All but a few of us are slaves to money, but it’s high time that we, the people, became its masters, writes Oliver Tickell in the article “The Money Revolution” in the Resurgence & Ecologist Magazine
Here is a short extract:
Although the quest for money is perhaps the leading human preoccupation of modern times, very few of us truly know what it is, or understand the laws that govern it. And that’s not just ordinary people. Economic ignorance is almost a qualification for the highest office in governments, treasuries and central banks. To appreciate this, just listen to almost anything George Osborne has to say on the subject – as he blindly drives the UK economy into a continued and deepening recession.
Take one example: his insistence that because the UK economy is in recession, and tax revenues are consequently reduced, the government must cut its spending. This would of course be true if a government’s role in an economy was that of an individual, family or company. But there are important differences whose effect makes Osborne’s dictum not just wrong, but the very reverse of the truth. During recessions the role of government is precisely to increase spending – and especially on long-lived assets (of many kinds) that will contribute to future wellbeing, prosperity, efficiency and resilience.
This simple fact is of enormous importance. It means that all the suffering imposed on the UK, and on other countries stuck in the same obsolete policy framework, is unnecessary. It serves no useful purpose, but is rather the cause of huge falls in the standards of public service, for no corresponding benefit.
So, just how is it that governments are different from you and me? First and foremost, governments have the power to create money. This is something no one else can do – at least in the sense of running a £50 note off a printing press and spending it. Yet despite having this unique and extraordinary power, governments are reluctant to use it. Instead, they devolve the power of money creation to private banks.
Although the central bank does indeed print the currency, far more money is conjured up by banks as they advance credit – on credit cards, mortgages and loans – than is ever printed (in the UK, about 40 times more). So the supply of money in the economy is mainly determined by the banks’ willingness, or otherwise, to advance that credit.
Now consider: the banks, whose reckless lending during the boom years of the early and mid-noughties created losses worth trillions of dollars, pounds or euros, were bailed out one way or another by taxpayers. Governments borrowed this money, ultimately from the banks themselves, only to be told by the banks (wearing their ‘bond market’ hat) that social welfare, health and education and all other areas of public spending were now unaffordable luxuries that had to be drastically pruned back.
Just as “war is too important a matter to be left to the military” (Georges Clemenceau), so the supply of money is far too important a matter to be left to the banks.