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Newsletter No. 25 - August 2009

Links to other Newsletters can be found here.


1. A Change in Website Format

2. A Petition: a Practical Step to Monetary Reform

3. Commercial Bankers Rule, OK?

4. Our Leaders are Missing the Point Too

5. Why is Monetary Reform a Censored Subject?

6. Some URL's to Visit



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 emails.



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

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

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! See



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 going.

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 - and the Eurozone - see

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 activity.

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 - - misses it completely.



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.

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 riskier functions.”

Meanwhile, the Conservatives would change the furniture differently:

by transferring responsibility to the 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?



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 profit-making "credit"?

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.



(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

(2) Bromsgrove UK, 2009 Annual Monetary Reform Conference, 2-4 October. Details from

(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 -

(4) "Beyond Markets". For contents of Development, Vol 52. No 3, September 2009 from Society for International Development, see

(5) US Tax Revenue Crisis. Tax revenues will suffer their biggest drop since the Depression -

(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?" -

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". See Details about him are at


James Robertson

14th August 2009