Time for Monopoly Money

The last few weeks have been a living nightmare! I am becoming over whelmed by a growing sense of despair. The banks are going to get away with it!

The Hayek Lecture at the LSE, where Professor Huerta de Soto shamelessly promoted his books, Socialism, Economic Calculation and Entrepreneurship and Money, Bank Credit, and Economic Cyclesbut told us little we didn’t already know.(Although he did have the good grace to acknowledge to the audience that there was nothing stopping us as a nation from paying off our debts simply by handing back the money we owe, once we had pulled our fingers out and printed it.) Lecture transcript.

Then last week the Channel 4 documentary “Britain’s Trillion Pound Horror Story” about the monstrous size of the national debt, in which I counted four previous Chancellors, none of whom said anything about who has the power to create money in this country. Indeed Geoffrey Howe’s only worthwhile contribution was to claim to have read Adam Fergusson’s book When Money Dies: The Nightmare of the Weimar Hyper-Inflation.  An hour and a half of prime time television which wasted 45 minutes looking at the philanthropic building works of 19^th century industrialists in the north east of England. The presenter asked us to marvel at what had been achieved when the cost of the public sector only accounted for around 15% of the national economy. One wonders if the “1947 Town and Country Planning Act” might have been a better choice of subject for this program.

Not once in the whole 90 minutes was there mention of the evil work of the banks, and their alchemy of the last hundred years. Indeed the presenter suggested that the tiny amount the banks have cost us over the last two years is chicken feed by comparison to the National Debt. 

Then over the weekend, pages and pages of reports in the papers about the failure at the G20, to achieve any consensus on currency exchange. Claims that the Chinese are the bad guys for protecting their currency, but without explaining that they can achieve that protection by the state keeping control of the creation of its own money. A monopoly on money!

Ireland is drowning in debt but its Ministers refuse to accept they are in difficulty, assuring the world that left to their own devices they will learn to swim any day now, ignoring the euro chained around their feet, pulling them down. 

This Friday (19^th November 2010) sees the second reading in the House of Commons of Douglas Carswell and Steve Baker’s Financial Services (Regulation of Deposits and Lending) Bill. This private members bill is definitely a step in the right direction. It is right to seek to get rid of the iniquity that is fractional reserve banking. This Bill proposes that credit extended by banks is 100% backed by savings and it would prohibit the lending on of demand deposits without the permission of the account holder. It is almost unbelievable that this is not the case and that anyone should seek to block passage of such a Bill. But no doubt the party whips, serving the agenda of the elite, will ensure that time runs out during the debate, and nothing will come of it.

But this Bill does not go any where near far enough. What we should be looking at are measures such as the proposed Bank of England Act, abolishing the Bank of England in its current form and replacing it with a National Bank of the United Kingdom.

The United Bank should operate both as the national central bank and the nations working bank. Those private banks that are now in national ownership (Northern Rock, Lloyds TSB, RBS) should be re branded as the National Bank for the day to day banking needs of the people, and the only deposits that the Government should then secure, are deposits held with the National Bank.