Andrew Jackson, Positive Money’s chief economist (and co-author of Modernising Money and Where Does Money Come From?) is just typing up the conclusion to a plan for a new approach to fixing the economy – one that doesn’t rely on allowing banks to create ever more money to fuel house price bubbles and speculation.
We’ll be releasing the paper in the next few weeks, and then it’s time to go out there and promote the alternative. We’re looking for 100 people to become regular funders of this next phase of Positive Money’s work, which will be essential if we’re to avoid another financial crisis in the next few years.
WE DON’T WANT ANOTHER HOUSE PRICE BUBBLE
For three years we’ve been warning that there are only two ways to get the economy growing again. We could either:
1) Allow banks to create more money when they make loans. This would push up house prices and leave families with even more debt.
2) Get the Bank of England to create new money instead. This new money would be granted to the government, who would spend it into the real economy where it can create jobs and support businesses.
Sadly the government’s taken the first option. Even though the crisis was caused by banks creating too much money and debt, the government think the answer is to get them to do it all again. They’ve put in policies to encourage banks to create more money for mortgages, but no policies to increase how many houses are built.
That means that house prices will get even further out of reach for ordinary people, while banks get to collect ever greater amounts of interest on money that they created. Even estate agents are now warning of a housing bubble!
If the problem was that people had too much debt in the first place, can the solution really be for people to borrow even more? No. Even Lord Adair Turner, the former head of the Financial Services Authority, has warned that we got into this mess by allowing banks to create too much money, and we should worry if the ‘way out’ is to let them create even more. More personal borrowing and more household debt could be laying the foundation for the next financial crisis.
THE NEXT STEP IN DEMOCRATISING MONEY
But there is another way. If the Bank of England created some money that could be given to the government to be spent into the real economy (rather than the financial sector), it would help to create jobs and support businesses (instead of blowing up another house price bubble).
This is what we’ll be campaigning for over the next few months, and your help would make a huge difference:
Click here to become one of the 100 extra funders who support Positive Money.
New money created by the Bank of England wouldn’t come with debt attached. This means it would actually offset the enormous mountain of existing household debt, and allow people to start paying down their own debts.
Some of the money could be spent on building new houses, which would make housing more affordable rather than fuelling another property bubble. Some of the money could be spent on dealing with the green infrastructure that we need to deal with the energy crisis. Whatever the money is used for, it will have a better effect on the economy than simply pumping more money into a house price bubble.
And as well as helping us avoid another financial crisis, getting some debt-free money into the real economy would set a precedent for a different way of creating money. We can then point to the damage that is done when banks are allowed to create money, versus the alternative when money is created in the public interest.
WHAT WE NEED TO DO
Once the proposal is out there, we need to spend the next few months publicising it and building support for a different approach. That’s where we need your help: we are looking for 100 people to cover the costs of this work, by setting up a regular donation:
HOW YOUR SUPPORT WILL HELP
Your support will allow us to spend time showing journalists, economists and business people why we need a different approach to money creation to avoid a future financial crisis, and to stop house prices becoming permanently out of reach.
As well as releasing the paper, we’ll be producing a new video that explains why we’re currently sleepwalking into a future financial crisis. We’ll be running workshops to help other campaign organisations understand the problems with allowing banks to create money. We’ll be having one-to-one meetings with influential economists and policy makers who can change the terms of debate around money creation. And we’ll be contacting journalists to make sure they understand why a recovery based on rising personal debt isn’t sustainable.
Sign up now to support our work, and choose how much you want to give, by Paypal or Direct Debit.
DONATE £10 OR MORE TO GET A COPY OF MODERNISING MONEY
Donate £10 a month or more, and to say thanks, we’ll send you a copy ofModernising Money(normally £15). If you’ve already got the book, just email us and we can send you Where Does Money Come From? instead, or you can spread the word by passing the book on to a friend who might be interested.
Thank you so much for your support,
Fran, Ben, Andrew, Mira and rest of the team.
PS. Since we launched in 2010, around half of all our funding has come from around 500 individuals who donate a small amount each month. If you’re able to join them it makes a massive difference to what we can do.
PPS. In case you’re still thinking about it, here are 3 reasons to donate to Positive Money:
1. We’re tackling the root cause of many social and economic problems.
Some not-for-profits deal with the symptoms of big problems. However, we know that there are very real challenges facing the world over the next few decades, including likely crises in climate, energy, and natural resources. We know that we can’t just change things superficially. We need to change the whole system. The money system is no longer fit for purpose and it urgently needs to be reformed. With a money system where money is created in the public interest, rather than by banks chasing short term profits, we can start tackling the bigger challenges facing us.
2. We’re having an impact
Three years ago we were just starting out. Now we get mentioned in the mainstream press, have been featured on BBC Radio, and the books we’ve researched and published are being used in universities. Three years ago almost no-one was talking about problems with the money creation. Now it’s discussed in the Financial Times, on BBC comedy shows and even in seminars run by the Federal Reserve or IMF. There’s more work to do of course, and your support will allow us to do it:
Sign up now to support our work, and choose how much you want to give.
3. We’re a community of 12,000 ordinary people
Positive Money is supported by over 12,000 people who know that something fundamental needs to change in our monetary system.
- “I hope that Positive Money and the team led by Ben Dyson soon take their place in history for changing this damaging debt based system.” (Shirley)
- “In my opinion, there is no organisation on the face of the earth doing anything more important right now.Thank you very much for your efforts, you’re worth a great deal more than the donations you’re currently receiving.” (Tim)
- “Can I just take this opportunity to say thanks very much to you all for the great source of information your website is. I also greatly enjoyed reading your book. It’s been an eye opening experience and please, keep up the excellent work.” (Simon)
Please set up your regular donation here.