Personal debt is at its highest level in history. We currently pay £192 million in interest to the banks every single day. Over 2 million people are unable to find work in the UK, and millions more worldwide… But the government’s ‘answer’ to this crisis is to get people to borrow even more!
Please take 3 minutes to watch this new video, and then read about why we decided to make it below:
In one way or another, money affects almost everything that happens on the planet. So if the people in charge of the economy don’t understand where money comes from or how it works, we’re in trouble.
Believe it or not, many economics graduates come out of uni without ever being taught about how money – those numbers in your bank account – actually come into existence. Even when they are taught something about money creation, it’s a story about the banking system that’s at least 40 years out of date.
These people go on to get jobs in the government, civil service, the media or in banks. They make decisions and policies that lead to financial crises, and then try to deal with the crisis in a way that makes things even worse.
This is why the government is trying to solve a debt crisis by encouraging people to borrow even more. As Holly says in the video:
We need money for everything we do, but the only way we can get it in the first place is to borrow it from the banks!
That’s why the government wants to get banks lending again – to get them to create even more money.
[sws_blockquote_endquote align=”” cite=”” quotestyle=”style02″]But the whole problem is there’s too much debt. So how can the answer be for us to borrow even more? [/sws_blockquote_endquote]
The financial crisis happened because people couldn’t pay the debts they had. But now the government (with the willing help of the Bank of England) is trying to blow up another debt-fueled bubble. The ‘recovery’ you hear about in the press is fuelled by new money created by banks. Even though families in the UK have the highest level of debt in history, mortgage debt has started rising again, as has consumer credit (personal loans and credit cards). But lending to businesses is still falling.
They say if you don’t know history, you’re destined to repeat it. And we’ve definitely been here before: in the ten years before the financial crisis, banks created and pumped hundreds of billions of pounds of new money (or “credit”, in banking jargon) into property bubbles and financial markets. Just 13% of their lending went to businesses. The result was the worst global recession in 80 years.
So if we don’t understand money, then we’re destined to head into another financial crisis. We’ll see ordinary people getting poorer, house prices getting further out of reach, and unemployment staying high, because those with the power to create money – the banks – use it to push up house prices rather than to support the real economy.
It doesn’t have to be like this. Simply removing the power to create money from the banks that caused the financial crisis would limit the chances of another debt-fueled bubble turning into a second financial crisis. As Holly says:
[sws_blockquote_endquote align=”” cite=”” quotestyle=”style02″]Why should the same banks that caused the financial crisis be allowed to decide how much money there is and where it goes? [/sws_blockquote_endquote]
We want to return the power to create money to a public and accountable process, working in the public interest. This would mean that when new money is created, it can go into the real economy, where it will fuel jobs and support real businesses, instead of going into the financial markets and property bubbles. We’ve written a book on this (Modernising Money), and we’re about to release a paper on how we can get a sustainable recovery instead of the government’s current debt-fueled ‘recovery’. And we’ve seen a few encouraging signs that people in positions of influence are seriously rethinking the wisdom of letting the banks that caused the financial crisis have the power power to create money.
Right now, we need your help to share this video
We’re trying to get the people in charge to understand why our current money system is broken and how we can fix it. It’s not going to happen overnight, but we think Holly’s explanation of the problems in our money system will help other people – and policy makers – to understand why we need to change it. The faster we get the public, academics, the media and politicians to understand money, the faster we can change the system. So please take a few minutes to:
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