UK General Election: parties' position on money reform

Please consider asking your Parliamentary election candidates what their party's position is on monetary reform.

---------------------------------------------------------

To The Treasury Committee Members*:

April 6, 2010

The Daily Telegraph and its publication last year of FoIA disclosures regarding expenses claims have vilified Members of Parliament and brought the national government into disrepute.

The general population know there is more than meets the eye in this relentless pursuit of MPs by the media. Nevertheless, all shades of the political spectrum are regarded with suspicion by the electorate.

MPs of all parties now have an historic opportunity to bestow an unparalleled benefit upon the people of this country by implementing wholesale reform of the debt-based fractional reserve money system of the UK.

Proposals:

(i) Abolish the private banks' power of issuing the nation's currency by means of interest-bearing credits and vest the power of currency issuance exclusively in the Government. Thereby also abolish Ponzi-scheme style fractional reserve lending, whose inherent instability threatens the integrity of the financial system.

(ii) Issue the currency without interest/bank rate.

(iii) Re-nationalise The Bank of England, currently an agent of the 'Treasury', thereby bringing it back into public ownership and Government control. The Bank of England was *not* "freed" from political "interference" in 1998 and was not truly nationalised, in economic terms, in 1946.

(iv) Dissolve "Bank of England Nominees Limited" allegedly owned by The Bank of England, assigning its holdings/assets to the Nationalised Bank of England.

(v) Withdraw the privilege under law afforded to The Bank of England by the DBI&S/DTI of not having to disclose accounts or corporate details.

From :

"In their book 'Creating New Money' (2003) Joseph Huber and James Robertson assert that [removing money creation from the private banks and investing it in the public purse] would be the equivalent of saving 12p in the 1 on income tax for the average tax-payer. Alternatively it would enable a government to increase spending by the equivalent of 6p in the 1 on income tax whilst at the same time decreasing taxes by 6p in the 1. This would involve a straightforward 'swap' of the existing arrangement of money being privately created for new publicly-created money and so would have no impact upon inflation. During a recent election, the Liberal Democrats made a big thing about proposing an extra 1p in the 1 on income tax to pay for education, allowing for an extra 5 billion to be spent on our schools. With money reform, we could have an extra 1p in the 1 for education, an extra 1p in the 1 for the NHS, an extra 1p in the 1 for increased pensions, an extra 1p in the 1 for transport, an extra 1p in the 1 for the armed forces, an extra 1p in the 1 for the police and fire services and still have had a 6p in the 1 cut in our tax bill."

"With any debt bearing a charge of interest, the total debt due will always exceed the amount borrowed. With 97% of the money supply created as a debt at, say, 5% APR interest, the amount of debt-free money needed to pay the interest will be 4.85%, but there is only 3% of debt-free money available, so the other 1.85% has to be borrowed to pay the interest. (Yes, UK plc is borrowing to pay interest!) Debt-based money causes inflation of a small but insidious nature, because more money has to be continually created to meet the interest on previous borrowing. The present government's 'target' of 2.0% inflation represents the extra amount of money needed by the economy as a whole to pay the interest on previous borrowing, over and above the amount of money needed to run the economy. So with debt-based money, a zero inflation rate is impossible."

_Expansion Of The M0 Aggregate From 2% To 100%_

"At a Gala dinner in Leeds, On October the 21st 2008, Mervyn King, the acting Governor of the Bank of England, announced to a sombre audience that the bank finds itself in the same position it faced at the onset of the Great War in the summer of 1914, however, he made no mention of how the then Secretary to the Treasury - John Bradbury -- solved that identical problem back then by intervening with an issue of 500 million Treasury Notes which were given to the banks free of charge to stop them collapsing after they ran out of enough gold coins to redeem the millions of baseless "Promises to Pay" that they had issued to an unsuspecting public. He could have recommended similar measures on this occasion but chose, instead, to remain silent. Three days later, Mr. Bean, the appropriately named Deputy Governor of the Bank of England, announced that the crisis was the worst in the entire history of mankind...

THIS HISTORY (THE OTHER ROAD TO SERFDOM) PROVES THAT - LIKE ALL THE OTHER RECESSIONS SINCE 1694 -- THIS ONE COULD BE ENDED IN 24 HOURS AND THE OTHER ROAD TO SERFDOM AVERTED USING THE "QUANTITATIVE" EXPANSION OF THE M0 AGGREGATE FROM 2% TO 100% - "THEY ARE LYING WHEN THEY SAY THEY NEED TO CUT PUBLIC SERVICES & RAISE TAXES"."

_The Guernsey experience._

Guernsey is an island state located among the British Channel Islands about

75 miles south of Great Britain. In 1816 its sea walls were crumbling, its roads were muddy and only 4 1/2 feet wide. Guernsey's debt was 19,000 pounds. The island's annual income was 3,000 pounds of which 2,400 had to be used to pay interest on its debt. Not surprisingly, people were leaving Guernsey and there was little employment.

Then the government created and loaned new, interest-free state notes worth

6,000 pounds. Some 4,000 pounds were used to start the repairs of the sea walls. In 1820, another 4,500 pounds was issued, again interest-free. In 1821, another 10,000; 1824, 5,000; 1826, 20,000. By 1837, 50,000 pounds had been issued "I returned from Guernsey last weekend. It is a fascinating little island. There are about 60,000 permanent residents on the island. The average family owns 3.3 cars, their unemployment rate is zero and their standard of living is very high. There is no public debt. There is a surplus of public funds which earn interest. The Guernsey Treasury increased the Ml of the island by 40 percent in the last three-year period, and this increase did not do anything to inflation. The price for a gallon of gasoline in England translates to about $5US whereas, the price in Guernsey is about $2US. Contrary to the teachings of current economics in all higher institutions, inflation is not related to the volume of money but rather to the size of the commercial debt."

  • Committee Members

(1) Nick Ainger MP (2) Mr Graham Brady MP (3) Mr Colin Breed MP (4) Jim Cousins MP (5) Mr Michael Fallon MP (Sub-committee Chairman) (6) Ms Sally Keeble MP (7) Mr Andrew Love MP (8) Rt Hon John McFall MP (Chairman) (9) Mr George Mudie MP (10) John Mann MP (11) John Thurso MP (12) Mr Mark Todd MP (13) Mr Andrew Tyrie MP (14) Sir Peter Viggers MP

Copies:

(15) Mark Field Esq MP, Westminster & City of London, Conservative Party House of Commons Palace of Westminster SW1A 1AA

(16) Vince Cable Esq., MP, Liberal Democratic Party House of Commons Palace of Westminster SW1A 1AA

(17) British National Party National Central Office Admail 4148 London EC12A 1UY

(18) United Kingdom Independence Party / UKIP London Regional Office London SE1 3XS

(19) The TaxPayers' Alliance London Office

43 Old Queen Street LONDON SW1H 9JA

cc: Internet: alt.politics.british,uk.finance,uk.media,uk.politics.misc

Reply to
Frederick Soddey
Loading thread data ...

Erm, it already is.

Oh dear. Someone else who doesn't understand the fractional reserve system.

FUs restored.

Reply to
Andy Pandy

Murray N. Rothbard in 1983 book "The Mystery of Banking" wrote: "...modern fractional reserve banking is a shell game, a Ponzi scheme, a fraud..."

Here is a simplified example of how the system operates, copied at random from a website.

"I have 100 and I put it in my bank. The bank keeps 10% (10) and loans you the remaining 90. You use that 90 to pay for a plumber to come round an fix a tap. Putting aside the plumber's costs for the sake of simplicity, he puts that 90 into his bank. That bank keeps 10% of it and loans out the remaining 81 to someone else. They use it to pay for a meal at a restaurant. Again, putting aside costs, the restaurant puts that 81 into their bank. That bank retains 10% and loans out the remaining 72.90 etc etc ..... I still have an asset of 100, the plumber has an asset of 90, the restaurant has an asset of 72.90 and the banks have an asset of 27.10. Thus 290 has been generated from 100 - no money has entered or left the system and yet the amount of money in circulation has grown because the banks have taken on debt of 243.90 while only keeping on 27.10 in reserves. Normally this is fine - unless there is a run."

The only criticism of the analysis of which I am aware is that, put shortly, the process of fractional reserve lending never results, in practice, in the destabilising multiplicity of further deposts and loans that the theory mandates as possible. That criticism is hard to sustain in the present times when gross over leveraging of the banks' reserves has contributed to such a momentous risk to the stability of the banking system.

A misapprehension in a subject as weighty as this would long before now have been identified and been widely publicised, together with all the reasoning. If this issue were founded on an illusion then writings such as Rothbard's or those listed below or speeches in the House of Lords as now follows would not exist. A selection taken at random is as follows:

Arthur Swan - The Other Road To Serfdom (1993) David Astle - The Babylonian Woe (1974) David Starr Jordan - Unseen Empire - A Study Of The Plight Of Nations That Do Not Pay Their Debts (1912) Ellen H. Brown - The Web Of Debt (2008) Eustace Mullins - The Secrets Of The Federal Reserve (1948) Frederick Soddy - Money Reform as a Preliminary to all Reform (1950) Frederick Soddy - The Role Of Money (1934) June Grem - The Money Manipulators (1971) Mullineux and Murinde - Handbook Of International Banking (2003) W. Cobbett - Paper Against Gold (1810)

If you wish, go to and download leaflet mrp17cai.pdf. Its content for ease of reference is as follows:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ OUR DEBT-BASED MONEY SYSTEM WILL BREAK US:

The Earl of Caithness speaks

This speech was delivered by the Earl of Caithness in the House of Lords, Wednesday, 5 March, 1997. It is reprinted in full from Hansard, Vol. 578, No. 68, columns 1869-1871.

The Earl of Caithness: "My Lords, I too wish to thank my noble friend Lord Prior for initiating this debate. It comes at a most interesting time in the runup to the general election and, as a result, we could not have envisaged the parties opposite saying anything thought-provoking or interesting about the economy. We were not disappointed.

Looking at it from a conventional viewpoint, the economy is in good shape and the Government have done better than most of their counterparts in Europe. We have moved out of recession and on the surface the economy is stronger and people are more confident. There is much that I could say about that. I think the Government have done a very good job.

However, it is also a good time to stand back, to reassess whether our economy is soundly based. I would contest that it is not, not for the reason to which the noble Lord, Lord Eatwell, alluded, which is that it is the Government's fault, but our whole monetary system is utterly dishonest, as it is debt-based. "Dishonest" is a strong word, but a system which by its very actions causes the value of money to decrease is dishonest and has within it its own seeds of destruction. We did not vote for it. It grew upon us gradually but markedly since 1971 when the commodity-based system was abandoned.

Let us look at what has happened since then. The money supply in 1971 was just under 31 billion. At the end of the third quarter of last year, it was about 665 billion. In 25 years it has grown by a staggering 2,145 per cent. Where has the money come from? Interestingly, the Government have only minted a further 20 billion in that time. It is the banks, the building societies and our commercial lenders who have created the balance of 614 billion. If this rate of growth is projected over the next 25 years, the money supply in 2022 will be over 14,000 billion.

All that new money bears interest paid either by us as individuals, by companies or by the Government. Today the Government pay over 30 billion annually in interest charges -- coincidentally about the same as the total money supply only 25 years ago. Governments since then have abdicated their responsibility for producing new money and controlling the money supply so that now they are marginalised. In 1971 government notes and coins accounted for 14 per cent of the money supply. Now it is only about 3.5 per cent. "So what?", noble Lords might ask.

The problem is that it is commercial lending that has boosted the money supply, thus increasing debt and, as sure as night follows day, inflation follows growth in money supply of this sort. The only reason that debasement has not flowed into price figures in the last four years is that the high interest rates in the recession gutted businesses and individuals, leaving too many unable to pay the price levels that the debasement requires. But the wall of money is increasing remorselessly. The noble Lord, Lord Ezra, mentioned the Halifax Building Society's latest surplus of about 3 billion to 5 billion.

Since 1991, in a time of recession, it has increased by 32 per cent and most of that is in the last two years. We must remember that virtually all the increase represents a rise in the burden of debt the economy must carry. The wall of money has already driven the stock market to an all-time high and some are now questioning whether it truly reflects company performances. Recently more money has begun to be channelled into both the residential and commercial property markets. Here I must declare my interest as a residential surveyor in central London who has benefited from that. Our company, Victoria Soames, recorded a hardening of the residential market early last year, followed by a 20 per cent rise in the last six months. That rise is continuing, if not accelerating. Lenders remain aggressive and, very disturbingly, the proportion of borrowing by individuals is moving up.

When the money supply increases, as it is doing, the previously existing money is debased accordingly. Therefore, either wages and salaries must also increase to maintain parity or those who earn wages and salaries will find that they no longer participate in the national economy to the same extent as they did previously. This exacerbates the growing fragmentation of our society, which cannot go on for ever. I am not advocating high wages but I am advocating less debasement and better control of the money supply.

When wage inflation does happen, it will feed through to all parts of the economy. The result, sadly, will be that the Government have to use the only tool they know -- an increase in interest rates. That has happened fairly recently, but it is not the first time that is has happened. We saw it in the

1970s and again in the 1980s. It is a consequence of our debt-based monetary system that it leads inevitably to business and economic cycles.

Conventional wisdom tells us that in order to create new jobs and boost the economy, interest rates have to be reduced. That has happened. People are encouraged to borrow to invest and spend. That has happened. As the continuing flow of new money finds its way into the economy, inflation will follow and up will go interest charges again to reduce the level of borrowing. In order to pay the increasing levels of interest, borrowers will once more have to reduce expenditure in other areas of economic activity. The cycle will continue, but the next time, as before, we will all start deeper in debt and with a burden harder to carry. Personal debt has already increased by nearly 3,000 per cent since 1971. How much more can we take? I hope, for the sake of our economy, without which we cannot finance what we want to see - a good health service and a good social security system among other things - we will question this conventional wisdom.

We all want our businesses to succeed, but under the existing system the irony is that the better our banks, building societies and lending institutions do, the more debt is created. The noble Lord, Lord Kingsdown, said that there is little that can be done about debt. No, I do not believe that. There is a different way: it is an equity-based system and one in which those businesses can play a responsible role. The next government must grasp the nettle, accept their responsibility for controlling the money supply and change from our debt-based monetary system. My Lords, will they? If they do not, our monetary system will break us and the sorry legacy we are already leaving our children will be a disaster."

Further Political (In)activity

The Earl of Caithness was not the first, nor has he been the last, Parliamentarian to raise the matter of the nation's money supply within the hallowed chambers of the Palace of Westminster. Yet it is currently 'off the agenda' for all the major parties.

The issue of money has been raised by other Lords and Members of Parliament from both the 'left' and 'right' of the British political spectrum. It is not a matter of right and left, but of right and wrong. It is right that money should be created solely as a public resource. It is wrong that money can be created out of thin air for private profit - why else do we have laws against counterfeiting? Money reform may not therefore been seen as a left/right ideological issue, but given that only Parliament has the authority to change the present origin and nature of the money supply, the issue of money is quite clearly a political issue.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Follow-ups to alt.politics.british restored, aioe.org constraints.

IMPORTANT POSTSCRIPT:

Professor Frederick Soddy FRS (d. 1956) in his book "Wealth, Virtual Wealth and Debt" (1926) said at p.291:

"Of the existence of a real conspiracy -- a conspiracy of silence -- on all monetary problems, in the Press and on political platforms, among editors, publishers and economists, who more than any others ought to be alive and awake to their infinite importance -- there can be no question whatever. It exists, and anyone who has tried to call the attention to the evils of the present system will affirm it. Mr H.G. Wells is reported to have said: "To write of currency is generally recognised as an objectionable, indeed almost indecent, practice. Editors will implore the writer almost tearfully not to write about money, not because it is an uninteresting subject, but because it has always been a profoundly disturbing one."

Reply to
Frederick Soddey

Yes, and I have a debt of 90 and "someone else" has a debt of 81 and someone else 72.90.

No it hasn't. Only innumerates who don't understand negative numbers think that. You need to subtract the negative balances (ie loans) from the positive balances (ie deposits) and then you'll find no new money is magically created.

It's no more creating money than if I lend you a tenner and you lend it to your mate. I have a 10 "deposit" with you, you have a 10 "deposit" with your mate, and your mate has the tenner. Magic, 30 from 10! Erm, no because there two 10 debts to subtract.

The amount of positive balances has grown but is exactly offset by the negative balances.

So what? The loans the bank makes are assets to the bank, which together with the reserves will cover their liabilities. Or should do unless too many of the loans go bad.

Of course a run will present a problem, because the bank can't suddenly call in all its loans if the depositors all want their money back at the same time. And a run will usually be caused by problems at the bank - for instance bad debts which might wipe out too much of the bank's assets.

If people don't want banks to lend their money out, then they are perfectly free to rent a deposit box at their bank and put all their money in that. They obviously won't get any interest, because the bank aren't making interest by lending the money out, and the bank will charge for the service of safe storage.

FUs restored

Reply to
Andy Pandy

Erm, no - the restaurant has 81 in the bank, not 72.90. It's the "etc etc" which has 72.90.

"Frederick Soddey" wrote

Well, actually the first bank has 100 assets (10 in the vault and is owed 90) and 100 debts (which it owes).

The second bank has 90 assets (9 in the vault and is owed 81) and 90 debts (which it owes).

The third bank has 81 assets (8.10 in the vault and is owed 72.90) and 81 debts (which it owes).

Thus each bank has assets = debts, or *zero* overall.

"Frederick Soddey" wrote

You'll need to try again...

The banks hold 27.10 cash (between them), and "etc etc" has 72.90 cash.

Some people have 271 (in total) in bank accounts, and some other people owe banks 171 (in total).

So how much has been generated from the 100?

Reply to
Tim

A somewhat more accurate scenario is that you deposit £100 and the bank lends out £1000 on that basis. If the borrower defaults, your deposit of £100 (which you may get back if the bank is still solvent) has allowed the bank to lose £1000.

Of course, the defaulting borrower has had £1000 of free money, and has presumably spent it in ways that make it unrecoverable. But when the banks make humungous losses, we never hear about who won the money.

Money can be either created or destroyed only by the issuing bank (whose promise it is), usually a sovereign state, so all of the 'losses' which occurred were in fact matched by gains elsewhere. In the case of my bank, it didn't create the £1000, as you say, the money lent was matched by a debt on the bank's books. It got to keep the debt.

Reply to
Joe

WTF are you on about? If you deposit 100 then the bank can lend 90 of it (or whatever the fraction is). They can't lend any more without additional deposits. The additional deposits can be the same money redeposited, which confuses the innumerate into thinking free money is created, but all that's happening is more positive and negative balances all of which add up to the reserve (which it what they've actually got in cash).

Reply to
Andy Pandy

"Joe" wrote

But the bank charges higher interest on the loans than it pays on the deposits. The difference can be set to cover any losses on defaults, plus leave a bit left over for profit.

"Joe" wrote

Well, there will have been a group of people with 1100 (in total) deposits, and another group of people with 1000 (in total) debts.

But even if *all* of the debtors defaulted on their loans, then the worst that could happen is that the 100 in the banks' vaults could be shared out amongst the depositers so that they each get 9.09% of their deposits back...

But never mind, with the total money supply reduced back down to

100 (instead of 1100), each would be "worth" more anyway...
Reply to
Tim

The bank can't lend out £1000 on the basis of a £100 deposit. It can borrow and lend out £1000 on the basis of £100 of share capital. You are confusing two different types of reserve here.

Reply to
Jonathan Bryce

Andy Pandy wrote: [snip]

Depends on what you count as "cash". It doesn't have to be notes and coin, does it ?

Reply to
Fergus O'Rourke

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.