Galloni: No Bail-Out, No Bail-In But Glass-Steagall
July 6, 2013 • 10:06AM

In a June 28 interview with the online magazine Abruzzoweb economist Nino Galloni exposed the bail-out and bail-in policies of central banks, and called for for Glass-Steagall as the only solution. Abruzzoweb is based in L'Aquila, whose mayor recently went to Brussels to beg for reconstruction money and came back with "broken bones," as Abruzzoweb reported.

"Money is there and costs nothing, it is not true what Brussels says," Galloni is quoted saying.

"The new model ... must necessarily start from the internal development of each country, of each situation, of each region, within which we decouple from the international currency and we produce everything we can produce. If then, we are so good as to produce more than we need, than we will export at an arbitrary price determined on the international market. This, to clarify the mistakes of the insane model we joined. I never had doubts about the euro: It was not born as a currency but as a system of rules and that would be enough to understand its harmfulness. Furthermore, it has been managed as if it were gold, or a precious commodity, and it was artificially made rare, and finally unmanageable....

"A few years ago, the system changed. In order to deal with the liquidity needs of the banks, which derived from the speculative, non-credit activities, 'quantitative easing' popped up. All central banks, including the ECB, authorize unlimited monetary means on behalf of those banks, which continue making unsustainable financial operations—even though, to improve things, it would suffice to reintroduce the Glass-Steagall Act, imposing the clear-cut separation between subjects with speculative activity and those which must extend credit to the economy. This was the second, very damaging pathway in which central banks heavily entered, directly or indirectly, the sovereign debt market.... In this context, if EU rulers commit to promote a recovery through deficits, things will change. Otherwise, the Euro will be dropped....

Galloni in Germany at the Schiller Inst. New Paradigm Conference.

"Draghi is closer to U.S. positions, which are more expansive than European [German—ed.] positions, but he is member of a group that wants to take over banks, a dangerous thing: the 'bailing-in' [sic—in English], i.e., seizing deposits—a proven way to blow out banks and, in my view, means little clear-headedness. I repeat, either we make deficit-financed public investments, or things will go from bad to worse....

"There are two scenarios, but always within the framework of monetary sovereignty: either people do it, or else they will be subjugated. I believe that we will go back to monetary sovereignty. I am convinced of it."

Galloni blasted those who say that earthquake reconstruction in L'Aquila is blocked for lack of money. "It is like saying that there is lack of kilometers to build roads." On the other side, "we do not solve things by printing money as such. Money must be invested in the best way, but here money has disappeared. Let us regain the currency, which is there and costs nothing, and then let us balance the budget, once it has met the capacities and the needs of European people."