The National Health Executive published an article entitled “The Elephant in the Room: Economic Determinants of Health” in which the authors Richard Shelley and Sara McCafferty of Newcastle University argue that economic determinants of health have an equally if not more profound impact on individual and population health than the more widely discussed social determinants of health. They discuss the creation and allocation of money, and how it impacts health through debt, inequality and economic crises.
Here is an extract:
Few people will deny that one’s health is strongly influenced, especially at the lower end of the socioeconomic spectrum, by how much money one has. Although it is common to think about this in terms of the individual, consideration at the societal level is perhaps more revealing. How our money supply is created, allocated and controlled determines what activities we are able to engage in and at what cost.
Under this system private banks are able to benefit at our expense as the money they create and earn interest on dilutes the money supply and causes inflation.
They also determine where new money is allocated (in this case housing) and control the quantity of money in circulation through their willingness or unwillingness to lend, potentially giving them huge amounts of power.
How this affects our health
This relates to our health in numerous ways including: the burden of debt, problems caused by inequalities, and the psychosocial implications of the financial crisis. These three issues will now be considered in turn:
The existing monetary system means that virtually all new money entering the money supply is created as debt.
From 2001 to 2008 the money supply doubled through bank created money from about £1tn to £2tn with a consequential doubling of debt. Currently in the UK each household owes on average £5,972 (or, including mortgages £53,613).
Increasing household debt (and by implication higher debt repayments) reduces the amount of money available for food, bills, rent and things like gym memberships or engaging in cultural or leisure activities. Debt and the financial difficulties it brings are known to be a major cause of stress. They are also heavily implicated in family conflict, violence and break-ups. This directly impacts individuals on a physical, psychological and social level leading to poorer health outcomes for individuals, families and in particular children.
Inequality is built into our privatised money system. Money is created, allocated and its quantity controlled by private banks for private profit yet guaranteed by the state and backed by the taxpayer who has to step in if anything goes wrong. Firstly, compound interest has to be paid on all the debt that has been created (over £2tn).
This widens inequality as it draws money away from the poor and middle classes and towards the more socioeconomically privileged connected to the big banks and the financial centres they occupy.
Secondly, independent investors with sufficient capital to invest in property have been able to gain significant returns on their investment without actually creating any value, at the same time funnelling money from young to old and geographically from the poorer areas to the richer ones. For example, between 1977 and 2010 the income share of the top 1% has almost tripled and they now take home almost 9% of all income after tax. These high levels of inequality are strongly associated with poor health outcomes as a country divides into ‘us and them’.
3) The financial crisis
The financial crisis can be thought of as a bank run on a grand scale. When people were awakened to the fact that the banks’ financial stability relied on rising house prices (or at least stability of house prices) for the foreseeable future and noted that this was unlikely to continue, individuals and corporations came to claim the money represented by the numbers in their accounts.
However, under the current system banks only have a fraction of what their accounts say they have in terms of cash and central bank reserves (hence the term fractional reserve banking). The Royal Bank of Scotland for example held £1 of reserves for every £80 in its customers’ accounts at the time of the crisis. With the overwhelming majority of money in the UK being digital and the fear being that the electronic payment and ATM system could collapse, the Government decided to intervene. The higher levels of government debt which have followed the crisis have provided (controversially) the rationale for the austerity measures currently being experienced in the UK.
The immediate effect of the financial crisis was that it became much more difficult to borrow money from banks. This is of particular significance in our current system where people and companies are dependent on bank created credit to survive. When the rate of loans being paid back overtakes that of those being taken out the money supply starts to shrink and with it interest payments on personal and company debt (which have to be earned from the circulating money supply) become increasingly difficult to meet. As such bankruptcies and job losses have followed the crisis and with them depression and suicide, with one thousand extra suicides being attributed to the crisis in the UK alone. Globally, tens of millions of people were pushed below the poverty line, which again implicates associated increases in morbidity and mortality.
You can read the whole article here