It’s been an exciting and slightly exhausting 12 months for Positive Money. I just want to review some of things that have happened over the last year and say thank you to everyone who has been involved in one way or another.
We started the year rushing to finish the book Modernising Money: Why Our Monetary System is Broken and how we fix it. The book is now the most detailed book ever written on taking the power to create money away from banks and returning it to democratic control. We’ve sold around 2,000 copies to date and given another couple of hundred to influential people who are thinking about the problems with our economic system.
On Saturday 26th January, more than 280 people joined us in London for the Positive Money 2013 conference – the biggest event on monetary reform that had been held to date. Between the various workshops and updates on the campaign, one highlight was this talk by former Reuters journalists on why the media don’t understand money.
I opened that conference by talking about the growing discussion of the issue of money creation in the press and policy debates. Less than three weeks later, the former chairman of the UK’s Financial Services Authority, gave a landmark speech where he proposed the idea that fuelling the economic recovery through debt-based money created by banks might not be a good idea – especially after a crisis caused by exactly that! Lord Adair Turner suggested that rather than relying on more bank-created money, or using QE to flood financial markets (benefiting the wealthiest more but doing little for the real economy), it would be better for the Bank of England to create money, grant it to the government, and for the government to spend this money into the economy.
This idea – that the state should be allowed to spend money into the real economy rather than relying on banks to put it into the financial markets and property bubbles – is considered fairly radical amongst mainstream economists. But having someone who was at the centre of the financial system presenting these ideas has opened up the discussion and made these ideas much less of a ‘taboo’.
The door for the creation of money in the public interest is open…
In March 2013 the UK government released a review of the “Monetary Policy Framework”that governs the Bank of England’s remit and targets. The exciting detail about this was that the review recognised that the old mechanisms of managing money creation (e.g. lowering interest rates to encourage people to go further into debt) were no longer working effectively, and that something else was needed. The review permitted the Bank of England to use “unconventional monetary policy instruments” – meaning that the door is open for the creation of money in the public interest, so long as it can be shown to be an effective way of meeting the Bank of England’s remit.
The proposal in Modernising Money suggests that banks should be prevented from creating money, and that power returned exclusively to the state. But we realised that no government of an economy the size of the UK is going to make such a change overnight. So we developed the ideas put forward by Lord Turner, along with some of the research we’d done for Modernising Money, to put forward a new proposal under the title Sovereign Money: Paving the Way for a Sustainable Recovery. This paper, which we released in early November, explains that the UK’s current economic recovery is fuelled by money creation by banks and by rising personal debt. We explained that this will ultimately lead to crisis. And we proposed an alternative way of fuelling the economy that doesn’t rely on rising debt, which is to have the state create and spend money into the real economy. This proposal allows the government to take a first step towards reclaiming the power to create money, in the public interest, and can be done without requiring the massive lobbying battle that will be required to fully stop banks creating money.
In August my talk for BBC Radio 4’s Four Thought programme was re-broadcast as part of their “Best of Four Thought” episode, going out on the second most popular radio station in the UK.
It’s been a busy and productive year and we’re grateful to everyone who has come to the conference, attended a local event, shared or talked about our videos and website, or helped to fund the work we’re doing to change the monetary system. If you’d like to get more involved in the coming year, check out our upcoming conference, join a local group or become a regular donor to help us keep going.