75 percent of the sources of investments are domestic. The remaining 25 percent is not a gift either, we give our market and our workforce for it

75 percent of the sources of investments are domestic.  The remaining 25 percent is not a gift either, we give our market and our workforce for it

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The only thing the opposition sympathizers could say was that "This is not Orbán's merit, it was built with EU money". to turn the money into country-building, there was EU money even in the time of the Gyurcsánys, yet schools were closed, hospitals were sold, nurseries were not built, but this was only in parentheses. Let’s stick to the topic of resources.

EU funds account for 3-4 percent of GDP, roughly as much as a car factory produces. EU funds go to the Member States. So these are not donations, but in return we opened our markets when we joined the EU, we suffered the related damage, we opened our labor markets - said Balázs Orbán in the discussion with Katalin Cseh.

📌About blackmail:
To put it very simply: it’s like when you have an apartment that you rent. You give the tenant the right to use the apartment, in return he pays militarily. The previous contract has expired, but the tenant has come up with new conditions: you continue to secure the right to use the apartment, but then the tenant decides whether to pay you or not, if you think you are a good man, you pay if you think you are a bad boy, then you don't.
The dear tenant, of course, never describes what he means by "being good-natured." if you do not meet the conditions, then in addition to still living in your apartment, you will not pay the money due to you because you are not a good man.
Would you go into such a contract? Isn't that right? That is why Viktor Orbán had the prospect of vetoing earlier, that is why we fought.

📌About the money itself. Why do we say that this is not a gift, but this is our money?

"Union money" is distributed according to the EU Accession Treaty, if anyone withdraws anything, ie unilaterally violates this treaty, the Hungarian state will also be entitled to deviate from the treaty and, say, tax Western products, thus placing Hungarian companies at a competitive advantage.

Left-liberal power-hungry politicians and those who blindly follow them would have time to wake up from their Sleeping Beauty dream - the “EU money” they always use to harass and guide people is not a gift. Hungary paid a very high price for it, because we joined the market for it at the same time as joining the EU.

"Closing money taps" doesn't work. It does not follow from the Treaty of Lisbon that political considerations can be incorporated into normative regulation, and the multiannual budget is not set by the European Commission or the European Parliament, but by the European Council, made up of the first people in 27 countries (heads of state or heads of government according to their own national systems, from us to the Prime Minister), and an agreement can only be reached by unanimity, ie compromises. No one can block anything.

The resources coming through the EU are for us, and that is our money. YOU ARE WALKING because at the time of the accession treaty we gave up a lot of things in the agreement, we allowed a lot of things, e.g. we have opened up our markets, as a result of which entire industries have been hijacked, ruined (sugar industry, for example) and, in return, budgets are being drawn up in the EU to compensate them to some extent. Although we seem to be net beneficiaries of EU budgets, the projects that are being implemented are largely carried out by Westerners, especially Germans, so a significant part of the money is leaking back.

German EU Commissioner Günther Oettinger has said earlier (that is, he has spoken out) that the Germans are not net contributors but net beneficiaries of such a policy. In the article on the index (linked to the Source), the reporter asks about Hungarians and Poles, Oettinger answers:

"Why not save even more - for example, the billions in EU structural funds that go to Poland and Hungary, since those two countries refuse to take in refugees?

Budgetary policy should not be used to impose political penalties. The structural funds are for making weak regions more competitive. And a large part of every euro the EU gives Poland comes back to Germany. The Poles use the money to place orders with the German construction industry, to buy German machines and German trucks. So net contributors such as Germany should be interested in the structural funds. From an economic perspective, Germany is not a net contributor but a net recipient. "

In Hungarian, the Germans are much more interested in the policy of such "union money", because although it seems from afar that Eastern countries pay less and get more back, in practice most of the money flows back into the German economy because we buy German machines, some companies in Hungary We support job creation, German products have surpassed the Hungarian market TAXABLE.

It can be understood with common sense peasant reason: the old Western EU did not take in the countries of Central and Eastern Europe because it wanted to do us good. They took it because it was to their advantage.

“EU grant” is actually a money printing license

Between 2004-2015 approx. HUF 8 trillion "EU aid has arrived in the country". This amount is HUF 800,000 per capita. Most people see "EU support" as a donation from the EU.

It may come as a surprise, but this “support” is actually costing the EU nothing at the moment. And without "EU support", Hungary could do the same thing as before: create money from scratch and distribute it.

How is it possible? What is "EU support"?

To judge the truth of the introductory thoughts, it is necessary to go into some technical details.

What does it mean to “come into the country” with “EU aid”? The bank of the Hungarian state is the Hungarian National Bank. The MNB has euro accounts with several Western banks, such as the Basel Bank for International Settlements. For example, when Brussels transfers "EU aid", the euro can go to this Basel account. At the same time, the central bank enters this amount into the euro account of the Hungarian state with the central bank. The Hungarian state thus acquires a euro claim on the central bank.

The Hungarian state does not distribute "EU subsidies" in euros, but in HUF. He therefore asks the central bank to convert the euro into forints. Ordinary thinking would suggest that the conversion means that the central bank sells the euro - in Basel in the example - and therefore buys the forint on the foreign exchange market. In fact, the central bank does not do this, but “converts the euro in-house”. “In-house conversion” means that the central bank withdraws the amount of euros from the euro account of the Hungarian state and at the same time creates forints from scratch, and then writes this to the forint account of the Hungarian state. So the central bank created a forint out of nowhere for the Hungarian state.

Let's look at an example: 1 billion euros "EU support is coming in" and the exchange rate is 350 forints per euro. In this case, the central bank will create HUF 350 billion from scratch for the state, and in parallel will park EUR 1 billion in Basel.

After that, the Hungarian state will allocate the “EU support”, ie the newly created forint, to the companies that won the tenders. Businesses receive the amount won in their bank account, so the allocated forint appears in the banking system. But since the banking system doesn’t really need that money, the banks put it back in the central bank and deposit it as a deposit. Thus, freshly printed central bank money, after making a circle in the economy, can be said to be dormant central bank money.

What happens to the EUR 1 billion in the MNB's Basel account, for example? In the “in-house conversion” presented, the central bank has not yet reached this euro. The central bank later “invests” this euro, so it buys “valuable” interest-bearing eurozone government bonds. For example, French, German, Italian, etc. government bonds. This means that the central bank returns the euro to eurozone countries and therefore receives eurozone government bonds in return.

Then this returned euro can give the start of a new round. This can then be transferred again by the eurozone states to the common hat in Brussels. From this, Brussels can give back “EU aid”, meaning the euro can go back to Basel. Under the pretext of the Basel euro, the central bank can reprint the forint. And then the euro can be remitted by the central bank to the eurozone countries when it “invests” it in eurozone government bonds.

The end result is that the MNB acquires more and more eurozone government bonds on one side and prints more and more forints out of nowhere on the other. only between 2004-2015 approx. HUF 8 trillion “EU support came in” to the country. In fact, the vast majority of this amount still lies on the central bank's asset side under the heading "foreign exchange reserves". The central bank has had so many surplus (French, German, Italian, etc.) government bonds since 2004. In parallel, the central bank approx. the same amount, i.e. approx. It created HUF 8 trillion in central bank money from scratch between 2004 and 2015

Is the foreign exchange reserve really a treasure?

We have previously questioned whether the foreign exchange reserves are really a treasure and whether a country without a strong military has the opportunity to redeem its foreign exchange reserves for some value.

Let’s look at an example to illustrate the situation. There is a settlement where a local mobster constantly buys on credit at a local convenience store. The shopkeeper is accumulating more and more receivables from the mobster. But what can you do about it? How much are these claims worth? If, in the end, these claims cannot be redeemed for money, then what actually happens is that the mobster is constantly buying for free.

If the “foreign exchange reserve” is something like a stock of claims against a mobster, then the EU doesn’t really get anything for “EU aid”. This is because the euro we receive as 'EU aid' is returned as 'foreign exchange reserves', and we cannot finally redeem the 'foreign exchange reserve' for anything. Thus, the whole complex series of operations should rather be considered as a kind of money-making permit.

If we are already printing, why not print money for ourselves?

The question arises as to why this whole hocus pocus is needed for money printing. Why shouldn’t the central bank simply print money for the state?

The Hungarian state is currently prohibited by law. In 1996, the country “transformed” its financial system “with the help” of the IMF and the World Bank so that it could not generate money for itself, only against foreign exchange. After that, the country was initially able to raise money primarily against the dollar. Then, since joining the EU in 2004, the country can create a forint against the euro instead of the dollar. Without this legal limit, the central bank would be able to print money for the state without further ado.

Perhaps the first reaction of many is that printing their own money would certainly not have a good ending, so let’s not do it. It is worth distinguishing two different problems:

"Is it a good thing to print money out of nowhere?"
- Is it a good thing to hand over the right to the EU to control when we print how much money out of nowhere?

Is it a good thing to print money out of nowhere?

It used to be about the money-making authority taking away purchasing power from everyone else. Whoever gets the fresh money gets free purchasing power. At the same time, the amount of money increases, so the value of money decreases a bit, that is, the price of everything goes up a bit. Thus, every money owner loses purchasing power. It was also about the fact that if the rate of money printing is not very large, you can live with it. If the state spends printed money usefully, efficiently, and cleanly for society, then money-making can be seen as a kind of fair tax.

Both under the auspices of the EU and in the case of independent money creation, the same questions may arise about the correctness of printing money: is this tax really fair, does the state spend printed money well, and so on.

Is it a good thing that we have handed over the right to the EU to control when we print how much money out of nowhere?

The difference between the two options is that we have given power to EU bureaucrats by handing over the money-printing license. The EU can constantly blackmail Hungary that if Hungary does not dance the way the EU whistles, the EU will withdraw its “EU support”.

If we did not know that 'EU support' is just a money-making license and we could change the relevant legislation if we wanted to, then this blackmail would make us feel very threatening. In this case, we would believe the slogans that “the EU finances Hungary”, “there would be no economy anywhere without EU subsidies” and the like.

If we want to step out of the current framework, one way to do that is to change the legislation on money creation and create money for ourselves. In addition, we limit how much money the central bank can print for the state each year with bomb-proof and transparent rules.

In fact, the issue of self-sufficiency cannot be addressed in a hermetically sealed manner. In the current "federal" system, ie as an EU member state, it is probably a mandatory element for smaller members to give up money creation on their own. On the other hand, in the hypothetical case that we would have had enough of the EU, the fear of losing “EU support” should not deter us from our intentions. We can print money for ourselves at some other address.


📌An earlier article in the Numbers on EU money, in a little more detail, in more detail:https://szamokadatok.hu/Post/1058/Az_unios_penz_nem_ajandek_-_a_piacunkat_adtuk_erte

Tags: Development  European Union