Could these 3 simple changes to banking fix the economy?

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If someone told you that a mountain of personal debt could be cleared via 3 simple changes to the way that money and banking works, would you like to know how? Would you like to see a more stable economy, with more jobs, less personal and government debt? Would you like to see money created free of debt and going into the real economy and support businesses, instead of getting trapped in financial and property markets?

This 4 minute video explains how 3 simple changes to the way that money and banking works would make all this (and much more) possible.


In one way or another, money affects almost everything that happens on the planet.

If we want to deal with the big social, economic and environmental challenges that we’re facing today, changing the nature of the money we use is where we have to start.

Right now we have a problem.

More than 97% of all the money in our economy is created by banks, when they make loans.

Most of this money goes into house price bubbles and gambling on financial markets.

This has lead to ever widening inequality, the highest personal debt in history and house prices that very few people can afford; before even mentioning the financial crisis.

But 3 simple changes to the way that money and banking works could make a huge difference. These 3 changes would give us a more stable economy, with more jobs, less personal and government debt, and a solid footing to begin tackling the environmental crisis.

So, what do we need to do?

Firstly, we need to take the power to create money away from the banks and return it to a democratic, accountable and transparent process.

History has shown that when banks have the power to create money, they create too much in the good times, causing financial crises, and too little in the bad times, making recessions and unemployment even worse.

They put most of the money that they create into house price bubbles and financial speculation, and only a small amount into businesses outside the financial sector. We simply don’t think that we can trust banks, who are hardwired to chase short-term profits, with something as powerful as the ability to create money.

And it’s not enough to regulate them; regulators have repeatedly failed to keep banks under control. There’s no reason why they should get it right this time around.

But we can’t trust politicians with the keys to the printing press any more than we can trust the big banks.

Instead, we need a new committee that decides whether and when to create new money.

This committee would need to be accountable to Parliament and sheltered from vested interests.

They would ensure the right amount of money is created – not enough to cause bubbles and a financial crisis, but not so little that it causes a recession.

Secondly, we want to see money created free of debt.

Right now, banks create money when they make loans, which means that for every pound in your bank account, someone else must be a pound in debt.

It means that almost all the money in the economy is effectively ‘on loan’ from the banks, and we have to pay interest on nearly every pound that exists.

If we try to pay down our debts, money disappears from the economy, making it harder for others to repay their own debts.

Instead of letting banks create our money, the state could create it, free of debt. And instead of lending money into the economy through mortgages and loans, it could be spent into the economy. This means that new debt-free money would stimulate the real economy, create jobs, and make it possible for ordinary people to start paying down their debts.

Finally, we want to see money come into the real economy before it reaches financial markets and property bubbles.

If newly created money was used to fund public spending or cut taxes for ordinary people, then that money would start its life in the real economy. It would create jobs and support businesses, instead of getting trapped in financial and property markets.

There are real challenges facing us over the next 40 years, such as how to provide for a growing population, a changing climate, and increasingly scarce natural resources. Right now it’s impossible to solve these problems because money – which affects almost every aspect of our lives – is broken.

We need to fix it, and get a money system that works for society rather than against it.

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 the faster we get the public, academics, the media and politicians to understand money, the faster we’ll get a banking system that works for society and not against it.

So please take a few minutes to:

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  • Dennis R Perrin

    If “banks are hard-wired” to behave in a certain way, this is through their training. If training can hard-wire them, then re-training can re hard-wire them. We are all hard-wired to need or want what money can buy, including the people in Positive Money. Aren’t we?

    A “new committee will be sheltered from vested interests”. Why? How? There seems to be a lack of detail and explanation as to how your alternative system will work.

    Why are the “challenges” you mention “in the next 40 years”? Why 40? You don’t explain why. “Money is broken” sounds over simplified. The videos show very simply why the system is corrupt and not working, fine, but, these videos do not seem to explain how the “new committee sheltered from vested interests” will work in practice.

    Has the practical transition been thought through? Once there is a proper plan put out and put to ministers, economists, etc., explaining the advantages and the processes of changes necessary, there is no doubt that the ideas will gain acceptance.

    People will need to know who will lose from the changes, who will gain and by how much. There is a great need of thinking to be done.

    • Christopher Waller

      @Dennis R Perrin I wonder how the Bank of England Monetary Policy Committee works, right now? Do you really not understand Positive Money’s proposal?

  • Guest

    We believe that what the fewest people understand about complementary currencies is that they should have negative interest rate, whereas that should be the baseline in the first place.
    (picture shows Cyclos4 Communities worldwide)

  • Elsa Canelon Karg

    The video is too simple, there shall be more details on the 3 proposed steps. Also send the Spanish version, it is also important to reach the non english speakers.

  • mitaky

    May be the first step is to set up public banking where local sales and tax revenue and private deposits stays local and regional and get invested in real economy and farms for good returns. The new Committee must be transparent and non-partisan and nominated by people from community leaders, volunteers, interfaith people, farmers, business people, teachers and change agents for a period of 3-5 years. Designing good adaptable organizational framework capable of maintaining transparency and integrity is a pre-requisite for positive money system.

  • Ron Helwig

    The first step mentioned is exactly what we did in the U.S. in 1913, creating the Federal Reserve system.

    I believe the short term mentality of the banks is not inherent in banking, but is a result of the regulatory regime. Banks should normally be long term planning entities due to the structure of loan processes – they need to think ahead to ensure that loans are going to be a good investment for them, but regulations change their perspective by mandating quarterly reports and insisting on continual and immediate proof of solvency.

    If we really want to fix the monetary system, we need to return to using sound, that is limited, money. The gold standard wasn’t perfect, but it was much better than an unlimited printing press can possibly be. IMHO, a combination of Shire Silver (for cash transactions) and bitcoin is all we really need. There’s no need for politicians to be involved in money at all; as their incentives are perverse and cannot be trusted to keep them working in the best interests of the economy and people.

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