Newsletter No. 30 - May 2010
Links to other Newsletters can be found here.
COULD A HISTORIC POLITICAL BREAKTHROUGH
help to achieve
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
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".
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
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.
19th May 2010