Whose Money?

Paying the cost of your own slavery

Below are the News and Comment entries from February, 2008 until the end of May, 2008.

(For entries before February, 2008, see our new Archive section.)

Saturday, 31 May, 2008

Today, The Newcastle Journal’s leader tells us, in the North East, that

We must not talk ourselves into recession

This echoes the opinion of Common-Purpose-impregnated One North East’s chief economist Paul Mooney (see Thursday’s entry on this website); though the most encouraging statistic to emerge is what the Journal itself calls a “modest” monthly increase in house prices in the region.

More realistically, it’s acknowledged that “rising household bills, fuel prices and fears over job security and a host of other factors also come into this equation - and no-one can pretend it is a comfortable scenario”.

However, although “comparisons with what happened in the early 90s and 80s are spurious”, the causes being dissimilar, “the effects were similar”.

The Journal concludes that the worst we have to fear is “(hard) times for a year or 18 months and a gradual return to an upward economic cycle”.

We agree that the majority, by hook or by crook, will survive the present bleak economic future.

However, we have to point out the most significant difference between our situation now and that of previous downturns, which is the sheer quantity of debt which burdens not only the government but private individuals and their families.

To be precise, in 1983 total private debt, at Ł151 billion, was slightly less than the national money supply (the amount available to repay that debt), which then stood at Ł161 billion.

By 1985 private debt, now standing at Ł209 billion, already exceeded the money stock by Ł4 billion; and by 1992, the shortfall had risen to no less than Ł100 billion.

So what were the comparable figures in the last available statement by the Bank of England?

According to statistics released for the first quarter of this year, private debt has now soared to Ł2,522 billion, with the money supply a mere Ł2,024.9.

In other words, ordinary people are going to be hit far harder by the present downturn, because they are having to cope with previously unthinkable levels of debt: debt which is the result of inexcusable loose lending by profiteering banks, and the equally inexcusable decision of the government to turn a blind eye and proclaim a boom.

Other pages of The Journal confirm this fact:

Northern Rock debtors rise is forecast

The Journal

NORTHERN Rock is to more than double the number of people who work in its debt management arm, according to a document seen by the BBC.

The internal memo said the recently- nationalised bank had the equivalent of 176 full-time workers in the division at the end of April, but this number is set to increase to 444 by the end of March next year.

It suggests Northern Rock is expecting to see a big increase in the number of people having trouble paying their mortgage.

Meanwhile …

Disquiet as bank bosses in line for Ł120m deal

Iain Laing, The Journal

A CONTROVERSIAL bonus scheme which could net five senior directors of banking giant HSBC more than Ł120m over the next three years has received less than unanimous backing from shareholders.

About 82% of the bank’s investors voted in favour of awarding chairman Stephen Green and four other executive directors a chance to earn cash and share bonuses up to 11 times their salary.

And here’s a video interview with speculator Jim Rogers, in the Telegraph:

http://www.telegraph.co.uk/telegraph/telegraphtv/?ID=Business&bcpid=1137770159&bclid=1233427573&bctid=1564399577

and a written one in the Guardian, from 2004:

http://www.guardian.co.uk/business/2004/jul/03/6

Whose Money? says:

Great if you can just up roots and move off to enjoy the fruits of your speculation in a comfortable residence in the new boom area. Not so good if you're struggling to keep your head above water, and your family fed and housed, in a nation which is being relegated to "dog" status, and have no means of escape.

Is it really a good idea to run our economies in a way which means there must always be people on the breadline? Do we really want to cling to a financial system which encourages speculation in life’s essential commodities? A system that makes it profitable to promote shortages by hoarding, holding back on production, and suppressing discoveries or inventions that might affect profits? Why, for instance, has so little official interest been shown in cold fusion (http://jlnlabs.online.fr/cfr/index.htm)? Why has so much effort been put into the destruction of British agriculture (http://www.warmwell.com/)? Who killed the electric car? (http://quicksilverscreen.com/watch?video=44020)

You can’t blame Mr Rogers and his ilk for taking advantage of the many opportunities for unproductive gain offered by a system run purely according to financial logic. The plain fact is that, whatever the system, most people will seek to maximise their incomes, even if this means speculating in people’s homes and foodstuffs, or cheating taxpayers by playing the benefits system for all they’re worth.

But there would be far less opportunity for speculative gains under a system of publicly-created, debt-free money; and far less redistributive taxation up for grabs if everyone was assured, instead, of a national dividend (basic income) that would enable even those earning a low wage to enjoy a modestly decent standard of living without being forced into debt, or fiddling the Exchequer.

Sorry, Journal, but under a system that depends on borrowing at interest just to put money into circulation it’s not a question of “talking ourselves into recession". Talking has nothing to do with it.

The bottom line is that less bank lending equals less money, equals economic slowdown. Full stop.

Talk or no talk, sales, and employment are bound to fall, as the millions of ordinary peoplewho have been gallantly consuming the nation into a boom are forced to cut back on non-essential spending merely to keep up with their mortgage repayments, feed their families, and pay the bills.

Friday, 30 May, 2008

Food prices rise 5.8pc as weekly shopping bill rises to Ł136

Ben Farmer, The Telegraph

The leap of nearly six per cent since the start of the year has added an estimated Ł500 million to the nation’s monthly groceries bill, as the cost of living continues to stretch already strained household finances.

A basket of typical weekly shopping now costs Ł7.48 more than in January, up 5.8 per cent — nearly double the official rate of inflation …

… Rising fuel costs, growing demand for food from other parts of the world and poor harvests for some crops have all been blamed for the rise …

… A study, led by the Humboldt University of Berlin, has predicted that demand for food will outstrip supply for at least another five years.

Whose Money? says:

We have been told that “free” trade - effectively, cut-throat competition for world markets, with the cheapest goods, under a financial system which keeps money scarce, always winning hands down - brings prosperity; and that it’s an economic sin of the first order to promote maximum agricultural and industrial productive capacity in your own nation.

Supranational organizations like the EU and the WTO have imposed this doctrine as a law (though, curiously, turning a blind eye to the peccadilloes of favoured nations, in order to divert production into the areas of their choice, planning the world into the state of helpless interdependence and subjection to central rule which is their Utopia.

The present food shortages have called this policy’s bluff, showing how important it is that fertile parts of the world are not priced out of the market simply because they do not enjoy the “natural advantages” of cheap labour and poor working conditions. The sensible course is surely for each country to aim to feed itself, even if this requires subsidies, so that when problems arise in one part of the world, areas unaffected by those problems are able to help out.

Monopoly in food production, as in all other areas is a thing to be avoided.

Britain’s inability to feed itself has been proceeding for some time. CH Douglas pointed out, in the 1930s, that no fewer that 3 million acres of good farming land had been abandoned by the end of World War I, not because of EU-imposed set-aside, but because of a vicious tax on land which had to be paid in money, when the farmer’s wealth was measured not in money but in the goods which he produced. (See: Dictatorship by Taxation, a speech given at the Ulster Hall in Belfast on 24 November, 1936, http://www.alor.org/Library/Dictatorshipbytaxation.htm#1a)

Under a sensible financial system, it would be possible both to lower taxes, and to make our own agricultural produce more affordable, by distributing publicly-created, money, issued debt-free, either in the form of price subsidies, or (our preferred option) as a non-means-tested national dividend to all adult citizens; while, at the same time, imposing an import levy on any foods from abroad which could equally well be grown at home.

What is certain is that “free”-trade, globalist policies imposed by supranational institutions which have no democratic legitimacy are now leading to starvation in third-world countries and threatening the budgets of already debt-ridden or impoverished families here in the UK: and that, until we free ourselves from the absurd restraints that global controllers and planners are exerting on us, in particular through our membership of the European Union, there will be no chance of introducing the publicly-created, debt-free money which, alone, is capable of boosting domestic agricultural production, and of making Britain a contributor to, instead of a burden upon, world food stocks.

Thursday, 29 May, 2008

Region well placed to survive economic slowdown

Adrian Pearson, The Journal

THE North East’s top economist has dismissed fears of a recession crippling the region – but warned that the days of uninterrupted economic stability are over.

Paul Mooney, chief economist at development agency One NorthEast, said last night that the region is “remarkably well placed” to survive the economic slowdown currently worrying business leaders across the UK. His knowledge of the economy has convinced him that while the region may not see its impressive record of recent years matched in the near future, there is nothing to suggest the North East will not achieve its targets of narrowing the North-South wealth divide.

Whose Money? says:

Hmmmm ...

The greater fall in illusory wealth (ie, over-priced property) in London and the south-east of the country, where it increased disproportionately during the recent lending binge, will, of itself, probably effect a closing of the gap between north and south.

But we are intrigued by the idea that the North East has been notching up an "impressive record" over the past few years. Yes, there has been the Quayside development, an expansion in the arts and what has come to be known as "culture" (a word bandied about with increasingly less discrimination), and a flourish of highly-paid quangos, producing a lot of hot air with their mantras of "diversity" and "best practice", as they set and implement their pet agendas.

But there has been no growth in our capacity to produce the basic goods needed for survival which should be the bedrock of any economy: regulation by the European Union and the nominally British officials who promote it, plus the financial poverty engendered by dependence upon debt money have made sure of that.

In a time of world food shortages, the sheer idiocy of any country relying on imports is laid bare. Set-aside, quotas, tipping dead fish back in the sea, and all the rest of the economic destruction inflicted by the Common Agriculture and Fisheries policies, expose the nation both to scarcity and to manipulation by those intent upon establishing first continental, then one-world government, under one all-powerful financial and corporate élite.

When you actually read what Mr Mooney has to say, it is evident that the headline of this report is an over-optimistic interpretation of what is merely a lot of fudge and waffle - the kind of stuff we've come to expect from economic "experts", especially those representing agencies such as One North East, which, in bed with politically-motivated "charities" like Common Purpose (see this video of its founder, Julia Middleton: http://www.meettheauthor.co.uk/bookbites/1203.html) aim to lead "beyond authority" (ie, to manipulate the poor, put-upon electorate down paths which they would never follow of their own free will).

There's one thing you can be sure of: those comfortably ensconced in the quangos purportedly aiming to revive the North-East's economy will never deign to look at the crucial issue of boosting the region's money supply, either by campaigning for the creation of an adequate and well-distributed supply of debt-free money by public authority, or by advocating the use of supplementary currencies.

Why should they care? They might be doing themselves out of a sinecure.

Wednesday, 28 May, 2008

Tumbling prices dog US housing market

Andrew Clark, The Guardian

The fog of misery enveloping the American housing market has thickened with the sharpest drop in property prices for 20 years, leaving households in worst hit cities facing the prospect of their homes almost halving in value over a year.

Prices for US family homes fell 14.1% year-on-year during the first quarter according to the closely watched S&P/Case-Shiller index. Out of 20 cities in the survey, 19 reported a fall.

Whose Money? says:

So, "The bottom line is that if you buy a house today, there's a good chance it'll be worth 50% less in a year's time". And we can tell you, from our own experience, that the same thing is happening here.

The good news - if you didn’t go over your ears in debt to buy it - is that the real value of your house is exactly the same as it was before the credit crunch. It will continue to put a roof over your head, offer you protection from the elements, and provide a secure environment in which to bring up your family. If you want to move, you will be able to exchange it for a property of equal value.

The bad news is that you can no longer use your home as a spending account into which deposits are automatically made as the amount of money banks and estate agents tell you it’s worth goes up, month by month.

The people who told you that you were wealthy are now telling you that you’ve become a lot poorer, and are likely to become poorer still - especially if you’re stuck in negative equity, paying off the grossly inflated price of the “experts’” overvaluation.

Worse, with the banks cutting back on the amount of loans they are prepared to extend, there is going to be less money around: the inevitable consequence of our rulers’ insistence on creating the national currency as a debt owed to private, profit-making businesses: and scarce money equals businesses going bust, redundancies, and the possibility of cuts in income for many people, with repossession of the family home when the huge mortgage repayments, which seemed manageable in the days of soaring prices, can no longer be met.

Why did the banks lend so freely?

Because the more they lend, the greater their profits.

Why did the Government make no attempt to check this reckless lending?

Because bank lending puts money into circulation, giving the illusion of a boom: which allows our rulers to bask in a deceptive glow of good economic management even as the production of basic goods and is decimated, and valuable utilities and services are sold off to the highest transnational bidder.

Banks, especially when governments collude with them, are the worst possible bodies to put in charge of something as vital as the national money supply. Experience has proved again and again that they cannot be trusted.

What we need is a return to, at the very least, the same proportion of debt-free currency in publicly-created, non-cash money, as was usual when notes and coins were the principal means of payment for most of the population.

Don’t be too down-hearted, though. As is usual, with the filter-up effect experienced every time the banking system encourages people to over-extends themselves financially, and then dumps them, those at the top are experiencing a gratifying influx of cash. So …

Burberry beats the downturn with 25% profit surge

Graeme Wearden, The Guardian

Demand for luxury handbags and shoes is still strong despite the tough economic conditions, Burberry reported today.

Profits surged by 25% in the year to end March, to Ł195m, even though the credit crunch and rising inflation forced many consumers to cut back on spending. Sales of Burberry shoes, which cost up to Ł495, more than doubled, and luxury handbag sales were also up.

Whose Money? says:

Well done, Burberry, and all the rest of the big global brand names!

But hard luck on the small, locally-based business catering for those now on the breadline!

Do we really want a financial system that eliminates variety and local distinctiveness, while pushing prices up beyond the reach of more and more people?

Tuesday, 27 May, 2008

Local income tax 'would be illegal'

David Maddox, The Scotsman

THE Scottish Government's plan for a local income tax has been dealt another blow after an expert said it would break European and UK law.

Professor Chris Himsworth told MSPs that a European treaty ratified by Westminster could kill off the idea of replacing the council tax with a fixed local income tax of 3p in the pound.

Whose Money? says:

A nice little squabble north of the border about who raises taxes and how they raise them. The trouble is that what should be a local matter has got caught up in the “national independence” agenda.

We wonder if the Scottish National Party would have managed to drum up quite so much support if a sensible, debt-free money system, supplemented by regional and local currencies, had been in place?

We’d say that, in a small country with, for the most part, a common language and links of blood and friendship criss-crossing borders in a tight web, there would have been little support for separatism, if it hadn’t been for a monetary set-up that systematically drains power towards the bloated capital: a fact which is also resented by regions such as the North East.

We also wonder what would be the outcome if Scotland seceded from the UK, without re-joining the EU, and took control of its own taxes, while continuing to use debt as, effectively, its sole means of distributing purchasing power.

How long before there was a call for independence from neglected outlying regions, with Glasgow and Edinburgh taking over from London as most-hated cities, gobbling up the biggest share of the cake?

An alternative scenario is sketched out by James Gibb Stuart, in his short booklet, Scotland and its Money. Only if Scotland were to issue its own publicly-created money, debt-free at source, he says, could it enjoy real independence.

What is more:

“It has long been realised that if one small nation-state managed to bread the bankers’ credit monopoly, and articulated the methods by which this had been achieved, others would want to follow. That is why the big financial interests have been concerned to see that no such experiment ever materializes, and to stamp fiercely upn its manifestations, wherever they might be found.”

There can be little doubt that a debt-free currency flourishing across the border would make the absurdities of the debt-based system that we were still landed with only too obvious to the rest of us.

The booklet includes interesting information about the “Bradburys” (debt-free money issued by the government at the urgent request of the banks at the onset of World War I: see also our entry for 8 May), and about Australia’s Commonwealth Bank.

You can order Scotland and its Money, and other books by James Gibb Stuart, from Ossian Publishers, here: http://www.ossianbooks.co.uk/books.php

Also of interest is James Gibb Stuart’s suggestion for revitalizing local autonomy with vouchers issued by the council. Read about it at http://www.sustecweb.co.uk/past/sustec13-5/policy_proposal.htm

To see the kind of issues that fuel nationalism in Scotland, and which are causing such resentment in the English North East, you have only to read this article from yesterday’s Newcastle Journal:

Red tape blocks our new roads

Adrian Pearson, The Journal

THE Department for Transport is spending less on roads and railways in the North East than it is on administration costs – and the cash available for the region is set to shrink by millions of pounds.

Wage bills and consultancy costs are taking up more Government cash than the needs of North motorists, the DfT annual report has revealed.

Transport campaigners have called for a radical rethink in money management at the department after it was revealed that essential North East transport schemes such as the dualling of the A1 north of Newcastle could have been funded with less cash than it costs to run the money-hungry department.

Whose Money? says:

We bet money allotted for constructive spending is a lot less generous, too, than that enjoyed by all the quango-spawning quangos that have networked themselves to power throughout the region, and the nation. (Though, of course, we shouldn’t complain about that, should we? Not when we were given the chance to elect all this unnecessary interference into legitimate office, and were insubordinate enough to turn it down!)

Is there the least chance that people in control of their taxes would choose to neglect the improvement and maintenance of vital infrastructure, in order to fund a cancerous growth of administration, incestuously linked with bodies (elected or unelected) set on frog-marching a confused nation in the transnational direction most pleasing to finance and big business?

But what’s this about half of the “Ł83m handed to councils” being “permission for councils to borrow” ? Heaven help us! Aren’t long-suffering taxpayers forking out enough to service unrepayable debts already?

Come on, Journal: if you really want to see a thriving North East, why don’t you start campaigning for money reform?

Let’s make this a James Gibb Stuart Day, and recommend another of his books, Why Only in Fantopia?, which tells the story of two towns, and two bridges, and two very different outcomes.

Read a review here: http://www.prosperityuk.com/prosperity/revus/fantopiarev.html

and order it here: http://www.ossianbooks.co.uk/show.php?item=FANT

And in today’s Journal:

Credit crunch putting North's future at risk

Adrian Pearson, The Journal

A GOVERNMENT minister has ordered a study on how the North’s regeneration will be hit by the downturn in the economy.

Local Government Minister John Healey has told regeneration experts the whole region would feel its impact.

His comments followed an admission by an adviser in his own department that not enough had been done to revitalise northern economies.

Whose Money? says:

The only thing that will revitalize northern economies (as well as other neglected regions, and the many black spots that blight even prosperous parts of the country) is publicly-created, debt-free money, preferably distributed as a non-means-tested national dividend to all adult British subjects; to be supplemented, where necessary, by equally debt-free regional and local currencies.

And if this is ever to happen, the first thing we must do is reclaim our right to make our own laws, by repealing the 1972 European Communities Act.

Finally , today, a message from Stephen Zarlenga of the American Monetary Institute, which you could pass on to any friends and relations across the Atlantic:

Dear Friends of the American Monetary Institute,

Memorial day is the most reflective of American Holidays, when we ought to honor and devote our attention to those who've given above and beyond to the advancement of humanity.

How far we have strayed from such an honor system! Look and see who is "honored" in our nation, and for what. Our society is so very sick, that instead of honoring those who contribute to its well being, the diseased mostly promote and emulate those who have unjustly accumulated an obscene share of our nation's wealth and power. There is often a direct
relation between how much damage someone does and how much wealth they receive in payment for it! For example in the media: Rush Limbaugh, Shawn Hannity and even characters like ABC's Stephanopoulis and Gibson. We have no real media in this country. Keith Olberman is a rare exception but remember one third of Americans (the poorest and least educated) don't have cable television.

However the media problem is small change compared to the macro-destroyers operating against America - the financial sector (and the same is true in other lands). This does not require a conspiracy because in any case it would be the inevitable result of our flawed monetary and banking system. It results from the privatization of control over the nation's money system which has removed it from the checks and balances of our constitutional republic. Allowing it to function on a fractional reserve basis, whch gives the banking system a huge accounting privilege. Letting the miscreants keep the loot they have stolen under color of law; so called "laws of economics" which deify the market.

That has fostered the accumulation of unearned wealth to obscene levels that are destructive to democracy, to justice and to humanity. With present day weaponry, it now even risks the annihilation of the species.

Thus the banking/money system promoted real estate speculation and created the real estate bubble, instead of focusing on repairing our vital infrastructure. New Orleans and Minneapolis and the army of unemployed pay the price so far, while the financial establishment gets bailed out. Who pays for the bailouts? One way or another the people of our country. Why? Because they don't understand how our money system operates against the general welfare. Their legislators also either don't understand, or find it convenient to pretend they don't understand.

The media does its best to block understanding, in order to promote the interests of the medias ultimate owners/controllers: the financial sector.

Memorial Day rightfully honors our veterans and our warriors who have and are now paying the ultimate price for the misdirection of our society by corrupt finance. A more meaningful thing would be to take better care of them. To pretend that America does not have the ability and resources to do that is an obscene lie.

Am I, as Director of the AMI overly passionate about this? Perhaps. You see we are involved in this battle on a daily basis. To get an idea how we are in combat against this insane system, please see our website at http://www.monetary.org Attached is a two page summary of the problem and solution: The Need for Monetary Reform.* We try to make our materials easy to understand, yet accurate.

And we do this without comfortable funding. The Institute did not begin with an endowment but with a donation of books in 1996. We have survived and will continue to grow and move forward based on much appreciated donations, and the sales of our classic research achievement, the Lost Scence of Money book, and our CD's. (see http://www.monetary.org/lostscienceofmoney.html )

But to continue our work in a more effective way, we really need your help. I better repeat that:WE CAN REALLY MAKE A BIGGER DIFFERENCE WITH YOUR HELP!

With a slightly higher level of funding, we could be moving five times as rapidly. So we ask your assistance this memorial day: Please support us in this battle. Make a tax deductible contribution at our website, through Paypal or by mailing a check. The American Monetary Institute will use your contribution to achieve monetary reform, to move our country towards justice, truth, freedom and what should be the American way.

I've just returned from the Northwest U.S. where we made important strides with forming AMI Chapters in Portland, and Seattle and Albuquerque. Seattle drew some really sharp young people who understand the challenge. Albuquerque attracted an older more experienced group who want to move forward on monetary reform activities. In neither city were they afraid of taking up this challenge.

With better funding for trips more chapters could be organized much faster. These chapters educate our citizens and state and local legislators on the need for monetary reform, and how it can help solve their most pressing local problems. With the assistance and support of such local politicos, and normal down to earth citizens, really effective pressure will be brought to bear at the national level.

You can help by joining a chapter in your area and by making a donation, or purchasing a copy of our book The Lost Science of Money, at our website. Consider attending the 4th annual AMI Monetary Reform Conference at Roosevelt University in Chicago, this September 25-28th. We bring together twenty of the most knowledgeable speakers on monetary questions, and we make it an enjoyable event. See the description at the website, and since I have not had a chance until now to remind people, the conference discount ($245 instead of $295 will remain in effect if postmarked by May 31. (registration form is at
http://www.monetary.org/2008conference.htm).

* You can find this document on the AMI website, see link in the letter.

Perhaps some of our readers would be interested in attending the conference, and getting to know more of what's going on in money reform in the States.

Monday, 26 May, 2008

Tories plan boot camps for jobless youths

David Hencke, The Guardian

A future Conservative government will bring in "boot camps" for unemployed young people aged between 18 and 21 who refuse to take a job, Chris Grayling, the party's welfare spokesman, will say tomorrow.

In a significant hardening of Conservative policy towards welfare claimants, he will announce the abolition of benefit payments for any able-bodied person under 21 who is out of work for more than three months and who refuses to go on a compulsory community service programme or a "boot camp" training course aimed at improving their work discipline and giving them basic skills to get a job.

Whose Money? says:

No doubt this, or a variation on the same theme, will be taken up by Labour and other parties: another example of the increasingly authoritarian measures necessary to paper over the damage inflicted by our debt-based money system - a system which requires wage packets to distribute money, even though the work done to acquire those wage packets may be unnecessary, or even counter-productive (as in the case of government regulatory activities, or the farming out of babies and small children, so that both parents may seek full-time paid employment outside the home).

Under a sensible system of publicly-created, debt-free money, the social ills attendant upon low pay, unemployment, and the dependence on benefits and tax concessions of even those who are earning, would simply not exist. Part-time working and job-sharing would be the norm, with homes and families properly cared for, and voluntary help in the community undertaken, by people who still had time and energy left for work done for love, or from a desire to be of service to their neighbours and their communities.

As CH Douglas pointed out long before automation had made its present inroads into production, when sufficient goods and services can be produced by only a fraction of the work force, why should working hours not be cut, without loss of income?

What is wrong with people having more leisure - as we were promised would be the case in the 50s and 60s? Why should two wage packets now fail to do the job satisfactorily accomplished by one, only thirty odd years ago? Why are so many people stressed and overworked, while a growing minority kick their heels, and their more fortunate fellow beings, in resentful and impoverished idleness, giving the state an excuse to increase its control by stepping in and frog-marching them into bootcamps?

With a non-means-tested national dividend distributed to all adult citizens, we might see the re-emergence of a proper balance between employment and home life; a greater sense of opportunity and belonging throughout the nation; and the flourishing of creative enterprises, as people enjoyed the greater control over their lives, and the extra time to follow their own interests and talents, which even the smallest dependable income brings. (Just ask those fortunate enough to be born into financial security!)

Chronic unemployment and boot camps are the natural consequences of an unnatural economy, geared to serving the aims of finance, rather production to meet human needs.

Sunday, 25 May, 2008

City bonuses defy credit crunch and hit new record of Ł13bn

Edmund Conway, The Telegraph

A Telegraph analysis of government figures shows how bonuses for City workers and other financial services professionals have continued to soar, exceeding previous records by more than Ł500 million.

The recent annual awards were mostly triggered by large profits made early in 2007, before the credit crunch hit, but will fuel a growing row over whether bankers are encouraged to take excessive risks with investors' money.

Whose Money? says:

That should keep them going nicely through the credit crunch! Meanwhile, ordinary people are being thrown out of their homes, as they fail to keep up with the mortgage payments they were, criminally, allowed to take on in order to maximise bank profits.

The Government, too, are complicit, since they were happy to allow the borrowing bonanza to go on, to pump money into circulation and give the illusion of “growth”.

It is interesting that “The Ł12.6 billion sum would almost match the Ł15 billion hole that has emerged in the accounts of British banks as much of their profitability proved temporary”. Will orthodox economists continue to maintain that it is safer to leave money creation to private businesses, because they will prudently avoid backing activities likely to make a loss?

Why should they worry? They can just take what they please, and leave the rest of us to pay the bill.

And, in case anyone should think we are indulging in the particularlyunattractive sin of envy, a quote from CH Douglas will make our position clear:

“To me it is a matter of no consequence whatever that many or most people are very much richer than I am. The only financial matter which is of consequence to me is that I shall be well enough off to meet my own needs, which are quite modest, as I believe are those of most people.”

We agree with him that “the aim or objective of the average human being (is) to live in a pleasant house, have sufficient to eat, and to be well clothed”: and we also agree that, this being the case, even a “child would say at once that what you ought to do was to build sufficient pleasant houses, grow sufficient food, and weave whatever clothes you require and then stop and enjoy yourself”.

Unfortunately, under the present, debt-based financial system, this is not enough. Under the present, debt-based financial system you have to go on and on producing short-lived, disposable goods, at the behest of fashion, in order to put into circulation money which can be creamed off at source by essentially non-productive bankers and financiers.

You can read the CH Douglas speech from which we’ve quoted in full on the website of the Social Credit Secretariat, here: http://douglassocialcredit.com/resources/tsc/2008_spring.pdf

Douglas Social Credit Secretariat’s home address: http://douglassocialcredit.com/index.php

Saturday, 24 May, 2008

Two recent stories from the Newcastle Journal:

Move 10,000 jobs North and save Ł78m

Adrian Pearson, The Journal

THE Government could save Ł78m a year by moving 10,000 jobs from London to the North East, a report will say today.

A damning report by the Commons Public Accounts Committee has warned the Government that “the assumption that staff have to be in London should always be challenged” after revelations Ł325m a year is wasted nationally on inefficient use of offices.

And:

Head count error costs region dearly

William Green, The Journal

NORTH East councils are losing out on millions of pounds in public funding because of “inadequate” official statistics on the region’s population, it was claimed yesterday.

The warning from the Association of North East Councils (ANEC) came as MPs launched a blistering attack on the “shambles” of the system supposed to accurately work out the population and its future size.

Whose Money? says:

But why should all the money go down south in the first place?

Local government will never have any clout until local people get first use of their taxes for their own priorities - and that means ALL taxes: income tax, national insurance, Vat … the lot. Westminster should receive only that which is necessary for genuinely national business (ie, defence) which has been specifically costed and approved by taxpayers.

Naturally, ordinary people will only benefit from financial and political decentralisation if:

a) there is root and branch reform of local government, including abolition of undemocratic unitary authorities, and free votes, in open meetings, for unwhipped, non-party-political representatives actually living in the area concerned on a day-to-day basis (we understand that the Bill of Rights, 1689, says that all votes in Parliament, and therefore, by implication, in councils, should be free); and

b) a switch to publicly-created, debt-free money, preferably distributed in the form of a non-means-tested national dividend to all adult citizens, and supplemented, where necessary, by equally debt-free local and regional currencies.

It would, of course, be necessary to withdraw from the European Union to implement these policies: but since this would give us an opportunity to revive our industry and agriculture, reclaim our fisheries, and maybe even control our own utilities and services, most people would consider that a small price to pay.

Incidentally, all the treaties giving EU law precedence over our own Common Law are illegal anyway, under the British Constitution (and don’t believe them if they tell you we don’t have one).

Friday, 23 May, 2008

Crewe and Nantwich by-election: Edward Timpson victory a blow for Gordon Brown

Andrew Porter, The Telegraph

The Conservative victor in the Crewe and Nantwich by-election today hailed his triumph as sending Gordon Brown and the Labour Party a loud and clear message: “The Government needs to change.”

Whose Money? says:

As usual, the media attention goes to party politics - as if a mere change of government would make any difference to the crucial issues facing this country: the deliberate undermining of the Constitution by a determined and unrepresentative élite; absorption into the European Union; and, of course, reform of the financial system.

In all these issues, the same enemy is at work: a plutocracy using ill-gotten wealth, and the influence which that wealth brings, to control nations, and the real resources of the world.

Party politics is a great way to make sure only the right things get onto the agenda, isn’t it?

Thursday, 22 May, 2008

Back again, to find the same old stories hitting the financial headlines. For instance, will interest rates go up or down?

MPC minutes hint at splits as BoE steps up inflation crusade

Edmund Conway, The Telegraph

It could hardly be clearer now that the Bank of England is on a crusade against inflation. The minutes to its latest meeting suggest that it regards a housing market slump and a possible recession as prices worth paying to keep inflation under control in the long term.

The threat to growth, as prices rise, and the housing market no longer supports equity withdrawal for current spending:

Inflation and weaker housing weigh on retail sales

Larry Elliott, The Guardian

Britain's shops and stores suffered the first back-to-back falls in spending in more than two years last month as higher inflation and the housing market slowdown prompted consumers to tighten their belts, official figures showed today.

Data from the Office for National Statistics showed that retail sales volumes dropped by 0.2% last month following a similar fall in March. The decline was smaller than the City had been expecting, and analysts said it cut the already slim chances of the Bank of England cutting interest rates next month.

http://www.guardian.co.uk/business/2008/may/22/consumerspending.retail

Then there’s the progress of the popular campaign against unjust bank charges, reported in the Mail: http://www.dailymail.co.uk/home/frame-money.html - though, as we’ve pointed out repeatedly, what’s the point of quibbling about minor injustices inflicted by the banks, in the face of the huge injustice of a national currency which has to be borrowed into existence: much of it by private individuals and small businesses, at their own risk and expense?

So we’ve decided to give the papers a miss today, and look, instead, into the relationship between the National Debt and today’s excessive taxation.

In 2006/7 we paid out no less than Ł31,000,000,000 (Ł31,000 million, or Ł31 transatlantic billions) interest on the cumulative borrowing of generations of British governments - much of it undertaken under highly dubious circumstances (see the entry in our News and Comment section for 8 May).

In that same year, total Income Tax Receipts amounted to Ł143,327 million, more than one-fifth of which was required to pay the interest on the National Debt; or, to look at it another way, out of every five income tax payers, one was forking out Income Tax merely in order to cover the (entirely unnecessary) charges required to roll over and increase the National Debt from year to year.

Those who have been reading this website for some time will, perhaps, notice a discrepancy. We have previously quoted CH Douglas as saying that interest on the National Debt, during the 1930s, swallowed up not only all Income Tax receipts, but also all the money collected in Surtax and Death Duties.

Are we, then to assume that the National Debt is now less of a burden than it was seventy years ago?

Of course not!

It’s not that the National Debt has gone down - indeed, it is currently threatening to break all records, not only in absolute figures, but as a proportion of GDP! - but that the amount of money extorted in Income Tax has risen ludicrously, as governments insist on taking over more and more responsibilities. Indeed, it now has to be supplemented not only by the deceptively-named National Insurance levy, but by more and more cunningly-devised tax wheezes. (See: http://www.hmrc.gov.uk/stats/tax_receipts/table1-2.pdf)

Also of interest is the fact that official National Debt figures ignore the enormous government expenditure demanded by pension liabilities for government employees (increasing in number, as more and more “jobs” are created, to mask unemployment, in an economy still dependent on wage packets to distribute purchasing power, in an age of automation); and by misguided public/private finance initiatives, landing the nation with what are likely to become yet more essentially unrepayable debts. (See: http://www.economicshelp.org/2008/03/national-debt-statistics-problem-of.html)

So we feel that organisations like The Taxpayers’ Alliance, which are doing an excellent job in representing taxpayers’interests, should also be aware of the huge amount of waste involved in servicing unnecessary debt: unnecessary, because any sensible government would avail itself of its right to create the nation’s money supply debt-free, instead of continuing to take out endless loans, to the detriment of this and future generations.

Those who have not fully investigated the situation speak of eventually paying off National Debt.

This is pure nonsense.

Careful analysis of the situation will prove that UNLESS WE SWITCH TO A PUBLICLY-CREATED MONEY SUPPLY WHICH COMES TO US DEBT- FREE AT POINT OF ISSUE REPAYMENT IS IMPOSSIBLE. Michael Rowbotham has gone into this thoroughly in his ground-breaking book, The Grip of Death (read the first chapter here).

In the mainstream media, however, none of this is discussed in relation to the present dire economic situation.

Why not? And what will it take to break down the wall of silence?

Thursday, 15 May, 2008

We’re taking a week’s break - back Thursday, 22 May.

Meanwhile, take a look at the latest article from Ellen Brown, on Web of Debt:

The secret bailout of JP Morgan: how insider trading looted Bear Sterns and the American taxpayer

... Like the Panic of 1907 that justified a “bankers’ bank” to prevent future runs, the collapse of Bear Stearns has been used to justify a proposal giving vast new powers to the Federal Reserve to promote “financial market stability.” The plan was unveiled by Treasury Secretary Henry Paulson, former head of Goldman Sachs, two weeks after Bear Stearns fell. It would “consolidate” the state regulators (who work for the fifty states) and the SEC (which works for the U.S. government) under the Federal Reserve (which works for the banks). Paulson conceded that the result would not be to increase regulation but to actually take away authority from state regulators and the SEC. All regulation would be subsumed under the Federal Reserve, the bank-owned entity set up by J. Pierpont Morgan in 1913 specifically to preserve the banks’ own interests …

…Evidently “promoting market stability” means that whistle-blowers and the SEC must be silenced so that a grossly illegal situation can continue, since the crime is so pervasive that to expose it and prosecute the criminals would unravel the whole financial system. As Nathan Rothschild observed in 1838, when the issuance and control of a nation’s money are in private hands, the laws and the people who make them become irrelevant.

Read it here:

http://www.webofdebt.com/articles/banking-bailout.php

Whose Money? says:

We find "naked short selling" beyond comprehension. How can you "borrow" something without the owner knowing it? How can you "borrow" something that doesn't even exist?

But then, how can you make people pay through the nose for "lending" them something you haven't got?

It's all just one big scam.

Wednesday, 14 May, 2008

Is this sheer stupidity or not?

A postscript to yesterday’s posting re Tracy Corrigan’s endorsement of globalisation in the Telegraph, this comment below the article, at http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/05/13/do1303.xml:

I now live in NZ - a country which is protectionist to the gills!

A Canadian pension fund recently tried to buy a controlling interest in Auckland airport and the government stopped them - as if the asset could ever be taken out of NZ!

Non residents must also obtain consent to buy farmland and property over a certain (internationally-speaking very small) value.

The antipodean countries are very parochial - understandable historically due to the fact it took so long to get here and they were quite isolated. Let us hope that modern communications and a better travelled population brings them into the wider global village and helps them to look outward and to grow.

Scaring off big international investors is not the way forward in the modern world! They even recently had a situation where one man's objection derailed an international cuisine school proposal cited to bring NZ$68 million a year into the economy! Sheer stupidity!

Posted by Smoking Gun on May 13, 2008 11:17 PM

Whose Money? says:

The same old knee-jerk assumption that the main aim of economic activity is to produce money, with everything, including human well-being, devalued by comparison. Maybe the objection to the international cuisine school was over the top, but will New Zealand actually suffer from the lack of it?

This fixation on money would be reasonable if it actually were, by its very nature, a scarce resource. But is it really impossible to acquire a sufficient amount of it without selling up national assets (which, Smoking Gun, even if they can't be physically removed, may not be used to the nation’s best advantage when controlled by foreign interests), or skewing production towards the export market?

Of course it isn't!

We have the actual example of publicly-created, debt-free notes and coins: and there is no reason why these could not be supplemented by an adequate supply of non-cash money.

If we keep arguing from the false premise that all economic activity must be aimed primarily at bringing more money into the country, rather than ensuring the production and distribution of sufficient goods and services for all, we are inviting the lunatics to run the asylum.

The docility with which the Smoking Guns of this world - with their accusations of parochialism, and blind enthusiasm for "growth" of any kind - accept this nonsense is depressing, and patronisingly offensive (eg, "Let us hope that modern communications and a better travelled population brings them into the wider global village and helps them to look outward and to grow") to nations which prefer to retain their own power of decision-making.

Fortunately, though, more and more people are questioning the status quo, and realising how the establishment keeps its grip on us by constantly reinforcing only the "right" ideas - see another comment below the same article:

I've been reading up on an organisation that, up until recently, I didn't know existed. It's called Common Purpose, and it seems the group has infiltrated the mechanisms of Britain -- the judiciary, politics, quangos, the media, the police, and the military. I suggest others go to Google Videos and search for the organisation, and also read up on it. Is this a fifth columnist group deliberately destroying our nation to lead us into a 'post democratic age'?
Posted by Michael Anthony on May 13, 2008 11:45 AM

And he’s backed up by another reader:

To Michael Anthony on May 13, 2008 11:45 AM

Welcome.
You are indeed fortunate to have heard of 'Common Purpose'. It's not something you would have stumbled across (in my experience anyway) from trawling other newspapers or the BBC.

Posted by Jim, in the West Country on May 13, 2008 12:21 PM

We thought we’d do a search through Google videos, and found this:

http://video.google.co.uk/videoplay?docid=3664960863576873594

Not directly related to money reform, but it certainly looks like a concerted attempt to ensure that specific policies come out on top: and no doubt the financiers and corporatists are in it up to their necks …

Tuesday, 13 May, 2008

Producer prices soar as retail sales plunge

Kathryn Hopkins and Larry Elliott, The Guardian

The Bank of England's dilemma over interest rates was heightened today when back-to-back drops in high-street spending followed official data showing inflationary pressure for industry is at a two-decade high.

Despite heavy discounting, the British Retail Consortium (BRC) said sales of clothing and footwear were at their lowest for eight years last month as "hard-pressed customers watched the pounds".

700 jobs at risk as Northern Foods abandons M&S contract

Graeme Wearden, The Guardian

More than 700 workers in Nottingham could lose their jobs after Northern Foods abandoned its contract to make Italian ready meals for Marks & Spencer, admitting that it could not make a profit on the deal.

Northern Foods announced this morning that it plans to mothball its Fenland Foods factory in Grantham, which produces a range of chilled Italian meals for M&S.

After long-running contract discussions with M&S, Northern Foods said it was unable to reach an agreement under which it could make a profit. It now hopes to land a deal with another supermarket chain.

Whose Money? says:

Basing the means of payment upon debt makes it certain that, sooner or later, the system must break down.

Companies bound to keep up payments on their loans can only lower prices so far.

Customers crippled by soaring mortgage costs can only fulfil their patritoic duty as consumers while rising asset prices give them an illusion of wealth, as they dip into their apparently unlimited "equity".

A comment following Ambrose Evans-Pritchard's article (see yesterday) predicts:

1 A resurgence of economic and political nationalism.
2 Widespread unrest in the developing nations as the lollipop is taken away just as they were beginning to savor it.
3 Ethical foundations crumble as debt is repudiated on a massive scale.
4 The rise of populist and socialist parties as confidence in unregulated capitalism wanes.
5 And, in the West, with the issue in doubt, a titanic struggle to save 500 years worth of Enlightenment.
Posted by hojo0710 on May 12, 2008 4:11 PM

Or we coul see sense, take advantage of the breakdown of a dysfunctional and destructive financial system by replacing it with one based on publicly-created, debt-free money.

It's so British to let our firms become foreign

Tracy Corrigan

… The UK's historic strength in research and development, has attracted similar companies to set up shop here, too, benefiting the UK economy. Yet if Glaxo and AstraZeneca were bought by, say, Pfizer and Novartis next month, that sense of the UK as a pharmaceuticals power base might subtly start to be drift away.

There is no sensible way of preventing this from happening. The Government, often accused of meddling in other areas, has studiously avoided protectionism, and business has shown little inclination to ask for special treatment. Rightly so. "We gain enormously more from openness than we would from erecting barriers," says Sir Geoffrey Owen, former Financial Times editor, and fellow at the London School of Economics.

That ability to cope with uncertainty and embrace change is something to champion. If there is no simple marker of Britishness, there is still, perhaps, a British business culture. Willing to evolve rapidly, but fed up with pointless government initiatives. Internationally minded and confident, even in difficult times. Anyway, who wants to be easy to define, when complex and varied are so much more interesting.

Read it in full here:

http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/05/13/do1303.xml

Whose Money? says:

So “There is no sensible way of preventing this from happening”?

Of course there is.

The whole process of globalisation is driven by the logic of debt-based finance, not by the practical demands of providing for human needs.

If the rules were based on the efficient production of goods, rather than the endless conjuring up of an endlessly disappearing money supply, and its manipulation by profiteers, globalisation would be seen for the insanity which it is.

Monday, 12 May, 2008

The global slump of 2008-09 has begun as poison spreads

Ambrose Evans-Pritchard, the Daily Telegraph

The avalanche of bankruptcies has begun. Six US companies of substance have defaulted on bonds over the past fortnight, against 17 for the whole of last year.

As a "non-believer" in the instant rebound story, I am not easily shocked by gloomy reports. But the latest note by Standard & Poor's - The Bust After The Boom - gave me a fright.

Whose Money? says:

As usual, Ambrose Evans-Pritchard takes a more realistic look at prospects for our debt-based economy than most commentators (though we don’t join him in feeling particularly thankful to the Fed for prolonging the debt agony of millions of people, or to the US government for missing an opportunity to stop relying on bank loans to create the nation’s money supply).

Far from looking to China to avert a slump, he believes that, “(t)he oil spike will burn itself out. China has hit the buffers. With inflation at 8.5pc, it risks political turmoil. Moreover, it has repeated Japan's mistakes in the 1980s, building too many factories shipping too many goods at slender margins into a crumbling export market.”

There is a link in the Comments section which follows the article (pjh, at 3.18am) to a video interview, in two parts, with Kevin Phillips, author of a book called Bad Money: Reckless Finance, pointing to the sheer number of problems now undermining the US economy - including the air-brushing of statistics on such things as inflation and GDP by successive governments. (Certainly relevant in the UK, too.)

He winds up the interview with an assessment of how likely it is that the next president will tackle these problems:

"I think, unfortunately, the first thing that would be good would be to have serious political candidates taking serious political positions. The two parties are both complicit in some of the circumstances here. They’re not going to want to grapple with the truth of some of what’s happened to the economy, and the incredible amount of debt and the danger that poses, so I don’t think we’ll see it discussed .

"If it’s not discussed the president elected, whoever it is, won’t have a mandate to deal with these things: and the interest groups are so much in control of congress that only a president elected by going to the poeple with a serious case for reform - and some of the reform has to be re-regulation of finance - only such a president would be able to do it; and I doubt that any of the people running at this point have laid the groundwork to have a mandate for serious reform …

"… We can’t have solutions come to the fore until we have at least a discussion."

Precisely.

When are the mainstream media, let alone our feeble, lobby-fodder politicians, going to get down to discussing the real issues?

And there’s even less hope in the UK, where MPs are mainly occupied with rubber-stamping into the law directives and regulations dreamed up by transnational bureaucrats in Brussels - frequently at the overt or covert behest of global corporations and finance.

See the videos here:

http://www.youtube.com/watch?v=xIoEU1yK1_c

http://www.youtube.com/watch?v=eAblDSCP3Hg&feature=related;

and order the book from Amazon, here:

http://www.amazon.com/review/product/0670019070/ref=dp_top_cm_cr_acr_txt?%5Fencoding=UTF8&showViewpoints=1

Another pertinent comment on the article from Minuteman, at 8.38am:

"The oil price is due to the devaluation of the dollar. This is due to the hyperinflation of the money supply by the US Fed, to bail out the banksters. US M3 money supply is increasing at almost 20%. The spiv speculators' money has left housing/housing derivatives and gone into oil, food, energy and metals.

"Evans-Pritchard says the average US household is spending one-twelfth of its income on fuel or energy. Wow! Tell that to the average Brit. The UK has the highest fuel taxes in the world. Of the current Ł1.10/litre or Ł5 imp. gal. petrol price, 67p or more than 60% goes in taxes to the Govt. That's a tax rate of 156% on the basic price of fuel! The average UK household(2 cars/3 bed semi house) is spending Ł150 a week on petrol/diesel(Ł1.22/litre) and almost Ł30 a week on electricity and gas bills. That equals nearly Ł10,000 a year. Given that the average wage in the UK is barely Ł20,000, at best an average household has a total income of Ł30,000 or so, before tax. After tax and deductions they'd be lucky to clear Ł20,000 in disposable income. Therefore their spending on fuel for the car(s) and elec./gas to keep warm and cook represents 50%, not 8%! Where do these clown 'economists' like evans-pratchard live? Give the above the average Brit would be better off under medieval feudalism - slaving for the Lord of the Manor - or in jail with bed, board, and grub from the State. Or maybe that's what 'they' want?"

We’d disagree with the argument that, “ (g)iven that the average wage in the UK is barely Ł20,000, at best an average household has a total income of Ł30,000 or so, before tax.”

One of the most depressing consequences of the decision to create our money supply as a debt owed at interest to the banks, is the fact that families - including those with small babies - now need two wage packets just to get by. So average household income today will usually be greater than the average wage.

Not that this is much of a consolation. Huge child-care fees, and increased transport costs (see the two cars now required by the average UK household, above) notch up the costs; and the chronic insecurity of juggling the demands of home and work, when there are two indispensable jobs that may be lost, and two indispensable wage-earners who might fall sick, increases the likelihood of falling into debt.

Sunday, 11 May, 2008

Bank of England warns of two years of stagflation

Edmund Conway, The Sunday Telegraph

The Bank of England will this week admit for the first time that it is set to breach its inflation target in the coming months and warn that Britain is destined for two years of soaring costs and weak growth.

Mervyn King, the Bank's Governor, is poised to unveil new forecasts showing that the Consumer Price Index (CPI) will rise above 3 per cent over the next six months, forcing him to write a letter of explanation to the Chancellor. In a further blow to Alistair Darling's credibility, the Bank will cut its economic growth forecasts for both this year and next.

Whose Money says:

Just the outcome we've been predicting for months.

Inflation and unemployment: the worst of all worlds, in an economy which allows finance to control production, and depends on wage packets to distribute purchasing power.

Quote of the day, from CH Douglas:

Through the power of the sun (oil power, steam power and so forth consist of what is generalised as solar energy) the so-called curse of Adam is being transferred from the backs of men to machines, so that a small number of persons operating on this machine of industrial "production", can produce all that is required for the use of the population. And the problem is not to exchange between the number of the population, who are less and less required to push keys, but it is to draw from this central pool of wealth by means of what can be visualised as a ticket system.

And the modern money system is in fact losing almost daily its aspect, however much it may at one time have been true, of a medium of exchange, and becoming more and more a ticket system by which people, who are not exchanging their production, can draw from that central pool of wealth.

That I believe at bottom to be the fundamental cleavage between, let us say, my own view and those who think with me, and the school of classical economics.

(From a speech given at Oslo on February 14, 1935, to H. M. The King of Norway, H.E. The British Minister, The President, and Members of the Oslo Merchants Club.)

So from now on we'll stop talking about money as a 'means of exchange' on this website, and call it a 'means of distribution instead.

Saturday, 10 May, 2008

Flexible working planned for millions of parents

Melissa Kite, the Daily Telegraph

The Prime Minister will signal a major extension in the right to part-time working when he sets out his plans for the next parliamentary term and attempts to fight back from Labour's disastrous local elections showing.

Around six million people can currently request flexible working, including 3.6 million whose children are aged under six or disabled. But the Government will say that the age limit is to be at least doubled so that some 2.6 million more parents will be included in the statutory right.

Whose Money? says:

The only flexible working right which is worth having is the flexibility enjoyed by families who either have an independent income, or who are profitably self-employed, or who can survive on one wage packet.

For more and more people it is simply not feasible, financially, to work part-time. Both parents must find full-time employment outside the home to maintain a reasonable standard of living.

(And a reasonable standard of living at the present time is naturally higher than the best that could be expected for the majority of people a few generations ago. Why should ordinary people be criticised for aspiring to it? What is the point of dedicated men and women throughout the generations working to improve the quality of life for human beings if only a minority are to benefit from the advances which have been achieved?)

Experience tells us that the successive imposition of new rules to counter the effects of previous ones only creates fresh problems … at least for those without the financial clout (ie, the borrowing power) to adapt quickly.

The big corporations rarely have any difficulty in accommodating themselves to the new order. (Might they, possibly, through their political influence, not to mention their ready media access and the judicious financial support which they offer to pressure groups of their choice, even have a hand in shaping government policy?) As usual, it is the small, home-grown businesses who will find themselves stretched to the limit, as they struggle to cope with an increasing labyrinth of regulations.

The proper solution to the financial dilemma of caring for a family when the number of hours required to earn a decent wage packet has doubled (ie, when it takes two people working in full-time employment outside the home to bring in enough money to maintain a decent standard of living) is to abandon the debt-based financial system which has led to this untenable state of affairs in favour of an adequate supply of publicly-created, debt-free money - preferably distributed, at least in part, as a non-means-tested national dividend to all adult citizens.

If we want to ensure that everyone can afford to enjoy the increased creative leisure hours made possible by technological advances, we need to differentiate between the puritanical contention that “he who does not work shall not eat”, and the plain fact that if the necessary amount of work is not done, there will be nothing to eat.

In the present era, the time and effort needed to produce sufficient goods and services for all simply does not equate with the demand for full-time, well-paid employment. Why, under these improved conditions, should anyone be required to work more than part-time in boring, repetitive jobs? Why should they have to take on the futile, and frequently counter-productive "work", which is now created by the government in order to keep unemployment figures down?

Only the use of debt as our means of exchange has led us into this entirely unnecessary dead-end.

And incidentally ...

When did human beings become re-classified as “resources”?

Only a few years ago, Ms Imelda Walsh (mentioned in the report above) would have been in charge of the Personnel Department.

We don’t think “Director of Human Resources” is an improvement.

This may seem a small point, but the choice of words reflects attitudes: and the idea that human beings are on a par with other materials, to be bought and sold as required, is pernicious.

Friday, 9 May, 2008

The latest figures:

As jobs in the City are axed, repossessions mount, and the party politicians continue their bickering, the debt juggernaut rolls on.

Take a look at Credit Action’s most recent statistics, here; and the Bank of England figures on deposits and lending for the First Quarter of 2008 at http://www.bankofengland.co.uk/statistics/abl/2008/mar/index.pdf.

Note that, according to the Bank's statistics, there is only Ł2,024.9 billion available to pay debts now amounting to Ł2,522 billion - even without taking the National Debt Monster in the Treasury basement into account!

Picture from The Money Bomb, by James Gibb Stuart - order it from Ossian, here: http://www.ossianbooks.co.uk/books.php

Thursday, 8 May, 2008

How much is the National Debt costing us?

As families struggle under an increasingly heavy tax burden, it's instructive to reflect upon how the National Debt which gobbles up such a large proportion of taxpayers' money each year was actually acquired.

The First World War, for instance, was a period which saw rapid escalation of this debt.

Here is an extract from The Financiers and the Nation (published 1934), by the Rt Hon Thomas Johnston, a former Lord Privy Seal, Chapter VI, Usury on the Great War, telling the story of the infamous war loans:

The bank managers at the outbreak of War were seriously afraid that the depositing public, in a panic, would demand the return of their money. And, inasmuch as the deposits and savings left in the hands of the bankers by the depositing public had very largely been sunk by the bankers in enterprises which, at the best, could not repay the borrowed capital quickly, and which in several and large-scale instances were likely to be submerged altogether in the stress of war and in the collapse of great areas of international trade, it followed that if there were a widespread panicky run upon the banks, the banks would be unable to pay and the whole credit system would collapse, to the ruin of millions of people.

Private enterprise banking thus being on the verge of collapse, the Government (Mr. Lloyd George at the time was Chancellor of the Exchequer) hurriedly declared a moratorium, i.e. it authorized the banks not to pay out (which in any event the banks could not do), and it extended the August Bank Holiday for another three days. During these three or four days when the banks and stock exchanges were closed, the bankers held anxious negotiation with the Chancellor of the Exchequer. And one of them has placed upon record the fact that 'he (Mr. George) did everything that we asked him to do'.

When the banks reopened, the public discovered that, instead of getting their money back in gold, they were paid in a new legal tender of Treasury notes (the Ł1 notes in black and the 10s. notes in red colours). This new currency had been issued by the State, was backed by the credit of the State, and was issued to the banks to prevent the banks from utter collapse. The public cheerfully accepted the new notes ; and nobody talked about inflation.

Not since 1697 had the State itself issued paper money. In that year, 1697, notes in the denomination of Ł5 were issued direct to the public without the intervention of the finance houses ; and these notes were not backed by gold but were legal tender for the payment of taxes.

In 1914, however, the State issue of money was upon a colossal scale ; the legal tender was not limited to the payment of taxes, but was complete for all purposes, and the issue was made with the goodwill of the bankers and indeed at their plea and intercession. Had that new money not been issued, the private banking houses of Britain would have been compelled to default to their creditors in a week's time. …

… there was no provision whatever in the Currency and Bank Notes Act of 1914 for any gold backing, and, in any event, the amount of gold coin reserved for pretended security against Treasury notes totalling some three hundred million pounds was, at its maximum, only twenty-seven million pounds. The three hundred million ofnew money issued by the Treasury in 1914 was therefore, in effect, a War Loan, free of interest.

But, alas, when the War was over, the Treasury, by a Minute issued on December 15, 1919, announced that its policy was to be a gradual reduction in these Treasury notes ; and it proceeded year by year to take the notes off the Market, on the plea that the notes so cancelled were not covered either by gold or by Bank of England notes. Between the years 1920 and 1926, there was a progressive reduction in Treasury notes from Ł320,600,000 to Ł246,902,500. ...

... To return, however, to the early war period, no sooner had Mr. Lloyd George got the bankers out of their difficulties in the autumn of 1914 by the issue of the Treasury money, than they were round again at the Treasury door explaining forcibly that the State must, upon no account, issue any more money on this interest free basis ; if the war was to be run, it must be run with borrowed money, money upon which interest must be paid, and they were the gentlemen who would see to the proper financing of a good, juicyWar Loan at 3.5 per cent, interest, and to that last proposition the Treasury yielded.

The War was not to be fought with interest-free money, and/or/with conscription of wealth ; though it was to be fought with conscription of life. Many small businesses were to be closed and their proprietors sent overseas as redundant, and without any compensation for their losses, while Finance, as we shall see, was to be heavily and progressively remunerated.

As each war loan became exhausted the lenders upon the first lower interest War Loans were permitted to transfer into the later higher interest Loans, and usurers' interest upon credit was added to the national burden, so that to-day that burden is insupportable and the nation staggers along, cutting the bread and cheese of its poor, and starving the social services in a vain attempt to meet the charges, incurred in the Great War Loan ramps. …

… while the nation struggled almost at death's door for its very existence, while masses of the fittest of our manhood were daily being blown into bundles of bloody rags, our banking fraternities continued to create for themselves a great volume of new credit and to lend that credit to us at interest, and indeed at progressively increased interest; … (and) by this manufacture of bankers' credit some portion, variously estimated in amount, of what now stands as the public debt, was simply fabricated for private ends and was not a bona-fide loan of real wealth to the nation. Professor Soddy has estimated that the bankers actually created Ł2,000,000,000, no less, of this bank credit, and lent it out to us at 5 per cent. That means 100,000,000 a year upon nothing.

The first War Loan at interest was floated in November 1914, at 3.5 per cent., and the investors were only required to subscribe Ł95 for each Ł100 of scrip. The total amount of the loan was Ł350 millions, but as there were not three hundred and fifty millions of money in the country, what the State received was credit - the pledged credit of individuals and corporations and banking houses (the same banking houses which, as we have seen, three months earlier had been begging the Treasury notes on loan from the Government to save their precious banking system from bankruptcy) .

The second War Loan was issued at par in June 1915 at 4.5 per cent, interest; and such investors,and corporations and banking houses as had held the previous War Loan Stock at 3.5 per cent, were permitted to transfer into the new loan at the increased rate of interest.

Actually of the 4.5 per cent. loan the sum of Ł176,000,000 was not new loan money at all, but was a considerable portion of the old 3.5 per cent. loan silently 'jumping the counter ' on to the higher rate. And, in addition to that, the holders of no less than Ł138,000,000 of the new 4.5 per cent. loan were old holders of 2.5 per cent. consols and 2.5 per cent, and 2.75 per cent. annuities, who also had been permitted to transfer into the higher rate of interest yield. These conversions at the higher rate of interest meant a clear gift of at least 4,000,000 a year in extra interest to the money-lenders.

But the story of this great finance ramp of June 1915 is incomplete without a reference being made to the pledge extracted from the State by the finance houses and banks that, should there be any subsequent issue of War Loan at a still higher rate of interest than 4.5 per cent., the holders of the new 4.5 per cent. loan (Ł901,000,000 in amount) would be entitled to convert at a higher scale, and this, as we shall see in a moment, the great bulk of them succeeded in doing.

Mr. Lloyd George has publicly declared that the increased rate of interest offered in the War Loan of June 1915 was quite unnecessary. He says :

'Looking back, I cannot help regretting that Mr. McKenna should have thought it necessary to raise the interest rate of a Government loan to 4.5 per cent. Maybe this corresponded to the price that was being offered for other gilt-edged securities. But in view of the increase in our nominal capital reserves due to war inflation and to the restriction of an overseas market for investment money, which was also one of the effects of the War, there can be little doubt that the Government could have continued to obtain as much money as it required by voluntary investment, without raising its interest rate beyond the level of 3.663 per cent, at which my first loan had been negotiated. Investors would have had to take this, for lack of an alternative. And if they had been unwilling to do so, there would have been a clear and popular ground for the conscription of capital for war purposes a step which would have been an appropriate corollary to the conscription of man-power which we were soon to introduce.'

… The banks actually issued circulars to thousands of their customers inviting them to apply for a portion of the new War Loan and to borrow credit from the banks for that purpose at 3 per cent. The customer was to put up no money for his War Loan, no margin, no securities. The bank was to supply the credit, or rather was to back the customer's credit and was to charge the customer 3 per cent, interest for so doing ; but the State was pledging itself to pay 4.5 per cent, interest on the War Loan which the customer was purchasing with his 3 per cent, money. The customer, after allowing for his Income Tax, &c., was clearly 1 per cent, per annum in pocket on the deal.

…Yet all these efforts surely paled before the shameless greed of the third great War Loan in January 1917. No foreign conqueror could have devised a more complete robbery and enslavement of the British Nation. The rate of interest in War Loan was jumped to 5 per cent, (or at the option of the investor, 4 per cent, free of Income Tax until October 1942) and the holders of previous War Loans and Treasury Bills and War Expenditure Certificates were invited to come in and convert their old stock into the higher rates of booty, and for each Ł100 of Stock in the new loan, only Ł95 had to be subscribed, so that the rate of interest really had been raised to 5.333 per cent.

Into this 5 per cent. War Loan tumbled the holders on Ł820,000,000 of the 4.5 per cent. Loan, thus securing an extra 0.5 per cent, or Ł4,000,000 in addition to the increases which many of them had secured when the rate of interest was previously jumped from 3.5 per cent to 4.5 per cent. And not only were the 4.5 per centers permitted to convert into the 5 per cent. War Loan, but the holders of Ł130,000,000 of Treasury Bills and 280,500,000of Exchequer Bonds also converted. The new 5 per cent. Loan of Ł2,075,750,000 secured only,in fact, Ł844,750,000 of new loans, the balance being paper conversions from old lower interest Stocks, whereby the converters were enabled to dig deeper into the national pocket than they had hitherto done.

But that was not the sum-total of the iniquitous ramp which the lackeys of the money interest imposed upon us with the 5 per cent. Loan of 1917. The investors were made exempt from all British Income Tax upon their interest payment if they chose to go and live abroad. Mr. Lloyd George has himself testified that this 5 per cent. Loan was raised at ‘a penal figure’, and he continues :

‘The same rate governed subsequent borrowings, which by the end of the War had added a further 4,000,000,000 to our National Debt. It cost the country a dozen years of remorseless deflation and concomitant depression to bring interest rates down again to a level that would enable this vast sum to be reconverted to 3.5 per cent. Throughout the interval, not only was the country taxing itself to pay a sum ranging at one time as high as 100,000,000 a year more than it would otherwise have done, but the high yield of a gilt-edged Government security kept up rates all round, and made money dearer for all enterprises, industrial, commercial, and national. It would be hard to estimate the sum-total of the price paid by the nation in every department of affairs for the decision of Mr. McKenna in 1915 to increase the rate of interest paid by the Government on its war-time borrowings. His action had, no doubt, the fullest authorization from the leading circles of banking and finance. But the country has since then had ample evidence that these circles are by no means to be reckoned as infallible advisers.’

The 4 per cent. Tax-Free Loan of 1917 provided a similarly convenient cloak for an increased tribute to the money-lending interests. If that loan be examined it will be found that out of a total loan of Ł52,000,000, over Ł30,000,000 was conversion from previously issued and less attractive interest-rated stocks. ...

… And now we have the indisputable testimony of Mr. Lloyd George, the war-time Prime Minister, that from 1915 onwards the country has paid annually huge unnecessary sums in War Loan interest, rising to as high as Ł100,000,000 per year …

… If we accept 3.5per cent, the outbreak-of-war rate for money and that is Mr. Lloyd George's figure as the normal and non-profiteer rate, then these successive bribes down to 1917 meant, upon the most conservative computation, a net increase of Ł30,000,000 per annum in the nation's toll to its money-lenders. Nor does the fact that in the year 1932 part of this money was reconverted to a 3.5 per cent. rate disguise, in the slightest degree, the shameless money ramps that were permitted for seventeen years onwards from 1915.

Whose Money? says:

And we're still struggling to pay the interest!

Just the interest ...

You can read The Financiers and the Nation in full online, here:

http://ia331308.us.archive.org/2/items/financiersandthe033017mbp/financiersandthe033017mbp.pdf

Or order from Ossian, here: http://www.ossianbooks.co.uk/books.php

Wednesday, 7 May, 2008

Broke Britain: How soaring bills have left cash-strapped families with less to spend than for 17 years

James Chapman, The Daily Mail

Devastating price rises mean families have less to spend on themselves than at any time for 17 years.

The share of household income eaten up by unavoidable outgoings such as housing, food, heat and council tax has soared over the past six years.

It means the amounts left over for "discretionary spending" are at their lowest since 1991. And the economic experts who produce the figures are warning of worse to come.

Whose Money? says:

This is not just the result of one bad government. It’s the result of government after government failing to provide the country with a stable means of exchange.

Debt-money distorts production. Debt-money encourages the waste of resources. Debt-money inflates prices. Debt-money raises taxes. Debt-money makes it certain that more and more people must borrow themselves into insolvency on behalf of their country.

When are we going to have a government that tackles the problem?

Tuesday, 6 May, 2008

Brown needs grassroots help on aid

Larry Elliott, The Guardian

… Debt relief is unfinished business, with the fear that too soft a line could encourage poor countries to lapse back into their profligate ways. Interestingly, a rather different view of the risks of moral hazard has applied to the losses made by western banks on sub-prime mortgages - action to help out the City and Wall Street has been massive and instant.

Read in full:

http://www.guardian.co.uk/business/2008/may/05/economics.internationalaidanddevelopment

Whose Money? says:

As usual, what it boils down to is that there is “a colossal funding shortfall" - though, as Mr Elliott points out, when it’s a question of propping up the failing pillars of our debt-based financial system, ways are found of solving the problem.

Yet the countries who provide “aid” have hardly shown themselves adept at managing their own budgets. These, after all, are the nations which boast by far the largest debts: yet they feel free to squeeze as much as possible out of people who have been forced to abandon production for their own needs in favour of goods (ie, real, rather than financial wealth) for export, and cut back on social provision, in order to repay, over and over again, the money they borrowed; money which, in many cases, was conjured up by the banks specifically to provide the loan.

The fact is that neither developed nor developing nations are well served by the present financial system, with its inevitable competition for an insufficient and ill-distributed supply of money; but it is particularly vicious when even the world's most needy people are trapped into the job of borrowing more money into existence .

The answer is not to deal with the worst cases of poverty by offering financial “aid”, but to reform the whole basis of international "free" trade, with publicly-created, debt-free money the norm, and each country genuinely at liberty to provide first for the needs of its own people, trading only surpluses for goods which cannot be produced on home territory.

Under such a system, and perhaps with some real aid in the form of voluntary work by people of good will from the developed countries, there is no reason why every child in the developing world should not receive a decent education and training. And maybe we could do something about some schools in the UK, too …

For an in-depth look at the effects of the global debt-based monetary system on third-world countries, including a demonstration of how their debt is being used to boost the money supply of the developed nations, read Mike Rowbotham’s second book, Goodbye America.

You can order it from Amazon here, http://www.amazon.com/Goodbye-America-Globalization-Dollar-Empire/dp/1897766564, and read a review in our Websites, Books, DVDs section, here.

Estate agencies shut 150 branches a week

Harry Wallop and Gordon Rayner, The Daily Telegraph

… Removal firms have also laid off hundreds of staff after a 26 per cent fall in the number of properties changing hands over the past 12 months.

The job losses are the clearest sign yet of the impact the global credit crisis and housing market slowdown have had on the wider economy.

Whose Money? says:

According to Peter Bolton King, the chief executive of the National Association of Estate Agents, “a healthy housing market is essential for the health of the high street”.

Our response is:

a) would you really call the property-price inflation of the past ten years or so “healthy”; and

b) why, exactly, is the housing market so essential to high street traders?

The answer to a) is no.

The answer to b) is that it is only in an economy which requires never-ending debt to provide its population with a means of exchange that continuous, exponentially increasing, borrowing is necessary.

Mortgages are the ordinary person’s biggest contribution to the national money supply, with the next-biggest consumer item, the family car, running a very poor second.

If enough stable money were circulating in the first place, people would not need to go into debt or to rely on asset-price inflation and “equity” withdrawal to maintain their standard of living and keep the shops in business … or just in order to pay the basic bills.

Ditch systemic debt in favour of publicly-created, debt-free money, and the housing market becomes irrelevant, except to those interested in putting a roof over their heads.

As for the unemployment now being generated by a moribund housing market, it’s worth considering CH Douglas’s contention that the very purpose of increased automation was to free ordinary people from long hours of toil, and that the wage packet should therefore no longer be the sole means of distributing purchasing power among the bulk of the population.

From a speech delivered by Major Douglas in Newcastle, on 31 January, 1923, published in Credit Power, February, 1923:

There is not one person in a hundred who, if offered a stable income of, say, Ł500 a year, would not accept it in preference to an offer of employment at the same pay. That is to say, the cry for employment is an artificial cry - what the unemployed mean is that they want purchasing power, which we usually refer to as money.

A continuous supply of money is associated inseparably, in the minds of the vast majority of the population, with employment.

It is my opinion that no solution of the present profoundly disquieting situation, which pervades the whole world, will ever be reached until a sufficiently influential body of opinion can be brought to examine this relationship, not as a moral relationship, but as a practical device for carrying on the world's business, to be rejected or retained only as it serves that end. (Our emphasis.)

In other words, employment is not an objective of a co-operative production system - it is an incident, a bye-product …

… If you insist on being provided with work, I feel sure you will be accommodated. But you must not complain if the solution raises up … problems, … because the fundamental fact, the fact on which the whole situation turns, is that if you set the whole of the available labour to work on the available real capital (tools, land, etc.), you will have an output with which nothing but organised destruction, in the shape of war, can cope …

… it must be borne in mind that when we speak of an unemployment problem, we are much too apt to consider only statistics, official or otherwise, in regard to those persons who are totally unemployed, and to omit or give wholly insufficient weight to the much more important consideration of general under-employment or employment in connection with production of the most dubious utility. …

… It is to be hoped that it is clear that the vast majority of people only regard employment as a means to an end, and that end is the attainment of a sufficient supply of goods and services; that, at any rate, an enormous step forward would be made if this desire for goods and services were met, even if the alleged demand for employment remain for the moment unsatisfied. …

… Is this a practicable proposition?

I have no doubt whatever that it is wholly practicable. I do not propose to numb you with a mass of statistics on production - such statistics are easily available to people who like that sort of thing - I do, however, ask you to take it from me that one-tenth of the available labour, working short hours but with the whole of its attention directed solely to the objective of the most efficient production, could supply all the general demands of the population of this country, either by direct production, or by exchange … for the production of other countries, in respect of articles which cannot reasonably be produced at home; in other words, production, as a problem, has been solved long ago.

There is not a single country where western methods of production are in operation, in which there is any technical productive problem at all, either agricultural or otherwise; and the problem we have to solve is a problem of distribution …

To condense the situation into a paragraph,. what the population of the world wants, and is determined
to get, is a sufficiency of goods and services; there is no lack of these goods and services, either actual or potential, but they cannot be obtained except through the agency of money, of which there is a lack. …

… This lack of money is, in no sense, natural, in the sense of being unavoidable, but is wholly artificial, and is the result of a deliberate policy in the operation of the money system, although that policy may not perhaps be wholly conscious.

No solution of the myriad of apparently unconnected social, industrial, and sociological problems can be found, unless we can bring ourselves to realise that 95 per cent. of so called crime is committed with the object of acquiring money, whether it be through the cocaine traffic or the abuse of public confidence in such cases as the failure of the City Equitable Insurance Company; that the cry for employment has no realistic basis other than an acceptance of the assumption that money can, or should, only be distributed through the agency of employment; and that, owing to its scarcity, the possession of money, in the sense of a claim on goods, confers upon its possessor the power to arrange the lives of others.

Whose Money? says:

Eighty-five years of increasing automation later, why are we expecting both men and women, even those with young families, to work in full-time paid employment outside the home, frequently in unnecessary jobs dreamed up by a tax-hungry government, just in order to distribute purchasing power?

Monday, 5 May, 2008

Parents are 'dumping' children on schools as Labour pushes for longer working hours, say teachers

Laura Clark, The Daily Mail

Ministers were yesterday accused of promoting a back-to-work culture where parents dump their children on schools and nurseries.

(Photo: Daily Mail)

Whose Money? says:

To get to the bottom of this mass dumping of children you need to examine not only the consequences of the two-wage-packet family (admirably presented in Elizabeth Warren’s lecture, The Coming Collapse of the Middle Class, here: http://www.youtube.com/watch?v=akVL7QY0S8A) but the reason why it is now the norm.

Using debt repayable to the banks at compound interest as the nation’s means of exchange ensures that there will never be enough money to go round, and that what there is will fail to get where it is needed.

Money created as a debt always favours those creditworthy enough to buy up more and more wealth in the form of property and other assets, as they indulge in large-scale borrowing unscathed. Conversely, it punishes those unable to acquire real wealth by borrowing money from the banks.

The longer a nation persists in using debt as its means of exchange, the worse the situation becomes, as the cost of borrowing the money supply into existence forces businesses to raise their prices, while simultaneously eroding their customers’ purchasing power (in particular through taxation and endemic inflation in the prices of goods and assets).

Without doubt some parents - particularly those in our growing underclass - are irresponsible; but many who are well aware of their responsibilities are forced to choose between being on the spot for their children and somehow getting enough money to pay mortgage and council tax, and all the other bills, while still having a bit left over to put food on the table.

Listen to Elizabeth Warren’s lecture, if you think that mass insolvency is simply the result of a profligate greed for designer goods and high living.

The absurd fact is that, because of ever-increasing debt - government debt, business debt, personal debt - people are now having to work in paid employment outside the home for twice as many hours per family as they did as recently as fifty years ago, just to get by ... and this in an age when automation makes it possible to produce enough goods to go round with a fraction of the effort previously required!

Until we take a long, hard look at the way we create our money, and refuse to vote for politicians who ignore this crucial issue, things can only get worse.

Sunday, 4 May, 2008

Irish Development Agency targets UK firms over tax regime

Dominic White, The Sunday Telegraph

The letter came on green headed paper. And it hopped out at Julie Moran from the mountain of junk post in her in-tray.

Moran, the finance director of online marketing company Latitude, had been blitzed with useless mail ever since the fast-growing Lancashire business started winning industry awards in 2006. But here, at last, seemed to be an offer her Ł40m turnover company couldn't refuse.

Did Moran know, asked the letter from Fiona McLaughlin of The Irish Development Agency (IDA), that Latitude could get a 12.5 per cent corporation tax rate if she moved its HQ to Eire?

Whose Money? says:

Tax competition is just another manifestation of the trade warfare inseparable from the present financial system.

A focus on exports and inward investment is the natural result of a system in which wage packets are the principal means of distributing purchasing power, yet jobs giving access to decent wage packets are becoming ever harder to find, as automation and the IT revolution take over, and foot-loose multinationals swallow up small, home-grown businesses.

Like us, Ireland now faces the end of a property boom which allowed the country to bask in an illusion of wealth ... while, by simultaneously inflating the cost of living and wagesw bills, making it less attractive to inward investors.

David McWilliams, in an article of 9 March, Time for New Thinking http://www.davidmcwilliams.ie/2008/03/09/610, writes: “In the past when we could not find enough work for our people, a 'jobs at all cost' policy was the right thing to do. Today, it is not enough. Ireland has to create value not jobs. To do this we have to build our own companies. Other countries have shown us the way. We should now copy them.” As yet, he goes on to say, “we have precious few indigenous success stories.”

So it seems that the Irish government is adopting the alternative policy of importing “success stories” from elsewhere.

The fate of Julie Moran’s Warrington company, which decided not to accept the tax bribe from Ireland, but which has now been taken over by a private equity company, illustrates the gloomy prognosis for small, independent enterprises, wherever they may spring up: get too successful, and you will attract the attention of the financial sector, and most likely end up as transnationals, poised to be transplanted to a more profitable environment with every economic fluctuation, and owing no loyalty to the local people you originally employed.

We agree with the aim of creating value, rather than jobs ... but only in a supportive financial environment: one in which the priority is production in order to meet human needs, rather than the pursuit of an inadequate and ill-distributed supply of debt-money.

It is making finance, rather than value, the priority which is behind the drive for exports and inward investment, as nations vie with each other to get their hands on money which people in the importing country went into debt to create, and which those same people are committed to repay to the banks at interest.

With a publicly-created, debt-free currency, the need to boost a debt-ridden domestic money supply with effectively debt-free overseas earnings would disappear … along with the most potent cause of international competition and aggression.

Would the issue of debt-free money by a public authority cause inflation?

Stephen Zarlenga, of the American Monetary Institute (AMI) replies:

There is a mythology – a reigning error – that government issued money has been irresponsible, and inflationary. But this is the result of decades, even centuries of relentless propaganda, and is contradicted by the historical facts. The Continental Currency is attacked, without discussion that while our government authorized $200 million and issued $200 million (plus replacement notes), the Brits successfully counterfeited untold $billions. They did the same for the French Assignats – the details became public when the counterfeiters sued each other in the English courts.

The American Greenbacks are smeared as worthless inflation money when in fact our government authorized $450 million and printed exactly $450 million; and every greenback eventually exchanged one for one with gold coinage – but very few people bothered to exchange them!

The German hyperinflation is cited by the private money gang without pointing out that the German Reichsbank was privately owned and controlled, or that the hyperinflation began the month that all governmental influence over the Reichsbank was removed on the insistence of the allied occupiers. These and other cases are described in The Lost Science of Money book.

The specter of inflation will be raised against any proposal that our government fulfill its responsibility to provide the nation’s currency. But again this is a knee-jerk reaction resulting from the same propaganda. The reason that inflation is avoided is that real wealth is created with the money spent into circulation on infrastructure, and education and health care. It results in the provision of real goods and vital services and the existence of these serves to control inflation. It is mainly expenditures for warfare that are inflationary, because not only is the money not directed to creating values for life, it actually destroys those values, while increasing the money supply, and THAT will always be inflationary.

It will be argued that the banks must have the money creation privilege in order to survive, and removing it would destroy banking.

But that is absurd. The Savings and Loan industry operated for many decades on principles close to what this Act - The American Monetary Act, http://www.monetary.org/amacolorpamphlet.pdf - advocates. We are not out to destroy banking – it’s a necessary part of modern society. However, the folly of our present system is self evident. There is nothing in banker’s background, training or philosophy that qualifies them to be above our constitutional system of checks & balances. Look at the mess that has been created around the World!

Whose Money? says:

For a unique and detailed history of how our present monetary system has evolved, read Stephen Zarlenga's book, The Lost Science of Money. You can order it from the American Monetary Institute's website, here: http://www.monetary.org/

Saturday, 3 May, 2008

Here we go again!

As the country lurches once more from Labour to Conservative, in a desperate bid to find a government that will respect the interests of businesses, families and ordinary people in general, the media focus, as usual, is on the exciting party political implications for the next general election ... with no mention of the basic issue which, unless it is tackled, will ensure a further erosion of living standards for the majority, whoever is in 10 Downing Street.

That issue is, of course, the insane decision to allow private, profit-making businesses to "lend" virtually the entire money supply of the nation into existence as a compound-interest-bearing debt repayable to themselves.

Local politics are in an even worse state than the national variety, with party policymakers dictating the agenda from on high, and severe cash deprivation down below, as the bulk of tax revenues are mopped up for the first use of central government.

For people to be able to take back control over their personal lives, the occasional choice from take-it-or-leave-it party manifestos is not enough: without financial democracy, political democracy quickly turns into a game of beggar-my-neighbour.

What is needed is publicly-created, debt-free money, supplemented where necessary by local and regional currencies, and with first use of taxes close to the grassroots - by reformed local councils whose independent - ie, unwhipped - members serve the interests of genuine communities (by which we mean those who live in close proximity and must get along with each other in a shared environment, not minority, or even majority groups sharing the same gender, race, religion, sexual orientation, or even political ideology).

Friday, 2 May, 2008

Don't blame inequalities on City salaries

Damian Reece, The Daily Telegraph

… In reality the City has represented one of the country's best answers to inequality by offering opportunity.

… financial services hands back about Ł20bn in tax to the Government for it to redistribute to those most in need of help. But whether it's the abolition of the 10p in the pound tax band, or the poor state of the education system, the Government's attempts at helping those lacking in opportunities too often fail.

So poor have governments been at fixing social problems that philanthropy has made a comeback, often funded by the City's wealth creation, to step in and give the disadvantaged hope.

There undoubtedly has been a widening wealth gap but the City, be it through the tax system, through funding and creating economic growth or through philanthropy, puts a huge amount back into society.

Read it in full here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/02/ccom102.xml

Whose Money? says:

We agree absolutely with Mr Reece, when he says that governments are ineffective almsgivers who, moreover, cause widespread resentment by robbing the Peters who are just about managing to keep their heads above water, to pay the Pauls who are already going under. What we usually end up with are a whole lot of even more desperate Pauls.

As CH Douglas pointed out (see Security: Institutional and Personal, in the Spring 2008 edition of The Social Crediter, on the Douglas Social Credit Secretariat’s website, here http://douglassocialcredit.com/thesocialcrediter.ph), Utopian schemes to redistribute money more “fairly” via taxation always end up “penalising someone else”; so that by compensating first one group and then another for previous punitive raids on their resources, “eventually you will have reduced everyone to a dead level of slavery”.

So no, we’re not keen on governments deciding who deserves to have money taken away from them, and who deserves to receive a bit extra; nor is it likely that highly centralized party-political governments will spend the tax billions contributed by City financiers wisely.

But neither do we consider it acceptable that those who profit unduly from the creation and manipulation of debt should choose who receives their bounty (in the knowledge that the taxman would take it from them if they didn’t give it away to their preferred recipients). This allows them altogether too much power over the direction of national policy.

Instead, we ask:

a) why so many people now need the aid of either the state or (frequently state-dependent) charities just to get by; and

b) why governments are constantly seeking new ways of extorting money not only from wealthy City financiers, but, through the percolating down of, eg, business and fuel taxes, from those who already need the support of other taxpayers.

The answer, of course, lies in our debt-based financial system, which has succeeded in impoverishing not only governments, but businesses, families and individuals, by keeping the tokens (commonly called ‘money’) necessary for the exchange of goods and services in perennially short supply.

And this problem has been exacerbated, over the past fifty or so years, not only by the mathematics of compound interest, but by the drastically diminished debt-free component in our money supply, now that non-cash currency has largely taken over from publicly-issued notes and coins.

No amount of almsgiving or redistributive taxation will ever succeed in reducing inequalities under a monetary régime which requires more and more of the population to shoulder heavier and heavier debts just to put money into circulation.

The only people who benefit from such a system are those involved in the creation and manipulation of the nation’s means of exchange.

The financial sector, by putting “a huge amount back into society”, is merely disguising the consequences of a debt-money system whose injustices would otherwise be only too apparent.

Mr Reece should meditate on the words of Sir Josiah Stamp, one-time Director of the Bank of England:

“The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.”

As John Tomlinson pointed out in the speech which we linked to yesterday, there is a direct connection between the prosperity of the City and the impoverishment of those who work in wealth-creating (as opposed to money-creating) sectors of the economy.

Under these circumstances hefty pay-offs to the tax man, along with selected charitable works in the community, are mere drops in the ocean.

New! from Ellen Brown, an article on the current object of speculation: your food supply!

Bad enough for us - but for third-world countries, it's a matter of life and death ...

Speculating in Hunger: Are Investors Contributing to the Global Food Crisis?

Investment newsletters are now featuring headlines like "How You Can Profit from the Global Food Crisis." The recommended investments include agribusiness stocks and exchange-traded funds (ETFs) that speculate in agricultural commodities. These investments will no doubt do very well in the global food crisis; but before you put your money down, you may want to explore whether you will be helping to alleviate the problem or actually contributing to it. Do you really want to "invest" in starvation?

Read it in full here:

http://www.opednews.com/articles/genera_ellen_br_080428_speculating_in_hunge.htm

Whose Money? says:

How many of us are unknowingly investing in hunger through our pension or insurance schemes?

Isn’t it time we ditched a financial system that compromises and erodes our values, as decent human beings - and which is now threatening to put nutritious food beyond the reach of the poorest in our own country?

Thursday, 1 May, 2008

Further to Mervyn King’s “extraordinary” outburst, reported yesterday, here’s Oxford-based economist John Tomlinson's analysis of just why those City salaries and bonuses are so high.

The following extract is taken from his talk at the House of Lords in the year 2000, entitled ...

Why is it Necessary to Maintain Confidence in Banks?

… (T)he success of the banks breeds a great deal more unwanted by-products than a burden of debt on the economy and unnecessary interest costs. The combination of the inflation produced and the solutions offered by governments of all persuasions and their advisors has divided the economy into two distinct sections.

The top section includes all the financial institutions. The ever-growing pile of money created by the banks remains within the banking system. Money managers and money managing institutions have a bigger and bigger stock to manage every year. It doesn’t take more and more people to manage the bigger and bigger supply of money. The fees earned for the management of an ever-growing money supply also grow. Yet, through the process of consolidation - also known as mergers and acquisitions, the numbers involved in the management of this growing supply of money tends to shrink Therefore, the salaries and bonuses of people in this top section tends to grow at a greater rate than the increase in the money supply itself.

The rest of the economy has a different set of ground rules - and they stem directly from the very activities that produce the increases in the top section. Over the past thirty years, the effects of inflation and the cures offered to control inflation have squeezed the rest of the economy.

To claw back the loss in purchasing power in their pay packets as the value of money was being debased, workers demanded and received higher than normal wage settlements during the seventies and early eighties. For this they have been severely criticized - and even blamed for causing inflation - by those in the top section.

The new money created was used to produce more - and more modern - production facilities both here and abroad, bringing to the marketplace excess productive capacity and greatly increasing price competition.

To curb inflation, interest rates were increased. As a result banks were encouraged to lend more:

a) the higher the level of interest they could charge, the greater their profits;

b) first rate borrowers were discouraged from borrowing;

c) to lend more, banks reduced the quality of their loan portfolios;

d) banks increased their interest rates even more to compensate for lending at greater risk, to borrowers of lower quality;

e) existing borrowers were locked in and had to pay the higher interest costs, and business overheads increased.

The effect of all of this has been a squeeze on business costs. The increased competition, brought by the increased productive capacity here and abroad - greatly increased by the demand for ‘free trade" - made it difficult for businesses to increase their prices. Thus, more efficiency was demanded. Managers had to choose between meeting the rising interest costs - which had to be met or the entire business was at risk - and paying employees. "Downsizing" roared in with a zest. Employees at all levels were laid off. Employers could no longer afford to feel loyal to their long-standing employees. Loyalty between companies and their employees was sacrificed in the name of efficiency. The bond had been broken. Employees could no longer afford the luxury of feeling loyal to their employers. The trust between them has been destroyed. Suddenly, everyone was on his own. Society as a whole is the poorer.

It made little difference whether an employee was in management or on the shop floor. No job was safe. Employees were not in the position to demand higher wages or salaries. The pressure on their income is downward.

At the same time, money managing institutions wish to encourage those managing the businesses and industries in which they have invested to produce greater profits. Good managers are offered stock options and other incentives to improve the performance of their businesses. They, too, are money managers. They control the flow of money through their businesses. They must control costs. It is part of their job to maintain the downward pressure on employee incomes - except their own, of course.

Money managers have a different set of ground rules. They are encouraged to make their businesses more and more efficient and more and more profitable. The better they constrain wage and labour costs, the more they, themselves, can earn. Their remuneration increases according to their success. The pressure on their income is upward.

Yet, with both prices and wages under pressure not to rise, the currently accepted measurement of inflation has remained very low. Governments and economists have celebrated the end of inflation.

Inflation is not dead. The celebrations are premature. Asset inflation is readily apparent in the stock market and in house prices - especially in the price of houses sought by those earning huge sums managing money and businesses. It trickles down to other houses.

In the top section - in top management and in ‘the city’ in particular - wages and salaries and bonuses have escalated to the point that the differential between their earnings and the earnings of those in the rest of the economy has become so great that it threatens the very fabric of society. Still the money supply keeps growing - as we have seen above - and the levels of income generated in ‘the city’ continue to rise. But, other than in top management, in the rest of the economy wages and prices have been constrained.

What in the UK is currently labeled "the North/South" divide is not a geographical divide. It is fundamentally a division between money managers and top corporate managers and the rest of the economy.

Whose Money? says:

Amazing, isn’t it, how, eight years ago already, one of the rare economists who recognizes the problems inherent in using debt as the nation’s means of exchange was able to spot the widening faults at the root of the UK’s “robust” economy - while those who talked the loudest and received the most publicity were not!

Visit John Tomlinson’s website (http://www.honest-money.com/talk.htm), and read his speech (http://www.honest-money.com/talk.htm) in full, giving it the attention it deserves.

You will also find a full online version of his book, Honest Money (http://www.honest-money.com/honest_money_01.htm).

And talking of books, Ellen Brown’s recent contribution to the money reformer’s arsenal, The Web of Debt, is now available from Amazon. If you haven’t got it yet, order it here http://www.amazon.co.uk/WEB-DEBT-Shocking-Sleight-Trapped/dp/0979560802.

Wednesday, 30 April, 2008

Mervyn King: Banks paying price for their greed

Gary Duncan, The Times

The days of City “hubris” must come to an end, the Bank of England cautioned yesterday in an extraordinary attack by Mervyn King, the Governor, on excessive pay packages and heavy risk-taking.

Mr King said that the Ł50 billion bail-out extended to cash-strapped banks should not be seen as an opportunity to continue paying multimillion-pound bonuses to executives who gambled with other people’s money.

Whose Money? says:

An “extraordinary attack”?

Surely the extraordinary thing is that we have sat back and accepted the bloated salaries and bonuses being swilled around in the City for so long!

Ordinary people can only say “Hear, hear!” when Mr King confesses to finding it “rather unattractive that so many young people, when contemplating careers, look at the compensation packages available in the City and think that these dominate almost any other type of career”.

We’re with him when he says that the companies that impress him most are “not the large institutions in the City” but “small and medium-sized firms” - the very ones which are rooted in home territory, but which tend either to be driven under, or, if they make too big a success of things, gobbled up as takeover fodder by the transnational giants that rule the roost: corporations which, whatever the implication of their names, are incestuously linked with international financiers and owe no loyalty to any particular nation.

So what is Mr King’s reason for bailing out these private businesses which have been bleeding “the real economy” (ie, businesses which actually produce essential goods and services) for years?

“We’re not doing this because we have an interest in the financial position of the banks as such, but their ability to finance growth in the rest of the economy,” he says.

But the only reason that banks are able “to finance growth in the rest of the economy” is that we choose to give them a virtual monopoly to do this: at the exponentially increasing risk and expense of millions of ordinary people.

Let us repeat a basic fact:

There is no reason why we should use bank-created debt as our means of exchange.

Many sensible people are suggesting ways in which we might free ourselves from the burden of borrowing the nation’s money supply into existence (see our Websites, Books, DVDs section).

It’s not for amateurs like ourselves to judge between the various alternatives put forward. We are not competent to deal with the technical niceties involved.

But it is up to people like us to start demanding, as a matter of policy, without prejudice as to the manner in which it is implemented, the provision of an adequate publicly-created money stock, issued debt-free at source.

One thing is for sure: as Nigel Grimshaw of Cambridge points out, in the comments which follow the report above:

“Given half a chance and in what they deem a favourable lending environment, the banks will indulge again in reckless lending and excessive pay packages."

This must not be allowed to happen again. It is time finance was put in its place, as the servant of production, not its master.

Tuesday, 29 April, 2008

UK job cuts feared in economic slowdown

Edmund Conway, The Daily Telegraph

Britain could be heading for an "avalanche of redundancies" in the coming months as economic reality finally catches up with the jobs market, a leading expert has warned.

and

UK job market risks losing its shine as slowdown deepens
Edmund Conway, The Daily Telegraph

One thing has confounded the gloomsters month after month. As the economy starts to slow and house prices slump at the fastest rate in 15 years, as high street spending dips and consumer confidence flags, all their forecasts of an impending crunch for UK Plc have started to look all the more prescient. But the one statistic that matters above almost all others still appears stubbornly positive.

Britain could not conceivably suffer a major economic slowdown without facing a similarly-proportioned rise in unemployment. And yet, in each of the past few months, figures from the Office for National Statistics have shown the jobs market remains in rude health - by pretty much whatever measure you use, it is at its strongest for decades.

Whose Money? says:

If unemployment begins to rise - and especially if we do experience “an avalanche of redundancies” - it could be time to remind our MPs of C H Douglas’s condemnation of a policy aiming at full employment in an age of automation and continuously evolving new technologies, in which minimal human labour is required.

Here he is, speaking in Newcastle, in 1923:

“It is to be hoped that it is clear that the vast majority of people only regard employment as a means to an end, and that end is the attainment of a sufficient supply of goods and services; that, at any rate, an enormous step forward would be made if this desire for goods and services were met, even if the alleged demand for employment remain for the moment unsatisfied.

“Is this a practicable proposition?

“I have no doubt whatever that it is wholly practicable. I do not propose to numb you with a mass of statistics on production - such statistics are easily available to people who like that sort of thing - I do, however, ask you to take it from me that one-tenth of the available labour, working short hours but with the whole of its attention directed solely to the objective of the most efficient production, could supply all the general demands of the population of this country, either by direct production, or by exchange ... for the production of other countries, in respect of articles which cannot reasonably be produced at home; in other words, production, as a problem, has been solved long ago.”

In fact, he points out, with modern technology (and this, remember, was close on eighty-five years ago, way before the additional job-destroying impetus of the IT revolution), “ … the fundamental fact, the fact on which the whole situation turns, is that if you set the whole of the available labour to work on the available real capital (tools, land, etc.), you will have an output with which nothing but organised destruction, in the shape of war, can cope”.

We need a financial system which serves the requirements of economies able to produce essential goods and services far in excess of what even today’s hugely increased world population requires: a financial system which does not use scarce money, constantly disappearing from circulation as it is repaid to the banks, and constantly needing to be borrowed back into existence, to limit the availability of those goods and services as and when they are needed.

Douglas’s eventual solution to insufficient purchasing power among the vast majority of the population was not full employment: it was a switch from bank-created debt-money (issued first to those whom the banks considered safe borrowers), to publicly-created money, debt-free at source, issued as a non-means-tested national dividend to all adult citizens.

In answer to those who claimed he would thereby be rewarding idleness, he replied, “That is a clear-cut issue: it is an issue which goes right down to the bed rock of human philosophy.” People who argue, effectively, that only those who are employed full-time in a wage-earning capacity deserve to have a decent standard of living, believe, at root, “that human nature is essentially vile, and can only be kept within bounds by being kept so busy that it has no time to get into mischief.”

Quite the opposite: those who are freed from the burden of long hours of routine labour are able to occupy their time more creatively … just so long as they are decently fed, housed and clothed.

Is working nine to five in a government regulatory job designed purely to reduce the unemployment figures really more useful than doing voluntary work in the community, or developing your artistic or intellectual talents? Is working as a paid nursery assistant looking after other people's children really more important than caring for your small sons and daughters and maintaining a comfortable family home?

How many jobs are really necessary? How many (in, eg, law, financial services, government) would still be necessary, under a régime of stable, debt-free money?

The present financial crisis should be welcomed as an opportunity for constructive changes of attitude towards both employment and money, not an excuse to drive an even greater proportion of the world’s population into poverty (see Elizabeth Warren’s lecture on The Coming Collapse of the Middle Class, here: http://www.youtube.com/watch?v=akVL7QY0S8A).

Monday, 28 April, 2008

Which way from the edge of the abyss?

Larry Elliott, the Guardian

… One option for Brown in the face of these mounting troubles would be to make a virtue of necessity. He could say that the global credit crunch is the result of the ideological dismantling of controls on the financial system since the mid-1970s and that in those circumstances it is the duty of a social democratic government to re-regulate the banks and to come up with proposals to forestall a wave of repossessions. On tax, he could say the need to find money for pensioners and low-paid workers with no dependent children affected by the scrapping of the 10p tax band requires a more redistributive tax system. And if he was really brave, he could say that the recent fall in the value of the pound and the impending drop in house prices are entirely welcome developments that will assist in the long overdue rebalancing of the economy. The productive side of the economy has suffered grievously from an over-valued exchange rate, which is why the trade deficit is so high. Rising house prices have encouraged over-consumption and resulted in a massive inter-generational transfer of wealth from young people to their parents. But let's face it, Brown is unlikely to say any of that, because to do so would be to admit that Labour has failed to address any of the long-term problems of the British economy.

Read in full …

http://www.guardian.co.uk/business/2008/apr/28/economics.economy

Whose Money? says:

It’s not only Labour that “has failed to address any of the long-term problems of the British economy”.

Those problems go back a very long way, and are fundamentally tied up with the decision to use debt as the country’s means of exchange.

It is this decision which drives inflation, both of the currency and of asset prices, and which makes boom and bust inevitable.

It’s unlikely that any modern government, intimately connected as they all are with finance and big business, will take steps to remedy the situation until their backbench MPs force them to: and it’s even more unlikely that a majority of MPs will start to think beyond the dogmas of orthodox economics until their increasingly impoverished constituents threaten to unseat them.

It’s up to the millions of ordinary people in the UK who will be most affected by a recession to refuse to walk into the abyss, by insisting on the public issue of an adequate supply of debt-free money available as and where necessary.

Picture: Down in the Earth, p36, http://www.gutenberg.org/files/17582/17582-h/17582-h.htm

House prices now falling year on year as economists warn credit crunch 'will see 33,000 lose their home'

Rebecca Camber, The Daily Mail

At least 33,000 owners will lose their homes this year, according to a report released yesterday.

It warns that property repossessions will top last year's figure by almost 25 per cent as house prices continue to drop.

Capital Economics, a research consultancy, predicts average price falls of 8 per cent this year, and 10 per cent in 2009.

Whose Money? says:

It was all so predictable … except to the experts.

When will governments stop relying on mass borrowing, on the back of asset-price inflation, to keep the wheels of the economy turning?

Exactly the same thing happened at the time of the Great Depression:

"Throughout the 1920s a long boom took stock prices to peaks never before seen. From 1920 to 1929 stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market.

"But in 1929, the bubble burst and stocks started down an even more precipitous cliff. In 1932 and 1933, they hit bottom, down about 80% from their highs in the late 1920s. This had sharp effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. New investment could not be financed through the sale of stock, because no one would buy the new stock. But perhaps the most important effect was chaos in the banking system as banks tried to collect on loans made to stockmarket investors whose holdings were now worth little or nothing at all. Worse, many banks had themselves invested depositors' money in the stockmarket. When word spread that banks' assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings. Unable to raise fresh funds from the Federal Reserve System, banks began failing by the hundreds in 1932 and 1933. (Our emphasis.)

http://www.pbs.org/fmc/timeline/estockmktcrash.htm

The New Deal and the Second World War merely sorted things out on a temporary basis. They didn’t eliminate the banks’ capacity for inflating, deflating and distributing a nation’s money supply in line with the logic of finance, rather than human need.

In fact, with publicly-created, debt-free notes and coins forming a smaller and smaller component of the total money stock, the situation is now even worse than it was in the Thirties: but it won't be made better, as far as ordinary people are concerned, by central banks flooding the economy with unstable and ill-distributed money repayable, plus compound interest, to the private lending institutions.

This time round, let’s get to the root of the problem, and recognise that it’s only a shortage of materials, labour, and human ingenuity that matters.

Restrictions on money-creation opportunities in the financial sector are no reason for putting a stop to the production of much-needed goods and services, as long as it is practicably possible to provide these things.

In fact, the sooner a national currency based on fluctuating levels of debt to the banks is replaced with a sufficient supply of stable, publicly-created money, free of debt at point of issue, the better.

Sunday, 27 April, 2008

An interesting item from Ellen Brown's Blog, on the Web of Debt site:

The UnMoney Convergence

Last week I attended an excellent conference in Seattle called the UnMoney Convergence. I’ve been so busy that I don’t know that I can give it justice here, but I wanted to add a note. I’d estimate that about 50 people attended, although I didn’t count. It was largely a community currency group, so that was the main focus of the discussions.

Read more here:

http://webofdebt.wordpress.com/

and also here:

http://unmoney.wik.is/Session_Notes

Whose Money? says:

It's good to know that people are waking up to the fact that the way we create our means of exchange is vital to the kind of life the majority of people will lead.

We're very much in favour of the flexibility and freedom of choice offered by local and regional currencies as a supplement to a national supply of publicly-created, debt-free money.

The more we put our heads together to work out solutions to the money problem, and the more we pressure our MPs to initiate a switch from the present debt-based system to something which allows everyone access to a decent standard of living, the better.

Saturday, 26 April, 2008

UK economic growth slows to three-year low

Sean O’Grady, The Independent

Figures showing that the British economy is growing at its slowest rate for three years may actually underestimate the level of decline over the past two months, economists warned last night.

Whose Money? says:

If we were not subject to the laws of debt-finance, we would not be concerned with growth: only with whether or not our economy was producing and distributing - either directly, or with the assistance of a balanced exchange of imports and exports - a supply of goods and services sufficient to provide a decent standard of living for all.

The present obsession with “growth” and exports skews the economy away from sensible production.

“Growth” is frequently unrelated to any increase in human well-being (see http://www.unm.edu/~econ/Binder/What's%20Wrong%20With%20the%20GDP.pdf); and the extra debt-free purchasing power brought by a surplus of exports over imports implies a surplus of imports over exports (and a consequent decrease in purchasing power) elsewhere in the world.

Until we free “the real economy” from the dominance of financially enforced “growth”, and focus on sensible production for the home market, with imports supplying only those needs which home producers are genuinely unable to meet (rather than those upon which they are unable to compete financially - disregarding the high social and environmental costs exacted both at home and in the exporting nation by the superficially lower prices of imported goods) the economic warfare inseparable from “growth” will continue to make strife between nations inevitable.

The answer is not a global dictatorship, regulating us all into submission.

As C H Douglas so rightly pointed out, abolishing nations in order to prevent war is about as sensible as abolishing individuals in order to prevent one-to-one fights.

What needs to be eliminated is not the right of nations to make their own decisions, but a financial system which cannot function without provoking international conflict.

(Our photos: Whitley Bay, during the recent period of vigorous "growth".)

Friday, 25 April, 2008

The coming collapse of the middle class

A lecture by Elizabeth Warren, who teaches contract law, bankruptcy, and commercial law at Harvard Law School. She is an outspoken critic of America's credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

Ms Warren says:

“ ... the single most important economic shift in the second half of the twentieth century in the US ... is that millions of mothers poured into the full-time pay work force. A woman in 1970 who had a a sixteen year old child was less likely to be in the work force than a woman in 2003 who had a six-month child at home. It was a profound shift …”

Photo: http://www.top-law-schools.com/harvard-law-school.html

Why, Ms Warren asks, has the advent of the two-earner family coincided with that same family's increasing inability to pay their way?

Listen to what she has to say here:

http://www.youtube.com/watch?v=akVL7QY0S8A

Whose Money? says:

Well worth a listen! Ms Warren is talking about the current situation in America, but what she says applies just as well to recent trends in the UK and other developed countries. If you want to skip the introduction, she makes her appearance at around 5 minutes into the video.

She doesn’t link the plight of the middle class directly with the way we create our money, but she does connect it with higher mortgage costs and an explosion of debt.

So why are wages - even when two wage packets are the norm - no longer covering the cost of living?

Ms Warren's analysis of where a two-parent, two-child family’s money actually goes - drawing on data maintained for more than a century by the US federal government - is illuminating, in the face of frequent claims that today’s unprecedented levels of debt are largely the result of the extravagant consumption of luxury goods (eg, designer clothes, eating out).

Her conclusion is that, on the contrary, it is the unavoidable items in the family budget (housing, health costs, taxes) that have risen out of all proportion: for example, in one generation (thirty years) mortgage costs on the average family house have risen by 76% - even though mortgage rates are lower, and the average size of house has only increased from 5.8 to 6.1 rooms.

The facts presented in this lecture clearly demonstrate just why people are no longer saving, and, indeed, why more and more of us are not even solvent.

We find her conclusions particularly interesting, in the light of widespread lack of sympathy for middle-class debt among those whose focus is, understandably enough, on third-world poverty. Why waste concern, it's frequently said, on the negligible pain of ostensibly affluent consumers, when elsewhere people are starving?

The assumption (at least until we ourselves are sucked into the undertow of the debt-based economy) is that our spendthrift neighbours have only themselves to blame if they are struggling to keep abreast of interest charges.

But Ms Warren argues that the financial difficulties of the traditional middle classes have wider ramifications, and are rapidly leading to a two-class society, in which a minority have all the choices, while the vast majority work non-stop just to service their debts and survive.

Listen to her summing up:

" ... for everybody who cares about poor families in America they should be riveted on these data. Middle-class families under enormous economic stress have fewer resources to give when we talk about how it is that we’re going to help the poor. …

"A middle class where people are falling out and into poverty is a middle class that has less room to bring the poor up and provide them with opportunities to join the middle class ... There’s no place for the poor to go, and not much help coming from the middle class today compared with even a generation ago ...

"We are going to see a larger upper class, not just the rich-rich, but the sort-of-rich ... who don’t have any of life’s bumps. And then the rest is just one long trail of underclass that stays on a constant debt treadmill … people who are constantly just living on the edge of a cliff … never with the kind of security that for the first three-quarters of the century we associated with being middle-class.

"I worry about what that means … I worry that the middle class which used to mean solid and boring and not worth studying, only worth making fun of … that that’s kept us from seeing a problem in the middle class that … really threatens the fabric of our country. We have a middle class today that’s really weakened and I think what this means is that it’s time to realign both our academic and our political interests and alliances to talk more about what’s happening to these families."

Focusing exclusively on the worst extremities of poverty has meant that we have made a faulty diagnosis of the disease, prescribing redistribution of limited resources as the remedy, rather than recognising the fundamental part played by our debt-based monetary system in skewing and restricting production and distribution of an adequate supply of goods and services for all.

We suggest that publicly-created, debt-free money should be supplied in line with the rise in essential living costs. Poverty will only extend its reach even further if, instead, more and more people are forced to undertake and service, at their own risk and expense, the astronomical debts now required to create an increasingly inadequate and ill-distributed means of exchange.

Thursday, 24 April, 2008

Bank of England's dilemma: A house price crash or soaring inflation

Edmund Conway, the Daily Telegraph

Which would you rather face: a recession and house price crash or years of soaring seventies-style inflation?

Two options; one nasty dilemma for the Bank of England. In particularly stark and simple terms, this is the question tearing a major split through the Monetary Policy Committee, which decides interest rates.

This is the debate which will determine how painful the coming months are for families throughout the country, and could set the UK on the road to either another boom in house prices or, at the other extreme, a dismal Japan-style depression.

Whose Money? says:

When the only answers offered by orthodox economics make it impossible to achieve the efficient production and distribution of those goods and services necessary to sustain and improve the quality of life on earth, isn't it time for the "experts" to admit defeat, and start looking at unorthodox solutions instead?

We ordinary people may not be able to decide technical matters, but we are perfectly entitled to demand a national currency that does not involve our increasing subjugation to essentially unrepayable debts just in order to exchange goods and services with each other.

Stable economic activity and a better chance of material security require a reliable means of exchange, based on a system of publicly-created, debt-free money. The "experts" should stop arguing over whether life would be more comfortable in the frying pan or the fire, and get down to working out the technical requirements of initiating such a system.

Has the Market Failed?

Sean Corrigan, LewRockwell.com

… this is a world in which banking "capital" is a veritable Cheshire Cat of insubstantiality (since banks are unique in having little but their own debauched "money" on both sides of the balance sheet). That "capital" is most easily increased by means of the notional profit booked on a deal – a profit which is often no more than a deliberately optimistic, upfront reckoning of many future years’ prospective income and, so, is one which is subject to a whole array of possibly unjustified, "modelling" assumptions.

As ethereal as this gain might turn out to be, the fact is that, for as long as this fiction can be maintained, it strongly induces banks to lend and re-lend against the collateral afforded by the very same assets which have most appreciated under the influence of their original loans, thus ensuring that they re-attain the maximum permissible degree of leverage and hence most flatter their returns on equity.

This powerful positive feedback – one whose underlying fuel is the banks’ unnatural ability to create money, simply by granting loans – means that they are rewarded (at least while things are in the upswing) for reinforcing any resulting instabilities. Thus, they frequently find themselves turning the most innocuous of convective puffs into a raging hurricane of wasteful malinvestment.

What this implies is that fractional reserve banking not only gives rise to a fall in the value of money, per se, but it is also the well-spring of that thoroughly avoidable and widely destructive bipolar disorder we know as the business cycle – i.e., the boom and the bust itself – and so gives the main impulse to those periodic, lemming-like waves of folly which so mar the history of material progress.

Read in full here:

http://www.lewrockwell.com/corrigan/corrigan90.html

Whose Money? says:

As always from Sean Corrigan, a beautifully written and tightly argued article. The only thing we’d disagree with is the need to use only gold or other precious metals as backing for the nation’s means of exchange.

The dangers of government actually running the banks and manipulating the money supply can’t be denied: but nor can the opportunity for profiteering afforded to advantageously-placed groups and individuals cornering available supplies of gold.

The argument of many money reformers is that the actual wealth of a nation affords sufficient backing for its currency.

At Whose Money? we believe that publicly-created, debt-free money in the form of a non-means-tested basic income to all adult citizens is the answer. Big government with its penal levels of taxation and unnecessary bureaucracy could be avoided if services were sanctioned, paid for and administered at grass roots level, with co-operation across the boundaries of locally-based communities for larger projects, and only the bare (and minutely scrutinised) minimum granted to Westminster, to pay for specifically approved, and truly national, business (eg, defence, the administration of justice). This would give individuals, families and the small businesses which are the basis of any thriving economy maximum financial autonomy and freedom of decision.

In the meantime, what we have, as Mr Corrigan says, is not a free market, but "financial corporatism".

Wednesday, 23 April, 2008

Labour revolt cancelled after 10p tax 'U-turn'

Andrew Woodcock, The Independent

Labour rebels today called off their revolt over the abolition of the 10p icome tax rate after Alistair Darling promised to compensate poor households who will lose out from the change.

Former minister Frank Field said he was withdrawing a rebel amendment which had attracted the signatures of 45 Labour MPs and threatened Gordon Brown with his first Commons defeat as Prime Minister.

The move came after Mr Darling announced he would meet one of the rebels' key demands that compensation should be backdated to the start of this financial year, when the tax change comes into effect.

Whose Money? says:

This particular dispute may have been settled; but nothing is more certain than that others will take its place, as this and future governments attempt, unsuccessfully, to balance the tax/spend equation: an impossible feat, with interest on the national debt snowballing year-on-year.

Until the nation takes steps to settle the unjustified “debts” of centuries and release its citizens from the obligation of going still deeper into the red, victims more acceptable to the ruling party’s supporters will continue to be selected to pay the price.

Tuesday, 22 April, 2008

An article by Michael Rowbotham, author of The Grip of Death and Goodbye America, two indispensable books for anyone interested in money reform:

Globalisation and the debt-based financial system

Fight globalisation. Beat the monster with sticks. Hunt it on the streets and hurl paving slabs, eggs, abuse - anything. Pursue it to the government lobbies, or better still the courts and strike it down with legal processes. Try to shackle the corporate beast by changing international law. Let’s fight globalisation. But what are we fighting?

The ultimate drive behind globalisation is the same engine that has driven our economies on the relentless path they have taken for many centuries. This is the ‘debt-based financial system’ where money is largely created by banks and other lending institutions.

Read it here:

http://www.sustainable.ie/convergence/magazine/pdffiles/Globalisation&thedebt-basedfinancialsystem_MikeRowbotham.pdf

And then order both of Rowbotham’s books from Amazon, here:

http://www.amazon.co.uk/Grip-Death-Slavery-Destructive-Economics/dp/1897766408

Monday, 21 April, 2008

Wages fail to keep up with rising bills

Adrian Pearson, The Newcastle Journal

FAMILIES in the North East are struggling to keep up with rising bills as wages fall behind living costs, experts have warned.

The average weekly pay in the North East remains the lowest in England and in some parts of the region salaries are now falling as well-paid jobs disappear.

As mortgage repayments and fuel costs continue to increase, a detailed look at average wages has revealed that the average person in the region earns around Ł388 a week – just 2% higher than last year.

Whose Money? says:

Why not boost incomes in the North East - and other places where wages are falling way behind price increases - with regional and local currencies, acceptable in payment of council tax?

Similar schemes have been tried before with great success (see http://alt-money.tribe.net/thread/70e5eb29-853d-44ca-9faa-b789d1757037; and http://www.barataria.org/i/4/i.4.htm).

They are even being tried at the present time by places in Germany hit by the one-size-fits-all euro economy, with currencies such at the Chiemgauer coming to the rescue (http://www.newmediaexplorer.org/sepp/2004/03/12/euro_or_chiemgauer_alternative_currency_to_support_waldorf_school.htm) and in Italy: see Marco Della Luna, Alternative currencies and money reform advances in Italy, Number 15 in our Articles section, here.)

This would not obviate the need for a switch to debt-free money, but at least it might help to prevent poorer areas falling into even greater dereliction.

Huge numbers live on benefits

The Newcastle Journal

THOUSANDS of people across the region have been claiming benefits for more than two years, figures released today will show.

The figures will reveal that 11,220 people in the Easington district of Durham were claiming unemployment benefits for at least two years – 19.8% of the population.

And in Middlesbrough there were 13,250 claimants – 15.4% of the town.

Nationwide almost 3.4 million people have been claiming benefits for more than two years. The number of long-term benefits claimants has risen by more than 250,000 since 1999, the Department for Work and Pensions figures showed.

Whose Money? says:

It’s suggested, in the previous article, that, “Moving Government jobs from the South to the North should have been prioritised”; but many government jobs are nothing but window-dressing anyway: designed, like the ludicrous inflation in university places, to disguise the real extent of unemployment, in an age when fewer and fewer human beings are required to produce all the goods which the nation needs.

Indeed, those engaged in useless - or, worse, counter-productive - government jobs are just as much on benefit, just as dependent upon the dwindling numbers of productive taxpayers, as those who have no fig-leaf of paid employment to justify such dependency.

Why not stop trying to tackle the “problem” of unemployment (known and enjoyed by those in happy receipt of an unearned income as “leisure”), share out all the free time which is the bonus of automation more equally, and start dealing with the problems of distribution resulting from the insane decision to use debt as, effectively, the nation’s sole means of exchange?

Sunday, 20 April, 2008

Autumn of our lives looks distinctly wintry

Jenny McCartney, The Sunday Telegraph

… In years to come, I fear, my generation will look back and rail against Gordon Brown with cracking voices full of impotent fury. The youth of tomorrow will respond with "Who?" But we will know who we mean: the man who has done most, single-handedly, to imperil the financial security of vast swathes of British citizens in their looming old age.

The pensioners of today have been punished by Mr Brown's wide array of "stealth taxes" and soaring council tax. But he has reserved his keenest punishment for the pensioners of tomorrow. The public's faith in private pensions had already been rocked by industry scandals when Mr Brown took the scandalous decision in 1997 to scrap tax relief on the dividends of private pension schemes. In this he ignored the advice of Treasury officials, although he had the full support of Tony Blair.

Read in full here:

http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/20/do2003.xml

Whose Money? says:

Governments - both national and local - that are having to fork out more, year on year, to service their unreasonable debts must constantly be dreaming up new ways of squeezing money out of the captive population.

How gratified Sir Josiah Stamp, one-time Director of the Bank of England, would be to witness the fulfillment of his prediction during the inter-war period:

"While a few years ago no one would have believed it possible that a scale of taxation such as that at present existing could be imposed upon the British public without revolution, I have every hope that with skillful education and propaganda this scale can be very considerably raised." (Our emphasis.)

The Liberal Democrat Party is vociferously at one with Sir Josiah in advocating the unquestionable desirability of ever-higher levels of taxation: but the other two major parties are equally committed to transferring as much as is electorally possible from the pockets of the public into the Chancellor’s coffers.

The fact is that, until we decide to stop using bank-created debt as effectively our only means of exchange, taxes must keep on rising, as CH Douglas pointed out well over half a century ago: see the extracts, below, from a public address given at the Ulster Hall, Belfast, on 24 November, 1936.

Dictatorship by Taxation

I am speaking to you tonight on one of the mechanisms - an increasingly important mechanism - through the agency of which the members of the financial oligarchy under which we suffer impose their will upon us.

It is important to understand this mechanism, at any rate in its broader aspects, but I should like to impress upon you at the outset that even an exact and extensive understanding of it can be regarded as having any practical use only if it acts as an incentive to recruiting you for organised action. It is the action that counts.

As someone said in regard to the international situation, "It is no use having the logic if you have not got the guns," and that is profoundly true in regard to the matter on which I am speaking to you tonight. It is no use realising that taxation is legalised robbery, is unnecessary, wasteful and tyrannical. If you stop at that, not only will you have to pay the taxes that you now have to pay, but, as Sir Josiah Stamp, one of the Directors of the Bank of England, suggested a short time ago, with that engaging candour which we are beginning to expect from the Bank of England, "While a few years ago no one would have believed it possible that a scale of taxation such as that at present existing could be imposed upon the British public without revolution, I have every hope that with skillful education and propaganda this scale can be very considerably raised."

THE OLD TITHE WAS NECESSARY

It is impossible to get a sound and clear understanding of taxation by any consideration of money figures or statistics, as at present compiled, since there is no relation between facts and money. It is essential to begin by a consideration of real, i.e. physical, economics as distinct from money economics.

For instance, the old and original tithe was a genuine and justifiable tax. It consisted of one tenth of the agricultural production of the taxed land, and this agricultural production so collected was handed over to the Church for the physical maintenance of the clergy and their dependants, it being assumed that the clergy were too busy with other matters to raise their own crops.

It may be recalled that the word 'clergy' is derived from clerk' and that it is to clerks that we owe (and pay) our taxes.

Now it is obvious that the physical meaning of this to those who paid the tithe was that they did a small amount of extra work or, alternatively, had a little less to eat themselves. There was nothing in such an arrangement which could, or did, result in a loss to the community on the one hand, or, on the other, make it impossible for the agriculturalist to live.

But now consider the fact of a money tax upon agricultural land, which is the form the tithe has now taken. It is imposed quite irrespective of the value of anything which is produced upon that land, and its effect is simply that of an overhead charge upon anything which is produced.

If a farmer owns the land he farms and has to pay tithe upon it, the tithe appears as a cost of production and increases the price that he must charge in order to live off his farm. If he cannot raise the price, which is generally the case, he makes a money loss, and ultimately ceases to farm, because he does not grow money, he grows produce, and money is demanded from him.

This is exactly what has happened in England, where three million acres of farming land have gone out of cultivation since the [First World] War. But the evil does not stop there. Since the farmer does not make a reasonable living, he does not keep his land in good order and he has no money to spend upon the products of other industries.

It is beyond all question, and it is, of course, obviously common sense, that all taxation which does not go into the pockets of the poor lowers the standard of living, and the margin of security is lowered by any taxation which discourages enterprise.

There could be only one fundamental justification for taxation - that, with the whole of the community in maximum employment, not enough was being produced to maintain the total population by reason of the excessive consumption of a small proportion of the population.

In fact the whole theory of taxation as a justifiable expedient rests upon two propositions: first that the poor are poor because the rich are rich, and therefore that the poor would become richer by making the rich poorer; and secondly, that it is a justifiable procedure to have a system of accumulating riches, and to recognise that this system is legitimate, while at the same time confiscating an arbitrary portion of the accumulated riches.

The latter proposition is very much the same thing as saying that the object of a game of cricket is to make runs, but if you make more than a small number they will be taken off you.

Please allow me to emphasize the point that I am in complete agreement with those who contend that some individuals are unduly rich, just as I am absolutely confident that taxation is not the remedy.

CONFUSION BETWEEN MONEY AND REAL WEALTH

Now the first of these fallacies - that the poor are poor because the not-so-poor are not-so-poor, and that the poor are made richer by making the richer poorer, arises out of the confusion between money and real wealth.

It is assumed, in the first place, that the equality between real wealth and money is absolute, and that, therefore, if an individual has a large amount of money in comparison with his neighbour the whole community will be raised in its standard of living if the richer man is taxed, even though the poor man does not get the money - which, in fact, he rarely does.

The absurdity of this argument, as apart from the other aspects of it, is evident if it is applied, say, to the question of the ability of a proportion of the population to buy Rolls-Royce cars. If one imagines all the purchasers of Rolls-Royce cars to be taxed so that they no longer can buy Rolls-Royce cars, it does not, of course, mean that the poorer portion of the population buys Rolls-Royce cars; it merely means that Rolls-Royce cars are not produced.

This would be a perfectly satisfactory state of affairs if the production system was lacking in some production which the freeing of men from making Rolls-Royce cars would enable them to produce.

We see exactly this state of affairs in wartime, when luxury production ceases, but in peacetime we know perfectly well that we have what is called an unemployment problem, that it to say, a surplus production problem, and that, under the existing financial system, the inability of anybody to buy Rolls-Royce cars would merely result in an increase in unemployment, and that the present financial system regards full employment as being the best method of keeping us in slavery to financiers.

All the preceding arguments lead up to, and are, in fact, dependent upon the proposition that the production of real wealth - that is to say, all things which money can buy - is entirely separate from the production of money with which to buy them, and that in taxing anyone but a banker we are merely increasing the value of the bankers' monopoly of money-making.

It is, fortunately, not nowadays necessary to develop this argument at any great length, since the facts are not in dispute in any reasonable circles. The Encyclopedia Britannica in its article on money, volume 15, states, "Banks lend by creating credit. They create the means of payment out of nothing"; or, as the Chairman of the Midland Bank put it, "The amount of money in circulation varies only with the action of the banks."

Since our civilisation is a money civilisation, and we none of us can carry on our daily pursuits without the possession of money, it is obvious, in the first place, that this situation places us ultimately at the disposal of the banks, and that increased taxation by lessening the amount of money at our disposal increases this hold that the banks have upon us.

The first point, therefore, on which to be clear, even without enquiring as to the destination of the money, is that the heavy taxation under which we suffer works directly to the advantage of the financial houses which control the banking system.

But if you will look at the back of your tax demands, you will find that the total amount received from income tax, sur-tax, and death duties, is approximately equal to the amount required to pay the interest on the National Debt, and that other forms of taxation supply the money for social services, to the extent that it is supplied.

CREATORS OF NATIONAL DEBT

Now the National Debt in 1913 was Ł706,000,000 and in 1935 was Ł7,945,000,000 or ten times as much, and it is steadily rising. Probably 80% of this debt was created by the process to which the Encyclopedia Britannica refers, that is to say, by the banks creating money out of nothing and lending it to the country through the agency of War Bonds and other national securities. Or to put the matter another way, just as the banks create money out of nothing, so they bought the War Debt for nothing, and our income tax, sur-tax, and death duties are what we pay them for having created and appropriated the National Debt for their own use.

It does not require much assistance to see that just so long as the population will stand it - and Sir Josiah Stamp assures us that, with care, the population will stand much more of it - we shall go on paying an increasing amount of taxes, the major portion of which will go to increase the power of banking institutions and their grip upon the population.

If the stock and bonds which the banks, including the Bank of England, have appropriated in the last fifty years had been placed to the credit of the community, not only should we be free of taxation but we should be drawing a substantial dividend.

A common objection to this statement is that under these conditions banks would pay fantastic dividends; but this is a misconception. Banks do, in fact, pay high dividends upon a comparatively small capital, but the stupendous profits which are made by the manipulation of the money system on the general principles that I have just been indicating to you, do not go to anybody; they disappear by book-keeping processes, and by the formation of stupendous invisible reserves; and, since they increase the disparity between purchasing power and real wealth, they perform a continuous deflation system.

For instance, if you see that the securities held by a bank amount to Ł100,000,000 sterling, you might suppose that that was the market value of the securities. It is extremely probable, in the case of a British stock bank, that every Ł100,000,000 of securities shown on the balance sheet represents at least Ł1,000,000,000 of market prices in normal times, and by this process of writing down, which is much more complex than the simple instance just cited, it is possible to conceal profits of several hundreds percent per annum, and there is little doubt that it is done.

The so-called stability of the British banking system is simply a measure of its grip on the national resources.

TAXATION A TYRANNICAL FRAUD

Stripped of its complications, the fact emerges that we live under a system not at all dissimilar to that of a commercial company with unlimited liability in which new debentures are constantly being issued and allotted free of charge to the financial system and its controllers, who take no risks and do no creative work.
The general population is fundamentally in the position of wage earners, and the taxation upon them goes to pay the interest on these mortgage debentures.

The income tax authorities are in the position of accountants and debt collectors, acting in the interest of the debenture holders. We are, every one of us, in debt to these debenture holders, even though some of us may hold debentures, and the policy is to load us individually and collectively with debt so that we shall be the slaves of our debtors in perpetuity.

It is impossible to obtain money to pay off the debt, owing to the fact that our debtors are at the same time in sole control of the power of creating the money which is required to pay off the debt.

Taxation is not primarily an economic device, it is a tyrannical device. Once the meaning of this situation is grasped, it is not difficult to see the general principles by which not merely could taxation be eliminated, but in place of it every individual could be placed in a condition of economic freedom and security.

As I put the matter before the monetary commission in New Zealand, the essential power which the banks have acquired is the power of the monetization and the demonetization of real wealth. That is to say, the power of creating acceptable and accepted orders or demands on the producing system and of destroying them on recall; and the essence of their fraud upon civilisation is not in the magnificent technique of the system which they employ, or even in the charges which they make for the use of this money which they create, even though these charges, i.e. their interest rates, may be considered in many cases exorbitant.

The essence of the fraud is the claim that the money that they create is their own money, and the fraud differs in no respect in quality but only in its far greater magnitude, from the fraud of counterfeiting.

At the instigation of the banking system, barbarously severe penalties are imposed upon the counterfeiter of a ten-shilling note, but a peerage is conferred upon the counterfeiter by banking methods of sums running into hundreds of millions.

May I make this point clear beyond all doubt?
It is the claim to the ownership of money which is the core of the matter. Any person or any organization who can create practically at will sums of money equivalent to the price values of all the goods produced by the community is the virtual owner of those goods, and, therefore, the claim of the banking system to the ownership of the money which it creates is a claim to the ownership of the country.

FUTILITY OF BANK NATIONALIZATION

If you are willing to admit that this ownership is justified there is nothing to be said; but if you are not - and I do not suppose in Northern Ireland (where there seems to remain a spark of that independent character which is apparently disappearing in England) that you are - do not be misled by any such phrase as 'The nationalization of banking.' The State and the banking system are very nearly one and the same thing at the present time and are wholly one in policy.

While the Bank of England is a private bank owned by international financiers, the Treasury plays straight into its hands, and the nationalization of, for instance, the Bank of England, would mean the transfer of the Treasury into the Bank of England rather than the transfer of the Bank of England into the Treasury. (Our emphasis.)

The Commonwealth Bank of Australia is a Government Bank, but its policy is identical with the policy of the Bank of England; and the same comment is applicable to the Bank of New Zealand, which has just been nationalized with the able assistance of its governor (who was sent out from the Bank of England to do the job), and the Bank of Canada.

No nationalization of banking will put one penny into the hands of the individuals comprising the countries over whom it rules, so long as this question of the ownership of money is left unaltered. But if it once be admitted that the community, not the Government, is the owner of the money, and the individual, as part of the community, is entitled to his share of it, the situation is obviously very different.

PUNISHMENT BY TAXATION

If the present system of taxation consisted, as it does, of an organized system of robbery but without any other objectionable aspects, it would, in all conscience, be unjustified. But in the past few years, and particularly since the [First World] War, another feature of it has come into prominence, although there is very little doubt that it has always been contemplated.

I refer to the use of the taxation system as a method of inflicting punishment without trial and at the discretion of anonymous individuals. As an example of what I mean I might say that, since my own efforts to explain the nature of the taxation have come into some prominence, I have been consistently pestered by various assessments for income tax which require a great deal of time, expense, and trouble to dispose of.

Even if and when disposed of, they constitute a serious additional tax, since it is inevitable that skilled legal assistance be employed in connection with them and much data collected, and, of course, the cost of this is not reimbursed.

It should be incredible, if it did not happen to be true, that a system which allows a claim to be made on you, leaving the trouble and expense of proving that it is not justified upon the shoulders of the person assessed and that no redress for unsubstantiated claims is possible, would be tolerated; but that is exactly the position of the taxation system.

It is, of course, exactly the reverse of ordinary business procedure, where a claimant for services rendered can always be put in a position of proving his claim. The system employed traverses the fundamental principle of British justice, in that it forces you to give evidence against yourself.

During the [First World] War I had some contact with the more hidden side of politics, and I was informed that income tax was a favorite device for penalizing anyone unpopular with the authorities. The same sum in taxation could be raised far more cheaply and with infinitely less friction, by simple taxes, such as sales taxes, or other straightforward devices , even if it be granted, which of course is not the case, that the taxation was necessary.

The recent commission upon the simplification of income tax stated that many of its provisions were
"frankly unintelligible to them and that only the skilled administration by the Inland Revenue officials had made them workable." This is exactly what they are intended to be, thus leaving the power over the individual for taxation purposes in the hands of the bureaucracy.

Lord Hewart of Bury, the Lord Chief Justice, has done invaluable service in drawing attention to this particularly objectionable form of tyranny. But there will be no alleviation from it so long as political power is allowed to rest in the hands of the oligarchy which rules us at present ...

In conclusion, perhaps you will allow me to express my opinion that in this matter it is now a fight to the finish.

Within the next few years you will either become subjects of a servile State, exceeding in powers anything known in history, quite possibly well-fed and even secure - just as many slaves were well-fed and secure in the days of chattel slavery and resented their freedom - or you will, but only by means of the greatest struggle in history, have achieved all these things, together with freedom - freedom of speech, freedom of action, immense leisure , immense opportunity.

No one is going to get these things for you. You must choose whether you want them, and if you decide that you do, you must take action without a moment's delay.

Whose Money? says:

Unfortunately, it seems, we chose to let ourselves be hoodwinked by the likes of Sir Josiah and his followers in parliament, and are now indeed "subjects of a servile State", governed by policies decided far beyond our shores, and financial objectives hostile to the well-being of billions of ordinary human beings.

Douglas advises us not to "waste ... time looking round for someone who is going to do the job" of recapturing democratic cotnrol of the nation's policies," since "you won't find him. If you won't do it yourselves, it is not going to be done."

He continues:

"Take your present Members of Parliament just as you find them and disabuse them of the idea that they are heaven-sent geniuses, whom you have elected to run the country for you. They don't run the country anyway, but you let them think they do. Your Members of Parliament are elected to represent the common will, not the uncommon intelligence. The proper place for intelligence is in the ranks of the technicians who should be the servants of the common will."

For those who, like us, are suspicious of the idea of a "common will", elsewhere Douglas makes it clear that this should be invoked only in matters of general policy, where it is actually possible to reach agreement: for instance, in the proposal to switch to a debt-free means of exchange, distributed in the form of a non-means-tested "national dividend" to all adult citizens.

He is scathing of those who equate a majority vote on issues which benefit one discrete section of the population at the expense of others with "the common will".

Is it too late to demand that our representatives move to provide us with a currency which serves the needs of ordinary people who need access to goods and services, rather than those of a financial establishment concerned only with the manipulation of monetary units?

It would be a good start if journalists like the excellent Ms McCartney would start pointing the finger of blame at the national debt which subjugates us to increasingly punitive taxation, rather than the wheezes of individual politicians who, under present circumbstances, are naturally keen to milk us for as much as possible.

Saturday, 19 April, 2008

Why is everyone worried about house prices?

Charles Moore, The Daily Telegraph

If you study media reporting of our current economic discontents, you notice something strange. Rising fuel costs, utility bills, startling food price increases are represented as bad. But house price increases are considered good.

The headlines about the housing market are all about falling prices, and they invariably contain words like "gloom". Why? Gloom for whom?

Whose Money? says:

“Gloom for whom?”

Well, for all the people Mr Moore mentions of course: but above all for the nation, as long as the economy has to be fuelled by ever-increasing levels of debt.

A hundred years ago, government notes and coins were supplemented principally by the non-cash money created by banks when businesses borrowed to invest. Since the last World War, business borrowing has increasingly proved inadequate to the task of creating sufficient liquidity, and private individuals in ever greater numbers have been forced to shoulder ever riskier “loans”, if the money supply is not to shrink - leading to a slump in effective demand, unemployment, and recession.

And what are the biggest loans that private individuals are prepared to undertake? Why, their mortgages, of course! Even the loan which buys the family car - the next biggest item of expenditure - runs a very poor second.

Recently the mortgages required to buy even a modest property have ballooned outrageously, creating huge quantities of ill-distributed debt-money, entirely unrelated to any increase in the nation’s real wealth.

If levels of borrowing now fall, there will be less money around: not a happy prospect for those - the vast majority - who did not make a financial killing during the inflationary boom period, and translate it into solid assets. (Those who did will find nothing to complain about in a system which will allow them to use the real wealth they have just acquired, through financial jiggery-pokery, as backing for yet more borrowing and asset grabbing during the next credit-creation bubble.)

Is Mr Moore really not aware of the part which mass borrowing now plays in providing the country with its inadequate and ill-distributed money stock; or of the huge contribution mortgages now make to the nation’s total patriotic borrowing?

Friday, 18 April, 2008

Be cheerful despite the financial gloom

Martin Vander Weyer, the Daily Telegraph

… So let's re-examine the assumption. Is it really possible that the global financial system can be in the grip of its worst crisis since the Great Depression, as some pundits claim - or at least the worst crisis within the working lifetimes of anyone who now has a hand in managing a bank - and yet domestic economic life can jog along with only a shallow dip in consumer activity, a flattening of property prices and little or no impact on jobs?

Read in full here:

http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2008/04/18/do1801.xml

Whose Money? says:

Here we have an article by a person with a well-paid job, and in a position to profit from the excesses of property-price inflation which have financially crippled less affluent home-owers (sic), while excluding many others from the market altogether. By selling a run-down house for way beyond its real value at the top of the boom, Mr Vander Weyer has furnished himself with the wherewithal to purchase his own “cushion of accumulated wealth”, which will provide him with increased collateral when the next debt-based bubble comes along..

What he does not consider is the fact that, even during the get-rich-quick frenzy that has transferred real assets to those able to borrow from the banks without encountering problems with their repayments, the majority of ordinary people have experienced little change in their fortunes during the "good times". As usual, most families have just been managing to scrape by, without significantly improving their standard of living, despite the extraordinary productive power of the modern economy.

They are now faced not only with the prospect of increased taxes and higher borrowing charges, in order to get the banks out of the hole they’ve dug for themselves, but with food-price inflation, as the cost of essentials rises way beyond the ridiculous claims of the Chinese Price Index.

As far as the country itself is concerned, no cushion of real wealth (ie, no increase in the nation's enduring assets) has been accumulated: only a whoopee cushion of debt-money, which is now proceeding to make a very rude noise.

Mr Vander Weyer’s solution is to restore “confidence to finance” - which, he believes, “requires international action and leadership”.

Quite the opposite.

It is the subjection of sensible economic production to the logic of globalisation that has landed us in this mess.

What is required is not continued kow-towing to those who have proved again and again that their recipes are designed primarily for their own benefit, but control and distribution of a debt-free, publicly-created money supply where it is most needed: at the grass roots.

Thursday, 17 April, 2008

Banks in line for Ł40bn bail-out - paid for by the taxpayer

Rupert Steiner and Becky Barrow, The Daily Mail

A massive bail-out of struggling banks is being considered by the Government.

A deal to lend financial institutions up to Ł40billion could be in place as early as next week.

Whose Money? says:

They should be allowed to go under. The only reason why they’re “too important to fail” is that we allow them to be.

If debt-based finance is abandoned to its well-merited fate, there will be no longer be any excuse for subjecting the population to all the risk and expense of borrowing their money supply into existence, and the way will be clear for the introduction of a publicly-created national currency, debt-free at source.

And thinking along the same lines, a recent article from Ellen Browne, on the Web of Debt site:

CREDIT DEFAULT SWAPS:
DERIVATIVE DISASTER DU JOUR

When the smartest guys in the room designed their credit default swaps, they forgot to ask one thing – what if the parties on the other side of the bet don't have the money to pay up? Credit default swaps (CDS) are insurance-like contracts that are sold as protection against default on loans, but CDS are not ordinary insurance. Insurance companies are regulated by the government, with reserve requirements, statutory limits, and examiners routinely showing up to check the books to make sure the money is there to cover potential claims. CDS are private bets, and the Federal Reserve from the time of Alan Greenspan has insisted that regulators keep hands off. The sacrosanct free market would supposedly regulate itself. The problem with that approach is that regulations are just rules. If there are no rules, the players can cheat; and cheat they have, with a gambler's addiction. In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion – ten times the gross domestic product of all the countries in the world combined. Somebody is obviously bluffing about the money being brought to the game, and that realization has made for some very jittery markets.

Whose Money? says:

As usual, Ellen does a great job of explaining the complexities that amateurs like ourselves find hard to grasp ... though, of course, even amateurs have the right to demand freedom from systemic debt to the banking system.

You may not be a qualified electrician, but you’d expect those who are to be able to install a safe and efficient system … and you’d certainly have the right to complain if, instead, they set your house on fire.

GM crops can save us from food shortages

Bill Emmott, The Telegraph

It is remarkable how rapidly the world has moved from worrying about deflation to worrying about inflation; from cheer to despondency about the reduction of poverty; and from concern about food surpluses to panic about shortages.

Whose Money? says:

Lunatic policies like “set-aside”, quotas, and biofuels apart; disregarding the idiotic idea of “harmonising” production, so that selected areas are exclusively licensed to grow selected produce, in pursuit of the interdependence (read loss of freedom) required by globalisation; even forgetting the increase in population, and the GM issue itself: doesn’t the question of money, once again, have something to do with the gradual transformation of the UK, over the past century or so, from food exporter to food importer, unable to provide for its own needs?

Back in 1936, C H Douglas was already aware of the problem. In an address given at the Ulster Hall, Belfast, on 24 November in that year, he said:

“It is impossible to get a sound and clear understanding of taxation by any consideration of money figures or statistics, as at present compiled, since there is no relation between facts and money. It is essential to begin by a consideration of real, i.e. physical, economics as distinct from money economics.

“For instance, the old and original tithe was a genuine and justifiable tax. It consisted of one tenth of the agricultural production of the taxed land, and this agricultural production so collected was handed over to the Church for the physical maintenance of the clergy and their dependants, it being assumed that the clergy were too busy with other matters to raise their own crops …

“Now it is obvious that the physical meaning of this to those who paid the tithe was that they did a small amount of extra work or, alternatively, had a little less to eat themselves. There was nothing in such an arrangement which could, or did, result in a loss to the community on the one hand, or, on the other, make it impossible for the agriculturalist to live.

“But now consider the fact of a money tax upon agricultural land, which is the form the tithe has now taken. It is imposed quite irrespective of the value of anything which is produced upon that land, and its effect is simply that of an overhead charge upon anything which is produced.

“If a farmer owns the land he farms and has to pay tithe upon it, the tithe appears as a cost of production and increases the price that he must charge in order to live off his farm. If he cannot raise the price, which is generally the case, he makes a money loss, and ultimately ceases to farm, because he does not grow money, he grows produce, and money is demanded from him.

“This is exactly what has happened in England, where three million acres of farming land have gone out of cultivation since the [First World] War. But the evil does not stop there. Since the farmer does not make a reasonable living, he does not keep his land in good order and he has no money to spend upon the products of other industries.”

Over seventy years later, how much more productive land has been lost? How many farmers, driven to the wall by debt, have gone out of business … or even contributed to the abnormally high suicide count among the country’s food producers?

With a stable, debt-free money supply, might there not be many more small mixed farms, employing traditional methods of agriculture, still contributing to the nation’s larder? And, with home production varied and thriving, and finance firmly in its place as the servant of production, would the issue of GM crops ever have had a chance to gain a foothold?

Wednesday, 16 April, 2008

10 ways out of the credit crisis

Sean O’Grady, The Independent

Slash? Spend? Guarantee? We analyse the options for Gordon Brown as he heads for US talks on the credit crunch.

Read it here:

http://www.independent.co.uk/news/uk/politics/10-ways-out-of-the-credit-crisis-809751.html

Whose Money? says:

Predictably, the solutions offered would probably just lead to further complexity and insecurity.

As Peter Thompson says, in the Comments on this article (today, 7.39am), “At the core of this 'credit crisis' is the very nature of credit-creation … The underlying problem cannot be treated unless there is fundamental reform of the financial underpinnings of capitalism itself.”

But don’t expect to find any acknowledgement of this fact in the mainstream press …

Hope for further rate cuts as inflation stays steady at 2.5%

David Prosser, The Independent

The headline rate of inflation remained stable at 2.5 per cent in March, the Office for National Statistics said yesterday, providing the Bank of England with welcome room for manoeuvre as it considers further interest rate cuts in the face of the credit crisis and the slowing global economy.

Whose Money? says:

Who do they think they’re kidding?

Inflation at 2.5%???

Only if you eat laptops!

Tuesday, 15 April, 2008

House prices decline at record levels

Stephen Adams and Andrew Porter, The Daily Telegraph

House prices are experiencing their most widespread decline since records began because of the fallout from the credit crisis, a report released today shows.

Almost four out of five chartered surveyors saw a fall in values in March, research by the Royal Institution of Chartered Surveyors has found.

RICS disclosed that they were the worst figures since it started compiling such data 30 years ago.

The widespread nature of the decline has eclipsed the house price crash of the early 1990s, when two thirds of surveyors registered drops, it said.

Whose Money? says:

What we are seeing is not a fall in values, but a fall in prices. The true value of a house, as a place to live, will not diminish unless it deteriorates in some way: for example, through lack of maintenance, or because the area where it is located becomes less desirable.

Unfortunately, the reverse is also true: and all those people who believed themselves suddenly wealthy, because the price of their house was shooting up way beyond both the general rate of inflation and any real improvement in the quality of accommodation it provided, are now realising that “valuation”, in estate-agent and banker speak, is a very different thing from good, solid value.

The recent extraordinary inflation in property prices was driven not only by greed, but by ordinary people’s need to find security, in an era when inflation and punitive taxation steadily erode purchasing power and make traditional methods of saving not only more difficult, but futile.

If people are to organize their finances rationally, rather than relying of speculation to put something by for the future, the basic requirement is a rational, and stable, financial system.

And that means publicly-created, debt-free money.

Monday, 14 April, 2008

Darling urges banks to ease mortgage costs

Larry Elliott, Katy Allen and Jill Treanor, The Guardian

Alistair Darling, the chancellor, has called a meeting with the country's biggest banks to urge them to pass on lower interest rates to squeezed mortgage holders in return for the billions of pounds of extra funds that have been pumped into the financial system.

Gordon Brown disclosed yesterday the planned summit between mortgage lenders and Darling as he ratcheted up pressure on the banks, calling for them to ease mortgage costs and come clean about any nasty shocks on their balance sheets.

Whose Money? says:

What a crazy, mixed-up mess it is!

The advantage of the present financial system is supposed to be its much-vaunted “independence” from state control: yet it has now proved itself unfit to run its own affairs, and politicians are having to step in, to try and knock it back into some kind of order.

With state aid to the banks now a visible item in the equation, the myth of a debt-based money supply which responds automatically to the needs of the market is seen to be precisesly that: a nice little fairy story which serves to keep private lending businesses firmly in control of the economy, controlling what may or may not be produced, as they decide who may borrow their newly created debt-money and who may not.

And what is our government’s response, as the utter inefficiency and inadequacy of the way we provide the country with its means of exchange is revealed?

Do they decide that enough is enough, and that sorely put-upon businesses and families should finally be relieved of the burden of going ever deeper into debt on behalf of their country?

No, of course they don’t.

They just put their little heads together with the banks, to work out how consumers may be made to afford the amount of borrowing necessary to ward off too disastrous a recession.

Yet, with the level of debt necessary to keep the economy afloat remorselessly and exponentially increasing, sooner or later there must be fundamental reform of a system incapable of meeting the needs of human beings throughout the world.

If our rulers are unable to grasp this fact at a time like the present, when will they?

G7 sees catharsis, not catastrophe

Larry Elliott, The Guardian

… All in all, it would be little short of miraculous were the global economy to escape from the pricking of a colossal credit bubble with a slowdown that the Fund is expecting to be far less severe than those in the mid-1970s, the early 1980s or the early 1990s. Indeed, the IMF says that the slowdown will be the mildest in the post-war era apart from that in 2001.

Nor would it be a good idea for the performance of the global economy to resemble one of those thrillers where the hero looks to be doomed and then escapes disaster by the skin of his teeth. As some policymakers are aware, such an outcome would merely encourage a business-as-usual mentality, with the lessons of the past nine months swiftly forgotten. That would be a dangerous outcome, since it would make another credit crisis - of perhaps even greater severity - all the more likely.

Read in full here:

http://www.guardian.co.uk/business/2008/apr/14/globaleconomy.marketturmoil1

Whose Money? says:

Mr Elliott goes to the heart of the matter when he says, “The history of the past 400 years suggests that bubbles develop no matter what safeguards are put in place by policymakers …”

Optimistically, he reckons that it’s still worth another try.

We are more pessimistic.

As long as private businesses are allowed to create our money supply as an interest-bearing debt to themselves, and at the risk and expense of governments, businesses and ordinary people, there will be no end to their abuse of this privilege.

Regulation is necessary: but it will only prove effective if introduced in conjunction with a switch from bank-created debt to publicly-created money as the nation’s means of exchange.

Saturday, 5 April, 2008

Teachers strike 'will close more than 10,000 schools'

Richard Garner, The Independent

More than 10,000 schools will close when Britain's biggest teachers' union, the NUT, stages a one-day strike later this month, according to a national survey published yesterday ...

... The strike was called to protest against the Government's proposed pay deal for teachers of 2.45 per cent this year, and 2.3 per cent in 2009 and 2010 – well below the 4 per cent demanded by unions.

Photo: The Daily Mail

Read in full here:

http://www.independent.co.uk/news/education/education-news/teachers-strike-will-close-more-than-10000-schools-804891.html

Whose Money? says:

With disproportionate rises in the cost of essentials, it's not surprising that people who aren't even offered enough extra money to cover the seriously skewed CPI estimate of inflation (weighted by a superfluity of cheaper, though inessential, items) start protesting.

They will also be asking why it is that well-paid MPs think it fair to watch ordinary people's standard of living plummeting, while extracting sufficient taxes to ensure that their own expensive lifestyle is maintained, and even improved - see the following report:

Prescott's grocery bill, and the other expenses that MPs fought to conceal

Nigel Morris, The Independent

The former deputy prime minister John Prescott, renowned for his prodigious appetite, claimed Ł4,000 for food and groceries in one year from the public purse.

The historic release of a detailed breakdown of MPs' expenses showed that Gordon Brown received nearly Ł5,000 for the cost of cleaning his private flat while he was Chancellor and Tony Blair claimed for his television licence.

David Cameron, the Tory leader, also took advantage of the scheme, receiving more than Ł21,000 a year towards the cost of the mortgage on a second property.

Whose Money? says:

And we bet the groceries concerned weren't basics like bread and milk!

No wonder these "representatives" of ours aren't interested in reform of the present financial system. You're never hit by the in-built inflation resulting from the use of debt as money, as long as you can simply turn the thumbscrews and get taxpayers to foot the bill ...

As the cracks in the debt-based financial system continue to grow wider, we're taking a break .... but for a little reading matter you might like to take a look at the Spring edition of The Social Crediter, online at http://douglassocialcredit.com/thesocialcrediter.php.

In particular, we recommend the opening article:

Security: Institutional and Personal

By C H Douglas

An Address delivered at the City Hall, Newcastle-upon-Tyne, on 9th March, 1937

... Employment as an end in itself is a concerted policy to be found in practically every country. It is an international policy; and it proceeds from the great international power in the world - the power of finance. It is conscious, and it is sustained by every argument and force at the disposal of that great interational power, because it is the means by which mankind is kept in continual, if concealed, slavery ...

... The working man of this country has been taught by propaganda of all kinds that it is a meritorious thing for him to say “I want work,” but a contemptible thing to say “I want money.” Once again, please do not think I am saying there is anything virtuous about laziness. Far from it. There is nothing especially virtuous about work either. … The healthy individual requires work of some kind, just as he requires food; but he is not a healthy individual, mentally at any rate, if he cannot find work for himself, and work that he can do far better than that which is arranged for him by somebody else ...

... A great deal of what I have been saying can be reduced to the good old English advice to “Mind your own business.” But I should like to expand this to “Don’t meddle with your neighbour’s business, but assist him to mind his own.” The difference is the difference between saying to a destitute friend, “I will convey you to a Poor-law institution where you will be given three meals a day if you do exactly as you are told,” on the one hand, and on the other hand saying, “I will settle fifty pounds a year upon you for life, which will at any rate keep you in necessities; what kind of necessities you obtain you can judge for yourself” ...

Nearly every paragraph of this article is worth quoting ... but read it in full, and see for yourself!

Goodbye for now - back on Monday, 14 April.

Friday, 4 April, 2008

Foreign banks flee Spanish property debt

Ambrose Evans-Pritchard, The Telegraph

... The root cause of the crisis is in a sense Europe's monetary union. The euro effect halved Spain's interest rates almost overnight. Rates then fell below Spain's inflation rate for several years, fuelling an explosive credit boom. The country's current account deficit has reached 10pc of GDP, the highest of any major economy.

Read in full here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/04/cnspain104.xml

Whose Money? says:

We can only be thankful that we're not in the euro ...

But then the use of debt as our national means of exchange, with the amount of money in circulation largely dependent on interest rates, has led to similar problems in those regions for which the UK as whole is not the optimum currency area.

With publicly-created, debt-free money, supplemented by regional and, where necessary, local currencies, the north-east of England, for instance, might even now have its own thriving economy.

With the old, debt-based system showing more cracks every day, what better time to start thinking of alternative approaches to providing people in all parts of the country with an adequate money supply?

Have you checked the UK’s debt statistics recently?

Did you know, for instance, that 30% of those questioned about their finances fear that they won’t be able to cope for much longer? And that 84% have financial worries?

Did you know that, while average pay rises are running at Ł44 per month the rise in essential living costs is Ł148 per month?

Did you know that 27% of people with debts have increased their borrowing in the last three months ... 2.03 million of them by 20% or more?

Did you know that money worries concern UK adults more than any other social issue, including terrorism, immigration, climate change and gun crime?

And did you know that money is the issue couples find it hardest to talk about? That it regularly provokes arguments? That it causes partners to lie to each other, and keeps them awake at night?

One of the most significant trends is that debt levels for the under-twenty-fives increase with age, leaving grandparents and parents - themselves frequently mortgaged up to the hilt - struggling to help the younger generation financially.

For all this information, and much more, see the latest figures from Credit Action - linked here.

Credit Action - Better thinking about money

Thursday, 3 April, 2008

Britain on credit binge as mortgage deals drop

Nick Allen, Myra Butterworth and David Litterick, The Daily Telegraph

Consumer borrowing through credit cards, overdrafts and loans is rising at its fastest rate in five years, with the withdrawal of cheap mortgage deals forcing millions of home owners to take on personal debt to finance their everyday expenses ...

... David Owen, the investment bank Dresdner Kleinwort's chief European economist, said: "This is a sign of distressed borrowing on the rise.

"The figures indicate a consumer who is running on empty. People are having to borrow on their credit cards to keep the show on the road and it's not sustainable."

Read in full here:

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/04/03/ncredit103.xml

Whose Money? says:

This is the predictable result of engineering a consumer-led "boom" fuelled by debt created against, and "equity withdrawal" from, over-priced assets.

How can we continue to take seriously those "expert" economists who assured us - and, in some cases, are still assuring us - against common-sense and our own personal experience, that house prices would never fall, that the "business cycle" was a thing of the past, and that we had a robust economy founded on sound essentials?

They were wrong, and amateurs like ourselves, and posters on websites like House Price Crash, were right.

Millions of ordinary people are now already suffering the consequences of being guided by "experts" who encouraged them to thrown caution to the winds - in some cases even conniving at falsifying crucial figures in their mortgage applications.

And at the bottom of all this human misery is a financial system which demands exponentially increasing debts to be shouldered by governments, businesses and ordinary people, as the price of its survival.

The Attwood Award, 2008

Thomas Attwood (1783 – 1856) was not only the first MP for Birmingham, he was also a banker, which gave him a rare understanding of both politics and economics. He was a tireless campaigner for ‘public rights’, parliamentary and currency reform and passionately committed to improving the lives of the ‘industrious’ classes: businessmen, masters and skilled workers in the small scale industries of the Midlands. The Attwood Award is given by the Attwood Group to those who continue to work ‘in the spirit’ of Thomas Attwood today.This year the award goes Austin Mitchell, MP for Grimsby,

in recognition of his persistent advocacy - including the presentation of a succession of relevant Early Day Motions - of the use of 'public money' to meet public needs.

It will be presented to him in the House of Commons on Tuesday, 22 April by Angela Shaw, a young descendant of Thomas Attwood.

For more about Attwood, see http://www.monies.cc/forum/backgrnd/attwood.htm.

Photo of Austin Mitchell: BBC

Wednesday, 2 April, 2008

Germans fear meltdown of financial system

Part II: Hitting big business where it hurts

The Spiegel

The state-owned banks are not alone. The German economy is also suffering from the effects of the financial crisis. "Germany cannot uncouple itself from the world economy," says Walther Otremba, state secretary in the German Ministry of Economics ...

... The plunge of the US currency has already shaken the core of German industry: machine building, aviation and automobile manufacturing ...

... Aircraft manufacturer Airbus is suffering the most from the dollar's weakness. Aircraft sales worldwide are transacted in dollars, but Airbus incurs a large share of its costs in euros. To respond to the problem, the company plans to drastically reduce costs with its "Power 8" restructuring program. The plan will mean the loss of 10,000 jobs and the sale of seven factories.

But now another side effect of the financial crisis is jeopardizing Airbus's restructuring plan. Because of the weak credit markets, Airbus may not even be able to sell its plants ...

... Even worse off are companies that fell into the hands of corporate raiders like Blackstone, Permira, Carlyle and Fortress during the takeover frenzies of recent years.

Read in full here:

http://www.spiegel.de/international/business/0,1518,543588-2,00.html

Whose Money? says:

From country to country, you'll hear the same story: the 'real economy'* laid waste and looted by speculative predators, aided and abetted by an economic orthodoxy which insists that production must serve finance: leaving the lives of billions at the mercy of debt-money and all the obscure machinations which it makes possible.

As Angela Merkel's advisor points out, "now even the Americans see the issue (of regulating Hedge Funds) in a new light."

But you can bet your bottom dollar that the financiers will do everything they can to wriggle off the hook again, once the present crisis is past!

The only hope of any real change for the better is a switch to a simpler and more transparent medium for balancing accounts: that is to say, to money issued by a democratically answerable public body authorised to create a unit of currency without simultaneously creating a unit of debt.

For make no mistake, it is the mind-boggling complexity of monetary systems based on interest-bearing debt and their logical consequence, the enforcement of "free" trade and globalisation, which enables financial profiteers, aggressively wielding their "expertise", to fleece the public with one plausibly justified scam after another.

* But if there is a 'real economy', why, exactly, do we need a fake one?

Tuesday, 1 April, 2008

Cost of household goods falls by nearly 50 per cent since 1970s

Steve Hawkes, The Times

With petrol racing to a record of Ł1.10 a litre and the price of a pint nudging Ł4, consumers could be forgiven for harking back to the days when flares were in fashion and the hostess trolley was a must-have.

However, a new survey shows that as far as the cost of everyday household goods on the high street are concerned, shoppers have never had it so good.

Read more …

http://business.timesonline.co.uk/tol/business/economics/article3649124.ece

Whose Money? says:

Great for those who have something left over, after forking out for the basic necessities whose prices are sky-rocketting!

But it’s worth remembering that one person’s gain from dirt-cheap imported goods is frequently another’s job loss and everybody's tax rise, to cover the unemployment pay … plus slave-labour wages, bad working conditions and environmental pollution for those on the overseas production line.

Aren't there better way of ensuring that everyone benefits from continuing technological advances?

US 2008: the Great Depression

David Usborne, The Independent

We knew things were bad on Wall Street, but on Main Street it may be worse. Startling official statistics show that as a new economic recession stalks the United States, a record number of Americans will shortly be depending on food stamps just to feed themselves and their families.

Read more …

http://www.independent.co.uk/news/world/americas/usa-2008-the-great-depression-803095.html

Whose Money? says:

The media may have been focusing on the tribulations of high earners on Wall Street, but most people are aware that it’s the low earners, the unemployed and those on fixed incomes who bear the brunt of each bout of banking excesses.

Of course, anyone who complains about rising prices must be a real whinger, as yesterday’s article in The Times (see above) makes clear. So we can take the assertion that , “Prices are just spiralling up, because of the cost of gas trucking the food into the city and because of commodity prices,” with a pinch of salt, can't we?

As for the whingers ...

let them eat cameras!

Construction outlook 'is worst for a decade'

Edmund Conway, The Telegraph

The outlook for the construction sector is the worst in over a decade, as both the commercial and residential property sectors face a double slump, a new report has warned …

… Industry experts said although the 2012 Olympics was providing much work in London and the South East, the outlook for the rest of the country was more bleak than for many years. Expectations for profit margins fell for only the second time in the survey's history.

Read it here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/01/cnbuild101.xml

Whose Money? says:

Did the government see what was on the horizon then, when the Olympics were so usefully awarded to their home ground of London?

But not much hope for the North East, then, as the accompanying loss of jobs in retail and services swell unemployment figures.

We no longer have coal or steel, or much in the way of manufacturing; farming has been ruined by EU policies dictating production or lack of it; fishing has all but disappeared.

What, then, is to support the services sector on which we increasingly depend?

And how is the money that is fast draining away going to be replaced, as people repay, or default on, previous borrowing, and boom-time lending, both for both the building and the purchasing of houses, comes to an end?

Bank needs iron hand to curb City gamblers

Larry Elliott, The Guardian

... The governor is sending out a message that he wants a more sober assessment of risk, and that's laudable.

It will, however, take more than a few hard lessons in the perils of moral hazard to change the culture. Action will be needed to rein in the banks and there is already work in progress to toughen the capital adequacy ratios to prevent them lending so much money in booms. Put simply, banks have to put aside a small percentage of their capital against which they are not allowed to lend. The bigger the ratio, the greater the limitation on their lending capacity. Charles Goodhart, a former member of the MPC, and Avinash Persaud are currently drawing up one such scheme, that would use share prices and the amount of credit being extended to judge when to tighten or relax the curbs.

Whose Money? says:

Along with curbs on bank lending - which should include scrutiny by ordinary taxpayers, to decide which projects merit specially created money (ie, projects which will increase total wealth in goods and services) and which do not (ie, anything which might lead to speculative asset-stripping and take-overs ... regardless of the justifications dished up to a gullible public) - the nation should also be provided with at least the same percentage of debt-free money as was present in the immediate post-war economy.

Why should we have to go into debt for virtually the entire money supply, simply because it is no longer convenient to use a large proportion of notes and coins?

Why should ordinary people and businesses be forced to risk their solvency simply because successive governments have failed to maintain the previous financial input to the economy by by ensuring that we have an equivalent proportion of non-cash money, equally free of debt at the point of creation?

Our rulers' refusal to supply the nation with an adequate debt-free means of exhange has increased dependency on money creation by the banks by close on 100% since 1945, with firms which must borrow to invest no longer able to undertake the lion's share of the burden, and ordinary people increasingly finding themselves caught in the debt trap, as house prices are pumped up by loose-lending, to keep the economy "growing".

Ideally, we would prefer the 100% stable money option advocated by James Robertson and Joseph Huber in their book, Creating New Money (click here http://www.jamesrobertson.com/books.htm#creating for a free download); but we tend to agree with Mike Rowbotham that this might cause too much fear among those brought up to believe that any public creation of money must inevitably lead to run-away inflation (as against money conjured up as an interest-bearing debt owed to themselves by those oh-so-prudent and socially-responsible banks).

Rowbotham's proposal is that money should be created by a public authority in quantities sufficient to check, and then reduce, the growth of debt among the general population. As the permanent presence of a greater proportion of stable money in the economy made it possible for people once again to live within their incomes, he suggests, levels of debt would automatically fall (after all, most of us don't enjoy paying interest to the banks if we can avoid it); and the amount of newly-created debt-free money could also gradually be adjusted downwards.

The aim would be to reduce our current debt-dependency to the point where only minimal bank lending was necessary - and, at the same time, to accustom people to the idea that enjoying the use of a publicly-created, debt-free money supply does not necessarily lead to financial chaos - as those of us who lived through the immediate post-war years, when inflation was far less of a problem, have already experienced.

For a detailed exposition of how such a scheme would work, buy Rowbotham's book, The Grip of Death, here http://www.amazon.co.uk/Grip-Death-Slavery-Destructive-Economics/dp/1897766408.

And while you're waiting for it to arrive, you can read the first chapter here.

Cost of household goods falls by nearly 50 per cent since 1970s

Steve Hawkes, The Times

With petrol racing to a record of Ł1.10 a litre and the price of a pint nudging Ł4, consumers could be forgiven for harking back to the days when flares were in fashion and the hostess trolley was a must-have.

However, a new survey shows that as far as the cost of everyday household goods on the high street are concerned, shoppers have never had it so good.

Whose Money? says:

Great for those who have something left over, after forking out for the basic necessities whose prices are sky-rocketting!

And it’s worth remembering that one person’s gain from dirt-cheap imported goods is frequently another’s job loss … plus slave-labour wages, bad working conditions and environmental pollution for those on the overseas production line.

Aren't there better way of ensuring that everyone benefits from continuing technological advances?

Monday, 31 March, 2008

Free market defenders need to find their voice

Roger Bootle, The Daily Telegraph

… What makes the change in the intellectual climate with regard to the financial system more worrying is that it coincides with growing acceptance of the case for public action to restrict or even forbid individuals and companies from a wide range of activities in order to prevent global warming.

Add to this, widespread misconceptions about the role of international trade in causing poverty in the third world and you have a strong intellectual tide running against free markets and in favour of increased state action …

Read in full here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/31/ccom131.xml

Whose Money? says:

As mentioned in previous posts, it's likely that enterprises associated with the combat of "global warming" (read climate change, read forces of nature which require foresight and adaptation rather than hubristic attempts at control) will help to inflate the next lending bubble, as our global oligarchy desperately struggles to pump money into circulation.

But since when have we had "free" trade anyway? Certainly not in living memory … and recently, with the torrent of regulations and restrictions from global, transnational and national authorities, it’s been getting less and less "free".

In fact, the assertion that we currently have “free” trade among nations is startling in its audacity.

How can trade be described as “free”, when it is forcibly undertaken to pay off debts which have already been discharged again and again, both financially, and in terms of steady wealth depletion, as goods of real value are exported by third-world populations in exchange for the effortlessly produced dollars of the developed world?

Is it likely that the vast majority of people in the Third World would “freely” choose to work for a pittance to obtain the dollars necessary for debt-servicing (no point in even thinking about debt repayments), rather than concentrating first on monetising their own wealth, and expanding their capacity to produce the goods and services which would offer them a tolerable standard of living?

Is it likely that they would “freely” grow cash crops for consumption in the “wealthy” (read money-rich) nations, rather than put food on the plates of their children, decent clothes on their backs, shoes on their feet, and a roof over their heads?

Is it likely that they would "freely" open their markets to goods they could perfectly well produce themselves, sell off their infrastructure to foreign corporations, and tolerate cuts in health care and education, while receiving insufficient wages to take care of these things for themselves, if the holier-than-thou pontificators of the global financial dictatorship did not demand all these things in return for a temporary and ineffective easing of the debt burden ... plus further entanglements?

And on the home front, is it likely that people would “freely” choose to be landed with quotas in the production of food, or see their industries bought out and transferred into the hands of transnational corporations sporting fig-leaf national insignia, if they were offered a choice?

If they were actually given the “freedom” to decide for themselves, might they not opt for home production of as many essentials as possible, feeling well able to cope with slightly higher prices, if this insured them against the hazards of depending completely on other nations or “the international community” for supplies? After all, with more people in work and earning a living wage, unemployment and taxation would fall; while the toll taken on infrastructure and environment by heavy goods vehicles bearing entirely unnecessary imports would be minimised.

Regarding things like subsidy, and protectionism: surely “free” trade entails the right of each nation to decide whether or not they wish to operate these policies in certain areas? How, by any stretch of the imagination, can the rigid imposition of a dogmatic economic creed by global bodies licensed to pauperise offenders and heretics be called “free” trade?

What we have at present is not "free" trade, but a treadmill of enforced trade, in the service of finance rather than human needs.

For fundamental to this discussion is the fact that trade can never be "free" until we enjoy a medium of exchange, at national and international level, which serves a provident master; a means of exchange which is not treated as a good in itself, to be manipulated by insiders and their privileged associates for their own profit, but which is designed, quite simply, to facilitate the production and optimum distribution of genuine goods and services.

Using debt as our means of exchange imposes false priorities. It severely restricts purchasing power, distorting markets, and therefore production, as too many people seek, first and foremost, to compete for an inadequate and ill-distributed supply of money.

Only when we enjoy the use of publicly-created, debt-free money, supplemented by local and regional currencies where necessary, will people have the freedom to determine the flow of trade by demanding what they actually need and want, and to make their own contribution to the nation’s wealth by performing work which, under the present financial régime, exceeds limited budgets or has been gifted to cheaper labour oversees.

Roll on the day when we finally have free markets: but the fact is that this day will never arrive until we free individuals, businesses and governments from the debt servitude currently distorting economies throughout the world.

Among the the trivia flashing up on the screen at a Costas coffee shop in New Delhi this morning:

"More monopoly money is printed in a year than real money throughout the world."

Bet most customers didn't realise that's because nationally-issued, debt-free bank notes now constitute only a minuscule part of the global money supply ...

Sunday, 30 March, 2008

Mervyn King ready to rock Bank of England's foundations

Edmund Conway, The Sunday Telegraph

… Appearing before the Treasury Select Committee during the week, King appeared to admit as much, saying the Bank was seeking out a "longer-term solution". This is putting it lightly. The Bank is now gearing up for the biggest overhaul of its financial market controls in decades. After conferring last week with the heads of the five big banks - Barclays, HSBC, Royal Bank of Scotland, Lloyds TSB and HBOS - it has undertaken to find new, potentially radical ways to kickstart the frozen asset-backed security markets at the heart of the crisis …

… The problem is simple: years ago, when banks were reliant for most of their funding on shareholders' capital and customers' deposits, they could usually be rescued by a quick infusion of crisp Bank of England notes. Now they are also reliant for funding on the sale of securities and packages of home loans.

Read in full here:

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/30/ccking130.xml

Whose Money? says:

But it’s not just the way banks raise their funds that’s changed over the years, is it?

Mr Conway apparently can’t see the elephant in the room: the fact that when rescue could be effected by “a quick infusion of crisp Bank of England notes” those notes and coins - issued to the nation innocent of debt, as a public service - comprised around one half of all the money in circulation.

In other words, we were dependent on the banks for only 50 per cent of our money supply (though we'd say even that was a lot too much).

At present, debt-free notes and coins account for somewhere around three per cent of the total.

In other words, we are dependent on bank-created debt for a whopping 97 per cent of our means of exchange!

Mr King should look outside the box, and think the unthinkable: if he is unable to promote a switch to 100 per cent debt-free money, he should push for re-establishing a more sensible balance between bank-created debt and publicly-created, debt-free currency - in the form of non-cash, as well as cash money.

Then at least we could be sure that half of our money supply was stable!

Saturday, 29 March, 2008

Predatory Lenders' Partner in Crime

Eliot Spitzer, The Washington Post, 14 February, 2008

… Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

… The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

Whose Money? says:

If we were conspiracy theorists, we might connect Mr Eliot’s recent disgrace with his efforts, over several years, to avert the worst extremes of the credit crisis.

And, without labouring the point, it really is quite hard not to speculate on whether his eagerness to publicise the deliberate connivance by the US government in the banks’ loose-lendng binge mightn't have made it more convenient to punish his misdemeanours rather than those of some equally culpable supporter of President Bush ...

Friday, 28 March, 2008

Pressure for rate cut as house prices fall

Hugo Duncan, The Evening Standard

The Bank of England was today under intense pressure to cut interest rates after house-price growth slumped to its lowest for 12 years.

Whose Money? says:

When houses have been so grossly over-valued, sooner or later prices must fall. In fact, the "grim" news is that - according to this report, at least - the cost of property is still going up.

For many people in the UK, the really “grim figures” have been the rising prices of the past ten years, which made it impossible for them to buy their own home, while pumping ill-distributed money into circulation without adding one iota to the country’s real wealth.

Now those who were lent far more than they could afford, on the assumption that prices could only go up, may well be left in negative equity … while the purchasing power of a currency which expanded in excess of wealth creation plummets.

Such is the result of allowing banks to create the money supply in line with their own immediate priorities, rather than the long-term interests of the nation.

Thursday, 27 March, 2008

New! from Ellen Brown, on the Web of Debt site:

ANOTHER WAY AROUND THE CREDIT CRISIS:
MINNESOTA BILL WOULD AUTHORIZE
STATE BANKS TO "MONETIZE" PRODUCTIVITY

Although the cost of borrowing is going up for municipal governments, this is not because they are bad credit risks. In fact, they are extremely good credit risks. Creditors know where to find them, and local governments have the power to tax to pay their bills. The problem lies with the bond insurers called "monolines," which have ventured into the very risky mortgage-backed securities market. This has put the insurers' triple-A ratings in jeopardy, along with the ratings of the municipal bonds they insure.

While borrowing costs for municipal governments are skyrocketing, the interest rate the Federal Reserve charges to banks has been going down, even though banks are proving to be much riskier investments than local governments ...

... Many people are getting tired of waiting for the Federal Reserve and the federal government to act, and one of them is a Minnesota resident named Byron Dale. Dale has drafted a bill called "the Minnesota Transportation Act" (MTA), which is scheduled for hearing before the Minnesota Senate Transportation Committee on March 25, 2008. If adopted, the bill could represent a major innovation in the way state and local projects are funded ...

Read it here:

http://www.webofdebt.com/articles/minnesota-bank-proposal.php

Whose Money? says:

An interesting article, showing that there is a more constructive approach to tackling the credit crunch than bailing out the banks which caused it, at the taxpayers' expense.

Isn't it time our MPs and councillors started pushing for something similar in the UK?

Even more inspiring is Ellen's concluding suggestion:

"If the U.S. Congress and the privately-owned Federal Reserve will not issue the funds necessary for bridge and road repair and other urgent public projects, we can encourage our State legislators to fill the breach; and if they won't do it, we the people can get together, apply for a bank charter, and create the funding ourselves."

Read all about how to start your own bank here: http://webofdebt.wordpress.com/page/2/

If it can be done in the States, surely it can be done in the UK?

The real moral of all this is that there is no need whatsoever for the nation to lie down and take punishment for the banking system's deficiencies and misdemeanours.

If there is a shortage of materials, we have to accept that infrastructure and services will suffer. If there is a shortage of energy, we have to accept that infrastructure and services will suffer. If there is a shortage of labour or of skills, we have to accept that infrastructure and services will suffer.

But only fools or lunatics would accept a shortage of money as a valid reason for putting an embargo on wealth creation, let alone for allowing the nation's already existing wealth to fall into decay.

During the Great Depression people starved, quite unnecessarily, in the midst of plenty, simply because they were taught, and believed, that goods and services were a by-product of money: when in fact money is a thing of no intrinsic value, and can be produced by a public authority as necessary to facilitate the optimum production and distribution of goods and services.

History has taught us again and again that the use of debt as money inhibits and distorts production, devalues the currency, and does a very poor job of distributing purchasing power among the population. If the present banking fiasco continues and worsens, we should not go gentle into the next Great Depression, but rage against a system that is pauperising billions: and, if our ruling transnational oligarchy won't reform it, simply reject it and replace it with something better ourselves, as Ellen suggests.

With regulation of bank lending, and publicly-created, debt-free money designed to serve human beings instead of the financial system, credit crunches simply would not happen.

Have you read Ellen Brown's book, Web of Debt? If not, you can order it here: http://www.webofdebt.com/order.php.

And remember to check out her blog (http://webofdebt.wordpress.com/) regularly, for a transatlantic money-reformer's view of the debt crisis: lots of interesting links!

Bank's Governor blasts 'hubris' of the bankers he blames for credit crisis

Sam Fleming, The Daily Mail

Mervyn King yesterday lashed out at the "hubris" of bankers whose greed had triggered the credit crunch and the current world financial crisis.

In an extraordinary intervention, the Bank of England Governor said turmoil in the banking system had worsened in recent weeks and that lenders would have to be more strictly regulated to prevent excessive risk-taking.

He said: "This financial crisis... arose out of the heart of the financial systems, in the main financial centres ...

" ... The heart of the problem is not in the real economy. It is in the financial sector itself ."

Whose Money" says:

Like anyone else capable of distinguishing between the "real economy" and financial requisites, Mr King points the finger of blame at the financiers.

He concludes that, " ... these activities will have to be monitored much more carefully" in future.

In our opinion, the present financial chaos shows that the idea that private, profit-making businesses are more fit to be put in charge of creating the nation's money supply than public authorities is a non-starter.

If "these activities will have to be monitored much more carefully" anyway, why not settle for monitoring a Monetary Policy Committee, answerable to the electorate through their representatives in parliament, and responsible for increasing or decreasing the amount of money in circulation as necessary? Doesn't that make more sense than attempting to monitor institutions which have repeatedly demonstrated their talent for getting around the rules?

As it is, the MPC has an impossible task, jumping from fire to frying-pan and back again, in its attempts to avoid both inflation and recession.

Iceland contagion may spread far and wide

Ambrose Evans-Pritchard, The Telegraph

As Iceland goes, so go the Baltics, the Balkans, Hungary, Turkey, and perhaps South Africa. All are living far beyond their means, plugging the gaping holes in their accounts with fickle flows of foreign finance. All have let credit grow far above the safe "speed limit", some exceeding 50pc a year.

Whose Money?

Global capital markets, investor flight, borrowing in foreign currencies ... not to mention derivatives, selling short, etc, etc - all way over the heads of most of us: yet prominent features of the financial system which serves the select few, and which has latched onto the world's productive economies, threatening to suck them dry.

It can't be repeated too often that what we're currently experiencing is not a crisis of wealth or production, but of finance. Those who engineered it, with their reckless manipulation and profiteering, are the ones who should reap the consequences.

Better that the financial institutions which have caused the mischief are left in ruins than that productive economies should be allowed to go under,and human beings reduced to penury, for want of something as easy to produce as money!

Council tax rises to be unveiled

Christopher Hope and Richard Edwards, The Telegraph

Millions of householders across England are to be landed with above-inflation council tax rises.

Bills for an average home are likely to go up by Ł52 a year to Ł1,370, as experts predict the taxes in England will increase by an average of four per cent for 2008-09.

The increases, which will be published by the Department for Communities and Local Government on its website, are higher than the official inflation rate of 2.5 per cent and come on top of rising food and fuel bills.

Whose Money? says:

How much of that extra taxation will go on servicing unnecessary debt, and how much on things people actually need or want?

Will North Tyneside Council, for instance, finally get round to renovating the paddling pool on Whitley Bay's lower prom, we wonder?

There really is no need to tax people to the bone to provide local services, and keep our infrastructure in a decent state of repair.

Which council will be the first to venture outside the box, and issue vouchers acceptable in payment of council tax, along the lines suggested by James Gibb Stuart, here http://www.sustecweb.co.uk/past/sustec13-5/policy_proposal.htm, as part of their employees' wage packets?

Wednesday, 26 March, 2008

Money from thin air

James Robertson, Guardian Unlimited, Comment is free

High street banks issue money in the form of loans. Could this be the root cause of the credit crunch?

… What we do know is that, once again, governments' failure to control the greed of bankers is creating financial disaster for many innocent people; and that, once again, officialdom has failed to ask the basic questions about why this has happened, and to give answers in words that normal citizens can understand …

… The key question is this: did the banks' privilege of creating bank-account money to lend to one another play a significant part in fuelling the credit bonanza, subprime market and financial boom that bust, leaving such a tangle of international interbank indebtedness that central banks and other authorities like the Financial Services Agency could not assess the potential consequences if it unravelled?

The answer, of course, is yes. But supposedly democratic parliaments, governments and monetary and financial authorities avoid explaining points like that to citizens in understandable words. Secrecy and deception about how the money system works, why it works as it does, and whether there might be a clear and simple way in which its workings could be reformed in the public interest, undoubtedly contributes to disillusionment with democratic politics and government …

… So the challenge is for independent citizens outside the mainstream political, economic, and financial complex to start … pressing the chancellor and others responsible for managing our money system to tell us, in words we will understand:

• Where did the billions of money come from which fuelled the credit bonanza, subprime market and associated financial boom?

• Broadly what proportion of that money was created out of thin air by commercial banks as loans to one another to invest in risky packages of already existing debts?

• Did their ability to create it for that purpose make it more difficult for the authorities to assess the potential consequences of the tangle of international interbank indebtedness when it threatened to unravel?

• Who are the people who have actually suffered from the banks having "lost" billions of pounds and dollars?

• Where have those billions gone? Where are they now? Who got them, and what have they done with them? Have they "been laughing all the way to a bank" with them? Is their bank quietly laughing too?

• Or have the lost billions simply disappeared into the thin air from which bankers originally created them?

• If so, during their return journey from and then back into thin air, roughly what proportion of them will have enriched the bankers and other financial operators who handled them on the way?

Read it in full here:

http://commentisfree.guardian.co.uk/james_robertson/2008/03/james_robertson_money_from_thi.html

Whose Money? says:

The questions James Robertson urges us all to start asking the chancellor are precisely those which the mainstream media should have been shouting from the rooftops long ago.

However, since we can’t rely on them to publicise this crucial issue, the more of us who now put the same questions in an open letter to the chancellor, sending copies to our MPs, and to the papers and broadcasting companies, the better.

Creating New Money, by James Robertson and Joseph Huber, can be downloaded free from James Robertson's website, here: http://www.jamesrobertson.com/index.htm.

Below are some of the comments in response to Mr Robertson’s article by those who think it’s a good idea to use debt as virtually our sole means of exchange.

Peter Clay, March 20, 17.41:

“Money as currently constituted actually does a pretty good job of being stable. We've not had to worry about inflation for a long time, which is a massive advantage.”

You may not have had to worry about inflation, Mr Clay. Presumably you are one of those fortunate people on an ample salary who enjoy pay rises large enough to more than cover the continuous increase in the cost of living: an increase which is inevitable when the nation’s money supply is created as a compound-interest-bearing debt owed to private lending institutions.

Other people - the vast majority, in fact - are not so lucky. The greater the proportion of your income gobbled up by escalating, but unavoidable, expenses - food, housing, heating, transport, taxes, etc - the harder you are hit by rising prices. Perhaps you should ask people at the lower end of the earnings scale whether they worry about inflation …

Check up on how much a pound could buy you fifty years ago, and how much you’ll get for it now, and reconsider your claim that we currently enjoy stable money.

Tim Worstall, March 20, 18.16:

“It's called fractional reserve banking. Complaining about it really is the hallmark of economic loons."

But why are proposals for money reform equated with “complaining”, Mr Worstall? And why should the suggestion that there are better ways of creating the nation’s money supply than fractional reserve banking be “the hallmark of economic loons”?

MoveAnyMountain, March 21, 6.51:

“Oh dear, oh dear, oh dear. Here comes the tin foil hat brigade. I don't know what depresses me more - that the Guardian does not know enough about economics to print this, or that someone who used to work in the Cabinet Office does not know enough about economics to write this.

“Banks do not create loans out of thin air … They cannot. The system as a whole *collectively* creates money but that also requires people to deposit the money they have taken from the person who took out the loan in a bank again. It does mean banks cannot create as much as they like whenever they like.

“The system is complex but it is not irrational or even that difficult to understand if you take the time. Any First Year Economics text book explains Fractional-Reserve Banking. I expect that even Wikipedia does.

"These views used to be the preserve of the Far Right. It is odd to see them on CiF."

Excellent example of the arrogant, know-all tone, and the preponderance of abuse over reasoned argument, when True Believers in the present monetary system set out to rubbish alternatives. What this person’s comments amount to is, “Fractional reserve banking rules, OK!”

Yes, the system has its own internal logic; and yes, borrowers are an important part of the fractional-reserve money creation process. If they didn’t deposit their loans in bank accounts, the banks wouldn’t be able to increase the money supply.

The fact that borrowers have been co-opted into the system, however, does not mean that it is the best one, or even a good one; it doesn't mean they have ever given their consent to it; and it certainly doesn’t mean that anyone pointing out the manifest disadvantages (eg, the current credit crunch, boom and bust) of relying on people and businesses going into debt to create the country’s money supply is a nutter.

Note, too, the way that the boring old feud between left and right is dished up, to warn devout socialists off forbidden territory. For heaven’s sake, how could any self-respecting, progressive paper allow ideas which have been entertained by fascists to sully their pages? And how could you, a decent, pure-minded socialist, dally with such disgusting suggestions?

Cristobal, March 21, 9.33

“Sorry to say thsis but this reflects an abysmal lack of monatary history on your part. If yiur proposal were adopted , the whole economy would collapse in seconds”.

Really? We'd say it's more likely to collapse under a régime which boosts or destroys production in line with the internal financial imperatives of the banking system.

“Part of the problem is not understanding that money is endogeniusly created by the transactions of the business sector and that this has been going on for centuries, at least since the 12 th c. in Europe.”

Er … “endogeniusly” ? Best stick to words that you, as well as the rest of us, are comfortable with, Cristobal! As
Mr Robertson points out, lack of public interest, over the past fifty or so years, in how money works is very much the result of officicialdom failing to speak on this subject "in words that normal citizens can understand".

And does the fact that something has been going on for centuries, and that it adheres to its own internal logic, mean that it’s unquestionably right?

“No time to go on at large here but money this days is created not just by regular banks but also by investment banks, money market funds, investment companies, hedge funds, etc. Every time they borrow , purchase or create financial claims , the double entry system of accounting via assets and liabilities, expands the money supply via an endless electronic ledger creating wealth in the form demand deposits crediting.”

Yes, indeed … and every time a loan is repaid, the money supply contracts, putting a brake on wealth creation and wealth maintenance in the real, productive economy: unless a continuous succession of borrowers step forward to replace the liquidity drained out of the economy ... at their own risk and expense.

As we see at present, the money (and it is merely money, not wealth) which is created in the banks’ electronic ledgers is NOT endless. Its multiplication is dependent upon the borrowing power of ordinary people and businesses … and, as the average borrower's ability to take punishment reaches its limits, upon ever more elaborate variations on the creative accounting theme.

“Mr Robertson, is referred to Cambridge U professor Geoffrey Ingham's book A History of Money as the best study on money.”

Eat your heart out, Mr Robertson - Cristobal knows a lot more about it than you do!

MoveAnyMountain, March 22, 6.40:

“ … every loan creates an asset”.

Er … really?

We thought that assets were useful goods and services. Apparently we were wrong. They are something banks create by “lending” out money!

So: if every loan creates an asset, does that mean that property isn’t an asset until someone has taken out a mortgage to buy it? And does the property cease to be an asset, when that mortgage is paid off … until somebody else takes out a loan on it?

Loans from banks do not creatre assets. Assets may come in the form of natural resources; or they may be created by human beings through their work, their skills and their ingenuity. Banks merely lay claim to assets created by others when they "lend" the money necessary to purchase them.

“Ideally the asset's value increases by more than the loan.”

“Ideally,” you say?

So, in an ideal world we will be able to rely on endemic inflation to pay off our loans: that is to say, the ideal financial system requires continuous erosion of the currency’s purchasing power, so that those credit-worthy enough to be granted whopping loans from the banks can pay them off cut-price … at the expense of those too poor to borrow, and those on fixed incomes.

“There are some issues where the only sensible response is to point out the people involved are weird. Fractional-reserve banking is such an issue.”

Here we go again: anyone who questions the system must be a nutter. QED.

Easier than actually addressing the arguments, isn't it?

And apparently defenders of the fractional reserve system are perfectly aware of, and happy with, the fact that debts are used to create our means of exchange; they are merely “ … refuting the claim … that banks can do it as they please and such debts are not backed by assets.”

Oh, that’s ok then! Never mind the fact that the "value" of the “assets” concerned fluctuates in proportion not only with supply and demand, but with the amount that people can be persuaded to borrow in order to pay for them … or that banks are prepared to lend.

The result is asset-price inflation ans boom and bust - bubble “wealth” followed by negative equity.

Far more to the point are the comments of cityeyrie, whose conclusions would be shared by most sensible people:

“If this really is a rational way to do 'value', 'credit' or 'money' in society then count me in with the tin-hatted lunatics who disagree. If this proves to be a stable or sustainable situation then I'll happily eat my tin hat ...

"In reality my hat may be all I'll have left."

We are taking a short break - back on Wednesday, 26 March.

But first ...

The global warming bubble

Steve Milloy, Junk Science

… The audience - a sold-out crowd of hundreds who had to apply to be admitted and pay a $3,500 fee -- consisted of representatives of the myriad businesses that seek to make a financial killing from climate alarmism. There were representatives of the solar, wind, and biofuel industries that profit from taxpayer mandates and subsidies, representatives from financial services companies that want to trade permits to emit CO2, and public relations and strategic consultants to all of the above.

We libertarians would call such an event a rent-seekers ball - the vast majority of the audience was there to plot how they could lock-in profits from government mandates on taxpayers and consumers.

It was an amazing collection of pseudo-entrepreneurs who were absolutely impervious to the scientific and economic facts that ought to deflate the global warming bubble …

Read in full here:

http://junkscience.com/ByTheJunkman/20080320.html

Whose Money? says:

See the Harper’s Magazine article, The next bubble: priming the markets for tomorrow's big crash.

Whose Money?

Paying the cost of your own slavery

Saturday, 31 May, 2008

Disquiet as bank bosses in line for Ł120m deal

Friday, 30 May, 2008

Food prices rise 5.8pc as weekly shopping bill rises to Ł136

Thursday, 29 May, 2008

Region well placed to survive economic slowdown

Wednesday, 28 May, 2008

Tumbling prices dog US housing market

Burberry beats the downturn with 25% profit surge

Tuesday, 27 May, 2008

Local income tax 'would be illegal'

David Maddox, The Scotsman

Credit crunch putting North's future at risk

Adrian Pearson, The Journal

Monday, 26 May, 2008

Tories plan boot camps for jobless youths

Sunday, 25 May, 2008

City bonuses defy credit crunch and hit new record of Ł13bn

Saturday, 24 May, 2008

Move 10,000 jobs North and save Ł78m

And:

Head count error costs region dearly

Friday, 23 May, 2008

Crewe and Nantwich by-election: Edward Timpson victory a blow for Gordon Brown

The Conservative victor in the Crewe and Nantwich by-election today hailed his triumph as sending Gordon Brown and the Labour Party a loud and clear message: “The Government needs to change.”

Thursday, 22 May, 2008

MPC minutes hint at splits as BoE steps up inflation crusade

Inflation and weaker housing weigh on retail sales

Larry Elliott, The Guardian

http://www.guardian.co.uk/business/2008/may/22/consumerspending.retail

Thursday, 15 May, 2008

Wednesday, 14 May, 2008

Tuesday, 13 May, 2008

Producer prices soar as retail sales plunge

700 jobs at risk as Northern Foods abandons M&S contract

Graeme Wearden, The Guardian

It's so British to let our firms become foreign

Monday, 12 May, 2008

The global slump of 2008-09 has begun as poison spreads

Sunday, 11 May, 2008

Bank of England warns of two years of stagflation

Saturday, 10 May, 2008

Flexible working planned for millions of parents

Friday, 9 May, 2008

Thursday, 8 May, 2008

Wednesday, 7 May, 2008

Broke Britain: How soaring bills have left cash-strapped families with less to spend than for 17 years

Tuesday, 6 May, 2008

Brown needs grassroots help on aid

Monday, 5 May, 2008

Parents are 'dumping' children on schools as Labour pushes for longer working hours, say teachers

Sunday, 4 May, 2008

Irish Development Agency targets UK firms over tax regime

Saturday, 3 May, 2008

Friday, 2 May, 2008

Don't blame inequalities on City salaries

Thursday, 1 May, 2008

Wednesday, 30 April, 2008

Mervyn King: Banks paying price for their greed

Tuesday, 29 April, 2008

UK job cuts feared in economic slowdown

Edmund Conway, The Daily Telegraph

UK job market risks losing its shine as slowdown deepens Edmund Conway, The Daily Telegraph

Monday, 28 April, 2008

Which way from the edge of the abyss?

House prices now falling year on year as economists warn credit crunch 'will see 33,000 lose their home'

Sunday, 27 April, 2008

Saturday, 26 April, 2008

UK economic growth slows to three-year low

Friday, 25 April, 2008

Thursday, 24 April, 2008

Bank of England's dilemma: A house price crash or soaring inflation

Wednesday, 23 April, 2008

Labour revolt cancelled after 10p tax 'U-turn'

Tuesday, 22 April, 2008

Monday, 21 April, 2008

Wages fail to keep up with rising bills

Huge numbers live on benefits

UK job market risks losing its shine as slowdown deepens
Edmund Conway, The Daily Telegraph

CREDIT DEFAULT SWAPS:
DERIVATIVE DISASTER DU JOUR