Newsletter No. 30 - May 2010

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COULD A HISTORIC POLITICAL BREAKTHROUGH FOR BRITAIN
help to achieve
A HISTORIC FINANCIAL BREAKTHROUGH FOR THE WORLD?

This newsletter contains only this item. Its title may sound ambitious, and it is. In practical terms, it refers to two very recent events of potentially historical significance. The first has been headline news in Britain for the past two weeks. The second concerns a topic that corporate media worldwide still feel compelled to ignore altogether.

The first is that, following post-election negotiations at this time of financial crisis, we now have a new UK government based on a Conservative/ Liberal Democrat coalition. It is part of a more pluralistic structure which is emerging in UK politics and government.

The second is the publication on the internet of the draft of a Proposed Bank of England Act 2010, specifying that " the Bank of England will be the only institution permitted by law to ‘create money’ or increase the money supply in any way". Although personally I played virtually no part in drafting this, it reflects the scheme that Joseph Huber and I put forward ten years ago in Creating New Money, and I support it wholeheartedly.

It embodies a banking and monetary reform that will both help to ease the burden of paying off our massive public debt and help to prevent future banking failures causing repeated credit booms and busts and damaging financial crises. In other words, it could directly help the new UK government to deal with two of our most urgent financial and economic problems, as well as bringing many other economic, social and ecological benefits.

The combined effect of the more pluralistic structures of government and politics now developing in the UK, the threatening economic and social hardships we now face, and growing public awareness that successive governments keep us dependent on commercial banks to provide our public money supply at big profit and little risk to themselves, could be profound.

You will find more about this in a short two-page note on "A Good Question, As We Face The Hardship Years Ahead". (Download as Word document.)

But what should we do?

One of the best things we can do is to ask our MPs to ask the government a question on the following lines. It doesn't matter whether the MP is Conservative, Liberal Democrat, Labour, Green Party, Scottish National Party, Plaid Cymru (Party of Wales) or Independent. In the present more pluralistic political environment any of these could see advantage in picking up the ball of monetary reform and running with it, or at least in not being left behind when others pick it up.

Why, in our modern democracy, do we continue to allow commercial banks to enjoy the privilege of creating the national currency and money supply as profit-making loans, instead of getting the Bank of England to create it in the national interest?

In addition to what you yourself want to say in the message to your MP, please use any material you like from my two-page note on "A Good Question" (download as Word document) without attributing it to me.

You could show that you know what you're talking about by specifically suggesting to your MP to ask the government to commission advice from the Treasury, the Department of Business and the Bank of England on whether the function of actually creating new money should be transferred to the Bank of England. The alternative of leaving the Bank to use interest rates to influence indirectly the amounts of money the commercial banks create as profitable loans to their customers has proved to be quite ineffective.

But, of course, the underlying need is to get more and more people to ask the question. We can do that by discussing it person-to-person, raising it with non-governmental organisations (NGOs) that we support, or using any local or national media (papers and journals, television and radio programmes) and the internet, to communicate it more widely.

Reforming the money system at the national level to serve the public interest, will also help to clear the path for comparable reforms of the international money system and provide greater freedom for the spread of local democratic innovations like community currencies and community banks that meet the needs of their own localities.

It is an excitingly ambitious challenge, and the present time provides a good opportunity to respond to it.

James Robertson

19th May 2010