The
Latest Early Day Motion on Money Creation
Invite your MP to sign
Lord Sudeley FSA, Convenor, Forum for Stable
Currencies
Early Day Motions as a Political Barometer
Early Day Motions (EDM) are considered a barometer in the House
of Commons: they indicate the kinds of issues that concern MPs but
don’t get debated. However, the media may take them up. The
best example for such a success was the campaign around banks wanting
to charge for their ‘hole in the wall’ cash machines.
The defeat was based on an EDM that was picked up by a newspaper.
I have been concerned about the banks’ virtual monopoly on
money creation ever since I researched the history of my family’s
bankruptcy 100 years ago. Through the Christian Council for Monetary
Justice my ally in the Commons became Austin Mitchell MP who
learned from his constituency how people suffer from the general
lack of money and increasing indebtedness on a personal and corporate
level.
Austin Mitchell MP talked to the Monday Club on these issues and,
to address the cause of the problem in Parliament, tabled Early
Day Motion 1515 in 2002. The title was Using the Public Credit.
The lack of money as a medium of exchange is in part caused by the
continuous decrease in the Government’s creation of interest-free
money while the banks’ creation of interest-bearing credit
is rising as a percentage of the total money supply.
A total of 24 MPs signed EDM 1515 even though the wording was rather
convoluted. David Chaytor MP made it clearer in EDM 854 in 2003:
Publicly Created Money and Monetary Reform. 29 MPs signed.
35 MPs signed either or both motions. The parties covered are Labour,
Lib Dem and Plaid Cymru.
The Mystery of Money Creation
Why has nobody from the Conservative Party signed? I suspect it
is simply the lack of education among Parliamentarians and the electorate
alike. The language and the arguments have become too nebulous to
understand how money is created and used between banks, the state
and the electorate. It is not obvious to a client that every loan
of his bank contributes to the total money supply. And it is generally
not known that the Government also borrows money at interest rates
that result in annual payments comparable to the spending on the
military or on education.
Westminster or the City – Who's in Charge?
Shortly after having come to office, the Chancellor Gordon Brown
MP passed the Treasury’s right to set interest rates over to
the Bank of England. We should note that the Government’s budget
equals 40% of the total money supply. 97% of the money supply is
now created by banks as interest bearing credit – whether to
individuals, companies or the Government – without any governmental
control or influence.
Everybody who has ever looked at the growth of interest, knows that
it is exponential – whether as positive gain or negative loss.
And exponential growth can not be long-term sustainable, especially
when total interest payments exceed the repayment of capital costs.
There are only a few studies that cover the long-term relationships
between cash and coin of the state and ‘credit money’
of the banks. The problem with this long-term relationship shows
up not only in funding pension payments but in more and more public
service requirements.
What can Governments do?
Government seems to believe that it can only either tax or borrow.
The third way out, the creation of its own interest-free money,
is ignored. As cover for this situation there exists the Financial
Services Authority whose task is to maintain public confidence.
At the same time, the Treasury Select Committee is examining
how to create confidence in long term investments. Neither would
be necessary if an honest money system was functioning.
The House of Lords’ Select Committee on Economic Affairs
has issued a report on aspects of the economics of an ageing population,
but it does not recommend what some monetary reformers have been
advocating for centuries: the investigation of an appropriate balance
between bank-created money and government-created money?
Are Banks Mis-using your Money?
It is rather deplorable that banks are not really accountable to
anybody except themselves. As long as banks have enough cash to
supply through their holes in walls, they are safe. But since loans
are created through computer entries and not by printing money,
it is very unlikely indeed that they have enough cash if everybody
came to pick up their money in cash.
The even more deplorable aspect is that the exponential growth of
compounding interest on interest means that the gap between the
growth of capital and the growth of debt will widen such that it
will never become bridgeable – whether in developing countries
or at home – without a change of monetary policy.
When students are asked to enter loan agreements, before they become
indebted as mortgage payers and home owners, it becomes apparent
that banks affect the daily lives of people far more than politicians.
EDM 323: Public Credit for Public Purposes
It is thus fortuitous that Austin Mitchell MP has tabled an EDM
that asks for the third time that the Treasury institute an Inquiry
into the possible benefits of raising money for the state as interest-free
‘publicly created money’. Why should five of the top 10
companies of this country be banks whose product doesn’t cost
anything to produce but a computer entry? Shareholders of banks
are happy to receive dividends from banks making money out of lending
almost effortlessly created money, while all other activities in
the country are more and more deprived of ‘real money’
for the ‘real exchange’ of products and services.
The tacit agreement between Westminster and the City, watched over
by the Financial Services Authority, does not benefit the country
as a whole and certainly not the values of the Conservative Party.
It would be a major wake-up call if Conservative MPs began to understand
the process of money creation and signed EDM 323.
http://edm.ais.co.uk/weblink/html/motion.html/ref=323
shows the full text and the signatories to date. Here’s what
the EDM says:
That this House notes with concern
• the contrast between the enormous expansion of private
credit and the growing debt burden that this imposes on society;
• further notes that public credit, as measured by the
proportion of publicly created money in circulation, has fallen
from 20 per cent. of the money supply in 1964 to three per
cent. today;
• believes that using public credit and increasing the
proportion of publicly created money should be used to cut
the costs of, and to boost the quantity of, public investment
and to allow the Chancellor to fulfil his golden rule without
further borrowing;
• further believes that this can be done without any
impact on inflation;
• and, therefore, urges the Treasury to commission an
independent review of the benefits of using the public credit
and increasing the proportion of publicly created money. |
Do you understand the issue well enough to write or talk to your
MP?
With a view to an inquiry by the Treasury, we’d like to aim
at
• as many signatures in this Parliamentary year as possible
• an All Party Group of informed Parliamentarians
• a regular agenda item for the Treasury Select Committee.
For a briefing paper on EDM 323, please contact
Sabine McNeill the Organiser of the Forum for Stable Currencies
at 020 7328 3701 or go to the Forum website at www.monies.cc
where you will also find a list of books on the
money question. |
