Downing Street launches the logo for National Citizen Service

Oh dear, some bright spark appears to have rather conflated Constructivism as a learning theory with Constructivism, the art movement.

Is it really possible that a Tory led government is seeking to flavour a flagship policy with the art of the Revolution as conceived by The Commissariat of Enlightenment, the Bolshevik government's cultural and educational ministry?

However Constructivism did have a great deal of effect on developments in the art of the Weimar Republic. And as the Weimar Republic is chiefly associated in our minds with hyperinflation, the choice might prove eerily prescient.

Cross posted from Charlie's blog.

Egypt

Uninstalling dictator in progress ... ███████████████████████████░ ...99.9% complete

They’re Making Monkeys of Us

My wife tells a story from her younger days, of a man armed with a sawn-off shot gun, dressed in a gorilla suit, walking into the pub and demanding the contents of the till. While the regulars watched with some intrigue, the landlady simply shrugged her shoulders opened the cash draw, pulled out a worth-while wad of the folding stuff and handed it to the man saying “There you go Trevor, but what’s with the gorilla outfit?”

I was reminded today of another classic gorilla moment, when I heard that the top four banks in this country “were livid” at the news that George Osborne has imposed a further levy on them of £850 million, taking their collective charges to £2.5 billion for the year.

As the day unfolded we heard various comments from our political leaders. Outstanding amongst them was firstly Tim Farron, President of the Lib Dems, who told listeners of Victoria Derbyshire’s show on Radio 5 Live, that it was only right that the banks be made to pay for “causing the deficit” and then George Osborne himself saying that the banks had to “pay their fair share towards the deficit”.

The problem with having a government made up of young career politicians half of whom have studied PPE at uni, is that they have all been taught from the same old texts, they have all sat at the feet of the same old indoctrinated economists spouting the same old accepted wisdom that has gone before. But let’s get one thing clear. What ever their dusty text books and dry old lecturers may have told them at university, it is inexcusable for senior political figures in this country to give the impression that the banks have anything to do with the setting of this country’s budget.

I will say it again! The Deficit is the difference between what the government spends each year and what it receives through taxation. The Deficit, is the government not living within its means.

The National Debt increases each year by the amount of the Deficit – It’s Not Rocket Science.

All three main parties went into the general election last year, saying they would halve the deficit over the life time of the next parliament, from around £150bn per year to about £100bn per year at the end of four years (clearly maths is not a big part of the politics, philosophy and economics degree curriculum) a reduction of £11bn per year (and interest). George Osborne and David Cameron then decided to go at it like a bull at a gate and get it down by £83bn over four years. Yet government borrowing for November was £23.9bn which would indicate the deficit for this year being more like £250bn. Austerity isn’t going to work. It isn’t the answer.

It’s time to throw away the dusty old text books, and let the old duffers at Cambridge out to pasture. We need to change the system so that is suits us, the people, not the bankers.

The answer is to change the monetary policy of the country, so that instead of the banks creating the nations money for the government to borrow, the government creates the money, and if the banks want to borrow some to lend to us, then they can pay interest to the government for the privilege. The government shouldn’t need to lay off thousands of people from their jobs, and then go cap in hand to the banks to borrow the money to pay them a bit of job seekers twice a month.

David Cameron tells us we are paying £120million a day in interest on national borrowing. The banks create the money that they lend to the government (and us for that matter) out of thin air, by way of an accounting fraud on a computer screen, and lend it to us at 3% interest.

Interest payments for the government this year are £43.8bn, but when George says he’s going to claw back £2.5bn by way of a levy, the banks all scream like a troop of baboons.

The people in the gorilla suits on this occasion are the bankers. The government is trying to give the impression of having tamed them, and like Gerald in the “Not The Nine O’clock News” sketch when the interviewer asks were they wild when they were caught? They have replied “Wild? We were livid! But it’s the bankers who are laughing, because dressed in their gorilla suits, we can’t see the grins on their faces.

They’re getting away with it again.

In truth the bankers are more like Psycho Trevor from the pub. We all know who it is that’s robbing us, but we just let them do it anyway.

EMA

It’s exasperating, if not particularly surprising, that the decision to scrap the EMA (Education Maintenance Allowance) descended into petty jostling for electoral advantage against all common sense.

Labour made an attempt (that they no doubt hope will appear as a principled and progressive stand) to save an initiative that has been much touted as helping young people from low household income families to stay on at school or college after 16.

And principled it might have been, if only the circumstances were only so. Campaigners appear to be blithely unaware that the EMA has also been a pretty unsavoury conduit for shovelling tax payers’ money into the pockets of the spoiled offspring of the idle rich. By rights the Labour Party should have been baying for its root and branch reform.

Surely not? Isn't it a lovely progressive incentive to keep kids at school?

Well it would be if it was as it seemed. And it is great for families that genuinely need it. The rub lies in the way that money was awarded to the undeserving rich according to the champagne socialist way under which the scheme chose to determine ‘household income’.

To qualify for EMA it is only the income of the household in which the young person lives most of the time that counts. So if Mum and Dad have separated and the young person lives mostly with Mum, it is only Mum’s household income that counts (or vice versa obviously). So Dad could be a hedge fund manager sitting on squillions of ill-gotten gains, and yet his wealth is ignored for the purposes of the EMA. Not only that but when calculating Mum’s household income “maintenance received from a former partner” is specifically excluded.

So we have a situation whereby kids from the wealthiest and most privileged of backgrounds are in receipt of the full EMA even though their actual household income might be tens of thousands a month - so long as the householder doesn't work! The scheme saw affluent – even filthy rich - families living in mansions claiming the full £30 a week.

It’s plainly wrong. And surely anyone can see that reform was required.

But Labour won't say so, since that would be to admit that it was their cock up. The Conservatives aren’t pointing this out, because there aren’t many Tory votes in reminding the comfortable that they have been milking the system of money they didn’t actually need. The Lib Dems are silent, having been thrown a bone called 'enhanced discretionary learner support' which will never emerge since anything vaguely helpful would have already been marshalled in support of the coalition policy to scrap EMA at the time.

So as I say, exasperating but unsurprising. This is perhaps the right time and a good reason to be Apolitical.

Having it Both Ways

There was a lot being made yesterday of the latest inflation figures. 3.7%!!! Mervin King is really having to earn his bacon these days, yet another letter to the Chancellor.

So the Governor of the Bank of England (that’s Mervin from above) writes to George Osborne, top man at the Treasury, to explain why the cost of living has gone up by more than their agreed target of 2%. But will he mention in his letter to George, the monster that is lurking in the shadows which is the deflation being caused to the pound in our pockets by our national debt? (And I’m not talking here about the value of the pound against other currencies on the money markets.)

Inflation as we all know, is the percentage increase, year on year, in the cost of living. Simply put, if you go to Tesco this weekend (other reputable supermarkets are available) and buy your usual weekly shop, and that half filled shopping trolley cost you £100. Then this months inflation figure would suggest that when you go to Tesco one year from now, that exact same weekly shop will cost you £103.70, the year after that it will be £107.54, the year after £111.52 and so on, because don’t forget this figure is compounded. That element of inflation, I know is obvious to us all, but the bit which is not so obvious is the effect the cost of the national debt is now having.

Let’s not consider the cost of our own shopping for the next bit, but instead let’s consider the shopping trolley of a public sector worker. I’m going to choose for our example, Emma! A lovely hard working, married mother of three teenage boys, who is a ward sister, working in the special care baby unit of a large regional NHS hospital somewhere in the south of England, (lets say Basingstoke because I’ve heard good things about them in the past), someone that all of us can’t help but to love. And let’s assume for this example that such a responsible position as Emma’s, would attract the kind of salary that George at the Treasury considers to be average, £26,000 per annum. That is £100 a day, five days a week, fifty two weeks of the year. (And don’t all you SCBU ward sisters go ringing in to tell me you are on nothing like that much, and that you can’t feed three teenage boys for a £100 a week - I’m just trying to make the maths easy for us all to follow.)

Actually, while we’re on the subject of making the maths easy, and having just blown the lid off the average wage calculation, have you any idea how much effort Tony Blair’s government spent working out at what level to set the minimum wage at its inception? 

Answer:
£10,000 divided by 52 weeks, divided by 37 hour/week = £ 5.20
Genius!

You really do have to know your onions, to make it as a Permanent Secretary of State at the Treasury. Those six figure salaries, CBE’s, enormous pensions and eventual promotion to the house of Lords, don’t come easy.

Any way, back to Emma’s salary! For the first time ever, a new factor has crept into the calculations surrounding the loss of value of the pound in our pockets. For the first time in our history the national debt is equal to, or greater than the governments annual spend. That means that for every pound the government spends this year there is a pound out there that we as a nation are paying interest on.

Interest on the national debt is currently running at about 3%. So if George Osborn borrows £100 today to pay Emma her wages, a year from now he will have to pay back £103 (the hundred he’s borrowed and the interest on it) before he can borrow another hundred to pay Emma again (and it will only be a hundred, since Georges’ mate Dave announced his pay freeze for public sector workers). Put another way Emma’s £100 next year will only be worth £97, but the shopping at Tesco will still have gone up to £103.70, in short, this time next year Emma will be worse off to the tune of £6.70 per hundred, not the £3.70 that Merv is writing home about today.

But the reality is far worse because George is not borrowing the £100 to pay Emma for just the one year, he has had to borrow it for ten years, and next year he will have to borrow another hundred to do it all again. Which means that the year after next he will have to pay £6 interest to have Emma in work for one day and Emma’s shopping will be £107.54, Emma’s daily wage is only going to be worth £86.46, poor Emma.

Why then if we have this monster in our sights, as we clearly do, isn’t anybody taking the shot?

Student Finance

We all know that student finance is up for a vote in the Commons tomorrow. But notwithstanding the Clegg grizzling on Radio 5Live this morning that people don't understand the proposals, it's damnably difficult to find the actual motion as proposed and genuinely uninterpreted by spin merchants and journalists, together with draft instrument and briefing notes. It's very fluffily interpreted by all sorts but it's very hard to find the actual nub of it.

So here it is in all it's baldness...

Rent Boys

Much has been said since Messer’s Osborn and Cameron announced their changes to the rules surrounding social housing rents. Their proposal is to set the rents for new tenants, at not less than 20% below the rents paid by tenants in privately owned accommodation. What is the thinking behind this new initiative?

Cameron is pandering to his money bag friends lurking in the shadows of power!

Private rentals are currently increasing at a rate of 5% per year according to figures from the institution of surveyors (estate agents to you and me). George and Dave would have us believe that this new initiative will provide much needed extra funding for the building of new social housing.

Student protester has a point...

Banking Reform Debate

Notwithstanding the talking out of the Financial Services (Regulation of Deposits and Lending) Bill on Friday as predicted here, it appears that a new 3 hour debate on banking reform has been scheduled for Monday, 29th November 2010.

Michael Meacher MP (Labour, Oldham West & Royton) has prompted the debate with this motion:

"That this House, concerned that no action has so far been taken which would prevent a recurrence of the financial crash, calls upon the Government to establish a clearing house for approval of all financial derivatives and to set in place alternative mechanisms to remove the implicit taxpayer guarantee, other than to purely deposit-taking banks, in the event of any future banking collapse."

We understand that the two Tory sponsors of the above Bill, Douglas Carswell (Conservative, Harwich & Clacton) and Steve Baker (Conservative, Wycombe), will be contributing to the debate.

How deliciously apolitical of them all!

Posted by C for Apolitical Dave.

Irish Banking Crisis

Three days of wall to wall coverage of Ireland’s debt crisis, and still the banks hold onto power.

On Monday morning I heard a contributor on the BBC’s 5Live, speaking of the events over the weekend, in which he reminded us that this whole global financial crisis started with American Sub-prime Mortgages. Where he claimed, “mortgages where sold to people who couldn’t really afford them”. Convenient as it is to blame the little man, this isn’t entirely true.

Maybe it’s a bit late in the day to be going on about this particular subject, but I’m not convinced that everyone gets it yet. The underlying flaw of the American Sub-prime Market was greed on the part of the bankers. Let’s look at the whole process.

The Current Irish Banking Crisis explained

A good story has just landed in the apolitical inbox....

Young Paddy bought a donkey from a farmer for £100. The farmer agreed to deliver the donkey the next day.

The next day he drove up and said, 'Sorry son, but I have some bad news. The donkey's died.'

Paddy replied, 'Well then just give me my money back.'

The farmer said, 'Can't do that. I've already spent it.'

Paddy said, 'OK, then, just bring me the dead donkey.'

The farmer asked, 'What are you going to do with him?'

Paddy said, 'I'm going to raffle him off.'

The farmer said, 'You can't raffle a dead donkey!'

Paddy said, 'Sure I can. Watch me. I just won't tell anybody he's dead.'

A month later, the farmer met up with Paddy and asked, 'What happened with that dead donkey?'

Paddy said, 'I raffled him off. I sold 500 tickets at £2 each and made a profit of £898'

The farmer said, 'Didn't anyone complain?'

Paddy said, 'Just the guy who won. So I gave him his £2 back.'

Paddy now works for the AIB.

Financial Services (Regulation of Deposits and Lending) Bill 2010-11

Surprise, surprise! No time today for the 2nd reading of the Financial Services (Regulation of Deposits and Lending) Bill 2010-11. Don't say I didn't tell you!

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.

Radio 4 programme 31st October 2010

In a week when I have had a letter published in the Newbury Weekly News expressing my concern that the press is doing nothing to inform the people of this country about the issues surrounding monetary reform, the BBC has broadcast a very interesting program about Quantitative Easing.

The program was on Radio 4 on Sunday 31 October at 02:30 Hrs GMT, half an hour after the clocks had gone back, so in effect half past three in real money. I am sure that the Beeb will consider its duty to the listening public to be fulfilled, and that it is informing us all of the issues of the day, but who in their right mind is going to be listening to radio 4 at that time of the night? (Obviously I was, but you can draw your own conclusions from that.)

The issuing of billions of “printed” pounds by the Treasury is no small matter, and one wonders whether such a topic shouldn’t have attracted a more prominent slot in the radio schedule. Whose agenda is the BCC working towards?

Repsonse to Comprehensive Spending Review

I am appalled by the austerity measures announced by George Osborne, as reported this week. And even more specifically apalled by the reaction of our, so called 'leaders', locally, to those measures.

It is clear that after all I said to them in the election earlier this year, they have done nothing to make themselves aware of the workings of the monetary system that operates in this country.

The cuts announced in the spending review will do nothing to reduce the national debt, and they don’t come close to achieving the abolition of the deficit by 2015, as has been reported.

Money as Debt

Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is in 5 YouTube Sections.

Financial Crisis and Economic Recession Lecture

London School of Economics Lecture on Fractional Reserve Banking

Date: Thursday 28 October 2010
Time: 6.30-8pm
Venue: Sheikh Zayed Theatre, New Academic Building
Speaker: Professor Jesús Huerta de Soto


A growing number of people are realising that our current money system, which gives commercial banks a monopoly on the supply of money to the economy and throws much of the population into unnecessary debt, is defective and urgently needs reforming. This was the main plank of my General Election Campaign here in Newbury.

On Thursday 28th October the following lecture is being held at the typically mainstream London School of Economics, and is worth attending if you're in the area. It's free.

Who makes the money?

The video below explains in under five minutes exactly where money comes from, who creates it, and why that’s a problem.

Election Literature 1

Three years ago I was putting leaflets like this one through your doors,  asking you to vote  for me in the local council elections.

At that time I was telling you about the dreadful waste of Section 106* money within West Berkshire District Council. Money that was intended to make our lives better,  was being used to    balance the councils books.

Two years later, following a freedom of information request by the Liberals in opposition, the Newbury Weekly News brought the story to the wider public's attention.

 Letters were written, the Conservatives denied  any wrong doing. It was the big story for weeks, until the Liberals realised that at the time of my revelation, they had been the ones in control of the council.The Conservatives were simply carrying on a practice that they had implemented years before. They are both as bad as each other.
(* The money paid to the council by developers to get planning applications approved)

Now it’s election time again, only this time it’s the big one “Parliament”.  But is anyone telling you the truth now? Will they have the guts to tell you what is really happening to the country?

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