The Solution to the global financial crisis – A proposal for Monetary Reform
Over the years I have been looking at many proposals for monetary reform. I have met many monetary reformers and of those the most influential in my work have been James Robertson and Ben Dyson. From the work of James Robertson and spending many hours with Ben Dyson I have copied a proposal below which I fully back. The proposal is taken from Ben Dyson’s website www.bendyson.com.
The following is a proposal for reform that can be implement in the UK (or US, with some adaptations). The purpose of each part of the reform is outlined below.
The reform is based on the excellent work done by James Robertson and Joseph Huber in their book Creating New Money (follow the link to download the book for free). I have extended this work as much as possible to provide a blueprint that the government can use to pass an Act of Parliament. I have also outlined some safeguards and ‘transition mechanisms’ that can be used to ensure that the transition from the existing (inherently unstable) system to the new, stable system is as smooth as possible.
I am ‘filling in the details’ as quickly as I can with limited time and resources (and the invaluable help of Jamie Walton of the American Monetary Institute and Mike Black). However, once the UK government realises that this reform is a much cheaper, more logical, and highly beneficial solution than anything that they have thought of to date, it would make sense for them to devote a team from the Treasury to further research.
Part A: Restoring The Exclusive Right To Create Money Back To The State
Until commercial banks are prevented from creating money, financial stability is impossible. Part A outlines the changes to the banking system that will need to be made in order to stop the creation of money by the commercial banking sector. It clarifies how banks will make loans (the process which is at the root of the current problems) and defines simple requirements that will make the banking sector infinitely more stable than it currently is.
Read Part A: Restoring The Exclusive Right To Create Money Back To The State
Part B: Mechanisms For Creating New Money
Money should be created for the benefit of the public – not for the benefit of privately owned companies. This is not a left-wing idea – just simple common sense. Part 2 explains how money will be created under the reformed system, by the Bank of England according to decisions made by the Monetary Policy Committee. It also ensures that politicians will have no influence over how much money is created, to prevent pre-election manipulation of the economy. It puts in safeguards that make inflation less likely than under the current system.
Read Part B: Mechanisms For Creating New Money
Part C: The Transition Process
Under the current system, commercial banks have effectively had the right to ‘print’ money* for the last 500 years. Allowing them to keep the proceeds of this money creation would be like the police, upon raiding a counterfeiting gang, confiscating the printing press but leaving behind all the money that they had forged. It would concentrate massive economic power in the hands of one small sector of society.
Part 3 outlines how we prevent banks receiving this windfall profit (of around £1.8 trillion over 30 years) and put the money that they created back into the use of the public. There is no vindictiveness in this reform - commercial banks will not be made to suffer, and they will still be able to earn interest on all the loans that they made before the date of reform.They will however be denied a massive windfall profit (which would otherwise be at the expense of the nation).
Economists may argue that this section will negatively impact on the banks’ future profits. This argument is no different to arguing that police raids negatively impact the future profits of counterfeiting gangs.
Read Part C: The Transition Process
* Money being numbers in an accounting system – not actual notes.Part D: Mechanisms For Reducing Debt & Increasing Wealth
This part of the reform does allow the debt burden of the public to be ‘unwound’ and reduced – something which is nigh-on impossible under the current system. It also allows government debt to be gradually extinguished, freeing up £32-70 billion per annum to be spent on public services or tax reductions.
Read Part D: Mechanisms For Reducing Debt & Increasing Wealth
