No Mr Cable we don't need your elitist cuts

Tony Gosling tony at
Fri Jun 25 00:45:32 BST 2010

This is a reform that could prevent a future 
financial crisis, clear the national debt, and restart the economy.
It cures the sickness in our economy and 
financial system by tackling the root cause of 
the problem, rather than just the symptoms.
It would make the 'inevitable' cuts in public 
services completely unnecessary, reduce the tax 
burden by up to 30% and allow us to clear the 
national debt. It takes control of the UK's money 
supply out of the hands of the commercial banking 
sector and restores it to the state, where it can 
be used to benefit the economy, rather than 
providing a £200 billion annual subsidy to the banking sector.

How It Works

Addressing the Root of the Problem

To find a solution, you have to start by looking 
at the root of the problem. In this case the root 
of the problem is the creation of new money (as 
debt or ‘credit’) every time a loan is made. As 
explained in the section before, this happens 
thanks to the fact that we permit banks to lend 
92% of all the money that they receive from 
depositors, whether the depositors actually wish 
for their money to be lent, or would have 
preferred for the money to be kept safe and away 
from risk. When this money is lent and returns to 
the banking system via other depositors, it is 
recorded as new money, and can then be used to fund yet more loans.

Preventing Banks Creating Money

Our first step then is to prevent banks from 
creating money each time they issue a loan. This 
step is actually remarkably simple – we just set 
a ‘universal rule’ that banks can only credit 
(put money into) an account if they 
simultaneously debit (take money out of) another 
account by the same amount. As is explained in 
this guide, this prevents money being created (or 
destroyed) within the banking system.

Creating a Public Source of New Money

However, up to now the banking sector has been 
increasing the money supply by an average of 8% 
each year. While this growth rate is almost 
certainly too high, a growing economy does still 
require an injection of new money each year, in 
the same way that a car requires the regular 
addition of oil to keep everything running smoothly.

Consequently, our second step is to give the Bank 
of England the power and responsibility to manage 
the money supply and create new money as and when 
the economy is judged to need it. We implement 
strict measures to separate control of the money 
supply from any political influence, and further 
strict measures that significantly reduce the 
risk of inflation, compared to the existing system.

With new money now being created debt-free by the 
state, we need to ensure that this money is 
distributed by the most economically efficient 
and socially beneficial method possible. We 
recommend that the money be given to the 
government as a non-repayable grant, and used to 
reduce the overall tax burden, phase out the 
national debt and invest in public 
infrastructure. Phasing out the national debt has 
its own complications, and we have made recommendations to deal with these.

+44 (0)7786 952037
"Capitalism is institutionalised bribery."

"The maintenance of secrets acts like a psychic 
poison which alienates the possessor from the community" Carl Jung
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