Ben Dyson was in Scotland on Tuesday 1st and Wednesday 2nd November. This is a report of his work over those 2 days.
Ben arrived on late Tuesday afternoon, in time for the second Glasgow MeetUp, which was held at the same city centre office premises at which the first one was held. Half of the people who came along were new faces who had not been to the first event back in July.
The evening was very informal and the first half hour was tea and sandwiches, and then Alistair, the host, spent 20 minutes describing the Positive Money proposal for the benefit of the new people.
Ben Dyson then spoke for around an hour, talking about the group’s latest activities and taking questions.
He read out a response from the Treasury related to our reform. The response suggested that such a reform would “reduce the amount of credit available”. It was noted that this is an interesting response because a few years ago the response from the Treasury, regarding this same reform was that it would “create runaway inflation” (the exact opposite!).
Ben emphasised that most of the people writing these responses are simply people who don’t actually know any better, and many are young people straight out of University, repeating the standard economics orthodoxies which they have just been taught.
He pointed out that the new book, “Where Does Money Come From?”– several copies of which were sold at the MeetUp – was the first book which educated everybody about how exactly money was created in the UK.
He said the book has already been adopted as a course text at a London University, and that he would like to see a module in a finance course, based around the content of the book. Positive Money would also like to create a “Teachers Pack” based around the material. (Anyone out there with the skills to do such a thing, please contact the office!)
Copies of the book, and the DVD “all about the money”, and hard copies of the 60-page draft Bill, were all on sale at cost price, and quite a few were sold.
Ben described a leaflet which had been given out to the Occupy people at St Pauls, which was cleverly titled “Government Planning to Privatise Money”. Over 400 had been given out on one day.
In answer to the question about how we could get a majority of MPs on side, it was pointed out – as Michael Meacher had said at the Conference only that weekend – there are around 50 or so MPs in Westminster who “make things happen”. The aim is to enlist those MPs, and the rest will follow. We also want to specifically target the MPs who are on “All party groups” or Committees relating to finance and poverty, and related issues, and who have signed relevant EDMs etc. It was also mentioned that, using the same logic, we only need to convince a small but noisy element of the public as well.
Someone pointed out that if the banks did leave the UK – which is an empty threat in any case – all that would mean is that they would have created a business vacuum which would be filled by new entrants to the market who were prepared to make money under the new laws.
The meeting ended with 8 people continuing the conversation at a bar round the corner, well into the evening. Thank you to everyone for coming along. It was great to meet up with you!
Wednesday the 2nd November was a busy day. The first thing we did when we arrived at Waverley Station in the morning was to walk up to St Andrews Square where there is an Edinburgh “Occupy” presence. We had already printed up leaflets describing the talk that evening at the Royal Scots Club. Importantly, we included directions from St Andrews Square to the venue, otherwise many people wouldn’t know how to get there. We spoke with a couple of people and they said they would spread them around.
Lunchtime Round Table Discussion
At lunchtime, Ben spoke at an “Ethical Finance Round Table Discussion” which had been organised jointly by the Islamic Finance Council and one of Edinburgh’s top banking and finance legal firms. This lasted for 2 hours, and the essence of the Positive Money proposals was described.
Points which arose were that the Positive Money reform could lead, in time, to a positive cultural change. We would move from our present “borrow and spend” culture, to a “save and spend” culture. This would lead to more economic stability in the long term.
Another point raised was whether it was “ethical” to enable a depositor to be insured by taxpayers up to £85,000.
One person, who was an economics lecturer, wondered why debt is such a bad thing, if it is always getting repaid? Although there was not time to develop this important point in more depth, a full answer would include pointing out that when money – the life blood of our economy – is created by the corporate banking sector for its own profit, then, not only is it profiting from the creation of a public good, but it is under no obligation to consider the long time view. Money goes to that which will deliver a short term profit.
The power to create money in this way means that, among other things, the sector has inflated house prices and put them out of reach of many people, as we had just heard at the Positive Money Conference.
Furthermore, by allowing the corporate banking sector to take control of digital money and to create money in this way, then we’ve lost out on nearly £2.1 trillion of government revenue to date. As Ben said at the Positive Money Conference, that’s £2.1 trillion which we’ve had to pay in taxes unnecessarily.
Thank you very much to the organisers of that event.
After the Round Table, Ben was taken to the MeetUp venue, at the Royal Scots Club, where a 2 hour interview had been arranged with one of Scotland’s top financial journalists.
At 6pm, the MeetUp was ready to begin. There were 32 people there, including 4 down from Aberdeen, and one person who had come up from Newcastle. 6 people from the Occupy group, which we had met that morning, came along as well. After the MeetUp, one of them described the Positive Money campaign as having “laser beam focus”.
The venue was absolutely excellent, with top of the range facilities. Ben was able to use his laptop and give a version of one of his many professional presentations.
Among other things he emphasised, was that our solution is not for the “government” to create money. Rather it is for an independent and transparent public institution, which is democratically accountable to Parliament (not to the government) to create money. It is important always to emphasise the separation of “Who Creates Money” from “Who Spends Money” – in the same way that a mechanic will tell you how much oil to put in your car engine, but doesn’t tell you where to drive.
The importance of Parts 3 and 4 of the draft Bill were also emphasised. These ensure the accountability and transparency of the money creation process.
Under our system, as Ben explained, the banks will no longer create money, but will essentially borrow money from the public – in the sense of attracting the money into their saving accounts. The banks will compete among themselves to offer the most appropriate interest rates. The interest rates will be set by a genuine free market in finance, because they will be set by the law of supply and demand.
Under the present system he said – as Simon Dixon has pointed out – “Trying to control the economy through interest rates means that either you get screwed, or your grandmother gets screwed. Your mortgage payments cost more, or the return on her savings fall.”
Ben spoke about how Scottish banks still have to purchase the cash from the Bank of England before they can print off their own “rebranded” notes. He explained that the Bank of England prints off a million pound note and the Clydesdale Bank, for example, will purchase it for one million pounds, which then gives it the right to print off one million pounds worth of, say, £10 notes, branded with the Clydesdale logo.
He said he found the idea of a million pound note quite amusing, because if you had it, you could never actually spend it anywhere, even though you were technically a millionaire. This prompted a member of the audience to say that there had actually been a comedy film on that very idea in the 1950s called “The Million Pound Note”, starring Gregory Peck (based on the story by Mark Twain).
Questions were asked about gold. It was pointed out that, among other reasons, currencies founded on gold would lead to terrible resource wars in Africa. In addition, gold ownership was already highly concentrated.
Someone wondered how this reform would “close the gap between rich and poor”?
It was pointed out that allowing banks to effectively create money, means that the already mega-rich can get easy credit, which in turn enables them to speculate on unproductive assets, and generally threaten national economies, putting vast liabilities on the rest of us and making us even poorer. Under this reform, it will be much harder for a speculator to get a loan of 100m to speculate on the markets because that money will not be able to be created out of nothing specifically for that purpose. It will already have to exist before it can be loaned. In other words, access to easy credit for speculation will diminish.
Furthermore, such mega-riches – often made from speculation – are a consequence of banks ability to create their own raw material. As paragraph 32 of the Explanatory Notes in the Bank of England (Creation of Currency) Bill, says, “Losing their present privilege of creating money will bring the commercial banks into line with ordinary private-sector businesses that are not given their raw materials as a free gift.”
Think of it this way. If you are working in an industry that can create its own raw materials – in this case, money – out of nothing, then you are going to become very rich. Imagine a grocer who could create magic vegetables out of nothing. That grocer is likely to become very rich, very quickly.
By closing down the source of this easy money, we ensure that the economy will become more stable. There will be less liability placed on the head of the taxpayer. Speculation on unproductive activity will decrease because the money will not be available for such speculation, and mega-incomes are going to decrease in line with this restriction.
Towards the end, one new person appeared to be so impressed with the presentation that they wanted to know, “Who’s funding you guys?” You know you’re making a professional impact when that is a question that occurs to the listener!
The reality is that Positive Money is funded primarily by its 3 staff – Ben, Andrew and Mira – who subsidise everything by taking wages well below the London average in order to ensure that this important work gets done on a full time basis! After that, it is funded over the long-term by each one of its individual Direct Debit donors who are an absolute lifeline to the organisation, and without whom it could not continue.
The meeting ended with quite a bit of literature being sold which helped to cover the cost of the venue. At least half the group stayed on upstairs and enjoyed the excellent facilities until well after 11pm. Again, thank you to everyone who came along. It was a great evening!
The James Gibb Stuart Trust, which facilitated Ben’s Scottish visit, is a registered charity working to “Reduce Debt by Educating about Banking”. It aims to provide expertise and assistance to those individuals, groups and activities which, in the opinion of the Directors, are helping to promote its charitable Objects.