Key to Challenging the Power of the Banks

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Key to challenging power of banks is regaining control of money supply, writes Michael Meacher MP:

The discovery by the Bureau of Investigative Journalism that the financial services industry spent £92m last year lobbying politicians and regulators shows how deeply entrenched the banks have become in the UK power structure contrary to the public interest.   The documents show that the lobbying firepower was used to slash UK Corporation Tax (Osborne caving in to them again) as well as to de-rail government plans to set up a new corporate regulator to police quoted companies.   But there’s a lot more too that they’ve secured which works against the national interest – the cut in 50p income tax, the soft touch on all the City mis-selling scandals, the watering down of the already weak Vickers recommendations, the rejection of a financial transactions tax, the wilful blindness over massive City-driven tax avoidance, the continuing failure to regulate complex derivatives that were at the heart of the 2008-9 crash, and many more.   So how should they be stopped?

The key to City power is their control over the money supply which they use ruthlessly to promote their own interests to the disadvantage of the nation at large.   Thatcher’s Big Bang in 1986 abolished all controls over consumer credit as well as de-regulated housing finance.   The banks were then able to use the expansion of the money supply, 97% of which they are responsible for, mainly for the purpose of feeding a property boom as well as huge foreign speculation, whilst only allocating 8% of credit for the purposes of productive investment (manufacturing, construction, communications, distribution, retail and wholesale).   That mere 8% allocated to business is a prime reason why Britain’s manufacturing capacity has deteriorated to the point where in 2010 the UK balance of payments deficit on traded goods reached £100bn, 6.8% of GDP, which is utterly unsustainable.

Regaining public control over the money supply, as all successful economies since the Second World War have exercised, is absolutely vital to ensure that the nation’s resources are primarily channelled into industry and exports rather than property and financial speculation.   That is a pre-condition for any sustainable UK economic recovery.   It is also a necessary, and perhaps even a sufficient, condition for reining in the power of the City.

Under this ‘window guidance’, which prevailed till the 1970s when the Tories replaced quantitative ceilings by the price mechanism and variable interest rates, unproductive credit creation like today’s lending to hedge funds was firmly suppressed.   Equally consumer loans on any significant scale, which would trigger inflationary demand for consumer goods and draw in increased imports, were discourages and hard to get.   Priority was given to productive investment (plant and equipment, key services, enhanced productivity via new technologies and R&D).

If we want to escape our economy being hollowed out by manufacturing deficits of £100bn a year as well to constrain the anti-business and anti-UK power of the City, that is the route we must now take.

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  • Mark Golding

    But new technologies and R&D produced by innovative private enterprises has been sucked into the military industrial complex since the 2nd world war creating an increasingly monopsonistic system centralised by a State monopoly increasingly evolving into a military state. Industrial activity orbiting the arms industry has shifted away from competing on quality and value for money towards a smug in-house activity of wealing and dealing over public funds for contracts that are deliberately under budgeted to secure tenure, creating a destructive war economy that self fulfils the creation of enemies abroad and that, worst of all, serves a very narrow circle of economic actors all raking in exorbitant incomes who identify themselves collectively as maintainers of national security – whatever the fuck that means in a post modern liberal thinking world.
    I’m not sure if Mr Meacher has a view on this but if he has I’m pretty sure it will be coloured by his signing of an oath to serve The Queen, Her Military Government and a rubber stamp Parliament to protect a realm of land and property owned and rented out by the relatively few.

  • http://www.facebook.com/cardinal1962 Colin Newman

    Well Mark Golding, the problem with the MIC is that it creates jobs and that’s seen as a good thing. The sooner we bust out of this idea of creating jobs and into the mode of preserving human life, the better. It matters what job you do and it is better to do nothing than to do something that doesn’t support human well-being, or worse is actually against it. We welcome labour saving devices in our homes, but we want to create more work in the economy. It doesn’t make sense. The only work that should be done is that which improves human well-being and as much of that can be automated should be, to free us up to do what only humans can do. 

  • Mark Golding

    Yes Colin. What is required is another renaissance of a different kind. One that is quintessentially a whole lot more reviving and educational than the first. There are so many ancient paradigms that need to be debunked it’s hard to know where to begin. The entire military establishment owes its existence to the paradigm of historical continuity, the lemming cult of teaching the young in University how to jump off a cliff using hand-me-down aphorisms like ‘we’ve always done it this way since the beginning’ as a kind of empirical truth.
    Now is the time for a full onslaught of public expression, a revived Neue Sachlichkeit of cultural revolt, a fearless attitude toward the megaliths of power that have evolved since the Industrial Revolution and a relentless anti-establishment message that pummels into dust icons and statues and memorials of grave importance to the raison d’etre of a traumatised body politic. As ex Prime Minister of Malaysia has publicly stated ‘ War is A Crime against humanity and those who prosecute for war must be treated as a criminal’.
    Ex War Correspondent Chris Hedges calls war a form of language that gives meaning to human enterprise. His Empire of Illusion work scrapes out the last vestiges of a justified war theory like one cleans stubborn shit from the toilet basin.
    The problem with the MIC is that it exists.

  • Pingback: Inequities of the planning system Michael Meacher – “already massively tilted in favour of corporate power and against democracy. ” Dave B. |

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