Newsletter No. 25 - August 2009
Links to other Newsletters can be found here.
1. A Change in Website Format
A Petition: a Practical Step to Monetary
3. Commercial Bankers Rule, OK?
4. Our Leaders are Missing the
5. Why is Monetary Reform a Censored
6. Some URL's to Visit
1. A CHANGE IN WEBSITE FORMAT
The Search Facility is now at the
top of the website's Navigation Bar, followed immediately
by the Subject Guide.
As the numbers of people asking me questions on particular
subjects continue to grow, I hope those two aids will
help at least some enquirers to find answers
more quickly than waiting for my replies to
2 . A PETITION:
A PRACTICAL STEP TO MONETARY REFORM
Charles Bazlinton’s petition to No 10 Downing
Street asks for the Bank
of England to use its power of “quantitative easing” to
create the money for internet broadband investment in
the UK. See http://petitions.number10.gov.uk/Broadbandfunding.
British readers should please support it and
ask your British friends to support it too. Apart
from its own merit, it could be a step
towards wider public recognition of the need for a
public agency to take over from the commercial banks
the function of creating new bank-account money - as
public agencies now issue banknotes and coins. Also
see Charles' entries for July 21st and 30th at www.the-free-lunch.blogspot.com.
This new petition proposes a sensible way of financing
an important particular project. It should raise more
support by January than the 500 signatures attracted
in less than 2 months by our
more general petition earlier
this year. (That was sidestepped with an irrelevant answer!
3. COMMERCIAL BANKERS RULE, OK?
More and more people in democratic countries must be realising that the present
arrangements for providing our national money supplies put us and
our governments at the mercy of the banks.
Top UK bankers became outstandingly rich by
creating too much money to lend in the recent boom. When
the consequent bust arrived, they had to be given
billions of taxpayers’ money to persuade
them to put enough into circulation to keep the economy
Now the banks are making it difficult and expensive for
people and businesses to borrow that
money. They are diverting it to their own needs and purposes:
to rebuild their balance sheets; to
continue to pay huge bonuses to their
best qualified staff; and, in the case of banks that
had to be “nationalised”, to restore
the value of their shares to enable them to
be sold back to the private sector at an acceptable price.
This is happening not just in
the UK, but also in the USA -
see www.globalresearch.ca/index.php?context=va&aid=14357 -
and the Eurozone - see http://au.biz.yahoo.com/090713/33/27edf.html.
The blindingly obvious conclusion is
that it is an
absurd mistake for governments to continue to entrust
the function of creating the public money supply to commercial banks.
Quite apart from the other serious economic, social
and environmental reasons for NOT creating
virtually all the national supply of money as debt, to
give the bankers this privilege inevitably incites
them to create frequent
credit booms for their own profit, then to
be bailed out in the busts at
great expense to everyone else, and then to fail
to provide the money needed to revive economic
The sensible way to avoid this damaging pattern of
events is to transform the present emergency
measure of "quantitative easing" into normal
procedure. This will involve transferring to
central monetary authorities (central banks) the function
of actually creating the public money supply. They should
create it in the public interest debt-free, and then
give it to their governments to spend into circulation under
normal democratic budgetary procedures and safeguards.
That is the point of the reform now urgently needed.
The Sunday Times’ forlorn protest on 9th August, "It's
now time for the banks to do their duty - www.timesonline.co.uk/tol/comment/leading_article/article6788649.ece -
misses it completely.
4. OUR LEADERS ARE MISSING THE POINT TOO
The UK government recently published
its White Paper on Reforming
Financial Markets. Its proposals centre
on closer co-ordination between the Bank of England,
the Financial Services Authority (FSA) and the Treasury.
Select Committee, " Banking
Crisis: Regulation and Supervision, report and press
notice", found the government's proposals"largely
cosmetic". John McFall MP,
the Committee's Chairman, said:
“Major banks have managed to establish
themselves in a powerful position in the economy.
By becoming too large and complex, they can
hold the taxpayer to ransom, because no
government could allow them to fail. ... This has
to stop. Tweaking the capital requirements to prevent
this happening may work, but we should not
rule out more drastic action, such as forcibly
shrinking the banks or separating out the
Meanwhile, the Conservatives would
change the furniture differently:
by transferring responsibility
Bank of England for financial stability,
with power to regulate banking pay structures and
decide how much capital each individual bank should
hold; and by replacing
the FSA with
a Consumer Protection Agency.
Vince Cable is the only leading UK
politician generally thought to understand these financial
questions. But even under his guidance the Liberal
Democrats appear to have no clear programme
of reform to bring these recurring banking booms
and busts to an end.
Other countries' leaders are also stumbling in the
fog. Why have they all missed the point so far?
5. WHY IS MONETARY REFORM A CENSORED SUBJECT?
Machiavelli pointed out that "He who introduces
a new order of things has all those who profit
from the old order as enemies, and he has only
lukewarm allies in all those who might profit from the
new" (The Prince, 1532). Very
true. But we need to pursue the question further.
Why do virtually no politicians, officials,
economists, academics, media commentators, and bankers
and other finance professionals acknowledge
publicly how our money supply is now created?
And why do they avoid discussing the possibility of
a better way than allowing the banks to create it as
And what about the multitude of charities and
pressure groups and NGOs around the world,
focused on poverty, overseas aid, the environment and
each of the many other spheres in which people suffer
from our dependence on banks to create the world's
money supplies? Are they so concentrated on raising
money for their own activities that they don't
recognise the present way of creating
money as a cause of the ills they oppose?
or are they just scared of offending the banks?
These are not academic questions.
To some people they will be hostile. To others they may
be helpful. Corrupting and corrupted self-interested
opponents of monetary reform will contest them
or try to ignore them. But, to the larger number
of people passively unmoved by the need for
reform, a less hostile approach will be more effective.
We are all motivated to some extent by how
we perceive the balance of risk and reward between
the different courses of action open to us. That applies
to all the professionals directly concerned with money,
and to the press and broadcasting media,
as it does to everyone else. To some extent, the careers,
reputations, earnings, pensions and investments of
thousands of influential people in our legislatures
and press and broadcasting industries as well
as banking are directly affected by
the fortunes of the banking industry.
To create the necessary momentum in favour of monetary
reform we have to find ways both of
combating the actively negative influence of
corruption, competing commitments, over-cautious inaction
and passive lack of concern, and of
strengthening positive interest and
committed support for reform.
Those two approaches together are
needed to convince public and electoral opinion strongly
enough of the need for monetary reform to compel
increasing numbers of the professionals in charge
of managing the money system to change their thinking
in that direction too.
6. SOME URLs TO VISIT
(1) AMERICAN MONETARY INSTITUTE: 2009 Conference,
Sept 24-27, Chicago. AMI promises an exceptionally
important conference at "a perhaps pivotal moment
in our country's history".
Details from www.monetary.org/2009conference.html.
(2) Bromsgrove UK, 2009 Annual Monetary Reform
Conference, 2-4 October. Details from www.prosperityuk.com/prosperity/contact/contact.html.
(3) "Happy Planet Index". The
New Economics Foundation's recently up-dated issue lists
the UK 74th and USA 114th out
of 143 nations surveyed. Costa Rica
comes top. A "Happy Planet Charter" calls for
an unprecedented collective global effort to encourage
good lives that don't cost the earth - www.neweconomics.org/gen/happyplanetindex040709.aspx.
(4) "Beyond Markets". For
contents of Development, Vol 52. No 3, September
2009 from Society for International Development, see www.sidint.org/Development.aspx?IdArea=21&Type=A.
(5) US Tax Revenue Crisis. Tax revenues
will suffer their biggest drop since the Depression - www.huffingtonpost.com/2009/08/03/tax-revenues-post-biggest_n_250108.html.
(6) Toxic “Neoclassical” or “Mainstream” Economic
Textbooks dispensing mass miseducation have
been a principal cause of the present economic meltdown
(7) The "Jobs" Mistake. "We
are trying to find work for [unemployed people] so they
can earn an income to gain access to the things that
would be produced whether they were working or not. Wouldn’t
it be simpler to just give it to them directly rather
than go through this complicated process that results
in so many negative side effects?" - http://unemploymentisgood.wordpress.com.
Yes, of course. Ownwork combined with a Citizen's
Income is the obvious answer. Not yet obvious
to our "leaders" though!
(8) I warmly commend an
article by Ted Trainer on Transition
Towns. He finds it an immensely encouraging
movement but stresses the need for a "much more
radical vision than seems to be informing it at present".
Details about him are at http://ssis.arts.unsw.edu.au/tsw.
14th August 2009