How We All Benefit From The Reform
The Massive Gains To Be Made
The high-street banks created £1,140 billion of money in just 8 years by adding £1,141 billion to our debt burden. This fueled the boom that ran up to 2007, but also laid the foundation for the financial crisis.
If the government, instead of banks, had created that £1,141 billion, it could have been used to pay for schools, hospitals and world-class public services before it actually ended up in the hands of the public. The public could have then used that £1,141 billion to buy everything that they did anyway, but without increasing our debt burden by £1,141 billion.
Under the current system, the method of creating money (through high-street banks):
- increases the debt burden - because as we borrow more we create more money that the banks can use to make even more loans;
- increases the risk of financial crisis - by forcing banks to keep lending more and more, until they are lending to the very riskiest borrowers, and
- creates a situation where everything gets more expensive (as money supply grows by 10% per year and creates inflation of a similar amount) and the standard of living falls and falls (because prices rise while the proportion of our income swallowed by mortgage repayments or rent goes up and up).
In contrast, when we create money through the Bank of England and government, we:
- reduce the debt burden of the nation - by allowing the government to clear the national debt, reduce taxes, and/or fund better government services (and putting more money into the hands of the public through the salaries of public sector workers and government contractors).
- reduce the risk of financial crisis – by increasing the money supply by a lower annual rate, thereby preventing inflation or asset bubbles in the housing market and other speculative bubbles;
- increase economic stability – by ending the money-creation that fuels risky and excessive lending, we’ll end the pattern of ‘very good years’ followed by ‘very bad years’.
- raise the standards of living year on year – by adding to the nation’s infrastructure and reducing the proportion of our money supply that is debt. As our debt burden falls from 130%+ of our GDP to somewhere around 50% of GDP, our repayments will fall and our disposable income will rise.
Go to Positive Money for more comprehensive proposals, videos, draft legislation, and to get involved in the campaign or attend a local meetup.
