The power to create money, in the hands of commercial banks, has been highlighted as one of the root causes of both the Great Depression of the 1930s and the financial crisis of 2007-2009. Lord (Adair) Turner, the former chairman of the UK’s Financial Services Authority, has argued that: “The financial crisis of 2007/08 occurred because we failed to constrain the private financial system’s creation of private credit and money” (2012).
On Wednesday 25th of June, Ben Dyson was joined by Professor Tim Jackson, Ann Pettifor and Dr Anastasia Nesvetailova in the Houses of Parliament for a debate entitled Making Money Work for People and Planet.
A couple of months ago, Positive Money's proposals to reform the creation of money were featured by Martin Wolf (the chief economics commentator at the Financial Times). In an article entitled "Why I disagree with Martin Wolf and Positive Money", veteran campaigner and economist Ann Pettifor responded that the proposal is 'deeply flawed', 'outlandish', and would lead to "a shortage of money, high unemployment and low economic activity".
In 2010 the government cancelled a program to rebuild 715 schools, because they'd run out of money. But at the same time the Bank of England had created £375 billion of new money through a program called Quantitative Easing. Instead of this money being spent on something useful, it was pumped into the financial markets, benefitting the richest 5% but doing almost nothing to create jobs and stable economic recovery.
Cash is disappearing. It is being replaced by electronic money which is just numbers in computers and other electronic devices. The joke is that electronic money is not legal tender. The law has been left behind by technology and up to now the politicians have omitted to extend the government’s monopoly of money to electronic money. That is no accident because the banks profit enormously from this legal loophole.