Douglas Carswell MP Introduces Bill to Stop Fractional Reserve Banking

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A significant point in history happened at about 1.30pm this afternoon. Douglas Carswell MP announced a bill that would end fractional reserve banking. It’s produced below in full (directly from Hansard), but I’ve added some explanatory comments in [brackets]. The bolding is mine. The bill passed to a second reading, which will be held on Friday 19th November 2010.

“Mr Douglas Carswell (Clacton) (Con): I beg to move,

“That leave be given to bring in a Bill to prohibit banks and building societies lending on the basis of demand deposits without the permission of the account holder; and for connected purposes.

[Demand deposits are bank account deposits that can be withdrawn on demand – you don’t need to give any notice before demanding your money back, for example.]

“Who owns the money in your bank account? That small question has profound implications. According to a survey by Ipsos MORI, more than 70% of people in the UK believe that when they deposit money with the bank, it is theirs—but it is not. Money deposited in a bank account is, as established under case law going back more than 200 years, legally the property of the bank, rather than the account holder. Were any hon. Members to deposit £100 at their bank this afternoon or, rather improbably, if the Independent Parliamentary Standards Authority was to manage to do so on any Member’s behalf, the bank would then be free to lend on approximately £97 of it. Even under the new capital ratio requirements, the bank could lend on more than 90% of what one deposited. Indeed, bank A could then lend on £97 of the initial £100 deposit to another bank—bank B—which could then lend on 97% of the value. The lending would go round and round until, as we saw at the height of the credit boom, for every £1 deposited banks would have piled up more than £40-worth of accumulated credit of one form or another.

“Banks enjoy a form of legal privilege extended to no other area of business that I am aware of—it is a form of legal privilege. I am sure that some hon. Members, in full compliance with IPSA rules, may have rented a flat, and they do not need me, or indeed IPSA, to explain that having done so they are, in general, not allowed to sub-let it to someone else. Anyone who tried to do that would find that their landlord would most likely eject them. So why are banks allowed to sub-let people’s money many times over without their consent?

“My Bill would give account holders legal ownership of their deposits, unless they indicated otherwise when opening the account. In other words, there would henceforth be two categories of bank account: deposit-taking accounts for investment purposes, and deposit-taking accounts for storage purposes.

[This is the system recommended by proposals such as Irving Fisher’s 100% Money solution and the modern full reserve banking proposal available at]

“Banks would remain at liberty to lend on money deposited in the investment accounts, but not on money deposited in the storage accounts. As such, the idea is not a million miles away from the idea of 100% gilt-backed storage accounts proposed by other hon. Members and the Governor of the Bank of England.

[Mervyn King is broadly in favour of ending fractional reserve banking, even if he hasn’t said so in those exact words.]

“My Bill is not just a consumer-protection measure; it also aims to remove a curious legal exemption for banks that has profound implications on the whole economy. Precisely because they are able to treat one’s deposit as an investment in a giant credit pyramid, banks are able to conjure up credit. In most industries, when demand rises businesses produce more in response. The legal privilege extended to banks prevents that basic market mechanism from working, with disastrous consequences.

“As I shall explain, if the market mechanism worked as it should, once demand for credit started to increase in an economy, banks would raise the price of credit—interest rates—in order to encourage more savings. More folk would save as a result, as rates rose. That would allow banks to extend credit in proportion to savings. Were banks like any other business, they would find that when demand for what they supply lets rip, they would be constrained in their ability to supply credit by the pricing mechanism. That is, alas, not the case with our system of fractional reserve banking. Able to treat people’s money as their own, banks can carry on lending against it, without necessarily raising the price of credit. The pricing mechanism does not rein in the growth in credit as it should. Unrestrained by the pricing mechanism, we therefore get credit bubbles. To satisfy runaway demand for credit, banks produce great candy-floss piles of the stuff. The sugar rush feels great for a while, but that sugar-rush credit creates an expansion in capacity in the economy that is not backed by real savings. It is not justified in terms of someone else’s deferred consumption, so the credit boom creates unsustainable over-consumption.

“Policy makers, not least in this Chamber, regardless of who has been in office, have had to face the unenviable choice between letting the edifice of crony capitalism come crashing down, with calamitous consequences for the rest of us, or printing more real money to shore up this Ponzi scheme—and the people who built it—and in doing so devalue our currency to keep the pyramid afloat.

“Since the credit crunch hit us, an endless succession of economists, most of whom did not see it coming, have popped up on our TV screens to explain its causes with great authority. Most have tended to see the lack of credit as the problem, rather than as a symptom. Perhaps we should instead begin to listen to those economists who saw the credit glut that preceded the crash as the problem. The Cobden Centre, the Ludwig von Mises Institute and Huerta de Soto all grasped that the overproduction of bogus candy-floss credit before the crunch gave rise to it. It is time to take seriously their ideas on honest money and sound banking.

“The Keynesian-monetarist economists might recoil in horror at the idea, because their orthodoxy holds that without these legal privileges for banks, there would be insufficient credit. They say that the oil that keeps the engine of capitalism working would dry up and the machine would grind to a halt, but that is not so. Under my Bill, credit would still exist but it would be credit backed by savings. In other words, it would be credit that could fuel an expansion in economic capacity that was commensurate with savings or deferred consumption. It would be, to use the cliché of our day, sustainable.

“Ministers have spoken of their lofty ambition to rebalance the economy from one based on consumption to one founded on producing things. A good place to begin might be to allow a law that permits storage bank accounts that do not permit banks to mass-produce phoney credit in a way that ultimately favours consumers and debtors over those who create wealth. With honest money, instead of being the nation of indebted consumers that we have become, Britons might become again the producers and savers we once were.

“With a choice between the new storage accounts and investment accounts, no longer would private individuals find themselves co-opted as unwilling—and indeed unaware—investors in madcap deals through credit instruments that few even of the banks’ own boards seem to understand.”

Update: full text of the Bill is now available here

Update 29th November 2010: The bill was quite low down on the list of items to be debated on the day, and because earlier items ran over, the bill has been rolled over to a later date.

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  • Joan

    There is a move to require banks keep a higher percentage of reserve money in the bank. Doesn’t this do the same thing?

    • Ben Dyson

      Hi Joan,

      Requiring banks to keep a higher percentage of reserve money in the bank would slow down the pace at which bank lending can increase the money supply (and the total amount of debt), but it wouldn’t stop it completely. As a result, even with a higher percentage of reserve money, banks would still be increase the money supply (and therefore devaluing your savings) whilst at the same time endlessly increasing the total amount of debt.

      In contrast, a bill like this, if implemented properly, should prevent banks from increasing the money supply in any way.

      • diameter

        Surely you’re not talking about stopping the money supply from expanding by doing this, rather contracting the money supply, seeing as banks are already doing this. how long a period are you planning to do this over? or what other plan do you have to cope with a sudden 90% collapse in the UK’s economy?

        • Ben Dyson

          @diameter – shifting from a system of debt-based money to its opposite (positive money, as we’d call it) can be done without causing any severe disruption to the economy, providing it’s done carefully. So there should be no need for a ‘sudden 90% collapse in the economy’ at all. But it is a little like weaning someone off a drug addiction. The current level of demand for credit (i.e. debt) is not natural. It is the product of a system where almost all money is issued by private banks as ‘credit’ (or debt).

          I imagine Douglas Carswell and Steve Baker will release full details of their bill before the second reading. As soon as they do, we’ll get a copy up on Positive Money.

          • Union Jack

            This is all very nice but it’s a bit late the damage has been done and it’s not just a British problem, It’s worldwide. Central banks have been inflating the money supply across the planet and the whole ponzi scheme is about to crash and burn putting the whole world in depression. No one will have any jobs, there’ll be nothing to save and there’ll be no credit either and the banks will accumulate more of the world’s real assets. They’ve been doing this for hundreds of years.

          • Ben Dyson

            So if it’s ‘a bit late’, would you prefer we just continue with the current system? (I agree that it’s a worldwide issue, but the best thing we can do now is to make people aware of what the issue is and start to fix it).

  • Robin Westenra

    It is amazing that such a bill has been introduced into the UK parliament. I shall follow the progress of this with great interest.

    • Martin

      But most of the current money supply has been issued in the form debt under the fractional reserve system, as this is repaid (plus interest), it will necessarily result in a massive contraction in the money supply. There would just not be enough money to satisfy borrowing needs of business and mortgage lending – unless there is a way of money entering the system by other means than bank issued debt…

      • Richard

        interest-free money can be created by the government – it’s called ‘fiat currency’ – at zero interest. that’s how! it’s easy but removes the control of our economic system from private banks

        • Martin

          I admit to playing ‘devils advocate’ here as I wanted to see if a reply such yours was forthcoming. What you propose addresses the gaping hole in ‘positive money’ as it is being presented, and I fear, the reason why it will not be taken seriously, as MOST of the money that currently exists has been issued as debt, AND THERE IS NOT ENOUGH OF IT TO REPAY THE CURRENTLY ISSUED PRINCIPAL AND INTEREST WITHOUT ISSUING MORE DEBT! The only way I can see for this system to work is for the hole in the money supply that would eventuate to be addressed in the manner you describe – for money to be issued debt free by a publicly owned institution rather than by private banks… but how would it enter the system? As debt to the state?

          • Derek

            The rules for issuing debt-free money are different from the usual rules where books have to balance. The money appears by magic from another dimension!

            Unlike the familiar “thin air” trick of the banks, the money is not balanced by debts but by government orders to issue money. These are public records and have no monetary value. They are virtual assets for the BoE, so its books do balance. But they are not transferrable to anyone else and not redeemable against money. So there can never be a call-in.

            Of course someone has to “pay” but it’s done through inflation. Fortunately, the inflation need only replace what is currently haemorrhaging away to the banks as interest. That’s the fundamental paradigm, everything else, like reforms to the mortage system, must be built on it.

    • Union Jack

      Making people aware of something doesn’t equal fixing it. It requires action. Tell me, what are they going to do? Vote for a change? Demonstrate? Riot? Several US presidents were assassinated over this. If they can’t change it you certainly can’t. Get real.

  • Tony Lawson

    What is there to stop banks placing a charge on the storage accounts and paying interest on the investment accounts? If they did that, virtually everybody would use the latter. To me it seems like things would be as they are now except that fractional reserve banking would be underpinned by individual choice. The banks could say, we operate a fractional reserve because it is what our customers want.

    • Ben Dyson

      If you put your money into an investment account, you would need to give up access to that money for a set period of time (eg. 4 weeks, 6 months, 1 year – whatever works for you). So it’s a case of having money readily available in your ‘storage’ or transaction account (where it’s safe, but doesn’t earn interest), and having it locked away in your investment account (where it earns interest, but isn’t guaranteed).

      Regarding ‘fractional reserve banking because customers want it’, here is the sales pitch that fractional reserve banks would need to give if they weren’t propped up by a state-funded deposit guarantee:

      “Put your money with us and we’ll lend most of it to other people. When you want your money back, we’ll pay you back with a little bit of money from each of our customers. However, if everyone wants their money back at the same time, we won’t have enough money to repay you, so we’ll become insolvent and you’ll lose your money. For this risk ,we’ll pay you a tiny bit of interest on the 31st of March each year. As long as everyone believes we’re good for the money, your money is safe with us. As long as you ignore the fact that I just told you we’re not good for the money, your money is safe with us. And if it turns out that your money isn’t safe with us, then just make sure you’re in the first 10% of people to get your money back from us once people panic!”

      • Neil Wilson

        Bear in mind that the banks don’t need our deposits. They can always get whatever reserves they need from other banks, or from the central bank at the stated price. Since the BoE has infinite capacity, it can always supply the necessary reserves to get the system to clear.

        So the banks only go after our deposits because they are cheaper than the other reserve alternatives.

        There’s actually a very strong argument that savings shouldn’t exist and that if people want a return on their money they should be required to purchase productive investments. So perhaps we should stop the deposit guarantee (and government bond issues) to get people to use the money more productively in the economy.

        And of course 100% backing still doesn’t help. If a loan goes bad and the collateral fails, then somebody’s deposits have still gone up in smoke – unless there is sufficient equity to cover the loss.

        The key to all this is to ensure that the bank equity holders carry the risk of all the loans they advance and that the loans advanced can’t exceed the equity in play.

        • Ben Dyson

          “They can always get whatever reserves they need from other banks, or from the central bank at the stated price. Since the BoE has infinite capacity, it can always supply the necessary reserves to get the system to clear.”

          You’re talking about the current system. If the bill is well-written it will address these issues as well.

  • sue worthington

    stop fractional reserve banking now!

  • John Stewart

    Where can we view a copy of this Bill? While I am all in favour of it (of course) and I have been speaking to people about such issues for 3 years, I am not without my cynicism and for very good reason. This system has been running since god knows how long. It is corrupt and criminal. The people who set the system up decades, if not centuries, ago have utilised it entirely to their advantage. The “credit crunch” (a financial decimation I would call it) has allowed these people to get away with the largest bank heist (over the public!) in our entire history. The people proposing and supporting this bill know the system was and is corrupt to the core and, as such, is criminal. I make no bones about it – it is criminal. The criminals, however, have already shot off with the money and it would seem this is a case of locking barn door after the horse has bolted.
    It is clear what these MPs are saying BUT they are then missing a very big point: The banks and the hedge funds STOLE people’s REAL money, value, homes, retirement savings and investments by creating 1s and 0s on a computer and multiplying money on their balance/Profit and loss sheets which did NOT exist! They then “lose” that money and have taxpayers bail them out with REAL money! If that is not a criminal heist I don’t know what is!!
    Furthermore, you may wish to look into even just ONE man who was responsible for this “heist” and the fact he was 18 years Chairman with the Federal Reserve and knew every single issue re the American (and world) economy and fiscal issues. I can prove that people such as Alan Greenspan KNEW what was coming in late 2008 by September 2002 and May 2003! This man then left the Federal Reserve in 2005 and, by Jan 1st 2008 (even before then) he was taken on as an advisor to Paulson & Co Hedge Fund outfit who made the largest ever “killing” in Hedge Funds in history by shorting? You guessed it: The Subprime market!! THAT is INSIDER TRADING at the highest level possible! Greenspan was taken on for exactly his advice in such markets. Please do not embarrass yourselves by suggesting such was coincidental!

    So the question then is: When do we claw back all this money which has bailed out the banks and when do we throw the people like Alan Greenspan, PLUS the people who originally set up this entire criminal enterprise and ponzi scheme, in prison?

    This is not simply words! This is entirely serious!

    • Miranda

      Thank you so much John Stewart for putting so well into words exactly what I would have liked to say – all of it!

  • John

    I will be surprised if this bill gets much further as the banks will lobby politicians to stop it.
    Do not forget this is not a Democracy we live in but a Plutocracy and the banks will use there power to stop it.
    Most of the cabinet members of the past including Blares Labour party end up on the top Banks payrolls.
    The sooner the British public realize this and elect a Government that can not be lobbied by these banks the better.

    After all who do we owe all this money? answer the banks, they created it. Let them go Bankrupt.
    The Government should nationalise the lot of them. Then only the government can create money and stop this fractional reserve banking.

    • Drake

      Well said! Wish more minds thought like yours. Since seeing a Zeitgeist film in 2006 about fractional reserve banking I have often wondered why nobody does anything about it. Thanks Douglas Carswell for bringing in the bill. Will surely support.

  • Charles S Mollison

    Although this Bill is looking in the right direction it misses the mark.

    Yes, we need to regain control of our money supply. The money supply must be tied to the capacity of our nation to produce goods and services that the (world) community wants. (Nothing to do with savings.)

    Yes, we need to stop private banks issuing credit (debt). To do this we must restrict private banks to lending only money deposited with them for that purpose OR money that private banks have borrowed from a publicly owned Central Bank.

    The Public Central Bank (while tightly monitoring the money supply) should lend money to private banks at (say) 3% interest and private banks should be restricted to on-lending that money (and money deposited with them for on-lending) at (say) 5% (maximum).

    At the same time, the Public Central Bank (while tightly monitoring the money supply) should make funds available to governments for infrastructure. This money would be provided on a “no-repayment”, “no interest” basis. (There is no point in repaying ourselves! The benefits (payback) are accrued in the infrastructure that is acquired without DEBT!)

    These two measures will ensure public control of the money supply (and thereby avoid boom-bust-cycles), prevent both the private and the public sector from drowning in debt, AND ensure that the profit to be made from creating money accrues to the People (not private bankers).

    • Neil Wilson

      Wouldn’t it just be easier to nationalise the banks and have done with it?

      All money is debt. Whether it is created by the Bank of England or private banks.

      Trying to pretend that cash isn’t debt, when it says on it ‘I promise to pay the bearer…’ shows a misunderstanding of what fiat money is.

      I find it mildly amusing that a bill to nationalise liquidity reserves is being introduced by a Conservative MP.

      • Ben Dyson

        Not really – if you nationalised the banks and left them running on the same fractional reserve banking system, it would collapse sooner or later anyway. The business model of fractional reserve banking (which creates money as debt) is fundamentally unsound, regardless of who owns the banks.

        “All money is debt” – only if it is created as debt. It doesn’t have to be.

        • Derek

          The promise to pay on a banknote is not an IOU, it is an assertion that the note is actually worth its face value.

          The BoE does not owe you the contents of your wallet, it is already yours: real money not “just paper”. That’s not debt.

          When people talk of money being debt, they are referring to the way that 97% of money in circulation has come into existence, by way of the lending process which by definition creates debt.

          Fiat money is not a panacea but it has no such debt-creation associated with it.

      • Matt R

        Debt created money is fairly new actually. Money used to reflect the bounty of the natural world.

        While I’m very excited about this discussion in parliament, I’m also somewhat dissapointed that there was no mention of the growth imperatives relationship with interest.

      • joebhed

        If money(currency) MUST BE debt because of what is printed thereon, does that not suggest merely an engraving solution?

      • Gill Bates

        “Whether it is created by the Bank of England or private banks”
        What do you mean OR private banks? BoE IS privately owned contrary to popular belief unfortunately. The greatest con of all time.
        This bill, while indeed valiant, will never succeed. The (same) power behind all central banks will never willingly give up such power. Let’s face it, we are all, already totally OWNED! :(

        • Ben Dyson

          The Bank of England is owned by the government –

          • Gill Bates

            Cheers Ben, although my research suggests that it’s the other way around… The government is owned by The Bank of England.

            The last place I would seek the truth though would be on their own site. Mostly compulsive liars at that level, after all, that’s how they got to that level right? Not by being fair and honest. It’s a scam and we’re all aware of it somewhere in the depths of our soul. We can feel it. Carswell feels it, hence the reason we’re all here. Tragically, it’s only one tiny piece of a much larger picture.

    • Derek

      Sorry to flood this blog but I really must applaud your comment:

      Yes, we need to regain control of our money supply. The money supply must be tied to the capacity of our nation to produce goods and services that the (world) community wants. (Nothing to do with savings.)

      Nothing to do with assets “stolen” from savers on a bank-by-bank basis, not even based on estimates of liquid (lendable) “reserves”. Nothing, heaven forbid, to do with ancient metals piled up in dusty heaps. Take account of these things when doing the calculation but in the end, just tie the ability to create money to what is actually needed.



  • Martin

    Derek – Thanks for your clarification. Despite pointing in the right direction, I fear if that the ‘Carswell solution’ doesn’t address the money supply issue it will be seen at best as an isolated component of a new system and at worst as simplistic and unworkable and harmful to the cause of banking reform.

    There will need to be a revolutionary approach to a transition from the current debt base to a ‘Positive Money’ system. I will still be beholden to the banks for my mortgage principal and interest – no matter how negative my equity becomes, just as the nation’s businesses and the government itself will still owe grotesquely massive debts. As John says above, the heist has already happened. Our private and public assets and income into the distant future are to a large extent ‘owned’ by, or committed to internationally controlled banks. Current public and private debt would have to be somehow cancelled, defaulted, repossessed or otherwise evaporated before ‘positive money’ could be a reality. But I live in hope that I am wrong.

    • Derek

      Wiping out existing debt is a different matter from dismantling the money-as-debt system. Although one may sympathize with people who have over-borrowed and blame the banks for making it too easy, the fact remains: individuals and companies choose to borrow against expected future income. Money reform should not bail out foolish borrowers.

      Currently, banks need to keep creating debt in order for money to keep popping into existence so that they can pocket it as interest. The new debts are not incurred by current debtors – you can pay off your mortgage out of earnings without ever again borrowing so much as a mobile phone call on credit. However for the system not to run out of money, someone has to borrow about as much as you did, just to get enough money into circulation for you to pay the interest.

      With 100% reserve banking the banks simply would not be able to do this, so the money supply would have to be replenished by the government printing debt-free money to spend on our behalf. This will allow existing loans to be paid back under their original terms whilst simultaneously the economy returns to health. Everyone wins – except the banks who now have to work for a living.

      • Martin

        So, as debts are paid down (and therefore money extinguished) the money supply would be replenished by government spending of printed debt free money. This money would then be deposited in banks who would store it or invest/lend it, at the discretion of the depositor. Presumably government would create money and spent it into the economy, then regather it as taxes then extinguish it as necessary to maintain a desired monetary equilibrium.

        That is a LOT of power to give politicians, who have hardly proven themselves worthy of the requisite trust! It would give them the carrot and the stick. It does have to be far superior to the current systematic theft, but how do we keep the pollies honest?

        (all money that isn’t backed by anything other than faith is ‘fiat money’)

        • Derek

          Are you still thinking in terms of balancing the books?

          Chequebook money is created against a borrower’s debt but it becomes the bank’s liability when it’s spent. So it is, indeed, extinguished when all the accounts are finally settled.

          Fiat money does not come back to the issuer to be cleared, there is no settlement of accounts or payments of debts involved. So there is no automatic extingishing of the money. Once it’s served its purpose in, it can, and should, stay in circulation indefinitely. You could forcibly destroy it but I can’t see the motivation for collecting hard-earned money and burning it. It would probably be quite unpopular too!

          I hasten to add that I am no economist – I cannot tell whether the sums add up under realistic dynamics of money flow, delayed wealth creation etc. But thanks for poking at simplistic ideas – anything as radical as 100% reserve banking is going to need at least one, and probably several, other measures in order not simply to stall the whole works.

          However, as far as giving politicians power is concerned… trust me, keeping politicians honest will be child’s play if we succeed in making the banking system honest!

        • Ben Dyson

          I’ve worked on a proposal along these lines, and our suggested solution to ‘keeping the politicians honest’ is to remove the power to create and destroy money from them and give it to the Monetary Policy Committee (see ). This separates the conflict of interest – the people who want to spend the money (MPs) will not be the same as the people who have to decide if it’s a good idea to create more money or not. Of course, you then have to ensure that the MPC are held accountable while at the same time shielding them from lobbying from either politicians or the City. But within the framework set out in the proposals (see the link), anything that would benefit the City would benefit the public beforehand, and anything that would hurt the public would hurt the City.

          • Gary

            why would you trust the MPC ? They failed to get the base rate correct for most of the past decade. That is where the credit bubble originated. Rates were too low for too long.

            Let the market set the rates, all of them. Let the market choose the currency, and you will find it will choose gold. Let the market price the currency and you will find that the price of gold moves in lockstep with the real rate, as I said below Keynes called that the most solid empirical relationship in economics, and that is what is required in a stable non-inflationary economy.

            The MPC represent the banks and they bake 2% inflation into the system, which is the amount of interest payable on the money already created. 2% is deemed low enough to rob the savers without scaring them. IOW boil the frog slowly. The MPC have no honest credentials to be in charge of any part of the money supply.

      • Gary

        Derek ,

        The only fly in the ointment with the govt issuing debt free money, is that a) they cannot be trusted and b) even if they could be trusted the Problem of Economic Calculation states that it is not possible to economically allocate resources, including money, outside of a market. ie only the market supply and demand can determine the money supply and the type of money to be suplied.

        If the price of money(interest rate) is equal to the demand for real goods and services in the economy, then that price must track the real interest rate. Gold does this better than any other substance known to man, and is the most solid empirical relationship in all economics , according to Keynes.

        So, I vote for a HARD gold standard. Problem solved.

        • Ben Curtis

          Government can not be trusted to issue debt free money in an economy where debt money exists, because all it does it at as a basis for more debt money to accumulate, causing hyperinflation.

          In an economy without debt money, with the government as the sole creator of new money, the economic calculation problem becomes irrelevant. You couldn’t judge a new system without money issued as debt using the same old paradigms. The government, and the government alone, could be held accountable for monetary inflation, and every single pound created would be carefully scrutinised by the taxpayer, and the voter. Any expenses the government incurred could be carefully scrutinised and whether they raised the necessary funds through tax or inflating the money supply would be a matter of contention and under constant debate. The important thing to remember is that the benefits of money creation would be going to the taxpayer through the government, rather than to the banking industry through the taxpayer.

          Whether gold or government issued currency is your preferred solution, we must all agree on, and promote, the statement that allowing private companies the right and privilege to create our money supply is deeply wrong.

        • Derek

          The Problem of Economic Calculation is not a mathematical proof, it is merely an assertion that Market Forces will do better than planners.

          But computing methods and data gathering have moved on quite a bit since 1920 and we are not talking about an ultra-socialist planned economy, just making corrections to the money supply on the basis of information.

          The thing is, the natural form of money creation by the banks is not 100% reserve lending of deposits nor to have gold in the vaults!

          Quite the contrary: left to themselves, the banks will lend with zero reserves independently of any deposits and investments going on in other departments. That’s a free market. Anything other system interventionist, gold and 100% mandatory reserves being about as restrictive as anything could be, short of arbitrarily requiring banks to have more in the vaults than they ever lend, not less. 250% minimum reserve, anyone?

          However, the 100%-backed measures do have the perceived advantage of being rigidly fixed formulae so no-one can completely muck the system up. And they’re rooted in ideas of what “honest money” should be. Gold, though, is ridiculous – some regions are blessed with mountains of the stuff, why should they benefit? Let gold’s price float on a free market by all means, it’s grossly overpriced for its miniscule utility value. But 100% reserves has problems too – getting to the point where the banks can function at all. QE is not the answer, the recent £175bn is nothing compared with what the banks need to back up existing loans – isn’t the number usually quoted as a couple of trillion? And that’s not going to come from savings any time soon.

          This is why I favour gently squeezing the lending rights of banks with non-tradable lending permits (or whatever they’re called, I don’t suppose I’ve invented them) that don’t suddenly gum the works up like a sudden change to 100% reserves would. Likewise, if the economy starts to deflate, do everyone a favour with calculated fiat.

          But hey, what would I know?

          • Derek

            I meant to say “Any other system is interventionist,”

  • Madeleine

    Should we be asking our MPs to be present at the second reading in order to support it? Or would that be counterproductive at this stage?

    • Ben Curtis

      Yes Madeleine, you should definitely lobby your MP to be present at the second reading, certainly not counterproductive!

  • Jem Bendell

    Fractional reserve banking needs ending, yes, as part of a broader change in monetary systems. However, ending fractional reserve banking cant be isolated from other policies and activities that would need to happen BEFORE ending it. These include
    a) changing the way the Treasury relates to the Bank of England and the wage the Bank of England relates to the private banks, so that new levers would be in place to create money to replace the massive contraction of credit that would occur upon ending fractional reserve banking.
    b) promoting efficient and credible local and complementary currencies to give people more options
    c) securing support from other key nations for them to enact similar policies, in order to avoid massive capital flight
    d) passing laws to prevent capital flight and speculative attacks in the run up to this legislation being discussed

    Otherwise, this bill will either
    a) fail because people will realise the negative consequences and thus this would set back the cause of monetary reform
    b) pass and cause mass deprivation, while also helping the billionaire bankers turn their paper money into real assets at bargain basement prices (which makes me suspicious of who is backing the bill)

    So, its great news this is on the agenda, but I dont think it is being done right.

    • Gary


      The govt will NEVER issue money in equilibrium with the economy ie non-inflationary, even if they knew what that number was, and they don’t. They already rig the CPI/RPI, and a welfare state is inherently inflationary, by definition. Pork barrel spending on campaign promises is what drives politicians and that cannot be changed.

      They will pull the wool over the peoples eyes as they already have done.

      The only way we can proceed is if we remove the creation of money out of the hands of both bankers and the govt. In fact we remove the creation of money from anyone’s hands. We have a money system that does not multiply up, but instead divides down. You start off with a fixed amount of money eg gold, and then as the economy grows and the demand for money increases then one unit of money increases in value(lays claim to more goods and services), and so you divide the unit and that is how the money supply grows. You always still have the same total amount of gold, it is just in ever smaller denominations. This is actually a mildly deflationary system, but it has the huge advantage of attracting savings(as opposed to an inflationary system that erodes savings) which can then be used to fund production as loans of 100% of reserves. No more credit boom (hyper-inflation)and credit bust(hyper-deflation). Interest rates stay stable, the yield curve flattens and the casino interest rates speculation is shut down.

      In this system the economy drives the money , not the money drives the economy.


    • Gary


      In a free market people where people have the freedom to choose the currency in which that they will accept payments, they would be very reluctant to accept an inflating 0% reserve currency. Their savings would not last. They would shun it.

      The only thing that forces us to use the banks’ money are the legal tender laws set by the govt. You have to use their fiat. And the banks have monopoly to print it. Try paying your taxes in gold, or your employees in platinum. They will arrest you.

      Gold has more monetary properties than any other substance known to man , and that is why its demand in a free market matches the real interest rate. Gold holds its value, that is why in a fiat inflation the price of gold rises.

      For a good money you require :

      portability – land or barrels of oil is of no use , you cannot carry them in your pocket.
      divisibility – it must be quite easy to make smaller denominations, with diamonds that is not easy
      durability – it must not degrade, iron rusts, oil degrades.
      non-counterfeitable – paper and electronic digits are counterfeitable. The current credit inflationary system and fractional reserve banking are counterfeiting of paper and digits.
      Not too many industrial consumption – if industry uses it all up then their is none left for saving. Copper , zinc , platinum and all the other industrial metals won’t do.
      etc etc

      When you factor this all in gold is the most perfect monetary substance known to man. That is why, under a free market, its price tracks the real interest rate, the real level of economic activity. It has done so for 5000 years.

      You cannot trust the politicians and bankers to issue non-inflationary(fractional reserve) money, so in the end, in any case, you will end up having to use gold. Gold forces economic discipline, and if it does not, then you don’t have a mark-to-market or HARD gold standard.


    • Gary

      The economic calculation problem will be with us forever. Even 100 supercomputers would not solve it. For if there was an algorithm that could allocate resources in the most economic way then that algorithm can be copied or derived by many and then it would change the equation as soon as it had been derived. The act of measuring and allocating would change what is required by the act of measuring and allocating. The interactions of millions of people each transacting to optimise their own outcomes can never be modelled. How many times can a committee or a computer predict the outcome of an open auction , and if they could why have auctions not been consigned to the dustbin, just use a computer to allocate the goods ?

      • Derek

        Gary – you say “The economic calculation problem will be with us forever. Even 100 supercomputers would not solve it.”

        In that case you must be talking about the economic calculation problem in its purest and original 1920 form – a legitimate objection to a money-less socialist system in which the central planners would have to assign value to every tradable item in the country and plan its production and distribution all without the benefit of market prices (no money=no prices!) to guide them.

        That is so far removed from tweaking the money supply in order to correct visible inflation that it isn’t worth arguing about.

        I would also disagree that money in computers is counterfeit. It does not pretend to be gold. It is tokens that can be transferred and spent. That makes it money. If anything, gold is the counterfeit, largely unspendable but pretending to have intrinsic value. Real money – secure records in computers – can’t be stolen or lost down a drain and is not unfairly distributed by geological accident. Perfect, really.

        • Gary


          When you take £100 deposit and lend £900 that you create out of thin air, to observe the 10% fractional reserve rule, then you have counterfeited the digits or the paper out of the reserves. You certainly could not do that on a hard gold standard.

          BTW : gold will flow to the enterprises that are the most profitable , so that you will get the largest return on your investment. Holding gold under your bed pays no interest and no dividends. If you want to increase your wealth you have to put gold to work and invest it. So, the notion that only the people that mine the gold will have all the gold is false.

          • Ben Curtis

            A quick interruption, there aren’t actually any fractional reserve rules in this country anymore, we have something else, called a “capital adequacy ratio”, and we use open market operations to control the level of base money and lending. We’ll be releasing a full description of this shortly on the website. Research undertaken by the Cobden centre has shown that some banks were actually creating on average £33 of debt with the initial £1 that was deposited.

          • Derek

            Ben – Isn’t CAR just FRB with a more sophisticated calculation of “reserves” based on their risk?

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  • Mark Haynes

    Hi Ben, This does look a very good first step, as long as the banker’s puppets in government and parliament do not de-rail it. The only thing i would say is that we really need some sort of jubilee to clear much of the fraudelent debt many people and businesses are in, as other posters have said the heist has already took place. Also the government through a public body would have to fill the void by issuing the money-supply.

    • Ben Dyson

      Unfortunately a debt-jubilee is very hard to do fairly. I’d suggest that if there is another round of quantitative easing, the money should be given directly to the people rather than used to shore up the banks. The £200bn spent on quantitative easing could have been divided between all 45 million adults in the UK and that would benefit everyone equally, whether they had debts or otherwise.

      • Derek

        So let me get this straight. The government want to get the economy debt-cycle moving again so it decides to print money that will end up as bank reserves. Somehow this will induce people to borrow more – which is a good thing because we’re already up to our necks in debt and we obviously need more.

        So they decide to print some money, rather a lot of it actually, which is bound to take a certain percentage of the purchasing value of savings away from everyone. So individuals, savers and non-financial businesses will suffer.

        However, the hand-out will benefit some people and no matter who it is, the money will end up in the banking system pretty quickly. The question is then, “Who gets the windfall?” Individuals, which is sort of fair, savers, which is also fair, businesses, which would be indirectly helpful, spending departments, for infrastructure improvements, the worthy poor – or cut the lot of them out of the equation and just give it to the banks directly?

        It’s a no-brainer. Give it to the banks so they can plunge us into more debt using our own money to do so without benefiting anyone.

  • Dan

    Heres a simpler idea for the government.
    They currently borrow money essentially the same way individuals do from private corporations typically commercial and central banks.

    Bank assets are promissory notes(debt obligations) that they have accepted for value when you deposited them in exchange for liability’s (credit)

    You promise to pay and you get credit because your promise IS what backs the credit. Once the banks have a promise (asset) they now no they can create the credit on their fractional reserve computer system because they have substance backing it(your energy via your promise)

    The government does the same thing but with bonds and a bond is essentially the government promising to pay the sum it is requesting which it can fullfill because of the tax payers promise to the government of tax’s.

    So government bonds are essentially promissory notes of the government to private corporations in exchange for credit at interest which ultimately results in the government and thus the tax payer entering into spiralling amounts of debt.

    Now this is how easy it could be, the source of wealth is the energy and time of people hence why all money is a promise. The people have granted the government the authority to tax them ONLY in exchange for certain benefits that a government can provide. That tax can take any form it likes it currently takes the form of pound’s but it REPRESENTS the peoples energy of which a portion they pledged to the government.

    So all government needs to do is Monetise its own bonds thus creating its own currency (serving as the currency for the country) which is backed by the promise of the people and incurs no interest because your not borrowing from any outside source there is no source higher than the government and you do not charge interest to yourself.

    In this situation the government can never be in debt and infact I would propose that any government seen to go into debt to any external source should be deemed an unlawful government for the obvious reason that a debtor is obliged to a creditor which is exactly why the government you created does not seem to be listening to you does it?

    And so with no debt you have an ever increasing value of your currency. As new production and innovation actually adds to the wealth of people rather than being absorbed by the financial elites.

    • Gary

      Not to mention that if you just drop money from helicopters onto the laps of the people, you distort prices and then investors cannot gauge where to best allocate the investment funds. Price leads investors, and when you distort price you distort investment. You end up with malinvestment and bad investment. You only have to look at the housing bubble. The MPC distorted prices (interest rates) and everyone piled into property , which turned out to be malinvestment and bust.

      That is why it is not just case of who should control the money supply, it is who can control the supply so that the it is in equilibrium with the real economy, and NOBODY can do that. It must be done by the interactions of the players in the real economy ie the market.

      • Dan

        Well what I am point out here only relates to this thread and the current money system.

        Personaly I am aware of what the future finacial system is and it is nothing close to what we have now. The infrastructure for it is already in place. It is alterntative digial currencys combined with microfinacing. This has nothing to do with central banking. It does still involve the private ownership of credit however it is no longer monoplised so any individual or business can start their own currency.

        If you understand banking you also understand how microfinacing completely bypass’s fractional reserve banking which on its own is a major tool for wealth creation yet whilst its linked to our current currencys its impact is limited. Its when its combined with alterntative currencys that you have what could possibly be the most perfect money system possible whilst a civilisation still deems it nessacary to use money.

        Early examples of alternate currencys are
        also facebook have recenly discovered that they can use their virtual currency for far more than just the buying and selling of useless virtual items. is a good example of microfinacing.

        The future is not about asking “leaders” to make the right decisions to THEIR systems, its about creating your own, namley soverignty

        • Gary

          I am in agreement with this. I like a variation of this spontaneous creation of money at the point of transaction. It was used successfully in the 19th century, it is called Real Bills. A bill is drawn up between buyer and seller and that bill expires on completion of the transaction or after 90 days, regardless. The Bills circulate as money until they expire.

          There is however one important point with all these surrogate money systems. At some point you are going to have to clear them for a non-inflating underlying commodity money. If you don’t then you are back to square one. How do you keep account of your savings and how do you stop counterfeiting ?

          So, at some point whatever currency scheme that you use you are going to have to clear it for gold, if you want to preserve savings , prevent inflation, and stop counterfeiting of paper and credits. When you really consider it, you will always come back to gold.

          • Derek

            I’d have liked to have seen Dan’s answer to you, Gary, because I have a strong feeling that “you are going to have to clear them for a non-inflating underlying commodity money” misses the point. Surely it’s better not to have any underlying currency at all?

            Here’s Rothbard’s take on microcurrencies:
            “Suppose that I decided to abandon the slow, difficult process of producing services for money, or of mining money, and instead decided to print my own? What would I print? I might manufacture a paper ticket, and print upon it “10 Rothbards.” I could then proclaim the ticket as “money,” and enter a store to purchase groceries with my embossed Rothbards. In the purely free market which I advocate, I or anyone else would have a perfect right to do this. And what would be the inevitable consequence? Obviously, that no one would pay attention to the Rothbards, which would be properly treated as an arrogant joke. The same would be true of any “Joneses” “Browns,” or paper tickets printed by anyone else. And it should be clear that the problem is not simply that few people have ever heard of me. If General Motors tried to pay its workers in paper tickets entitled “50 GMs,” the tickets would gain as little response. None of these tickets would be money, and none would be considered as anything but valueless, except perhaps a few collectors of curios. And this is why total freedom for everyone to print money would be absolutely harmless in a purely free market: no one would accept these presumptuous tickets.

            Why not freely fluctuating exchange rates? Fine, let us have freely fluctuating exchange rates on our completely free market; let the Rothbards and Browns and GMs fluctuate at whatever rate they will exchange for gold or for each other. The trouble is that they would never reach this exalted state because they would never gain acceptance in exchange as moneys at all, and therefore the problem of exchange rates would never arise.

            On a really free market, then, there would be freely fluctuating exchange rates, but only between genuine commodity moneys, since the paper-name moneys could never gain enough acceptance to enter the field.

            Nicely put, as one would expect. But Rothbard is talking about a system underpinned by conventional money. The question posed by Dan’s proposal is what would happen if local tokens of exchange, the Rothbards, Dans, Garys and Dereks, became so popular that they started being exchanged?

            Well the opportunity for this type of micro-currency comes about a) when communities are isolated as in primitive times when one lot traded in salt and another in yellow metal and you basically bartered real commodities at the boundaries and b) in the modern world where instant electronic trading ensures that the market reaches a balance in microseconds.

            My feeling is that the idea of money itself will become another barbarous relic sooner rather than later – and the system of local/personal microcurrencies will be subject to exactly the same problems. Unless we limit the right of (some) people to lend money they have not got.

          • Dan

            IS this from Murray N. Rothbard?

            He died just as the internet was beginning and of course the internet resolves many of the obstacles he identified for alternative currency’s.

  • joebhed

    Thanks. Please do post the content of the bill as soon as it is available.
    See you in Chicago.

  • Colin Wilson

    It’s a start and hopefully will make people acutely aware that the hart of the problem is with the Banks and they do need to be brought under control.

    The real problem is the fact that the government borrow from the banks and agreed to pay interest on that borrowing. Are you aware that the entire personal taxation for working people in this country is used solely to pay interest to banks on outstanding loans? Why should a government pay private banks interest on the creation of their money supply? Never mind this fractional banking bonanza. If the bank is the only place creating the money and they charge interest then it follows that the debt can never be paid off. It’s debt on debt. The insanity of it all is that there really is no money, only promissory notes as we live in the bankruptcy but they don’t want the public to know that, its a state secret. They stole all the gold between 1913 and 1931 replacing it with worthless paper. They, the bankers periodically turn this worthless paper into valuable assets by shrinking the money supply forcing people and businesses to go burst and they then take all their assets, is theft by another name and its designed into the system. If your interested in the full history go to YouTube and search for the Money masters video, it’s in 22 parts (Youtube link above) and fully explains how the banks have the governments eating out of their hands and how they ensured that you are the collateral for all government debt.

    • Colin Wilson

      How can anyone in their right mind suggest that saving fiat currency is a viable option? Inflation is built into this system and is a gamble whether any savings if thats what you want to call them would even hold their value never mind gain anything. You cannot save using till reciepts from an empty till, remember there is no money, nothing can actually be paid all we do is pass the iou’s around and they become increasingly worthless as more and more of them are created.

      The savings myth is again designed to rob the poor and the middle classes, the rich invest directly…. in banks, or buy gold, now thats saving

      • Simon Davies

        Great job Ben D and Ben C and for Douglas Carswell for introducing the Bill. Hopefully the first step on the road to sorting out our flawed money system. Let us rise up and be free from debt, and it’s malign consequences for the majority, and break the chains that bind us. Slavery was abolished in the British Empire in 1833, let’s get debt slavery abolished in the UK well before 2033, how about by 2023 ?

        • Ben Curtis

          or 2013!

          • Simon Davies

            Agreed – I got interested in all this about 3 years ago when Northern Rock went pear shaped and was naturally a little concerned about my savings with them.

  • Bill Davies

    Brilliant work Ben and Douglas Carswell. It is clear that we still have a lot of explanation to do before people understand how our money supply is created. There is no question of our proposals reducing the money supply it will simply slowly transfer the authority backing it from privately owned banks to the Bank of England.








  • Derek

    Gary – “When you take £100 deposit and lend £900 that you create out of thin air, to observe the 10% fractional reserve rule, then you have counterfeited the digits or the paper out of the reserves.”

    Nope. You’re not claiming to have any reserves at all, you’re accepting liability for the money the borrower spends. The cheque is written, spent, accepted by a bank, creates a new deposit, and comes back to you to be cleared.

    The deposit is then available to repeat the cycle, and the borrower still owes you the money. You owe the same amount, either to another bank or to the depositor directly.

    The entire process is cash-free and does not depend on liquid assets. Why should anyone want you to have a sack of gold under your bed before letting you expedite a transaction between third parties?

    “You certainly could not do that on a hard gold standard.”

    True enough. There’s a lot wrong with FRB that is cured by hard gold. But it could be cured in numerous other ways too.

    .. “So, the notion that only the people that mine the gold will have all the gold is false.” Sure, it goes into circulation. But most people have to buy it, whereas the mine just digs it up. That’s not mere profit on honest enterprise – on gold currency a gold mine is a money mine. Nature’s version of fiat dropped by helicopter. Grab it if you can, but it’s a geological lottery who’s in the right place.

    • John

      Seems to me not enough people know anything about the system that keeps us in chains…. a system that grows ever more powerful as time passes

      We allowed it to start here, in the City, now we should end it for the sake of the world and ALL its inhabitants.

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  • Terry Griffiths

    I fully support this proposed bill and wish it success.

  • Victor Ireland

    Containment of the international banking movement is imperative.
    It can done only nation by nation.
    If Britain passes this bill other nations will follow.
    Once the manipulative forces of the counterproductive “banking industry?” are put in check will come the sober realization of the extent to which society, the individual and the quality of life has been exploited and despoiled by them.

  • Rodney

    This really is quite silly. Its like saying to a property management business “I’m going to list my rental property with you – but you’re not allowed to find a tenant for it because I might want to move into it at any time”.

    It’s just naive to think people are going to use zero-return bank deposits when there are all sorts of other ‘storage’ mechanisms of wealth that are not subject to mass panic, while also being more or less inflation-proof – such as gold and silver.

  • Ben Curtis

    Hi Rodney,

    People would use zero-return bank deposits as they are safe, secure, your taxes can be paid with them, payments can be made with them, and because the consequences of not reforming the banking system are collapse. Gold and Silver are good stores of value, but your suggestion that people would favour them as they are not subject to mass panic are unfounded. Zero-return bank deposits would not be subject to mass panic, as they would be 100% backed, this, in conjunction with the other benefits of holding a back account rather than a store of value such as precious metals, render your analogy incorrect. If you have a zero return bank deposit, you are not “listing your property for rental”, you are holding it for safekeeping.

  • Mike Brimson

    Can you explain in simple terms please: is the intended effect of this Bill to enable the UK Government to issue new money into existence by spending it into the economy rather than borrowing non-existent money from banks at interest which payment obligation is then a charge upon the British / UK taxpayer? Also the interest element is not created in the process so the ponzi scheme effect results.

    If the answer is yes, how to do you expect to accomplish this objective which seems to have eluded legislators since the Bank of England (sic) was established in 1694? Captain Henry Ramsey raised an early day motion on this in IIRC 1964 and nothing came of that. There was the activity of the Duke of Bedford in the 1940s and nothing resulted. Then there was the Radcliffe Committee on the financial system generally in 1959 and nothing came of that. Then next there is the Money Reform Party which has campaigned in General Elections to no avail.

    Additionally, the current system not only exacts tribute from the borrowers on the inflation of the credit bubble but also exacts tribute from forced sellers on the deflationary phase which is the situation the country finds itself in now. Will this Bill eradicate that if enacted?

    Certain commentators say the existing fraudulent system could be corrected in 72 hours. They refer to the issue of debt-free Bradbury Notes by the UK Govt. Treasury to the banks in 1914. They ask why, if billions could be created out of thin air then and also in 2008 to bail out the banks, which have merely retained thse funds to maintain their balance sheet solvency and financial ratios, can debt-free funds not be issued now to maintain public services? The foprmer evidently carried no worries of price or monetary inflation so why should the latter?

    This con has gone on too long and a lot of people out here know about it and want something done.

    • Ben Dyson

      @Mike – I think this bill is likely to be more limited in scope than that. Although the full text hasn’t been released yet, it looks to be aimed at stopping commercial banks from multiplying the money supply over and over again, which would limit the destabilising price bubbles that we’ve just seen in house prices and the incredible rise in debt levels.

      For a similar proposal that goes into much further detail have a look at the proposed Bank of England Act. (I’ve been involved in developing that proposal so all feedback and suggestions are welcome).

  • Mike Brimson

    Tyopo: Captain *Kirby*

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  • Daniel1979

    Carswells bill makes a lot of sense to me, which probably and unfortunately means it will be doomed to fail.

  • dave

    Doh! Me and my faulty memory, I thought it was going to be read on the 18th, tomorrow it is then, will there be any news about what happened passed to us from this site or will I have to look it up?

    • Ben Dyson

      @Dave – unfortunately the bill was ‘balloted’ quite low down on the list, and a ‘Public Services’ bill took up most of the morning, so I believe the reading has been rolled over to a future date. We’ll have an update when we hear more.

  • Conrad Jones

    “Scotland, an industrialized nation with highly developed
    monetary, credit, and banking institutions, enjoyed remarkable
    macroeconomic stability through the eighteenth and
    early nineteenth centuries. During this time, Scotland had
    no monetary policy, no central bank, and virtually no political
    regulation of the banking industry. Entry was completely
    free and the right of note-issue universal. If the conjunction
    of these facts seems curious by today’s light, it is
    because central banking has come to be taken for granted in
    this century, while the theory of competitive banking and
    note-issue has been neglected.”

    “In 1844, Sir Robert Peel, a classical liberal who served as
    Prime Minister of Great Britain, put through a fundamental
    reform of the English banking system (followed the next year by
    imposing the same reform upon Scotland).”

    “Specifically, Peel’s Act of 1844 provided (a) that all further
    issues of bank notes by the Bank of England must be backed 100
    percent by new acquisitions of gold or silver; (b) that no new
    bank of issue (issuing bank notes) could be established; (c) that
    the average note issue of each existing country bank could be no
    greater than the existing amount of issue; and (d) that banks
    would lose their note issue rights if they were merged into or
    bought by another bank, these rights being largely transferred to
    the Bank of England.”

    That was the start of Monopoly money, monopolised by the Bank of England.

  • Conrad Jones

    Why did Gordon Brown sell half the UKs Gold so soon to the biggest Gold Bull market for decades. He ignored advice not to sell the Gold – so who was pulling Gordons strings?

    Was this Gold sale to make it less likely that the UK would be able to return to a Gold Standard?

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  • Conrad Drury


    1. Change the money system in every nation to one where the value of the currency does not vary.

    2. Create a Public Banking system and change the money system in every nation to a non-debt one where the government of each nation has sole authority to create money or inject it into the system.
    3. Eliminate all private economic activity where the use of “money” does not directly involve the production, procurement, etc of some product or non-financial service except a stock and bond market and business insurance companies.

    4. Establish an international protocol where the base currency unit of each and every nation can always be traded on a one-to-one basic with the base currency unit of any other nation.

    5. Establish in-country firm price ceilings on every item and service necessary to produce, procure, etc. any and everything needed to sustain human life.

    6. Include a firm and fair profit margin for any entity that uses its wealth or labor in the production, procurement, etc. of anything needed to sustain human life.

    7. Establish a full employment program in every nation so that every individual can contribute to the general welfare in some way and receive enough money on a regular basis , in return, to be able to buy all the necessities for life, all the time.

    8. Focus all non leisure human activity (FIRST) toward education , democratic government, religious tolerance, elimination of all offensive military capability, protection of all natural resources ,the environment, and satisfying the worldwide need for food, clean water, proper housing and the control of disease.


    The idea of “debt” is just a smoke screen –thrown up by a controlling few (the international banking cartel). Any nation that actually takes control of its “money system” can fund any and all programs–needed by its citizens–without creating debt!

    The system controlling the world today is one that benefit’s a few at the expense of the many and is the cause of most human suffering from poverty, hunger, and uncontrolled disease. It is destroying the environment and causing the early death of at least 28,000 children every 24 hours.

    The necessary changes listed above will not limit personal initiative or prevent any one individual from becoming wealthy but they will make it possible for all to always have the necessities for life. Each and every one of them can be accomplished , and if we as human beings are actually above the animals; they will be!
    “To kill the serpant–you must attack the head”

  • stojan nenadovic

    Noncredit money is the only real money. Noncredit money is the best positive money. Noncredit money is the necessary additional quantity of money in circulation (currency = dM) as a percentage (k) of existing quantity of money in circulation (M).
    dM = kM ; k = (supply – demand)/demand ; k = 5% e.g.
    If noncredit money is emitted according to the cited formula, inflation cannot exist. Taxes and debts are annulled for the amount of noncredit money. The consumers pay less and producers get more than today, in the order of credit money. All get the gift from noncredit money. The source of noncredit money is the growth of economic rationality. Noncredit money monetizes progress of mankind. There is both national and world noncredit money. We must create both national and world order of noncredit money. Biagio Bossone, former executive director of World Bank and IMF, said to Summit G-20: “We propose a noncredit money system, where money creation is separated from lending”.
    Noncredit money demands new system of national accounts. They are:
    GDP = P ; COST = C ; INCOME = I ;
    INCOME is income from costs plus incomes from noncredit money.

  • Roger G Lewis

    What is the news of this Bill, i watched this clip with a distinct feeling that history was being made, Has it been Squashed?
    I do hope it hasn’t.

  • Adam

    Hi everyone, I must say this is a depressing state of affairs. I had no idea of the scale of ignorance surrounding this subject until I was myself enlightened by luck from searching through documentaries on the net.

    I always knew, of course, that the whole democracy farce was just that. Plutocracy all the way I expect. Now I have confirmation. Debt-free fiat currency is needed which gains value through investment in infrastructure and services.

    I think that many borrowers on the low end of the income scale have next to no choice in borrowing at interest if they want basic things like an education, for example. Most of them probably do not realise it but that is the crux of most students’ arguments when protesting their increased fees, the towering debt they will endure.

    It is not justified, it is disgusting when you consider that the money system stratifies people and it is sheer luck whether one is born into economic circumstances that allow for self-development and contribution to society. Oh, I understand that it is possible to advance under the present system but it does not make it any easier does it?

    Meanwhile the political and upper classes have no problems paying their bills, educating their kids to fill their roles and stamping on the majority who may possess hidden talents that will not be developed as they while their lives away as wage-slaves. I am sorry but that is how I feel.

  • donald dietrich

    i support this bill 100%. i think it is brilliant! ive been talking about this subject for a number of years and i was starting to feel depressed. this bill has given me new hope. i will support this bill by donation of my time and money. although i bought my house at the peak of the credit crunch, and have 30% negative equity. i can live with my self because i know that i was taken advantage of, not knowing how banking works. which should be taught in schools right next to maths,science,etc. i hope one of the gents who wrote this bill will get some airtime on newsnight or something so that this information can get out to the masses! i feel that i know what this means; we could have the best health care system in the world. we can have the best education system in the world. we can limit or stop completely the thirst for foreign oil and gas and make ourselves independent for energy,staple foods,etc,etc,etc. to me this whole globalization thing is to do nothing more than to put every country in debt to the international banking cartels, to control there economies for the benefit of a handful,of very wealthy men. the i.m.f. and world bank need to be destroyed! any nation that would take on a similar act or bill would greatly benefit by not being forced to borrow money at interest! that is freedom without servitude. this bill will go down in history as the greatest step forward in the 21st century. best of luck to everyone involved!

  • Mike Brimson

    The “progress” of this legislation suggests history on this whole sorry topic of monetary reform is being implacably repeated.

    From 2003: “Publicly Created Money and Monetary Reform”: House of Commons Early Day Motion 854 tabled in the House of Commons by David Chaytor (ex-MP Bury North).

    David Chaytor, David Chaytor…. yes I remember the name now. He’s been “removed”. Temptation (and/or the sense that “it was all right, it was the accepted thing, there was an understanding, we all did it…”) was presumably put in his way and his judgment affected then he, less than mysteriously, is slapped down. Still, perhaps he should be grateful they didn’t do the lust of their father and murder him.

    I have not heard anything about the (other) Lord Taylor who was secretly filmed saying he was in principle prepared to take inducements for facilitating new legislation…

  • Steve – Coventry

    What happened to this proposed Bill – is it still live?

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