By Simon Dixon “Author Of ‘Bank To The Future: P… Modernising Money is long overdue and needs to be compulsory reading for economics students around the world. How this important issue has been missed by mainstream economists and has been allowed to get this far is beyond me.
I for one cannot wait to see where this book can go and I look forward to seeing a banking world that follows these reforms.
Well done and a great achievement to have written this book.
Compulsory reading for those interested in solving the mess we call a banking crisis today.
[line] For responsible citizenship, 1 April 2013
By Michael M A thought-provoking book that requires a certain intellectual effort to follow but well worth that effort. This should be standard reading for anyone who considers himself or herself to be a responsible citizen.
[line] The solution that we are all looking for, 3 Mar 2013
By Simon Thorpe How many times do you hear that the government is massively in debt, and that there are only two options – either (a) increase taxes, or (b) cut government spending?This story, which is repeated endlessly by policitians, economists and journalists is a fiction. And Andrew Jackson and Ben Dyson’s excellent book explains why. The real problem is that governments have handed the power to create the nation’s money supply to the commercial banking system. And those banks are responsible for creating 97% of the money in the UK system. They create that money “out of thin air” when they make loans. And then they charge everyone – individuals, businesses and governments – interest on those loans.My own calculations back up the claims made both in Modernising Money, and in the Positive Money groups’s previous book “Where does money come from?” (also highly recommended).[showmore]Since 1995, the UK goverment has paid over £495 billion in interest charges on government debt. That’s a substantial proportion of the £1.1 trillion in public sector debt. And these payments have been going on for decades. Indeed for most of the 1960s and 1970s, the government was paying around 3.5% of GDP to the banks in the form of interest charges, reaching a peak of over 4.5% in 1981-2.What Jackson and Dyson demonstrate is that those payments were totally unnecessary, because there is absolutely no reason why the nation’s money supply needs to be created as interest bearing debt by commercial banks. The Bank of England could, and should, be creating the money supply. And it should be providing that money supply to power the economy free of interest charges.The usual argument trotted out by the defenders of the Banks right to create the money supply is that if governments were to be given control of the money supply, they would be tempted to increase the money supply too fast, and the result would be hyperinflation – we would end up in Zimbabwe, or the Weimer Republic.But Jackson and Dyson calmly demolish these arguments. In an appendix, they demonstrate that the Zimbabwe/Weimar Republic arguments are phoney. They also demonstrate that, left to the commercial banks, money creation is done in a way that follows only one objective – maximising bank profits. And that is why a vast amount of the newly created money has gone to fuel house price inflation – with the result that working families are now priced out of the housing market.But the real killer is that they don’t propose to hand over the keys of the money creation mechanism to the government. No, they propose that money creation for the economy should be the responsibility of an independent, yet publicly accountable “Money Creation Committee” whose job would be to regulate the supply of money in the economy. I find this argument absolutely convincing, and it completely avoids all the usual counterarguments to monetary reform.Putting the money creation process in the hands of people who have nothing to gain from excessive money creation would end the boom and bust cycles that have plagued economies since the dawn of banking. It’s a point that was also demonstrated in a recent publication by two IMF economists who used state of the art economic modelling to show that taking the money creation power away from commercial banks and using what is known as Full-Reserve Banking would be extremely beneficial (“The Chicago Plan Revisited”).To make one last point, consider the following. Since 1983, the UK banking system has been increasing the total money supply (measured by M4) by an average of 10% every year. Even if you take into account inflation, you still get a net increase of 7% per year. But since the financial crisis in 2008-2009, the banks have effectively been removing around 7-8% of the money in the economy every year. That’s because everyone has been desperately trying to pay back their debts. And when they pay back the money they owe to banks, that money actually disappears. That is why the economy is in crisis.The commercial banks not only have the power to create money out of thin air when they create loans, they have the power to destroy in when those loans are paid off. Indeed, if we all tightened out belts, eliminated all our debts, and the government slashed all public spending to pay back all the “money” that it has borrowed from the banking system, there would be no “money” left.That is why the system needs to be fixed. The money supply should be in the hands of a publicly accountable central authority, and it should be injected into the economy debt-free. That is what Jackson and Dyson are proposing. And they are absolutely right.
Everyone, but everyone, should read this book. If you hear a politician, economist or jouralist saying that tax rises and cuts in public spending are the only options, you can tell them that they are completely wrong.
[line] Should be required reading for economists, politicians, journalists and activists, 28 Feb 2013
By loulouB This book should be required reading for anyone responsible for managing our economy (Treasury and Bank of England Officials, politicians, MPs), ‘opinion formers’ commenting on our economy (journalists), independent financial advisors and anyone teaching economics, finance or political science to anyone at any level. It should also be read by anyone working in the banking industry so that they realise that the sleeping masses – may not sleep forever. The book addresses complex issues (where money comes from, who controls the money supply and who wins and loses in the current system)intelligently. The writing is as simple as it is possible for it to be, and makes excellent use of clear examples. It is well referenced and presents an objective analysis of publically available information, and resists the temptation to make accusations of mismanagement (or worse. [showmore]There are clear proposals for how the current system might be changed in order to ensure that the management of the money supply is undertaken in the public interest – and not in the interests of a very small group of commercial banks. Read it, move your money, engage with the issues and exercise your democratic responsibilities.[/showmore]