Whose Money?

WHAT  IS  MONEY REFORM?

"Money has become by convention a sort of representative of demand; and this is why it has the name 'nomisma'  -  because it exists not by nature but by law (nomos) and it is in our power to change it."  -  Aristotle

Although money is an essential feature of modern life, very few of us understand exactly how it is produced. Its existence is simply taken for granted.  Yet money, as Aristotle points out, isn’t something which occurs naturally: it is a man-made convenience, and its creation is authorised and controlled by man-made laws.

 

Even those who realise this tend to believe that the government is legally obliged to issue us with an adequate supply of money, as a public service. Unfortunately, nothing could be further from the truth.

 

The Bank of England issues only 3% of the total money supply, as notes and coins.  The remaining 97% is created by commercial banks, in the form of loans to their customers.

 

In other words, increasing numbers of ordinary people are required to go deep into debt, just to provide the country with its basic means of exchange.

  

Monetary reformers are not against the concept of debt as a system of deferred payment.   People should be free to borrow and lend money, and in this respect banks have a useful function to perform.  What we oppose is dependence on mass borrowing as almost the sole mechanism for creating the country’s money stock. 

 

Substituting pounds for dollars, our predicament is essentially the same as that described by Robert Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta at the time of the Great Depression:

 

“We are completely dependent upon the commercial banks.  Someone has to borrow every dollar we have in circulation  …   If the banks create ample synthetic money, we are prosperous; if not, we starve.  We are absolutely without a permanent money system…

 

“It is the most important subject intelligent persons can investigate and reflect upon.  It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied soon.”

   

Those defects are still unremedied. 

 

We believe that a fundamental overhaul of the laws governing money creation is long overdue.   The essential need for reform can be summed up in one sentence:

 

The bulk of the nation’s money supply should be issued by a democratically accountable  public authority, and spent into circulation debt-free.