Transcript Positive Money workshop – Power point slides

Positive Money is a movement to
democratise money and banking so that it
works for society and not against it.
www.positivemoney.org/
Plan for the talk
1. Where does money come from? Analysis of the
problem.
2. How the monetary system affects eight big public
issues.
3. Two solutions proposed by Positive Money
4. Why is monetary reform a social justice issue?
5. Social justice and faith (discussion)
Where money comes from
Around 98.2% of the Broad money supply (by M3 definition) comes from
‘commercial monetary financial institutions’ (see any Bank of England report)
Private banks create electronic demand deposits when they issue loans.
(Money Creation in the Modern Economy,
Bank of England Quarterly Bulletin 1 2014)
Or a 10min video by the BofE released with this paper:
References:
Working Paper No. 529: Banks are not intermediaries of loanable funds — and why this matters,
by Zoltan Jakab and Michael Kumhof, Bank of England May 2015.
Where Does Money Come From: A Guide To The UK Monetary and Banking System. Josh RyanCollins, Timothy Greenham, Richard Werner, Andrew Jackson (2011)
.Modernising Money, by Ben Dyson and Andrew Jackson. Positive Money. London (2012).
Or short video format, Prof. Dirk Bezemer of Groningen University:
‘Money multiplier’ theory and commodity theories of money are false.
Most money is created endogenously, not by Central Banks.
(See textbooks by Howells & Bain, 1997, 2005, 2007).
Issues affected by monetary system design
Debt
Recessions & Crises
Taxes & Public Spending
Jobs & Businesses
Inequality
Environment
House prices
Democracy
(9th Global Debts and Modern Slavery
10th Psychological Well-Being and Cultural Impacts)
Debt
National Debt interest payments: £51bn/pa
Domestic debts’ estimated total interest:
£108bn - £217bn per year
Average per person per year:
£2,400 to £4,822
Recessions & Bail-outs
WHERE DID THE
MONEY GO?
40%
Housing
37%
Financial markets
INCREASE IN
LENDING
1997-2007
13%
Business lending
10%
Credit cards and
personal loans
Taxes & Public Spending
Money creation: 2000 – 2009 inclusive
If that £1tr had been a credit to the public Treasury
instead of allowing private banks to take the
profits on the interest, then
we could have paid £1tr less in taxes or invested
that much more on public services.
Jobs & Businesses
“During any business cycle, whether ending in a
financial crisis recession or just a normal
recession, there is a very strong relationship
between the growth of credit (relative to GDP)
on the upswing, and the depth of the
subsequent collapse in GDP on the
downswing.”
Taylor, A. M. (2012). “The Great Leveraging”.
National Bureau of Economic Research
Inequality
Democracy
Is the need for a ‘austerity’ real and due to public over-spending previously, or is it
merely an artefactual necessity due to the monetary system?
Do private banks set the parameters for democratic control of fiscal policy now?
Dods poll (August 2014)
Backbench Debate 20th Nov 2014
Money Creation and Society (12min edit)
Environment
Economic ‘growth’ is needed to make debts lower relative to
GDP.
High levels of debt to GDP (or debt to income) create political
and economic pressure to keep economic ‘growth’ going.
‘Growth’ as currently defined is incompatible with environmental
sustainability.
If all externalised environmental costs are accounted for, then
no global primary production and processing industries are
actually profitable currently.
(TruCost TEEB Report, 2015)
False compromise between social welfare and environmental
sustainability.
Two Proposals
Pilot Study
issue £10bn debt-free from BofE to Treasury
spend into public infrastructure, instead of banks.
Monitor, compare with matched sample of other QE
interventions, evaluate.
Complete reform proposal: ‘Sovereign Money’
Remove the power of money creation as debt from
private banks and then create money as needed as
a public credit to be spent directly into circulation.
See over…
Banking Reform
1. Remove the power of private banks to create money
2. Return that power to a transparent and accountable
public body
3. Create money free of debt as a credit to the Treasury
4. Create money only when inflation is low and stable
5. Spend it directly into the real economy instead of financial
markets
6. Give bank customers transparency and control over how
their money is deposited (no risk) or invested (no DGS)
Why is monetary reform
a social justice issue?
Artefactual necessities - fiscal deficits and austerity,
An artificial system in which poverty is inevitable
Private profits reliant on public risks and costs
What can you do about it?
1. Join our mailing list for campaign updates
2. Start an ongoing dialogue with your MP
3. Learn more about it and talk to people.
4. Engage with your preferred political party
about our proposals.
5. Support Positive Money however you can.