The Guernsey Model

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Free Thinker
With all the global debt and economic problems that are hampering the world today I thought a little study of the small Island nation of Guernsey might be helpful to open the eyes of some to the inherent problems with the monetary/currency problems rampant in the western world and, in fact, 99% of all nations.

What this little nation has done is remain devoid of any central bank and allow the govt to issue currency without selling interest bearing bonds or any other instrument that attached debt to currency. For example if the govt wants to build a new wharf at a cost of $1 million they do not borrow the money nor do they issue bonds that would require a payback greater than $1 million. What they do is print and issue $1 million and then spend it on the project. This has allowed them to maintain a high standard of living while accumulating absolutely NO national debt. They in fact have a huge surplus reserve of funds available and will not likely have to borrow money in the foreseeable future.

This system has recently been under much pressure from the EU, OECD, world bank and IMF to change to a debt based currency which is obviously self-serving to these organizations as they are not getting any income from the country as it owes nothing to anyone.

They have a reasonable tax system with all residents paying about 20% regardless of income and some of the best corporate rates in the world.

Guernsey Personal Taxation (external - login to view)

In Guernsey there is no general capital gains tax, inheritance tax or estate duty, purchase or sales tax, VAT or capital transfer tax. The main taxes are income tax at one rate of 20%; and social security contributions are payable. Property owners and occupiers may be liable for small parish taxes.

In July, 2006, Guernsey's parliament passed a set of economic and taxation changes that includes the zero rate of corporate tax and the capping of personal tax at GBP250,000. The new tax system went into force on January 1, 2008.

The package of measures includes:

A zero rate of income tax on company profits, except for specific banking activities which are taxed at 10%;
Guernsey residents continue to pay tax at 20% on assessable income;
Personal tax capped at GBP250,000 on non-Guernsey income and investment income;
Taxation of Guernsey-resident shareholders on distributed company profits only; and
Wealth taxes such as inheritance tax and capital gains tax will not be introduced.

I think it is time for Canada to try to emulate this model and break ties from the IMF/World bank system which is designed to keep every participating nation in perpetual debt and is realistically a huge ponzi scheme that will eventually force all nations into bankruptcy.
The Old Medic
Guernsey is a very tiny island (it is NOT a Country, it is part of Great Britain). Their system would not work in anything much larger than they are.
Free Thinker
Quote: Originally Posted by The Old MedicView Post

Guernsey is a very tiny island (it is NOT a Country, it is part of Great Britain). Their system would not work in anything much larger than they are.

Actually they are an independent nation.

Guernsey - Wikipedia, the free encyclopedia (external - login to view)

Guernsey ( /ˈɡɜrnzi/ gurn-zee), officially the Bailiwick of Guernsey (French: Bailliage de Guernesey, IPA: [bajaʒ də ɡɛʁnəzɛ]), is a British Crown dependency in the English Channel off the coast of Normandy.
The Bailiwick of Guernsey embraces not only all 10 parishes on the Island of Guernsey, but also the islands of Herm, Jethou, and Lihou. Furthermore, the Bailiwick includes Alderney and Sark, each of which has its own parliament.
Although its defence is the responsibility of the United Kingdom,[2] and despite common belief, the Bailiwick of Guernsey is not part of the UK - and while Guernsey lies within the Common Travel Area, it is not part of the European Union.

I see no reason this model could not be extrapolated into working on any scale.

Another feature of this nation is 2 different housing markets. The open market which is available to anyone and the local market which is only available to those who have established permanent residency over a period of time (I think it is 15 years). There is a substantial difference in price and taxation of the 2 markets with the benefit being to the established resident. Builders are bound by law to provide a certain # of local market homes in direct proportion to the # of open market homes they build. This ensures that the long time citizens are rewarded for their contribution to the society as a whole. It is quite an interesting situation that, unlike Canada, puts more burden on immigrants to finance the administration of govt building of essential infrastructure.
#4  Top Rated Post
I'm not surprised the IMF, World Bank, WTO and other supranational organizations are in such a fuddle over this. It can, with proper controls, work. Those controls deal with the regulation of the circulating money supply and its engagement with productive enterprise.. to avoid inflation.

The Debt based system is ludicrous.. it creates interest bearing bonds instead currency.. creating a constant non-productive drain on the economy for completely gratuitous interest payments. It is no guarantee against inflation.. but forces governments to use interest rates to control the money supply and thus saps the economy of its vitality.. for something that can be controlled without debt, while retaining adequate and affordable credit for viable enterprise..

A grave concern is that it forces the selling of national debt to foreign countries.. putting them in a position to dictate national policy. A dangerous and untenable situation for any sovereign government. The type of thing that leads to War.

This a cornerstone of Monetarism (and the other pillars of 'Fee Market' ideology)... which has put control of the world economy into the hands of supranational agencies and financial/trading institutions. It treats currency as a commodity outside the control of national governments, and forces it into the global casino of money trading, without hard, sustained, reasonably assigned values.

It is a corrupt, shameful and parasitic system... and it is FAILING... inevitably and catastrophically, world wide.
Last edited by coldstream; Oct 25th, 2012 at 01:51 PM..

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