can lead to standstill, if the right monetary intervention are not carried out in time, as we saw it the 1920s and 1930s. No national currency must be brought into the international monetary system. We have had a much similar system under the so-called gold-coin-basic that was especially connected to the appearance of industralism, its early development, and the worldtrade via City, London. Goldstandard (a looser system) became the pivotal point, but the gold was at the same time a good of trade and therefore it did not have a settled value in itself, but the price was decided by supply and demand from the central banks, lastly a politically decided. An international monetary unit a little corresponding to the ECU – originaly the voluntary European currency unit emitted from an independ organ; it could be exchanged when needed, but for the present aim just a unit of account. A unit of account in an published, settled amount, and at a settled price, an account and reserve unit. No saleable instrument that get impacts from any supply or demand. And international arena where both debitor and credit have to pay interest on loans with the new reserve unit as guarantee, so we prevent lending out at random, and if it does go wrong, ordinary people should not be cheated every time, and it should also prevent crises of finances from overturn one deloping or misinformated country, one upon the other. You can call it a nationalbank of the world as a foundation for the international trade. It is simplicity that everyone can understand: we cannot control the national/international markets of currency from a national central bank, if the international montary unit is for sale, and thereby has become a multi-lend of all national currencies.
I knew that when I was 21 years old in 1971, and USA ”left the gold” as it was expressed, but selfconfidence grow with experience. I learnt little of economics that offered me a more solid ground to argue from.
And we perhaps have to go through another catastrophe before the leaders understand, what their predecessors did definitely wrong, or were lead to make definitely wrong from their in many respects marionet positions.

Supplementary readings:
Economics of Tide:
Big recessions and recoveries in the 20th century : http://www.lilliput-information.com/tida.html (part 1)
Big recessions and recoveries in the 20th century (including the role of private company with anonymous ownership): http://www.lilliput-information.com/tidb.html (part 2)
Goldstandard in all combinations:
Gold as an international unit of account for values – a historical statement: http://www.lilliput-information.com/gol1/gol1.htm (part 1)
Gold as an international unit of account for values – a historical statement: http://www.lilliput-information.com/gol2/gol2.html (part 2)
Keynesianism, the misused of J. M. Keynes theories:
J. M. Keynes’ theories, the moment that actual inspired the last dependence: http://www.lilliput-information.com/keyne.html

November 27th 2004,M. Sc. (Economics) Joern E. Vig, Denmark,

[1] We remember how the nominal rates of currency sometimes were devaluated by one country or a group of countries at the same time. We were sure it must be some kind of advanced swindle with the values. We wondered that the other countries accepted it, but we did not fully understood the consequence of fraud then, to all of us.
[2] Other arguments than the need for working capital were certainly used.
[3]The roles were exchanged from the beginning, The World Bank was no bank, but a foundation, and the foundation was a bank, so let’s describe the first: ”With a share capital of $10 billion distributed among 100,000 shares that should be taken over by the member-states participating in the maintenance of the bank (mine: that certainly was not a foundation neither from the beginning or later on). Admission to this was given to states, that were members of The International Monetary Foundation, but later on other states were given admission too. That was the reason why only $9.1 billion of share capital was supplied at the founding meeting. 20% of the capital should be paid in, of which one tenth in gold (in reality then just 2%), occupied countries could postpone a quarter of payment in gold for 5 years. The main task of the bank was via (mine: private) lending or guarantees to promote the reparation after the war og hereby contribute to the delopment of the international trade and increase the productivity and living standards in the long run. Direct lending should be effected, if the borrower could not achieve a private loan or a gurantee on fair conditions. The management of the bank should be organized after the same principles as the principles in the International Monetary Foundation.” The former Danish Prime Minister Viggo Kampman wrote so as a civil servant in 1944. The italicized originates from the present author.
[4]Free-trade-considerations usually result in more than free trade, when we look behind the political rhetoric, and let the experience count.

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