Three years after the 2007/8 banking crisis and what have we now? A report from the Independent Commission on Banking (ICB) which can be likened to stitching a new patch onto a worn out garment.
It is often the case that depth of knowledge serves to cloud the real issues and a good example is this final ICB report. It is long on analysis and short on objective conclusions.
The ICB report fails to acknowledge the main causes for the financial crisis, namely the largely uncontrolled ability of banks to create debt to an unsustainable level, with digital money, compounded by the uncontrolled greed of the banking sector. The ICB report then allows a further 7 years for its recommendations to be introduced. Seven years for Bankers to stoke up a new debt crisis in the future, which is already anticipated by the Commission.
Yes there is a global problem, but it is Britain’s problems that should have been of most concern to the Commission. Improve Britain’s financial position and by definition you assist the global situation.
The report of the ICB members is a failure to face up to the facts as they applied to Britain. They have failed to advance proposals which could have avoided much of the needless hardship now suffered by many in this country. With forward thinking, they could have set this country on a course that would have ensured future prosperity for all.
What does Britain need to do to reverse the financial recession ? That was the paramount question.
The British economy is now stagnating because of an almost total reliance upon the banks to create new debt, in order to provide the necessary fuel for growth. This banks have been unwilling, or unable to do. Until such time as the economy is soundly based upon debt free money, i.e. money that does not have to be repaid, continued stagnation can be expected to drag on for many more years to come.
Our financial problems have been steadily building up over past years, with each recession more difficult to overcome than the last. Why should that be?
It is a fact that over the years the difference between what is owed to the banks and the total money available to repay that debt has been gradually widening to a point where there is now a shortfall of almost £300bn. That is a position that cannot be overcome without major changes to the economy, because with the total debt exceeding the total amount of money available, then the annual addition of interest and loan changes have also to be borrowed, thereby adding to this shortfall.
It would appear that the wisdom of allowing banks to retain the sole power of create new money has not been questioned, as it was in 1844 with the 1844 Bank Reform Act. Despite causing great expense to us all, it appears to be unthinkable that the Bank of England (BofE) should have the right to create debt free money. Why?
Is the financial damage cyclically wreaked upon our economy really a price worth paying for this continued monopoly over our money supply?
Britain’s economy has long been built upon sand. Sand which enters the economy as debt, only to trickle away over time as interest and debt repayments.. The greater the level of interest and repayments, the higher the level of new debt there must be to stem this perpetual loss to spending power. It is an endless cycle, except that lack of sustainability eventually calls a halt with a resulting inevitable financial crisis.
Many well informed individuals are convinced that we must introduce legislation which would remove the monopoly held by the banks over the creation of digital money.
The BofE should have the power to create money, which in a controlled manner, would be fed into the Government’s account, thereby allowing for greater government expenditure, debt and interest free. Such a measure would provide a solid basis to the economy whilst allowing for a multitude of benefits, not least, tax cutting measures, which would leave more money in the hands of the low paid who are currently taxed on their low earnings and dependent upon social benefits.
Was any thought given to that possible solution by the Commission?
It would not be practical in this response to outline the full range of advantages which would flow from just this one major change. A change which could lead to sustainable prosperity for all.
What the ICB report failed to recognise was (a) what was the problem, (b) what were the causes, (c) what needed to be done to remove those causes? In other words the Commission have spent a year drawing up a report at great expense to the Taxpayer which failed to provide anything approaching a meaningful solution to the actual problem.
This was no time for proposals, which may appear to be desirable, but which leaves the long term inherent shortcomings in the system to fester.
When a surgeon is faced with a gangrenous limb, he amputates it. He does not wrap it up to continue festering to the detriment of the whole body, which is what the ICB report has done.