1. The UK Election
... a possible opportunity to stop the bankers
creating the money supply?
2. Banking Background
to the Present UK Election
3. Monetary Reform
Plus Wider Money System Reform
(1) Steve Sorrell, "Energy,
growth and sustainability: five propositions"
(2) Some recent important items on Charles
Bazlinton's blog
(3) Fred Harrison’s new book “2010:
The Inquest”
(4) Laurence J. Kotlikoff's new
book "Jimmy Stewart is Dead:
Ending the World's Ongoing Financial Plague
with Limited Purpose Banking"
(5) Darius Guppy, "Our World Balances
on a Sea of Debt"
(6) Dave Patterson,"What
Happened?!?"
4. Some Items on Ethics and Religion
(1) Ekklesia and the "Ethics
Election"
(2) Robert
Van de Weyer, "Against
Usury: Resolving
the economic and ecological crisis"
(3) The Ecumenical Council
for Corporate Responsibility and the Better
Banking Campaign
1. THE UK ELECTION ... a possible opportunity
to stop the bankers creating the money supply?
In my January Newsletter (No 28) I reported a widespread
sense that none of our mainstream political
parties is capable of responding effectively to
the range of national and international challenges
we now face, and that the outcome of the election could
be a "hung Parliament". That outcome seems
much more likely now.
Prime Minister Gordon Brown (Labour) and David Cameron
(Conservative) are trying to respond to the dramatic
success of Liberal Democrat leader Nick Clegg in
the first televised debate between the three main party
leaders on 15 April.
After the second debate on 22 April the Liberal
Democrats continue to threaten the other two parties,
even if it is still thought doubtful that they could
lead the new government themselves after the election
on 6 May.
Brown may continue to
try to keep open the possibility of a Labour/Liberal
Democrat coalition in spite of the growing
unease at the prospect within the Labour Party
and Clegg's well publicised personal
dislike for him. At least for a few more days Cameron may
continue to attack both Labour and Liberal
Democrats aggressively, and to press the
case against a "hung Parliament" - which
sounds conveniently worse than a "balanced
Parliament"! - and to go for an outright
Conservative victory. Everything is, as they say,
still up for grabs.
What all this could mean for particular policy
areas isn't yet at all clear. For example, the bankers are
still attracting a lot of well-merited public
anger, as illustrated in Item
2. Would
there be a way to get monetary reform on to
the political agenda during the election campaigning
of the next ten days or during post-election negotiations
to settle the form of the next government?
I believe there could be a way, as follows. A
long shot, yes - but not impossible.
If any one of the three main party leaders issued
a statement broadly on the following lines,
the other two would be unable to ignore it.
"The need to explore every serious proposal
for stopping the recurrence of banking failures
that cause economic and social crises is becoming
increasingly clear.
One such proposal is for a monetary reform
that will restore to a public agency the function
of creating the public money supply in the
public interest, and remove the privilege of creating
it from the commercial banks.
It is claimed that that could not only help to prevent
future disastrous booms and busts, but also to
ease the burden of paying off the very high levels
of public debt which will otherwise cramp
our economic recovery for many years.
So after the election my party is prepared to participate
in a cross-party study of the arguments for and against
that reform and its feasibility.
At this stage no commitment need be made by any
party to act on the conclusions that the cross-party
study might reach."
The practical question is, Which of the three leaders would
be most likely to issue such a statement?
Perhaps not Clegg. Having succeeded
in making the Liberal Democrats a serious contender
for office, he might fear that voluntarily floating
this idea would enable his opponents to question his
credibility.
Probably not Cameron. The Conservative
Party and its supporters tend to represent the section
of the electorate which directly benefits from high
profitability in the banking sector. If he voluntarily
floated the idea he would risk losing support.
Of the three leaders Brown
would have most reason to risk taking the lead. On
14 April he apologised for not regulating the banks
more tightly while he was Chancellor of the
Exchequer from 1997 to 2007, and said he could now "be
relied on to make sure the banks act in the national
interest so you'll see more measures to do
that".
Moreover, the idea of monetary reform would appeal
directly to trade union voters, most
other long-term Labour supporters,
and other voters who want to see the bankers put in
their place. So, in extremis, Brown might risk floating
it as part of a last-ditch effort to consolidate
his leadership of the Labour Party and stay
Prime Minister after 6 May.
Will someone draw Gordon Brown's personal
attention to that? I hope so.
Meanwhile, back to the grass-roots, where the following
two candidates in the General Election deserve
support from people in their constituencies.
Anne Belsey is standing for the Money
Reform Party - www.moneyreformparty.org.uk - in Canterbury and
Whitstable. She says that because the constituency "is
rock solid Conservative, voters will be able to vote
for money reform happy in the knowledge that they
will not be 'letting in' the major party that they
dislike the most - which will either be the one that
will win easily or the one that has no chance of
winning! A vote for Anne will be a clear and unambiguous
show of support for money reform".
Rev Dick Rodgers is standing for
the Common Good Party - www.thecommongood.info - in Birmingham Northfield. Among
the policies he supports in his manifesto is to "Stop
bankers creating money out of nothing".
2. BANKING BACKGROUND TO THE PRESENT UK ELECTION
Goldman Sachs is a bank on which
US and UK governments have relied heavily for banking
and financial guidance - http://political-cleanup.org/?p=394.
It has also been called "a great vampire
squid wrapped around the face of humanity,
relentlessly jamming its blood funnel into anything
that smells like money", though it's boss claims
that is "doing God's work"! It is now
being investigated by America’s Securities
and Exchange Commission (SEC) and Britain's Financial
Services Authority (FSA) for fraud and deliberate
deception of clients. See www.guardian.co.uk/business/2010/apr/19/goldman-sachs-sec-inquiries,
and www.qfinance.com/blogs/ian-fraser/2010/04/23/sec-vs-goldman-sachs-suggests-changed-days-for-wall-street
and www.guardian.co.uk/business/andrew-clark-on-america/2009/jul/14/goldmansachs-banks.
The International Monetary Fund (IMF)
has now put forward proposals for two new taxes
on banks for discussion at the G20's April
meeting. The first is a "financial stability contribution" (FSC)
to cover the costs of future financial and economic
rescue packages; the second is a Financial
Activity Tax (FAT) based on a bank's profits and what it pays
its employees. The process of international negotiation
on complicated details - for example, precisely how
to define banks' profits and pay - is bound to drag
on before anything actually happens.
Meanwhile on - 19 April Ross Clark had a centre-page
article in The Times - not a radical paper!
- titled "For all the frothing, nothing
has been done about the banks. The
financiers gamble knowing that the taxpayer will always
bail them out".
As he said:
"There
has been plenty of talk about cutting banks
down to size and separating retail banking from investment
banking, but no action whatsoever. Only the
Lib Dems and UKIP hold out any promise of separating
retail from commercial banking in
their manifestos".
In
principle, it is certainly desirable for the
functions of retail banking and investment to be
separated as they were under the former
US Glass-Steagall Act, and for more smaller
banks to serve their customers more efficiently
in a more competitive banking sector in
which no banks have to be featherbedded because
they are "too big to fail".
But neither of those two proposals actually gets
to the root of why the world suffers from recurring
financial crises. The root cause is
that our governments have made us totally dependent
on commercial banks of all sizes for creating
the national money supply (with the minor exception
of banknotes and coins). The banks
have been given the privilege of creating it as debt and
putting it into circulation by lending it to be invested
and spent in ways that are most profitable to themselves.
Withdrawing that privilege from
the banks would automatically bring about those desirable
structural changes in banking. In many other more important
ways it would result in greater economic efficiency,
social justice and ecological sustainability than allowing
the banks to create the money supply as now.
Prof Richard Werner (Director,
Centre for Banking, Finance and Sustainable Development,
Southampton University) is one of the growing number
of academic economists to correct the hitherto dominant
view among their colleagues. (See Item 3(2) below.)
He gave a recent interview to Charles Bazlinton on
14 April - see http://the-free-lunch.blogspot.com/2010/04/uk-economy-richard-werners-diagnosis.html -
in which he said:
"Money creation and allocation are largely
undertaken by the private sector, namely the
commercial banks, through their extension of what
are called 'bank loans'. What led us into the crisis
is the persistent abuse of this public privilege
to create and allocate the money supply by these
private profit-oriented operators for the benefit
of unproductive speculators. The parties will have
to get to grips with this issue, ideally by banning
all bank credit extended for financial transactions
and speculation, or, by taking this public privilege
away from the banks, rendering the creation and allocation
of the money supply a public monopoly again. Unfortunately, none of the
three party leaders or their Treasury appointees
seems sufficiently aware of or interested in this
problem, thus we cannot expect the type
of policies that will deliver stable, sustainable
and equitable growth from them."
3. MONETARY REFORM PLUS WIDER MONEY SYSTEM
REFORM
(1) Steve Sorrell, "Energy,
growth and sustainability: five propositions" (www.sussex.ac.uk/spru/research/sewps and
scroll down to SEWP185 - or
click here for the direct
link).
This ground-breaking paper from
the Science and Technology Policy Research Unit at
Sussex University suggests, in the context of climate
change, that sustainability is incompatible with a
debt-based monetary system. This should be understood
and acted on by anyone in a position of environmental
responsibility.
Steve Sorrell questions the conventional
wisdom underlying climate policy and argues
that long-standing and fundamental questions about
energy, growth and sustainability need to be reopened.
He discusses the following five linked propositions:
1. The rebound effects from energy efficiency improvements
are significant and limit the potential for
decoupling energy consumption from economic growth.
2. The contribution of energy to productivity improvements
and economic growth has been greatly underestimated.
3. The pursuit of improved efficiency needs to be
complemented by an ethic of ‘sufficiency’.
4. Sustainability is incompatible with continued
economic growth in rich countries.
5. A zero-growth economy is incompatible
with a debt-based monetary system.
As he says, these propositions run counter to conventional
wisdom and highlight either blind spots or taboo subjects
that deserve closer scrutiny. While the focus of his
paper is energy use and carbon emissions, the conclusions
are equally relevant to (and informed by) broader resource
and environmental constraints.
His masterly summary of why a zero-growth
economy is incompatible with a debt-based monetary
system should persuade anyone seriously concerned with
environmental sustainability to stop ignoring the case
for monetary reform.
Thanks also to Steve for drawing my attention to
a recent article in "Ecological Economics" by Philip
Lawn of Flinders University, Australia on "Facilitating
the transition to a steady-state economy: Some macroeconomic
fundamentals". It explains how a central
government can use its unique spending and taxation
powers in a disciplined and policy-effective manner,
yet in a manner that is being largely overlooked. For
details, click
here.
(2) I have mentioned Charles
Bazlinton's blog in Item 2 above
- www.the-free-lunch.blogspot.com.
It is a prime source of up-to-date reporting on proposals
for money system reform. Recent
items include many others on Richard Werner and
also the following.
(a) 8 April. Michael Hudson, "Land
Tax will redesign failed economic systems". Hudson
favours: 'a major shift of taxes from
labour to land. There is no just alternative'.
(b) 9 April. Phillippe
Legrain, "Tax land or carbon emissions,
but not hard work", Financial
Times, 9 April. "Land appreciates not
through landowners' striving, but that of others".
(c) 22 April. Charles himself
suggests that a way to meet the "fairness" aspirations
of the three main party manifestos will
be by giving a non-means-tested benefit to every
citizen - a Citizen's Royalty (or
Citizens' Income). He points out that there are sources
of redistributable wealth for this Royalty that
are now going to bankers and landowners
in huge amounts.
See http://the-free-lunch.blogspot.com/2010/04/new-fairness-contrast-in-manifesto.html.
(3) Fred Harrison's new
book "2010: The Inquest", Horizon
Press (Discovered Authors), is covered in two substantial
entries of 13 and 20 April in Charles Bazlinton's
blog above (here and here).
It is a must-read account of how
- in spite of Fred's repeated advice over the years
- governments have failed to tax the value
of land and so have failed to avoid
the inevitable periodic recurrence of property booms
and slumps that he predicted. His work is
now increasingly attracting mainstream attention. He
foresees a future world of "chaos, with uncertainty
piled on confusion" if "the old model based
on capitalism continues to colour the minds of the
people in power".
I agree with Charles Bazlinton's Amazon
review that
this book is "a goldmine of enlightenment". Please
read it. I have only
one additional comment: that Fred tends to underestimate
the importance of monetary reform. It is the
combination of the failure to tax land values
with giving banks the privilege of creating
money for investment in land and property that
leads to spiralling booms in land values followed by
disastrous busts in house prices and disastrous shortages
of money ("credit crunches").
Fred is one of the prominent speakers
at the important international conference now taking
place in London on " Why is so much wealth
in the hands of so few?". Click
here for details. Fred's new blog is
at www.fredharrison.com.
(4) Limited Purpose Banking is
an important proposal from Prof Laurence
J. Kotlikoff of Boston University in his
recent book "Jimmy Stewart is Dead: Ending
the World's Ongoing Financial Plague with Limited Purpose
Banking" - details
here. Closely related to cutting the
banks down to size and separating retail banking from
investment banking (Item
2 above), it represents a
significant step towards monetary reform. Read the
enthusiastic Foreword by Jeffrey Sachs on the Ethical
Markets website here.
(5) Darius Guppy, in "Our
World Balances on a Sea of Debt"(Daily
Telegraph, 21 February 2010) clearly explains the
need for "a root and branch re-evaluation
of that most curious of cultural inventions – money
- how it is created, how it circulates
within an economy and how it can best be used to
serve the interests of the community itself ".
His next-door neighbour in prison in 1994 was there
for counterfeiting Dutch Guilders to such a high standard
that he had fooled the banks themselves. Sentencing
him his judge had said that usurping the role
of the state in that way was a parasitical activity.
Guppy's convincing and lucid
exposition explains very clearly how we
have come to allow the commercial banks and the wider
financial sector to engage in activities that usurp
the public function of money creation, essentially
similar to the counterfeiting activities of his neighbour
in prison. I recommend it without reservation to
people who want to understand what has gone wrong,
and I am grateful to Alistair McConnachie for drawing
my attention to it.
(Readers should not be put off by the fact that Guppy
himself was in prison in 1994 for fraud of a different
kind - for details, click
here.)
He concludes that "the analyses
of the current economic crisis and the sticky-plaster
remedies advanced by politicians, financial
journalists and the financial industry itself in
order to counter that crisis are woefully
inadequate because they fail to
grasp what is in fact a simple and
devastatingly effective swindle, a swindle
largely invisible because it has become so deeply
embedded in our culture". "Some original
and radical thinking, the type of thinking one encounters
nowhere in any of the political parties," is
needed.
(6) Dave Patterson,"What
Happened?!?",January
2010 (www.rudemacedon.ca/what-happened.html).
Although this long, radically outspoken indictment
of "the money supply scam" is
addressed primarily to Canadian readers, it is much
more widely relevant. I warmly recommend its wealth
of insights and useful references to readers everywhere.
Dave asks: "Why is something as fundamental
and centrally important to everything in our society
as where our money comes from
never talked about in school, or in the media,
or during election campaigns?". His
answer: "It is covered with a huge amount of obfuscation
in order to prevent people from understanding the
essential scam of allowing private interests to create
a national money supply, which is in essence not complicated
at all".
4. SOME ITEMS ON ETHICS AND RELIGION
(1) Ekklesia,
a "religion and society think-tank at the cutting
edge of culture, spirituality and politics" is
treating this general election as the "Ethics
Election" -
click
here for more information. For its report that
an independent website showing how people pick a political
party based on policy alone found that most people
go for Greens with Liberal Democrats in second place, click
here.
(2) A new book by Robert
Van de Weyer, "Against
Usury: Resolving
the economic and ecological crisis" - www.spckpublishing.co.uk/shop/against-usury -
is recommended by Peter Challen.
Sounds good but I have not yet been able to read
it myself.
(3) The Ecumenical Council for Corporate
Responsibility - www.eccr.org.uk -
is a church-based coalition working for economic
justice, environmental stewardship, and corporate
and investor responsibility. It has recently joined
nearly 200 other organisations in the Better
Banking Campaign, which is calling for fundamental
reform of the banking system - www.betterbanking.org.uk.
