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Modernising Money – A review

Modernising Money” by Jackson and Dyson, who are founder members of Positive Money is an analysis and also a call to action. It is well written, very clear and largely free of useless jargon. In short it is a book worth reading.

What I particularly like about “Modernizing Money” is that it seems to me to be one of those books that seeks to put clarity above partisan sniping and this makes it as potentially valuable for opponents as advocates. If you are suspicious of the whole family of analyses which range from Positive Money to MMT you could do far worse than reading this book, because if you do, I think you’ll have a clearer basis for continuing to dislike or perhaps even coming to approve of the ideas it contains.

The heart of the book and the analysis it advocates is to make clear that when banks lend, they create the money they are lending out of thin air. Such a statement will always seem a preposterous thing to say, and so the authors work hard to show exactly how this can be and in fact IS, and to debunk the widely assumed ‘traditional’ story that banks only lend money they have previously taken in from depositors. They do not claim deposits have no role or importance, just not the one we perhaps assume.

Once you come to see how banks can possibly just create their lending ‘out of thin air’ rather than only lending out what has been previously deposited, then something else becomes glaringly obvious. Namely that if banks don’t recycle already existing money from depositor to borrower, then they actually create the money they lend out. When a bank agrees to lend, they create credit and that credit swells the money supply. Your mortgage can be securitized, that security can be sold – for money – it can be insured – for money – and used as collateral to create more credit, which further expands the supply of money. And once you have have got that, then the vast and almost unrecognized, let alone unregulated power of the banks over our economic  well-being and indeed our governments become obvious. And this is the political call to action of the book.

Banks decide how much money exists, central banks and governments do not. Governments and central banks do have some levers of power, but in our present system they are not nearly so potent and direct as the power of actual money creation. Governments can find themselves forced (and I do mean forced) to chase , support and ‘back-stop’ this private money creation. QE is just the latet example of central banks and governments being backed into supporting private money creation. Let us leave to one side the very valid question of whether governments are happily complicit in this ‘forcing’.

Should banks have the power to create money and thus control the supply of money and credit upon which the rest of us depend? Should they have the power to ‘force’ govenments to dance to their tune and backstop their decisions and desires? The authors think not and I agree. That they should decide who to lend it to? Fine. That they should have control over its actual creation and supply? May not be nearly so fine.

It is a fact that about 97% of all the money in existence is created by the banks and only around 3% created by governments. This has profound consequences which the authors carefully tease out into the open. Consequences which are important and dangerous. Important  because they really do shape much of the rest of who our world actually works and dangerous because they remain unknown by too many people. If we don’t know the real workings of our world then we are very easily lied to and manipulated by those who do know.

It is a fact that private institutions create and control the money supply which the rest of us rely on. It is an argument if this is a reasonable or a very bad thing. It is a fact that having a system wherein the banks create the vast bulk of the money we use, means we pay rent on money. Money to the private institutions to whom our governments have given the power of money creation. They get this rent not for doing anything at all. They get it simply because they are allowed to be the creators of money. Not only money from nothing but private profit for nothing. It is an unfamiliar fact, but it is a fact. The question is, is it good? Should we allow private banks to create and control our money leaving us having to rent it from them? Or should we return that power to the people. Money by the people for the people or money for by banks for the banks? It is, in fact, a choice. Our choice.

Once the authors have layed out how how money, money creation and lending are currently arranged, and once they have laid out their objections to this system, they offer an alternative. I won’t spell out their alternative unless people ask me, because, after all, the authors do a splendid job in their book.

What I will note is that what they present as a workable , viable alternative, is very similar to how we all naively thought banking worked all along. Namely that banks should be restricted to lending out only what they have taken in from depositors. The authors address directly claims and worries that such a restriction would collapse global markets by restricting the flow of credit.

Lastly it is a rather satisfying thing, in my opinion, that what Positive Money advocates, is at one and the same time, a potentially sound, clear and ‘new’ way of organizing money, credit and banking, but at the same time, also clearly a return to the form of banking which we all thought we had.

Ideas like Positive Money are worth reading because of their attempt to be clear. They do indicate that they can see the points in the new system which would worry people and address those worries head on. You may or may not be convinced but you will understand what they intend. That on its own is more than can be said of our present bankers and governments.

There is a debate to be had about how money, credit and banking ought to be arranged and who should have their hands on those levers of power. It is a debate which lies close to the heart of the larger debate about the very future of democracy itself.

For me the real value of Modernizing Money’, beyond the quality of the particular argument it makes about money and banking, is that it clearly says there IS a debate to be had, that there are workable and intelligent alternatives to the system as it is presently and, most importantly, that those who say to you over and over that “there is no alternative” are liars. And they are liars because it profits them hugely, in money and power,  to keep unchanged and unchallenged, the system at whose pinnacle they sit.

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84 Responses to Modernising Money – A review

  1. Neil Wilson June 3, 2013 at 1:24 pm #

    But the proposed design has an underlying feature that they might not want you to know about, which is that it causes a concentration of equity in the hands of the wealthy and domination by a cabal of the elite.

    A less destructive and more democratic design is here: http://www.3spoken.co.uk/2013/05/making-banks-work.html

    • Golem XIV June 3, 2013 at 2:22 pm #

      Hello Neil,

      I will read your link this afternoon. In the mean time I would be most interested to read why you think PM’s ideas would concentrate equity in the hands of a few and power in the hands of a cabal.

    • Bob June 4, 2013 at 12:47 pm #

      Hi Neil,

      I’ve read the book and your statement contradicts my understanding of the Positive Money’s proposals.

      Can you expand that a little?

      As I can see, the PM reforms would introduce a permanent, debt-free, stable state-issued money supply that is not dependent on banks’ lending. Since money will exist without a corresponding debt – there will no longer be a need for the rest of the economy to ‘rent’ the medium of exchange from the banking sector.

      It seems to me that these reforms would enable to significantly reduce the debt burden of the public (without reducing the money supply and triggering recession).

      The proposals re-align risk and reward, so that those who stand to gain from the upside of risky investments also stand to take the downside.

      I believe that by taking the power to create money away from banks, we can reduce inequality.

      In fact, reducing the level of debt and inequality are some of the main issues that Positive Money proposals seek to address. (http://www.positivemoney.org/issues/inequality/)

      • Phil (Mcr) June 4, 2013 at 1:32 pm #

        Thank you for a concise reply there, Neil.

        I watched this very interesting debate on the future of the City. Positive Money’s ideas were mentioned and Ann Pettifor, whose work I have admired a lot, said that she disagreed with PM’s proposals even if she agreed with them about the roots of the problem in the private banking system. I’m sorry, I can’t flesh out her reasons (I’m on my lunch break!) but I wanted to add this into the debate. Will try to provide a better comment later.

        http://www.youtube.com/watch?feature=player_embedded&v=Qh8Lz70aCss

        • Bob June 4, 2013 at 3:39 pm #

          Ann Pettiffor’s reasons are that “the politicians can’t be trusted with money creation”.

          But this is based on misunderstanding of Positive Money’s proposals.

          PM have always been very clear that we should never give politicians the power to print money. Under their proposals, it would be independent of George Osborne et al and under strict controls so that if inflation starts rising significantly, they have to hold off on creating more money.

          This video presentation explains the main principles behind the PM proposals very succintly:

          http://www.positivemoney.org/our-proposals/video-reforming-the-monetary-system/

    • Andrew Jackson June 4, 2013 at 5:33 pm #

      I posted the following comments on Neil Wilson’s blog to respond to two charges that he has also posted here, firstly that the Positive Money proposal will lead to a concentration of wealth, and secondly, Positive Money is well funded by elite interests because of this. Unfortunately both my replies have since mysteriously disappeared. I’m reposting them here as they are pertinent to the discussion.

      Andrew Jackson said…
      “Look at some of the people who promote the ideas behind those proposals and the point above and you’ll understand one of the reasons why support and funding is forthcoming.” (comment by Neil Wilson @ http://www.3spoken.co.uk/2013/05/making-banks-work.html)

      Seriously? I almost fell off my chair laughing! Positive Money is the best funded out of any of the monetary reform groups and we operate on a shoestring. Last year our total income was £68,000, half of which came from small individual donations (£8 a month average). The other half came from charitable trusts.

      Of course you could have found this in a couple of minute on the PM website (available here: (http://www.positivemoney.org/about/finances-funding/), it’s a shame that you choose to spread misinformation instead.

      The most powerful people and institutions in the world today are the banks and the bankers – they are the ones most against the Positive Money proposals.
      4 June 2013 15:02

      Andrew Jackson said…
      And to your point on concentration of wealth, in fact the complete opposite is true. As the new scientist recently pointed out:

      “An analysis of the relationships between 43,000 transnational corporations has identified a relatively small group of companies, mainly banks, with disproportionate power over the global economy. … When the team further untangled the web of ownership, it found much of it tracked back to a “super-entity” of 147 even more tightly knit companies – all of their ownership was held by other members of the super-entity – that controlled 40 per cent of the total wealth in the network. “In effect, less than 1 per cent of the companies were able to control 40 per cent of the entire network,” says Glattfelder. Most were financial institutions. The top 20 included Barclays Bank, JPMorgan Chase & Co, and The Goldman Sachs Group.”

      (http://www.newscientist.com/article/mg21228354.500-revealed–the-capitalist-network-that-runs-the-world.html)

      But then it’s hardly surprising – in fact it would be surprising if giving the power to create money to banks led to anything other than a concentration of wealth in the hands of banks and bankers.

  2. Roger June 3, 2013 at 3:00 pm #

    I have followed and been a supporter or Positive money from their beginning. I also follow Ellen Browns Institute for Public Finance in the States and have read widely on the issue.
    I came across a 1894 Speech by Henry George over the weekend the wider problem of the private Money power hijacking democracy can bee seen as same old shit different century.

    I decided to try to bring the speech to life with some sound FX and contemporary images of analogous events.

    I welcome the Positive Money Book and their other efforts the debate is needed Ignorance and blind obedience make our selves our own worse enemies.
    What is the reason that we are building ships of war and increasing the size of our army? It is because the millionaire monopolists are becoming afraid of a poverty- stricken people which their oppressive trusts and combinations are creating. It is because great wealth, unjustly acquired, always wants the security of standing armies and navies. (Long cheering.)
    THIS HENRY GEORGE SPEECH IS AN IMAGINED RECONSTRUCTION OF THE ACTUAL EVENT WITH THE AUDIENCE REACTION AS DESCRIBED IN THE PUBLISHED SPEECH.

    http://youtu.be/N70W-Pal6vw
    ´´What has destroyed every previous civilization has been the tendency to the unequal distribution of wealth and power´´.
    Henry George

    • Mike October 14, 2013 at 11:56 am #

      This is my post on a related thread over on the Media Lens message board, responding to the question “So, in short, Brown’s solution to the inevitably of capitalist crisis is to develop a less centralized version of capitalism? Is that right?”

      I’m trying to explain Ellen Brown’s public banking initiatve while considering it a stepping stone to Positive Money’s 100% reserve banking solution.

      http://members5.boardhost.com/medialens/thread/1381196205.html

      Well what she proposes is, I think, an interim solution, relatively easily adopted to which all objections can be quickly dismissed by looking at the example of the state Bank of North Dakota – North Dakota is the only state in the union with a public bank, the only state with a budget surplus, has the lowest unemployment rate, the lowest foreclosure and default rates. BND works in partnership with commercial banks, steering investment (using loan guarantees) to fund projects beneficial to society.

      The main difference between other states who have to use the services of commercial banks is that as a public / state bank, (which is used by all public agencies in the state) the profits from the BND are returned to the state budget rather than extracted by out of state Wall Street global mega banks who must return profits to owners and shareholders. Also, the BND does not gamble in derivatives.

      40% of banks globally are run as public banks and most, if not all, escaped the worst of the financial collapse. These banks tend to be in BRICS nations and this explains how they have had 97% growth in the first decade of the 21st century, compared to about 13% on average for western nations.

      There was a meeting in Cardiff last month hosted by a new group called Money Wales looking at the North Dakota model and discussing whether it could be implemented in Wales. I believe Scotland and Northern Ireland are looking at similar ideas.

      More info here:

      Wales needs to consider following the successful public banking model
      http://bsnews.info/wales-needs-consider-following-successful-public-banking-model-north-dakota/

      Public Banking for Wales, Ireland and Scotland: Promise and Possibilities
      http://bsnews.info/public-banking-wales-ireland-scotland-promise-possibilities/

      I think the real benefit of this approach is that it is something which could happen now – it’s not contingent on some paradigm shifting financial revolution. This is how banking should be – in fact, from the US perspective, this more resembles the original colonial land banks setup during the time of Ben Franklin. These banks were using their own paper currency called colonial scrip and they would make loans at 5% but would spend money into the economy to cover the interest – so for example, they would loan $100 and spend $5 which would all return to the colony to re-loan indefinitely.

      This is very different to how money is created today – banks only create the principle but demand principle plus interest in return meaning more and more debt is required in order to service past debts. If this sounds a little like a pyramid scheme, well that’s because it is!

      Some colonies did over inflate their money supply and this caused the English merchants to petition the king to ban colonial scrip.

      Franklin inadvertently blew the whistle on the success of the colonies monetary experiment when he came to London in 1764. He was asked in Parliament how the colonies managed to pay for their poor houses. Remember that work houses and the poor were a huge problem in England at the time. In fact, the English had, due to overcrowding, sent some of their workhouse and prison population to the colonies. Franklin told Parliament that there were no work houses in the colonies and if there were, there would be no-one to put in them. Everyone that wanted to work had a job!! This would obviously not do. The whole idea of a colony was not to bolster their economy but to provide cheap raw materials for the mother country. The king’s ban held and the colonists were forced to borrow money from the British bankers to pay taxes to the king. The oppressed colonists finally ignored the ban and went back to issuing their own paper money. This was the first act of rebellion and which some suggest was the one issue above all others that caused the American Revolution.

      I highly recommend Ellen Brown’s two books – she is an excellent researcher and very good at distilling complex issues into layman’s terms.

      In Chapter 14 of her latest book, she discusses the Reconstruction and Finance Corporation – I’d never heard of this before, believing that the New Deal was entirely funded by commercial bank credit, adding to the US national debt. To my surprise, the RFC was “America’s largest corporation and the world’s largest banking organization. It was a remarkable credit machine that allowed the government to fund the New Deal and World War II without turning to Congress or the taxpayers for appropriations. It generated massive infrastructure and development all across the country, while returning a profit to the government. Yet this stellar model for what might be done is rarely mentioned in the media today.

      …The RFC generated the funds for roads, bridges, dams, post offices, universities, electrical power, mortgages, farms, and much more; and it funded all this while actually making money for the government”

      Brown concedes that the system of credit creation is one of humanity’s greatest inventions – allowing economies to expand when needed. That this money creation power is currently in the grip of a for-profit cartel of private corporations is the elephant in the room.

      With regard to your four concerns / activities

      a) The overarching system of capitalist exchange will not be changed, at least not at this stage of the journey. Rather, public banks will exploit the ability of ALL banks to extend credit, which is to create money from thin air, and spend this in ways which are beneficial to society. It’s incumbent on the newly formed bank to have a publicly agreed charter which will determine the basis for how and to whom the bank extends the people’s credit.

      b) Preserving private property relations – again this will not be change on the face of it but the public bank is far less likely to foreclose on households, is able to write off bad debts completely or can choose to make below market interest rate loans to stimulate house building etc.

      c) The aggregate growth principle is a direct result of the ever expanding debt, both household debt, corporate debt and government debt are all spiraling out of control – and the system is designed that way. When banks are responsible for 97% of our money supply and this money is all created as an interest bearing debt, the impossible contract jumps off the page; P < P + I – the bank creates the principle of a loan but demands principle plus interest. It is this mathematical impossibility that forces everyone onto the hamster wheel, competing with each other over a resource that is deliberately made to appear scarce.

      Brown used this joke in one of her many public speaking engagements to illustrate this point:

      An alien lands on earth, in New Orleans one year after Katrina and is greeted by the city mayor. The alien looks around at the total devastation and asks what happened. The mayor replies 'There was a huge hurricane 12 months ago. It caused floods destroying much of the city'. So the alien scratches his head and asks 'so you don't have any workers available to repair the city?' to which the mayor answers 'no we have plenty of workers available'. Confused, the alien asks 'so you don't have the materials needed to do the rebuilding?' The mayor replies 'No we have all the materials needed'. Even more confused the alien finally asks 'so why is the city still so devastated? ' The mayor replies 'well what we don't have are these little green pieces of paper that you need to get the workers and the materials together so that you can do the work'. The alien looks up to the mother ship and says 'beam me up Scottie. There's no intelligent life on earth!'

      So by using sustainable public banks to act counter-cyclically the worst effects of a recession can be mitigated as well as any emergency such as hurricane Katrina

      The BND’s emergency capabilities were demonstrated in 1997, when record flooding and fires devastated Grand Forks, North Dakota. The town and its sister city, East Grand Forks on the Minnesota side of the river, lay in ruins. Floodwaters covered virtually the entire city and took weeks to fully recede. Property losses topped $ 3.5 billion. The response of the state-owned bank was immediate and comprehensive, demonstrating a financial flexibility and public generosity that no privately-owned bank could match.

      d) Leave the current capitalist class in place will hopefully become a moot point once everyone else begins to be able to afford to live in dignity.

      Obviously this is step one but as I said it’s heading in the right direction while we await the global insurrection against banker occupation (to steal the phrase coined by Max Keiser)

      Public banking gets my support precisely because it is a stepping stone to much better things – this step in the right direction may not cause the downfall of the capitalist system but it has the potential to free humanity from the clutches of exponential debt.

      Further along the road, once people wake up to the possibility of moving from austerity to abundance we would have 100% reserve banking – this is what Positive Money are calling for but I fear it’s a step too far at this stage and there will be too much push bank from the financial establishment. For example, many economists are going the other way and calling for a 0% reserve requirement.

      Once the money power is back in the hands of government, there will be the possibility of a citizen’s income – a fixed amount given to every adult without means testing, raising the level of dignity for everyone in the society. Think about the implications – we would be less reliant on a job to pay the rent and bills – we could follow our calling, take a lower paid job that’s more beneficial to society – become a teacher, a nurse etc. We could do volunteer work and dedicate more hours to it.

      No-one would want to do the essential but mundane work like cleaners, bus drivers etc so these kinds of jobs would, with the benefit of a really free labor market, be forced to pay more. And so they should!!

      If you think basic income / citizen's income is too pie in the sky, the Swiss, having secured 100,000 signitures, are having a vote to pay every adult $2,800 per month (see Swiss to Vote on Guaranteed $2800 Monthly Income for All Adults – http://bsnews.info/swiss-vote-guaranteed-2800-monthly-income-adults/)

  3. Dana June 3, 2013 at 4:56 pm #

    I haven’t read the book, admittedly, but it seems pretty clear that, if banks were limited to lending out their caches of bank deposits, there would be that much more incentive for the entire hierarchy, corporate and financial, to ensure that people had sufficient incomes to maintain positive bank balances.

    For decades, banks have been earning fortunes off of aggressive wage suppression and consequent interest-heavy consumer debt load. This is a key factor in the current, so-called “debt crisis”.

    While productivity has grown exponentially in the past half century, corporations and industries have extracted phenomenal sums from the work force, which has buoyed profits and bonuses, which were then lent out to the worker / consumer, at interest!

    Consequent losses in government income tax revenues led automatically to increased, interest-laden state borrowing, and here we are …

    But rather than address these fundamental underlying causalities, the financial industry and their political puppets are imposing austerity measures on nations, with requirements to privatize publicly owned industries and services, while imposing additional wage suppression, and unemployment, in the name of competitiveness … and economic growth!

    Isn’t the self-destructiveness of these policies obvious? The next question is, why are they being implemented, who is it who is calling for them, and what is the goal.
    .

    • Dana June 3, 2013 at 5:16 pm #

      PS: Limitation of bank lending to deposits would, in effect, return the backing of a currency to the working force, as opposed to gold, rentiers and financial speculators.

      • Golem XIV June 3, 2013 at 5:37 pm #

        Hello Dana.

        Thanks for commenting.

        Yes, I think you’re right, it would. Or rather it could.

    • Miha Klement June 3, 2013 at 9:40 pm #

      Dear Dana

      That is a very sophisticated analysis of modern economic history. Well done for articulating it so well.

      You don’t live in Bristol by any chance do you?

      I am starting the Bristol branch of Positive Money and could use some help.

      • Dana June 4, 2013 at 3:48 pm #

        Hello, Miha

        Pleased that my comment made sense to you : ) Thank you for the compliment.

        No, I don’t live in Bristol, but I know people who do, who might either be interested in your project or know others who would be.

        Do you have an official address where you can be reached?

        Ah, I see you’re on LinkedIn. I’ll pass your page on to my contacts.

        Wishing you all the best for the success of your project.

        Dana

  4. Jesse June 3, 2013 at 6:10 pm #

    It is a bit of an overstatement to separate the central bank and the government from ‘the banks.’

    They work in concert. The banks are not creating money as they will, without significant support and forebearance from the central bank, and the regulators. They hold some very powerful levers.

    In times of slack real world economic activity, the central bank becomes the money creator of last resort. The expansion of the US Federal Reserve’s balance sheet is unmistakable.

    This may be a bit of a nitpick, and I am not commenting on whatever it is that Positive Money recommends as replacement. But if it is transferring the ability to create money from the ‘private banks’ to some public entity such as Treasury or Ministry, then I would say that the same potential abuses, fraud and corruption exist, to the extent that the system is not absolutely transparent, and open to limitations, checks and balances, and informed criticisms.

    • Golem XIV June 3, 2013 at 6:59 pm #

      Hello Jesse,

      I completely agree that transfering control from one closed set of interests to another will achieve little. Accountability and transparency are what we need whoever is charged with control of the money supply.

      But might at least taking it away from banks might lessen the tendancy toward maximum instability which Minsky wrote about.?

      Of course I agree that government and regulators are a significant part of teh mix. But I do think the banks have the whip hand. I do think there isn’t that much central banks can do to stop credit expansion.

      They are just so many ways around whatever is put in place to limit bank balance sheets.

      I know you have written about the various theories of banks credit and money creation. Would you be willing to post a couple of links to pieces of yours? I for one would like to read them.

    • John G June 3, 2013 at 9:26 pm #

      Sovereign governments do create money. That is the narrow money in the system that is the basis for all the credit money produced by the banks and the shadow banks.

      The bankers discourage governments from spending this money into existence for public purpose with their fake deficit/sovereign debt scare mongering.

  5. Jesse June 3, 2013 at 6:12 pm #

    I think this piece helps to illustrate that we do not have a ‘banking problem’ so much as a partnership between corporations and government problem: the oligarchy is audacious, and knows few bounds in their greed.

    http://jessescrossroadscafe.blogspot.com/2013/06/net-asset-value-premiums-of-certain.html

    • Golem XIV June 3, 2013 at 7:00 pm #

      Thank you. I wrote the above before I saw you had already posted this.

    • Karalan June 5, 2013 at 2:36 pm #

      “a partnership between corporations and government”

      I believe that’s called fascism? The Bilderberg attendees list is instructive.

  6. Just me June 3, 2013 at 6:28 pm #

    “UK’s Biggest Tax Evasion Money Laundering Fraud”

    http://educationforum.ipbhost.com/index.php?s=ae97d07322a89bf244039e97f2acc686&showtopic=20238&hl=

  7. Buck Turgidson June 3, 2013 at 8:48 pm #

    I’ve never had the desire to become a banker but if the rules of the game were changed as described(i.e.not lending out more than you had on deposit) if would be the most boring profession in the world. Where would you get people to do the job? Boring Boring Boring I would kill myself first.

    • Golem XIV June 3, 2013 at 9:10 pm #

      Worry not Buck old boy we would never force you. But there would be people who would love the steady, solid routine of it. There used to be lots of them around. They were called bank managers.

      I once had lunch at the Insitute of Actuaries, The man I had lunch with asked me if I knew what sort of people became actuaries. I said I didn’t. He said, “People who found accountancy too exciting.”

    • Phil (Mcr) June 3, 2013 at 9:27 pm #

      I presume from the masses of people who do all the other boring boring jobs for scant reward and a life time of debt.

      Still, better to let a tiny number of City boys live a life of excitement and riches, what! Hurrah

    • Bob June 4, 2013 at 11:34 am #

      On the contrary, I would suggest the work of bankers is more boring in the current system (although certainly more profitable).

      In the Positive Money system, banks will no longer be able to make loans first (by making an accounting entry) and ‘go looking for the reserves later’, as they do in the current system. Instead, they will have to find the money they need to make loans before they make them. Banks will thus become true intermediaries, merely transferring pre-existing purchasing power from savers to borrowers.

      Then, banks will be allowed to fail. They can no longer rely on government bailouts if they become insolvent. This will mean that they should improve their risk -management and take fewer risks that could threaten the solvency of the whole bank. Banks that become insolvent will be allowed to fail, rather than being rescued by the taxpayer. The banking sector will lose its ‘too big to fail’ subsidy.

      (More info in this extract from the book “Modernising Money”: http://www.positivemoney.org/2013/04/ending-the-too-big-to-fail-problem-for-good/)

      • Woodgnome June 10, 2013 at 10:51 am #

        I agree.

        If the banks were forced to aggressively compete for reserve assets, in order to have money to lend out at profit, then they’d offer depositors attractive interest rates (which is another thing that should be totally out of the control of government and/or central banks) or otherwise attract customers by dangling something of worth in front of us as an incentive to give our business to them, rather than to one of their competitors (which they currently don’t have, in any real sense – Libor, gold price manaipulation etc clearly pointing out that they’re all in collusion in order to more cleanly sheer the sheep).

    • Mike October 14, 2013 at 12:06 pm #

      But banking is meant to be boring and it should be – it’s precisely the kind of person who would like a boring job that we want to run our banks; conservative (with a small ‘c’) rather than reckless risk takers. The stakes are too high to trust our lives to those willing to play fast and loose with the rules just to make a quick buck.

  8. Roger June 4, 2013 at 6:20 am #

    David Harvey has some interesting things to say in this lecture about the roles of money and how they are classic contradictions in a Marxist Sense. He describes the focus of Das Capital Volumes 1 and 2 and how they effectively bring out the contradiction of Value in Use and Value in Exchange and how money which performs several functions is tied up with those contradictions.
    David goes on to ask some interesting questions about what money would do out side of Capitalism. It does seem that the present system could be made fairer David says that from 1945 to 1971 Vol 1 of Das Kapital was addressed and things became fairer, this caused concern to the Financial Bourgeoisie and the Neo Con agendas of Reagan and Thatcher were ushered in to progress the Interests of Capital according to Volume ii metrics.

    Its really a very interesting lecture delivered at Warwick university, I have a mind that Warwick is akin to The Lions Den and David here is Daniel examining the dentures of this
    Golden creature of Capitalist thought.

    http://www.youtube.com/watch?v=8UD-QqYFJqY

    One of Davids analysis of the contradiction of Exchange Value and use value is the uncomfortable loss of 40 billions in housing equity in the sub prime sector at the same time as Wall street were gorging on 40 Billions of bonuses, he doesn’t say the analogy is a smoking gun but it certainly serves as a metaphor for how contradictory the system is.

    • Phill Joyce June 23, 2013 at 8:04 pm #

      Just wanted to state that Prof. Harvey also asked the question. “Can money have a use by date? I like the idea that over a certain limit money must be used or lost. Not sure of the economic implications of this but it would certainly address the issue of limitless accumulation(a source of most of the economic and environmental issues ). If you economic wizards on here could give me a breakdown of the pros and cons of this idea I would be most appreciative.

      • Hawkeye June 24, 2013 at 9:16 am #

        Hi Phill

        The flippant answer is that we already have in place a system of devaluing monetary claims. It’s called inflation! Or more correctly titled “negative interest” rates, where inflation is higher than interest rates, thus diluting your savings.

        Obviously this has a somewhat uneven impact on society, as it hurts a pensioner on modest means, more than it does a millionaire (who probably doesn’t hold his savings in interest bearing debt anyway, but other forms of higher yield).

        Another blunt form of slowing down excessive accumulation by the uber wealthy is for higher taxes (mansion taxes, land tax, income supertax etc.), but that sort of progressive nonsense gets you ridiculed these days.

        All fiat money systems do come to an end, eventually, and the Dollar’s days could be numbered:

        http://www.finalcall.com/artman/publish/Business_amp_Money_12/article_9934.shtml

        But as well as asking how we can ensure there is isn’t excessive hoarding of monetary claims, we also need to keep a watchful eye on excessive hoarding of physical assets too.

        • Phill Joyce June 24, 2013 at 1:49 pm #

          Hawkeye,

          Thanks for your reply. I think what Prof. Harvey was asking was slightly more nuanced than perhaps I stated. My understanding is that if you have a value over and above say £100,000 you have a set time(say a month) in which to put it to use(in a productive rather than rent-seeking sense) or it loses all value. From my limited understanding this would address the real problem of capitalist production: The extraction of surplus value from the productive process. The incentive to extract becomes futile as it wouldn’t achieve the omnipotent social and political power unlimited accumulation does.(Highlighted in your examples)

          As far as physical assets are concerned I would agree with you in principle but the hoarding of physical assets has a limit, the hoarding of the commodity money has no limits as we are all only to aware.. Thanks for the link btw and I’ll have a gander when I get a chance.

  9. Kreditanstalt June 4, 2013 at 6:45 am #

    It’s very difficult on the “Positive Money” website to find out just WHAT they are advocating. My bet is that it is some sort of Ellen Brown/Bill Still scheme to hand the power to print paper money over to governments.

    While there are multitudinous problems with banks “creating” money out of thin air, allowing the biggest spenders of today’s money to print as much as they like is sheer madness.

    The money supply does not need to grow at all. Prices will adjust instead. Thus the argument that “too much money is in private (bank) hands” is a non starter, it seems.

    While a gold-backed currency would be a vast improvement over either “Positive Money” suggestions or today’s system, I’d really like to see the definition of what constitutes “money” left up to the market and to individual participants in economic transactions…

    • Roger June 4, 2013 at 9:03 am #

      2. Money should only be created through a democratic and transparent body working in the public interest.
      We’d like to see the power to create money transferred to a democratic, accountable and transparent process, where everyone knows who has the power to create money, how much money they create, and how that money will be used. However this process is set up – whether it’s the Bank of England or a new committee that decides whether to create money, it must be accountable to Parliament and protected from abuse by vested interests. We also want to see safeguards that ensure that the right amount of money is created – not too much (causing bubbles and a financial crisis) and not too little (causing a recession).

      http://www.positivemoney.org/our-proposals/

      That was pretty easy.

      • Kreditanstalt June 4, 2013 at 4:09 pm #

        I don’t want anyone “creating” my money or the money my trading partners and myself agree to use…

        • Phil (Mcr) June 4, 2013 at 10:17 pm #

          But the banks, as we have shown, DO create your money.

          The money supply HAS doubled in the last decade or so. Who else did it? The fairies?

          • Kreditanstalt June 4, 2013 at 11:46 pm #

            They create the CURRENCY – something whose use is mandated through government force. They do not create the MONEY. Neither can they create wealth.

            As we are seeing with today’s collateral shortage, real, money-good and unencumbered wealth is scarce. No one saves in these fiat paper currencies…we are forced into a headlong and desperate search for yield precisely because the (potential) money supply is expanding.

            I save in physical gold – have done for seven years now – and am very satisfied with the outcome.

        • Mike October 14, 2013 at 12:13 pm #

          But you are happy with private banks manipulating the price of your gold?

          Money is not gold and nor should it be. The world was on a gold standard in the 1920’s but this did not prevent a massive contraction of money by the Federal Reserve which went on to cause the great depression.

          I actually think you’re wise to save in gold (notwithstanding the manipulation of the bullion markets) but it can’t be considered a sustainable or even practicle currency.

          As Bill Still says, it’s not what backs the money that’s important but who controls its quantity.

    • Bob June 4, 2013 at 11:17 am #

      Positive Money do NOT advocate to hand the power to create money to the government! They have always been very clear that we should never give politicians the power to print money. Under their proposals, it would be independent of George Osborne et al and under strict controls so that if inflation starts rising significantly, they have to hold off on creating more money. It’s about what the economy needs, not what politicians need.

      Their proposals can be found in the main navigation in the left sidebar under “Our Proposals”

      http://www.positivemoney.org/our-proposals/

      They have published a Plain English version of their proposals too:

      http://www.positivemoney.org/our-proposals/positive-money-proposals-in-plain-english/

      A more technical presentation of their reforms, for economists and those with some background in money and banking is also available on their website:

      http://www.positivemoney.org/our-proposals/positive-money-proposals-technical-version/

    • Joe Taylor June 18, 2013 at 3:11 pm #

      >It’s very difficult on the “Positive Money” website to find out just WHAT they are advocating.

      Why don’t you read the book, like David did?

  10. bill40 June 4, 2013 at 9:17 am #

    Golem,

    I have not read the book but I’m told it’s a little bit Janet and John, so excellent for newcomers to the debate but slightly old hat to anyone who has looked into these matters in any depth. Please note the last thing I mean is don’t read it please do.

    The Bubble and Beyond is Michael Hudson’s book that I’d recommend for advanced readers. Amongst the very important points he raises is that interest payments are tax deductible which has wreaked havoc on our economy. Banks in the classical sense did not involve themselves with production. Equity markets did that and todays disconnect is laid bare by Hudson.

    He talks about this here and the desire to control what Adam Smith described as the “Economic Rentiers”. http://www.nakedcapitalism.com/2012/09/michael-hudson-on-how-finance-capital-leads-to-debt-servitude.html

    • Golem XIV June 4, 2013 at 9:42 am #

      Thanks Bill,

      That is a REALLY good article by one of the best thinkers out there.

    • Bob June 4, 2013 at 11:56 am #

      It might be a bit ‘old hat’ to few people who really have looked into these matters in depth – which are very few. And considering the wide-spread general misconceptions about this issue, I believe that even these people will benefit from reading it. It is a thoroughly researched and very timely investigation into the way money is created, managed and circulated by our commercial banks.

      And what certainly can’t be labeled as ‘old hat’ is the second part of the book which presents in detail the actual reform proposals.

      In my opinion, it should be a required reading for anyone responsible for managing our economy (Treasury and Bank of England Officials, politicians, MPs), ‘opinion formers’ commenting on our economy (journalists), independent financial advisors and anyone teaching economics, finance or political science to anyone at any level. It should also be read by anyone working in the banking industry so that they realise that the sleeping masses – may not sleep forever.

      If you hear a politician, economist or jouralist saying that tax rises and cuts in public spending are the only options, you can tell them that they are completely wrong.

    • Phil T. June 5, 2013 at 1:05 am #

      Thank you Bill40 … I enjoyed revisiting that article from Michael Hudson.

      I have not (yet) read the book Modernising Money, but after re-digesting Hudson’s articulations from last September AND recent articles from Golem like What Banker’s Don’t Know, Making The Truth Illegal -revisited & Twilight of Justice, i wonder how any (viable) alternative can ever emerge without the utter and complete destruction of this vast culture of corruption and the underlying pathologies.

      If we consider Hudson’s discussion on (Neo-liberal) Europe/ECB/EU and its goals and his discussion of Derivatives — we are reminded that in order for this Rentier Tollboth Economy and Casino Capitalism to continue to thrive, information asymmetry is absolutely a prerequisite.

      Can anyone comment on how MMT, Positive Money regard (if at all) Information Asymmetry when proposing their respective alternatives.

      Best wishes …

      • bill40 June 5, 2013 at 8:38 am #

        Crikey Phil T. You raise some questions I’m not sure there’s an answer to as such. Equality of information is taken as a given by libertarians and their ilk as is the assumption that because their system is moral the actors within will start exhibiting a previously unevidenced desire to stop behaving like a bunch of sociopathic bastards. That is an assumption too far for me.

        The beauty of neo liberalism is that it matters not a jot what colour of government is in power, you get the same economics. That is why I advocate MMT rather than engage in politics. MMT merely seeks to create the correct macroeconomic conditions for the private sector to thrive. There is no such thing as IA.

        That brings us to the imperfect alternative which is the state, regulation and democracy which have all been captured by one degree or another. The latest lobbying scandal illustrates this perfectly although Golem, of course, has been banging on about this for years.

        No system is perfect but creating the maximum benefit for the maximum number of people, hence the Job Guarantee, is the aim of MMT. There will always be those who walk into a revolving door and come out ahead of you, they will be the ones with superior information.

        In short MMT does not believe IA is possible but democratically controlled regulation is. Hope I haven’t waffled too much.

  11. desmond June 4, 2013 at 11:01 am #

    thanks again Golem. I want to add that everyone talks of regulators and accountability to Parliament etc. without any mention that all the guard dogs have proved toothless and blind with no bark. How does one regulate to stop corruption??

  12. Roger June 4, 2013 at 11:49 am #

    We can, therefore, understand the occult influence on international politics exercised by the powerful directors of these financial societies, with their mysterious bookkeeping and with the plenary powers that certain directors exact and obtain from their shareholders- because they must be discreet when nearly half a million pounds have to be paid to Monsieur So-and-so, £10,000* to a certain Minister, and so may millions, besides the orders of the Légion d’Honneur, to the Press! There is not, says “Lysis,” one single large newspaper in France that is not paid by the banks. This is clear. One can easily guess how much money was distributed in this way among the Press during the years 1906 and 1907, when a series of Russian State loans, railway loans, and loans for real estate banks were being prepared. How many “quill-drivers” waxed fat on the loans — we see it in “Lysis’s” book. What a windfall, in fact! The Government of a great State at bay! A revolution to be crushed! Such luck is not to be met with every day!

    No doubt everybody is more or less aware of that, and there is not a single politician, in Paris or elsewhere, who does not know the workings of all this jobbery, and who does not hear mentioned the names of the women and men who have received large sums after each loan, great or small. Russian or Brazilian. And each one, if he has the slightest knowledge of business, knows to what degree this organisation of great financial houses is a product of the State, an essential attribute of the State.

    And it would be such a State — the powers and prerogatives of which our politicians are so careful not to lessen — that most of the social reformers expect to be the instrument for the emancipation of the masses! What nonsense!

    Be it stupidity, ignorance, or imposture — it is equally unpardonable in people who believe themselves called to direct the fate of nations.
    http://dwardmac.pitzer.edu/anarchist_archives/kropotkin/warsandcap.html

  13. stone June 4, 2013 at 3:11 pm #

    I was a fan of the positive money type approach but I’ve come to see it differently. I agree with the basic idea of separating off the payment system from the lending system so that the payment system is not held hostage by irresponsible lenders. My issue though is about how they hope that having lending funded by fixed term savings accounts will eliminate private “debt as money” expansion of the money supply. I think the issue is deeper than it might appear at first glance. If you have a saving account that is due to mature in a year, then you will feel confident to take out a one year loan knowing that you will be able to pay it off when your saving account matures. The lender will similarly see you as a safe bet for lending to. Fixed term savings accounts do in that way increase the money supply. I think it is a lost cause to try and cause lending to be separate from private (aka endogenous) money creation. Maturity matching of assets and liabilities in the lending system does make the lending system stable by eliminating the risk of bank runs. I just think there should be no attempt to make those maturity matched liabilities less “money-like”. Let people sell them on if they need the cash. I’ve had a go explaining it in http://directeconomicdemocracy.wordpress.com/2013/04/09/what-full-reserve-banking-could-and-couldnt-achieve/

    • Golem XIV June 4, 2013 at 4:34 pm #

      Hello stone,

      I will have a read as soon as I can.

      I think the PM people did give a little thought to this. If I remeber rightly they did suggest that it should be illegal for anyone to re-assign ownership of their fixed term savings account. Which I took to mean that you could not use such a savings account as collateral for a loan.

      Would this go any way to answering your problem?

      • stone June 4, 2013 at 4:50 pm #

        It wouldn’t need to be a formal collateral agreement though. If I needed the money and I had a savings account that was due to mature in a year, I would feel perfectly prudent taking out a one year loan -wouldn’t you? It is so integral to the whole nature of credit that I don’t think it can be disentangled.

        • Roger June 4, 2013 at 5:35 pm #

          There would be no problem with you taking out a loan the loan made to you by the bank would be made out of deposits held from other customers. Or am I missing something? It seems unlikely that all short term financing would just disappear only speculative lending with no moral hazard attached.

          • stone June 4, 2013 at 10:03 pm #

            Roger, I think you are missing something. When the Bank of England is estimating how much money there is they need to take into account money that isn’t instantly accessible. They have various measures, M0, M1, M2 etc that take that into account. A savings account that is due to mature in a year is acting as “money” if it emboldens me to take out a one year loan and/or emboldens the lender to grant me the loan. The “97% of money” created by banks consists of bank liabilities. Bank deposits are instantly maturing bank liabilities but in practice liabilities don’t need to be instantly maturing for them to influence how people spend and for credit fueled asset bubbles to be blown etc etc. The amount of instantly accessible money isn’t what constrains spending. It can simply turn over faster so as to allow more spending. If you gave everyone in the country a savings account with a million pounds in it that could be accessed in one weeks time, you would get an increase in spending before the week was up wouldn’t you?

          • Roger Lewis June 5, 2013 at 2:19 pm #

            Hello Stone. You were referring to the proposals of positive money where there is no fractional reserve banking and only money that is deposited by customers can be lent out as honest broker then clearly the moral hazard is put in place to ensure prudent lending. The present system which you are describing does not have this moral hazard element.

            Your thought experiment is pretty simplistic in the debt ju7bilee proposals of Steve keen for instance should QE be placed int he hands of normal people where by they have to pay down debt rather than consume the proposals would not be inflationary and would accelerate the system back to an even p,laying field where everyone knows where they are.

            I am familiar with the various measures of money, I do not see that you are making a point as yet perhaps you could try again to explain the problem you see with the PM proposals specifically so far I just can not see what your point is.

  14. Just me June 4, 2013 at 8:50 pm #

    “America’s Misplaced Deficit Complacency”

    http://lecercle.lesechos.fr/economistes-project-syndicate/autres-auteurs/221173470/america-misplaced-deficit-complacency

    • Just me June 4, 2013 at 10:37 pm #

      “- Public announcement GEAB N°60 (December 16, 2011) -”

      “With £1.8 trillion of public money invested in banks to prevent their collapse in 2008, the British taxpayers are in fact those who have paid the most for the rescue of financial institutions. And the British government may well continue to exclude this amount from its public debt calculations by claiming it’s an “investment”, de facto, fewer and fewer people consider that the banks in the City will recover from the crisis, especially since its worsening in the second half of 2011: the shares purchased by the Government in fact are already worthless. The “UK hedge fund” is on the brink of collapse (25) … and thanks to David Cameron and the City, it’s isolated with no one to come to its aid, neither in Europe nor the United States.

      With the Chinese bubble (26) about to join the European recession and the US depression, the 2012 storm will determine whether David Cameron and his finance minister George Osborne are worthy descendants of the great British sailors.”

      http://www.leap2020.eu/Global-systemic-crisis-USA-2012-2016-An-insolvent-and-ungovernable-country_a8481.html

  15. harold wilson's pipe June 4, 2013 at 11:27 pm #

    It’s been a long time since I read “Money: Whence it came, where it went” (J K Galbraith) but I can’t help wondering if MMT would come as a surprise to anyone who’s read JKG, and/or whether the MMT folks have much to say about JKG’s thoughts.

    RIP JKG: “The process by which banks create money is so simple that the mind is repelled.” (can’t remember the rest, don’t have time to read it on the Interwebs)

  16. Phil (Mcr) June 4, 2013 at 11:30 pm #

    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public”. Adam Smith

    A little meet-up is happening in Hertfordshire this week. Although if you ask any questions about it, it means you think the world is run by aliens…

    Attendees:

    Chairman
    FRA Castries, Henri de Chairman and CEO, AXA Group

    DEU Achleitner, Paul M. Chairman of the Supervisory Board, Deutsche Bank AG
    DEU Ackermann, Josef Chairman of the Board, Zurich Insurance Group Ltd
    GBR Agius, Marcus

    Former Chairman, Barclays plc
    GBR Alexander, Helen Chairman, UBM plc
    USA Altman, Roger C. Executive Chairman, Evercore Partners
    FIN Apunen, Matti Director, Finnish Business and Policy Forum EVA
    USA Athey, Susan Professor of Economics, Stanford Graduate School of Business
    TUR Aydıntaşbaş, Aslı Columnist, Milliyet Newspaper
    TUR Babacan, Ali Deputy Prime Minister for Economic and Financial Affairs
    GBR Balls, Edward M. Shadow Chancellor of the Exchequer
    PRT Balsemão, Francisco Pinto Chairman and CEO, IMPRESA
    FRA Barré, Nicolas Managing Editor, Les Echos
    INT Barroso, José M. Durão President, European Commission
    FRA Baverez, Nicolas Partner, Gibson, Dunn & Crutcher LLP
    FRA Bavinchove, Olivier de Commander, Eurocorps
    GBR Bell, John Regius Professor of Medicine, University of Oxford
    ITA Bernabè, Franco Chairman and CEO, Telecom Italia S.p.A.
    USA Bezos, Jeff Founder and CEO, Amazon.com
    SWE Bildt, Carl Minister for Foreign Affairs
    SWE Borg, Anders Minister for Finance
    NLD Boxmeer, Jean François van Chairman of the Executive Board and CEO, Heineken N.V.
    NOR Brandtzæg, Svein Richard President and CEO, Norsk Hydro ASA
    AUT Bronner, Oscar Publisher, Der Standard Medienwelt
    GBR Carrington, Peter Former Honorary Chairman, Bilderberg Meetings
    ESP Cebrián, Juan Luis Executive Chairman, Grupo PRISA
    CAN Clark, W. Edmund President and CEO, TD Bank Group
    GBR Clarke, Kenneth Member of Parliament
    DNK Corydon, Bjarne Minister of Finance
    GBR Cowper-Coles, Sherard Business Development Director, International, BAE Systems plc
    ITA Cucchiani, Enrico Tommaso CEO, Intesa Sanpaolo SpA
    BEL Davignon, Etienne Minister of State; Former Chairman, Bilderberg Meetings
    GBR Davis, Ian Senior Partner Emeritus, McKinsey & Company
    NLD Dijkgraaf, Robbert H. Director and Leon Levy Professor, Institute for Advanced Study
    TUR Dinçer, Haluk President, Retail and Insurance Group, Sabancı Holding A.S.
    GBR Dudley, Robert Group Chief Executive, BP plc
    USA Eberstadt, Nicholas N. Henry Wendt Chair in Political Economy, American Enterprise Institute
    NOR Eide, Espen Barth Minister of Foreign Affairs
    SWE Ekholm, Börje President and CEO, Investor AB
    DEU Enders, Thomas CEO, EADS
    USA Evans, J. Michael Vice Chairman, Goldman Sachs & Co.
    DNK Federspiel, Ulrik Executive Vice President, Haldor Topsøe A/S
    USA Feldstein, Martin S. Professor of Economics, Harvard University; President Emeritus, NBER
    FRA Fillon, François Former Prime Minister
    USA Fishman, Mark C. President, Novartis Institutes for BioMedical Research
    GBR Flint, Douglas J. Group Chairman, HSBC Holdings plc
    IRL Gallagher, Paul Senior Counsel
    USA Geithner, Timothy F. Former Secretary of the Treasury
    USA Gfoeller, Michael Political Consultant
    USA Graham, Donald E. Chairman and CEO, The Washington Post Company
    DEU Grillo, Ulrich CEO, Grillo-Werke AG
    ITA Gruber, Lilli Journalist – Anchorwoman, La 7 TV
    ESP Guindos, Luis de Minister of Economy and Competitiveness
    GBR Gulliver, Stuart Group Chief Executive, HSBC Holdings plc
    CHE Gutzwiller, Felix Member of the Swiss Council of States
    NLD Halberstadt, Victor Professor of Economics, Leiden University; Former Honorary Secretary General of Bilderberg Meetings
    FIN Heinonen, Olli Senior Fellow, Belfer Center for Science and International Affairs, Harvard Kennedy School of Government
    GBR Henry, Simon CFO, Royal Dutch Shell plc
    FRA Hermelin, Paul Chairman and CEO, Capgemini Group
    ESP Isla, Pablo Chairman and CEO, Inditex Group
    USA Jacobs, Kenneth M. Chairman and CEO, Lazard
    USA Johnson, James A. Chairman, Johnson Capital Partners
    CHE Jordan, Thomas J. Chairman of the Governing Board, Swiss National Bank
    USA Jordan, Jr., Vernon E. Managing Director, Lazard Freres & Co. LLC
    USA Kaplan, Robert D. Chief Geopolitical Analyst, Stratfor
    USA Karp, Alex Founder and CEO, Palantir Technologies
    GBR Kerr, John Independent Member, House of Lords
    USA Kissinger, Henry A. Chairman, Kissinger Associates, Inc.
    USA Kleinfeld, Klaus Chairman and CEO, Alcoa
    NLD Knot, Klaas H.W. President, De Nederlandsche Bank
    TUR Koç, Mustafa V. Chairman, Koç Holding A.S.
    DEU Koch, Roland CEO, Bilfinger SE
    USA Kravis, Henry R. Co-Chairman and Co-CEO, Kohlberg Kravis Roberts & Co.
    USA Kravis, Marie-Josée Senior Fellow and Vice Chair, Hudson Institute
    CHE Kudelski, André Chairman and CEO, Kudelski Group
    GRC Kyriacopoulos, Ulysses Chairman, S&B Industrial Minerals S.A.
    INT Lagarde, Christine Managing Director, International Monetary Fund
    DEU Lauk, Kurt J. Chairman of the Economic Council to the CDU, Berlin
    USA Lessig, Lawrence Roy L. Furman Professor of Law and Leadership, Harvard Law School; Director, Edmond J. Safra Center for Ethics, Harvard University
    BEL Leysen, Thomas Chairman of the Board of Directors, KBC Group
    DEU Lindner, Christian Party Leader, Free Democratic Party (FDP NRW)
    SWE Löfven, Stefan Party Leader, Social Democratic Party (SAP)
    DEU Löscher, Peter President and CEO, Siemens AG
    GBR Mandelson, Peter Chairman, Global Counsel; Chairman, Lazard International
    USA Mathews, Jessica T. President, Carnegie Endowment for International Peace
    CAN McKenna, Frank Chair, Brookfield Asset Management
    GBR Micklethwait, John Editor-in-Chief, The Economist
    FRA Montbrial, Thierry de President, French Institute for International Relations
    ITA Monti, Mario Former Prime Minister
    USA Mundie, Craig J. Senior Advisor to the CEO, Microsoft Corporation
    ITA Nagel, Alberto CEO, Mediobanca
    NLD Netherlands, H.R.H. Princess Beatrix of The
    USA Ng, Andrew Y. Co-Founder, Coursera
    FIN Ollila, Jorma Chairman, Royal Dutch Shell, plc
    GBR Omand, David Visiting Professor, King’s College London
    GBR Osborne, George Chancellor of the Exchequer
    USA Ottolenghi, Emanuele Senior Fellow, Foundation for Defense of Democracies
    TUR Özel, Soli Senior Lecturer, Kadir Has University; Columnist, Habertürk Newspaper
    GRC Papahelas, Alexis Executive Editor, Kathimerini Newspaper
    TUR Pavey, Şafak Member of Parliament (CHP)
    FRA Pécresse, Valérie Member of Parliament (UMP)
    USA Perle, Richard N. Resident Fellow, American Enterprise Institute
    USA Petraeus, David H. General, U.S. Army (Retired)
    PRT Portas, Paulo Minister of State and Foreign Affairs
    CAN Prichard, J. Robert S. Chair, Torys LLP
    INT Reding, Viviane Vice President and Commissioner for Justice, Fundamental Rights and Citizenship, European Commission
    CAN Reisman, Heather M. CEO, Indigo Books & Music Inc.
    FRA Rey, Hélène Professor of Economics, London Business School
    GBR Robertson, Simon Partner, Robertson Robey Associates LLP; Deputy Chairman, HSBC Holdings
    ITA Rocca, Gianfelice Chairman,Techint Group
    POL Rostowski, Jacek Minister of Finance and Deputy Prime Minister
    USA Rubin, Robert E. Co-Chairman, Council on Foreign Relations; Former Secretary of the Treasury
    NLD Rutte, Mark Prime Minister
    AUT Schieder, Andreas State Secretary of Finance
    USA Schmidt, Eric E. Executive Chairman, Google Inc.
    AUT Scholten, Rudolf Member of the Board of Executive Directors, Oesterreichische Kontrollbank AG
    PRT Seguro, António José Secretary General, Socialist Party
    FRA Senard, Jean-Dominique CEO, Michelin Group
    NOR Skogen Lund, Kristin Director General, Confederation of Norwegian Enterprise
    USA Slaughter, Anne-Marie Bert G. Kerstetter ’66 University Professor of Politics and International Affairs, Princeton University
    IRL Sutherland, Peter D. Chairman, Goldman Sachs International
    GBR Taylor, Martin Former Chairman, Syngenta AG
    INT Thiam, Tidjane Group CEO, Prudential plc
    USA Thiel, Peter A. President, Thiel Capital
    USA Thompson, Craig B. President and CEO, Memorial Sloan-Kettering Cancer Center
    DNK Topsøe, Jakob Haldor Partner, AMBROX Capital A/S
    FIN Urpilainen, Jutta Minister of Finance
    CHE Vasella, Daniel L. Honorary Chairman, Novartis AG
    GBR Voser, Peter R. CEO, Royal Dutch Shell plc
    CAN Wall, Brad Premier of Saskatchewan
    SWE Wallenberg, Jacob Chairman, Investor AB
    USA Warsh, Kevin Distinguished Visiting Fellow, The Hoover Institution, Stanford University
    CAN Weston, Galen G. Executive Chairman, Loblaw Companies Limited
    GBR Williams of Crosby, Shirley Member, House of Lords
    GBR Wolf, Martin H. Chief Economics Commentator, The Financial Times
    USA Wolfensohn, James D. Chairman and CEO, Wolfensohn and Company
    GBR Wright, David Vice Chairman, Barclays plc
    INT Zoellick, Robert B. Distinguished Visiting Fellow, Peterson Institute for International Economics

    AUT Austria
    INT International
    BEL Belgium
    IRL Ireland
    CAN Canada
    ITA Italy
    CHE Switzerland
    NLD Netherlands
    DEU Germany
    NOR Norway
    DNK Denmark
    POL Poland
    ESP Spain
    PRT Portugal
    FIN Finland
    SWE Sweden
    FRA France
    TUR Turkey
    GBR Great Britain
    USA United States of America
    GRC Greece

  17. Just me June 5, 2013 at 9:55 am #

    “Meet the Republican who is demanding that the government let poor people starve”

    http://m.dailykos.com/story/2013/05/20/1210395/-Meet-the-Republican-who-is-demanding-that-the-government-let-poor-people-starve

  18. Ceilidhman June 5, 2013 at 10:10 am #

    On a lighter note, here’s a fabulous piece from Russia Television with the irrepressable Max Keiser and (later on) Scottish comedian Franky Boyle discussing, would you believe it, an independent Scotland adopting Bitcoin as its currency!

    http://www.youtube.com/watch?v=CJtP-iXQsvA

    If you are feeling jaded with all this currency talk, it’s the perfect antedote! Enjoy!

  19. Patricia June 5, 2013 at 10:29 am #

    So when a bank borrows overseas, in whatever currency, it is borrowing to increase its reserves at the Central Bank so that it can just create/lend more?

  20. Dave June 5, 2013 at 5:18 pm #

    Given that States are run by anonymous Treasurers related to International Bankers I agree with Neil Wilson’s criticism of Positive Money [3/6/2013, 13:24].

    My own proposals are more like Neil’s – separating personal and business banking – but involve general acceptance of the concepts of Negative Money and the real Wealth of Nations being the development and maturity of their people. Put simply, if money is created as debt then its value is negative, and the more you have of it the more you owe the society which allows you to exchange debt for goods. If people are born uneducated, wild, with different talents and possibly handicapped then the national objective has to be to support, discipline, educate and enskill them them during those phases of their lives when they are not able or needed to contribute to material provisioning. It follows that we are all in debt from birth, we need to survive healthily to be able to work and so, whether or not anyone wishes to employ us, we should be paid – by means of loans – to look after ourselves and our dependents, the loan being written off insofar as it is repaid by proper use and appropriate work. Similar loans could provide for “bank”-authorised business enterprises, and motivation provided by fixed (not percentage) prizes for exceptionally good, hard or reliable work in any field. Deeper analysis shows that bank loans are indistinguishable from credit card transactions and amount to credit limits rather than loans even fraudulently offered in exchange for collateral, so all that is required for personal loans is a statutory Citizen’s Income programmed as a credit limit increment into existing personal bank accounting systems. Bankers, Government officials and Traders would of course get paid their Citizen’s Income the same as everybody else (including the pensioners etc who currently rely on financial gains, rents and interests), while Traders’ business loans would be written off as sales were accounted for. Those now considered “wealthy” need not be stripped of their assets but would be confronted by the reality that they had them “on tick” and perhaps ought to give to the needy what they themselves didn’t really need.

    I liken this to a Copernican Revolution. It changes the interpretation of what we see and makes understanding it a lot easier, but it changes very little else apart from the perceived direction of motion: now acted on as if it were from rich to poor when evidently it is from poor to rich.

  21. guidoamm June 7, 2013 at 4:53 am #

    Now we are getting somewhere. It is the monetary system.

    Very quickly.

    Regardless the monetary system chosen, what matters is that the people must have a say in which one is chosen. One monetary system rather than another, will not prevent recessions. But transparency in the choice of monetary system will ensure that there are fewer and lesser exorbitant advantages to one party or the other.

    Money is just a noun. Anything can be money.

    If an entity is given the privilege to define and impose one arbitrary variety of money, this entity is given the privilege to shape society. This is what is meant by those that have noticed that we transitioned from controlling people physically with walls and chains to controlling them through their wages.

    Money is an intimate and intrinsic part of who we are – our skills, our ideas, our creativity. If we have no control of what we deem is suitable to exchange against our skills we are at the mercy of those that have been given that privilege. Not only that. But by progressively devaluing the medium of exchange, our skills are gradually pledged to the creator of the currency for our own survival.

    It is the monetary system stupid!

    • Golem XIV June 7, 2013 at 8:35 am #

      Yes I like that Guido. Especially your last point about devaluing. I had not thought of it quite that way. Food for thought. Thank you.

  22. Robin Smith June 9, 2013 at 11:13 am #

    Dear Mr. Malone,

    On the matter of having “a debate”, I hear you loud and clear.

    Why is it, when a point of certainty has been reached in “a debate”, that the ones initially calling for “a debate”, suddenly no longer want “a debate” to proceed?

    I’ve spoken many times to Mr Dyson, Mr Jackson, The NEF, over the years and asked them a for “a debate”. They are good guys and try earnestly to satisfy. And when what they discover in “a debate” runs counter to their belief system – their prejudices and what they would like to happen – they no longer want the debate to proceed using, the classic defence mechanisms you rightly protest against here.

    Isn’t that interesting. This is the same kind of psychology in defence of a belief system, just on a more intense level. And an attack on whomever wants to proceed with “a debate” – that is, everyone else!

    May I remind you, these one time “debaters” are heavily funded by ‘charity’. I’ve met with the most senior trustee of that charity. He too initially welcomed “a debate” … until I asked him to dig deeper and precisely where to look – to challenge his belief system, prejudices and the vested rights underpinning the charity. This charity is heavily vested in the very same powers your forum and the money “debaters” are challenging with “a debate”.

    Does this tell you anything important? I have a challenge for you. To ask you, Mr Malone, for “a debate”. I’ll ask the same simple question I’ve been asking Mr Dyson for 5 years:

    “Imagine banking and the money were made a model of purity and thrift. Who then would collect the economic rents of nations, if it were no longer the banks. And then, qui bono?”

    Would anything important have actually happened?

    Many years ago I watched your superb films on things rationality cannot know about. What we call ‘forbidden knowledge’. What you did there was helped me ‘understand’. A teacher. Thank you.

    Do not take this personally, I’m asking for your current belief system to be scrutinised by “a debate”, the same debate others have declined. Mr. Malone is no longer my teacher because he has got so far in “a debate”… and then stopped. Has your inevitable journey into undiscovered country been denied by Golem too?

    I realise this will be an extraordinary challenge for you and sympathise. If you truly want to have “a debate” please contact me directly on 07786 078836 robinsmith@meltfund.com.

    Yours,
    Robin Smith
    CFO MeltFund
    http://www.meltfund.com

  23. Hawkeye June 10, 2013 at 9:35 am #

    Robin

    This Martin Luther quote from Soddy’s lecture on Cartesian Economics is most apt:

    “The heathen were able by the light of reason to conclude that a usurer is a double-dyed thief and murderer. We Christians, however, hold them in such honour that we fairly worship them for the sake of their money… Usury is a great huge monster, like a were-wolf, who lays waste all, more than any Cacus… For Cacus means the villain that is a pious usurer and steals and robs and eats everything. And will not own that he has done it and thinks no one will find him out, because the oxen drawn backwards into his den make it seem from their footsteps that they have been let out. So the usurer would deceive the world as though he were of use and gave the world oxen while he however rends and eats all alone.” Martin Luther, SXVI

    http://habitat.aq.upm.es/boletin/n37/afsod.en.html

    I doubt that you could “prove” what outcome would ensue, were we to implement NEF / Postive Money’s etc. recommendations, any more than they could “prove” what would happen either, in terms of the impact on wealth distribution (economic rents).

    However, as the Luther quote makes clear, it is the veil of deceit that is as harmful as the acts themselves. Currently, we can’t quite see “who benefits” or how they benefit.

    So, despite what you declare, under these monetary reform processes, something very important would happen. And that is the light of day shone on this murky world of banking & finance, to show us all indeed “who benefits”, and make it clear in which direction the oxen do indeed travel.

    That, I would assert, is axiomatic.

  24. lee June 29, 2013 at 7:42 pm #

    As far as i can see now so many people are stuck with 0% confidence in anything ever getting any better and find it easy to blame someone else for the mess. What we need now is the media to change tack and find positives in everything they write to restore little glimmers of confidence to help the seeds of growth take hold.

  25. Robin Smith July 7, 2013 at 12:18 pm #

    Whatever you do, do not think about the following knowledge with care:

    “And, as what is improperly called the National Debt has been admitted, in
    both Houses of Parliament, to be in the nature of a bona fide
    mortgage upon the realised property of the country, it is but strict
    justice that the owners of this property, and they only, should be
    henceforward held responsible for both capital and interest. At all
    events, the industrious classes should not be held answerable for it,
    seeing that the debt was not borrowed by them, nor for them, nor with
    their consent, and that even had it been so, they have had no assets
    left them for the payment of it. Moreover, the realised property of
    this country, being estimated at eight times the amount of the debt,
    the owners or mortgagers have no valid excuse or plea to offer on the
    score of inability, for refusing to meet the claims of their mortgagees. ”

    Its so untrue. Why would any sensible expert or professor want to do things the simple way. That would require a personal commitment… right? It must be made complex, such that the mass of people, all too busy t think with care, keep needing the priests.

    Whatever happens, do not listen to simple ideas.

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