MONEY CREATION DEBATE IN PARLIAMENT

November 21, 2014

READ HOW MPs DISCUSS HOW GREEDY, DISHONEST, FRAUDULENT  AND DESTRUCTIVE THE BANKING INDUSTRY IS

 

MONEY CREATION DEBATE PARLIAMENT

COMMONS Thursday November 20th 2014

FROM HANSARD – Read the full debate from the link below:

http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm141120/debtext/141120-0001.htm#14112048000001

SOME EXTRACTS FROM THE DEBATE

HANSARD 20 Nov 2014 : Column 434

Backbench Business

Money Creation and Society

11.18 am

Steve Baker (Wycombe) (Con): I beg to move,

That this House has considered money creation and society.

The methods of money production in society today are profoundly corrupting in ways that would matter to everyone if they were clearly understood. The essence of this debate is: who should be allowed to create money, how and at whose risk?………

……One of the most memorable quotes about money and banking is usually attributed to Henry Ford:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did I believe there would be a revolution before tomorrow morning.”………..

How is it done? The process is so simple that the mind is repelled. It is this:

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”

I have been told many times that this is ridiculous, even by one employee who had previously worked for the Federal Deposit Insurance Corporation of the United States. The explanation is taken from the Bank of England article, “Money creation in the modern economy”, and it seems to me it is rather hard to dismiss……..

It is a criminal offence to counterfeit bank notes or coins, but a banking licence is formal permission from the Government to create equivalent money at interest…….

There is a wide range of perspectives on whether that is legitimate. The Spanish economist, Jesús Huerta de Soto explains in his book “Money, Bank Credit and Economic Cycles” that it is positively a fraud—a fraud that causes the business cycle. Positive Money, a British campaign group, is campaigning for the complete nationalisation of money production……..

We are in a debt crisis of historic proportions because for far too long profit-maximising banks have been lending money into existence as debt with too few effective restraints on their conduct and all the risks of doing so forced on the taxpayer by the power of the state. A blend of legal privilege, private interest and political necessity has created, over the centuries, a system that today lawfully promotes the excesses for which capitalism is so frequently condemned. It is undermining faith in the market economy on which we rely not merely for our prosperity, but for our lives………….

Even before quantitative easing began, we lived in an era of chronic monetary inflation, unprecedented in the industrial age. Between 1991 and 2009, the money supply increased fourfold. It tripled between 1997 and 2010, from £700 billion to £2.2 trillion, and that accelerated into the crisis. It is simply not possible to increase the money supply at such a rate without profound consequences, and they are the consequences that are with us today, but it goes back further. The House of Commons Library and the Office for National Statistics produced a paper tracing consumer price inflation back to 1750. It shows that there was a flat line until about the 20th century, when there was some inflation over the wars, but from 1971 onwards, the value of money collapsed. What had happened?…….

where did all the money that was created as debt go? The sectoral lending figures show that while some of it went into commercial property, and some into personal loans, credit cards and so on, the rise of lending into real productive businesses excluding the financial sector was relatively moderate. Overwhelmingly, the new debt went into mortgages and the financial sector…….

Money is used to buy houses, and we

20 Nov 2014 : Column 438

should not be at all surprised that an increased supply of money into house-buying will boost the price of those homes…………

My point is that if a great fountain of new money gushes up into the financial sector, we should not be surprised to find that the banking system is far wealthier than anyone else. We should not be surprised if financing and housing in London and the south-east are far wealthier than anywhere else. Indeed, I remember that when quantitative easing began, house prices started rising in Chiswick and Islington. Money is not neutral. It redistributes real income from later to earlier owners—that is, from the poor to the rich, on the whole…………

Once the Bank legitimises the idea of money creation and giving it to people in order to get the economy going, the question then arises: if you are going to create it and give it away, why not give it to other people? That then goes to the question: what is money? I think it is the basis of a moral existence, because in our lives we should be exchanging value for value. One problem with the current system is that we are not doing that; something is being created in vast quantities out of nothing and given away. The Bank explains that 40% of the assets that have been inflated are held by 5% of households, with 80% held by people over 45. It seems clear that QE—a policy of the state to intervene deeply in money—is a deliberate policy of increasing the wealth of people who are older and wealthier.

Douglas Carswell (Clacton) (UKIP): I congratulate the hon. Gentleman on bringing this important subject to the attention of the House. Does he agree that, far from shoring up free market capitalism, the candy floss credit system the state is presiding over replaces it with a system of crony corporatism that gives capitalism a bad name and undermines its very foundations?

Steve Baker: I am delighted to agree with my hon. Friend—he is that, despite the fact I will not be seeing Nigel later. We have ended up pretending that the banking system and the financial system is a free market when the truth is that it is the most hideous corporatist mess. What I want is a free market banking system, and I will come on to discuss that.

11.45 am

Mr Michael Meacher (Oldham West and Royton) (Lab):

It is unfortunate that it is so little understood by the public that money is created by the banks every time they make a loan. In effect, the banks have a virtual monopoly—about 97%—over domestic credit creation, so they determine how money is allocated across the economy. That has led to the vast majority of money being channelled into property markets and the financial sector. According to Bank of England figures for the decade to 2007, 31% of additional money created by bank lending went to mortgage lending, 20% to commercial property, and 32% to the financial sector, including to mergers and acquisitions and trading and financial markets. Those are extraordinary figures…

……the overwhelming majority of the money created inflates property prices, pushing up the cost of living.

In a nutshell, the banks have too much power and they have greatly abused it. First, they have been granted enormous privileges since they can create wealth simply by writing an accounting entry on a register. They decide who uses that wealth and for what purpose and they have used their power of credit creation hugely to favour property and consumption lending over business investment because the returns are higher and more secure. Thus the banks maximise their own interests but not the national interest.

Mr Jim Cunningham (Coventry South) (Lab): Given what my right hon. Friend has just said, is there not an argument, in this situation of unlimited credit from banks, for the Bank of England to intervene?

Mr Meacher: My hon. Friend anticipates the main line of my argument, so if he is patient I think I will be able to satisfy him. Crucially, only 8% of the money referred to went to businesses outside the financial sector, with a further 8% funding credit cards and personal loans….

…..The question at the heart of the debate is who should create the money? Would Parliament ever have voted to delegate power to create money to those same banks that caused the horrendous financial crisis that the world is still suffering? I think the answer is unambiguously no. The question that needs to be put is how we should achieve the switch from unbridled consumerism to a framework of productive investment capable of generating a successful and sustainable manufacturing and industrial base that can securely underpin UK living standards….

…Under the current system, around just 80 board members across the largest five banks make decisions that shape the entire UK economy, even though these individuals have no obligation or mandate to consider the needs of society or the economy as a whole, and are not accountable in any way to the public: it is for the maximisation of their own interests, not the national interest. Under sovereign money, the money creation committee would be highly transparent—we have discussed this already—and accountable to Parliament.

Mr MacNeil: I hear what the right hon. Gentleman says about money going into building, housing and mortgages, but is that not because the holders of money reckon that they can get a decent return from that sector? They would invest elsewhere if they thought that they could get a better return. One reason why the UK gets a better return from that area than, say, Germany is that we have no rent controls. As a result, money is more likely to go into property than into developing industry, which is more likely to happen in Germany.

Mr Meacher: 

…………………..The question at the heart of the debate is who should create the money? Would Parliament ever have voted to delegate power to create money to those same banks that caused the horrendous financial crisis that the world is still suffering? I think the answer is unambiguously no.

For all those reasons, the examination of the merits of a sovereign monetary system is now urgently needed, and I call on the Government to set up a commission on money and credit, with particular reference to the potential benefits of sovereign money, which offers a way out of

20 Nov 2014 : Column 449

the continuing and worsening financial crises that have blighted this country and the whole international economy for decades……..

12.13 pm

Mr Peter Lilley (Hitchin and Harpenden) (Con): 

…………A lot has been made of the ignorance of Members of Parliament of how money is created. I suspect that that ignorance, not just in Members of Parliament but in the intellectual elite in this country, explains many things, not least why we entered the financial crisis with a regulatory system that was so unprepared for a banking crisis……….

First, all bankers—not just rogue bankers but even the best, the most honourable and the most honest—do things that would land the rest of us in jail. Near my house in France is a large grain silo. After the harvest, farmers deposit grain in it. The silo gives them a certificate for every tonne of grain that they deposit. They can withdraw that amount of grain whenever they want by presenting that certificate. If the silo owner issued more certificates than there was grain kept in his silo, he would go to jail, but that is effectively what bankers do. They keep as reserves only a fraction of the money deposited with them, which is why we call the system the fractional reserve banking system. Murray Rothbard, a much neglected Austrian economist in this country, said very flatly that banking is therefore fraud: fractional reserve banking is fraud; it should be outlawed; banks should be required to keep 100% reserves against the money they lend out. ……….

If a bank lends a company £10 million, it does not need to go and borrow that money from a saver; it simply creates an extra £10 million by electronically crediting the company’s bank account with that sum. It creates £10 million out of thin air. By contrast, when a bank loan is repaid, that extinguishes money; it disappears into thin air. The total money supply increases when banks create new loans faster than old loans are repaid…….

spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 731-32.]

Bob Stewart (Beckenham) (Con): I am listening carefully to my right hon. Friend. Does that mean that the banks are uncontrollable, as things stand?

 

 

MODERNISING MONEY

October 9, 2014

Money creation should only be used in the public interest

 

The same banks that caused the financial crisis currently have the power to create 97% of the UK’s money. They’ve used this power recklessly, putting most of the money they create into property bubbles and financial markets. And now they’re back to their old ways.

We need a change. The power to create money should only be used in the public interest, in a democratic, transparent and accountable way. The 1844 law that makes it illegal for anyone other than the Bank of England to create paper money should be updated to apply to the electronic money currently created by banks.

Banks create new money, in the form of the numbers (deposits) that appear in bank accounts, through the accounting process used when they make loans. In the words of the Bank of England:

“When a bank makes a loan, for example to someone taking out a mortgage to buy a house, it does not typically do so by giving them thousands of pounds worth of banknotes. Instead, it credits their bank account with a bank deposit of the size of the mortgage. At that moment, new money is created.” (Bank of England Quarterly Bulletin, 2014 Q1)

Conversely, when people use those deposits to repay loans, the process is reversed and money effectively disappears from the economy. As the Bank of England describes:

“Just as taking out a loan creates new money, the repayment of bank loans destroys money. … Banks making loans and consumers repaying them are the most significant ways in which bank deposits are created and destroyed in the modern economy.” (Bank of England Quarterly Bulletin, 2014 Q1)

When new money is created, it should be used to fund vital public services or provide finance to businesses, creating jobs where they’re needed, instead of being used to push up house prices or speculate on the financial markets.

 

Creating a Sovereign Monetary System

 

This proposal for reform of the banking system explains, in plain English, how we can prevent commercial banks from being able to create money, and move this power to create money into the hands of a transparent and accountable body.

 

It is based on the proposals outlined in Modernising Money (2013) by Andrew Jackson and Ben Dyson, which in turn builds on the work of Irving Fisher in the 1930s, James Robertson and Joseph Huber in Creating New Money (2000), and a submission made to the Independent Commission on Banking by Positive Money, New Economics Foundation and Professor Richard Werner (2010).

Taking the power to create money out of the hands of banks would end the instability and boom-and-bust cycles that are caused when banks create too much money in a short period of time. It would also ensure that banks could be allowed to fail without bailouts from taxpayers. It would ensure that newly created money is spent into the economy, so that it can reduce the overall debt burden of the public, rather than being lent into existence as happens currently.

PDF Download:

Download Here (Free, PDF, 56 pages)

 

BELOW IS AN EXTRACT FROM THE ABOVE PDF

 

SOCIAL & ENVIRONMENTAL BENEFITS

7. TACKLING UNAFFORDABLE HOUSING

Problem: Around a third of the money created by banks goes towards mortgage lending (and a further significant proportion goes towards commercial property). This creation of money to buy pre-existing assets (i.e. houses in limited supply, and the underlying land which is in fixed supply) leads to prices rising. Rising house prices make banks even more confident about lending further amounts for mortgages (since rising prices mean that they are unlikely to lose money even in the event of a default and repossession). This becomes a highly pro-cyclical process, leading to house price bubbles.

Sovereign money as a solution: There is a need for a number of policy and tax reforms to address the problem of unaffordable housing (particularly in the UK). However, removing the ability of banks to create money will remove much of the fuel for house price inflation. House prices that rise at a lower rate than growth in wages will mean that housing becomes more affordable over time.

8. SLOWING THE RISE IN INEQUALITY

Problem: House price bubbles have the effect of transferring wealth from the young to the old, and from those who cannot get on the property ‘ladder’ to those who can. This is a significant channel through which wealth inequality is further increased.

Furthermore, the fact that the nation’s money supply must be borrowed from banks means that we are having to pay interest on the entire money supply. Household income data surveys show that this has the effect of transferring income from the bottom 90% of the population to the top 10%. (See Chapter 5 of Modernising Money for further details).

Sovereign money as a solution: As discussed above, removing the ability of banks to create money should have a dampening effect on house price rises, which in turn will reduce the rate of growth in wealth inequality.

The creation, by the central bank, of money that has no corresponding interest-bearing debt, means that there is a stock of money that is effectively ‘debt free’, and no need for members of the public to borrow simply to ensure that there is money available in the economy. The resulting lower levels of private debt will mean that less interest is paid overall, and therefore less income is transferred to the top 10% of the population. Again, this will slow the rate of growth in inequality.

 

 

ONLY ONE IN TEN MPs KNOW THAT MONEY IS CREATED AND DESTROYED BY THE BANKS

September 20, 2014

http://www.positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/

 

WRITTEN BY BEN DYSON (POSITIVE MONEY) ON AUGUST 19, 2014.

MPs lack basic knowledge about the fundamentals of money, leaving them ill-equipped to understand the impending dangers of another house price boom or a second credit bubble, according to an exclusive Dods Monitoring poll commissioned by Positive Money, the campaign body calling for fundamental reform of our money and banking system.

When asked questions about who creates the nation’s money in the UK, nearly three quarters got the wrong answer. 71% of MPs believed that only the government has the power to create money. In reality, the government now only creates coins and notes, which make up just 3% of all the money in the economy. The other 97% of money exists as bank deposits – the electronic numbers in your bank account). This type of money is created by high-street banks – not by the government.

Just over 1 in 10 MP accurately understood that banks create new money every time they make a loan, or that money is destroyed whenever individuals or businesses repay loans.

………….Read the rest of this interesting article from this lPositive Money website link  below

http://www.positivemoney.org/2014/08/7-10-mps-dont-know-creates-money-uk/

And I include just two of the comments here because they reveal some astonishing information about what banks get up to. (you can see the rest when you read the full article via the Positive Money website link above).

simonthorpe • a month ago
One way to illustrate the role played by banks is to look at the amount of Assets that Banks have relative to capital. It is commonly believed that banks can only lend around 10 times their capital. But the most recent figures show that while the 50 largest banks in the world have $67.6 trillion in assets, they only have $722 billion in capital – an overall ratio of about 88 to 1. Indeed, several banks have more than 1000 times more assets than capital (see http://simonthorpesideas.blogs…
How do they do it? Well, the Basel II and III rules say that when banks create money to lend to AAA to AA- rated governments, such loans have a risk weighting of 0% – meaning that they need no capital at all to make the loans. It’s not surprising that Europe’s governments now owe over $11.4 trillion to the financial system, and that last year European taxpayers paid €365 billion in interest payments, bringing the total amount of interest paid to €6.2 trillion since 1995. These are interest payments made to a financial sector that didn’t even have the money that they lent. (see http://simonthorpesideas.blogs… )
This insane situation is likely to continue while 7 out of 10 MPs have not understood that when the UK government borrows money from the markets, that money is created out of thin air. Well done Positive Money for showing how ignorant our leaders are.

 

bankster01 • a month ago
Robert Peston in his book “How do we fix this mess ?” on page 183 I think, says ” Only the bank of England can create money”. This book describes very well how the financial crisis occurred, I have not got to his proposed solutions, which probably mainly involves separating risky investment banks from boring retail banks. He is a top economist and journalist, but in his book he gives no adequate explanation as to how the UK money supply tripled in 10 years from 1997. He seems to imply that central banks created, then lent money at very low rates to the commercial banks who then lent it on to us. Some banks used securitisation, or sold on their existing loans so they could further increase their lending. I do not think over £1 trillion pounds was created in 10 years by the Bank of England for commercial banks to lend on, or a wall of foreign money was used by the commercial banks to increase lending either. The Bank of England has provided cheap credit for schemes like “Funding for lending”, in the hope that commercial banks would lend it on when the economy was on it’s knees, but it was not doing that in the boom years. It was simply all the banks increasing their lending in step, knowing that new deposits would then flow back to them, to support further lending. Peston writes a lot of good stuff, but he implies like a lot of economists that money is just “oil” for the economic machine, when really it is petrol, fuel for the fire.

SORDID AND NASTY – OR WHAT ?

September 17, 2014

 

IT MUST BE THE TORY PARTY MANIPULATING THE ELECTORATE AGAIN !

17th September 2014

Immediately below is a link to the the Right Wing think tank  ‘founded’  (set up) by Margaret Thatcher & her simpering sidekick Sir Keith Joseph as a publicity tool to brainwash the so readily compliant electorate  and assist with manipulating public opinion with deceits & mis-informations of all sorts to enable the political party of the unscrupulous and rich to gain and retain power over the unimportant proles and workers and general riff raff comprising the rest of the UK population who are NOT members of the Conservative Party, once famously led by the great Maggot herself.

Centre for Policy Studies link:

http://www.cps.org.uk/blog/q/date/2014/09/12/illness-as-a-career-choice/

This article is so ignorant & idiotic I cannot believe anyone with sufficient education to become a physician could write such drivel.

It very much looks to me as though it is written by a typical PR man masquerading as a physician  instead.

Having already noticed increasing levels of publicity demonising every recipient of benefits & the ugly, mis-representations of welfare recipients made on Channel Four programmes fronted by unscrupulous publicity mongers ( public relations spin doctors like  the not so charming Nick Hewer) I now know this article is almost certainly written by some public relations minion as part of a wide ranging public relations campaign sponsored by the Tories.

Incredible as it may sound, I see clues all over the place to this spiteful outpouring of hatred for welfare claimants of any kind being an orchestrated publicity campaign deliberately  engineered by the Tories. It is an odd co-incidence that Nick Hewer, previously public relations Guru involved in massaging the truth for the rich and powerful, Freemasons and the like, should be involved as  your ever so friendly welfare benefits  programme presenter.

I am an ex publicity mongerer myself AND I once worked with Nick Hewer as one of his lackeys, which is why I can reverse engineer what I have observed and see what is going on.

It really is horrible and sordid and has made me defect from being a lifelong Tory ( My Dad stood  for Parliament in 1959 as a Tory & so I was brought up as a naturalised Tory, private school and all that)

So, the proper response to this is for everyone to join the Labour Party – particularly all the other commentators here, and also for everyone to persuade at least ten of their friends, and those people ten of their friends and so on repeatedly,  to join the labour party and generally all campaign very vigourously to oust this horribly selfish, venal, entirely self centred and destructive Government at the rapidly approaching General Election next year.

That any Government in this country could, in this day and age, engage in such underhand, spiteful, corrupt and nasty activities simply takes my breath away.Take note Mr Idiot Duncan Smith, your poisonous ideas will eventually make you and your kind pariahs in any decent society everywhere.

And just some other reminders  of the generality of this Tory evil; – ‘bedroom tax’  resulting in making people homeless, endless welfare reduction and withholding legally due welfare benefits to unemployed or disabled/ill people to ‘punish’ them resulting in suicide & starvation as no available money at all for basic essentials .

There is much more too, but we’ll just stop there for the moment as I hope you get the idea by now.

Below is that link to the original article again in case

you’ve already had an attack of the vapours.

http://www.cps.org.uk/blog/q/date/2014/09/12/illness-as-a-career-choice/

 

And here is the link to ‘The Diary of a Benefit Scrounder’ which says a thing or two about our good spin doctor confusing himself with being an actual medical doctor:

http://diaryofabenefitscrounger.blogspot.co.uk/

And just in case all these links are too much like hard work after all this exertion here is the actual article itself, written by our good pseudo doctor himself on the Centre for Policy Studies website, with all the comments coming afterwards to give you a general feel for how people generally seem to think of this sort of scurrilous crap from Mr Anonymous , all knowing idiot doctor dimwit.

 

by Administrator CPS

The author is a physician with a practice in the North-West.

It is vital that those suffering from disabling health conditions are well supported by the welfare system. However it is my belief that in some cases well-meaning welfare provisions can end up having severe unintended consequences.

As a physician I have previously worked in areas with a broad range of demographics and have seen the various stimuli that lead to and from ill-health. A fact that many on the inside, but few on the outside know is that a common driver to ill health is the welfare state. In short, it appears that being sick has become a way of life and a career choice for a worryingly high percentage of the population.

Disability benefits have the potential to inadvertently encourage a state of dependency, and incentivise an individual to remain sick. Two patients can have identical pathology – for example identical objective deficits from multiple sclerosis – but with striking differences in illness behaviour. It its current form the welfare system is prone to misuse.  For those in legitimate need, disability benefits can enable them and restore livelihood. For others however disability benefits can incentivise work avoidance.

But how extensive is the problem? How can a doctor tell if symptoms are being exaggerated? We are advised in medicine not to use the word malingering, but rather ‘subconscious amplification of symptoms’. It can be very difficult to know how much is subconscious and how much is amplified. One informal survey of colleagues from around the UK placed the figure at between 10% and 90%. Interestingly, if the question is restricted to doctors working in areas of high unemployment then a much higher figure is reached. This is of course not surprising as the alternative prospects for individuals are far more limited.

As an illustration, an intravenous drug user I once saw had lost use of his arm because of a drug-related incident. When I told him that he would not recover the function of his arm I was expecting great disappointment, but instead got the surprising reaction, “great, does this mean I will get benefits?”

When the disability reassessments were introduced a couple of years ago many colleagues saw a sudden and unexpected worsening in patients symptoms. Patients who previously had well-controlled epilepsy reported more seizures or that their pain had worsened. As well as costing the system, it also makes the doctor’s role difficult in trying to judge what is true illness and what is amplified, leading to more investigations, more hospital appointments, more drugs.

Such over-dependency can have a distortionary effect on the wider economy. Individuals on chronic welfare increasingly move from the affluent South-East to the North because there is a greater availability of social housing, and living costs are lower. In contrast, talent migrates from the North to the South-East because of better prospects. This then compounds the situation. It is an interesting observation that the area of the country with by far the lowest per capita spend on infrastructure, the North-East of England, has the highest welfare spend. In effect, successive government policy has attempted to enforce a deal on the population of providing the South with the investment and tools to generate the returns and then transfer some of this to the north in welfare payments. In crude terms, investment follows place (South), welfare follows people (North).

More importantly, over-dependency is not good for the individual. They become locked into a way of life with reduced well-being, and the attendant inactivity for many patients leads to further illness and obesity. Most significantly, I have observed that not working can result in a loss of sense of purpose, of personal value of being in a team.

Not only does the current welfare system incentivise false claims, it can also overlook legitimate ones. Many doctors have patients who they think deserve benefits yet don’t get them. Or the receipt of benefits is unacceptably delayed.  Thus there is a mismatch between patients on long-term benefits driven by the financial incentives of the system and becoming less employable, but other patients who we desperately want to get better and faster support. In essence, the disabled are suffering from the actions of others.

Why does the assessment system not weed out such cases? Firstly, I believe that welfare assessment should focus on what can be done, not what can’t be done. The ability to accurately assess disability and levels of dysfunction can be very difficult. In some cases even skilled physicians with decades of experience can get it wrong. The inaccuracy that results is compounded further by the current assessment procedure, which pressures physicians to not be entirely open. This is because the patient can review the report before it is sent off for approval. A doctor’s performance is determined by their patient throughput and number of complaints received. Thus by conceding to a patient’s expectations a doctor can avoid a potentially hostile confrontation and complaints on their record. Indeed the degree to which patients can pursue doctors who do not give them what they want is so great now that once one has been bitten, the easy option is much more likely to be followed.

In this regard I believe the views of the ex-head of the NHS litigation authority were shockingly naive when he stated that if we eliminated errors there would be no complaints. In reality the relationship between errors and complaints is surprisingly shallow.

Some doctors will provide diagnostic labels which provide a potential ticket to benefits, which if examined closely are part of the normal spectrum. A common example I see is patients being diagnosed with joint hypermobility syndrome with associated pain. When does a flexible patient become hypermobile, and why does this lead to some developing chronic pain and on benefits? Or take depression, which affects 1/3 of the adult population at some stage. There is a big difference though between someone needing sectioning and ECT, and someone needing citalopram and a bit of cognitive therapy.

Proposals:

1. Doctors reports should be anonymised and made confidential. The current forms are better than the previous ones, but need support from non-assessment service doctors and this will work best if those doctors can be open and frank.

2. Illness/disability benefits assessments should be designed to identify activities which an individual can do, not what they can’t do. The Government must encourage the full range of mental, physical and social activities. For example, if an individual took extra welfare support for one domain, they would be required to utilise other domains. e.g., if a patient were wheelchair-bound but had full mental faculty then financial support would be provided to assist with mobility only if they were active in terms of work (even if only voluntary work) that required their mental faculties or social engagement. Conversely an individual with mental health problems and unable to function in a stressful work environment could be supported in using their physical abilities, for example with manual work or even befriending lonely elderly individuals.

3. For conditions which can be ameliorated by the action of the individual, greater emphasis should be placed on determining the right balance between disability payments and programs that emphasise greater personal responsibility for recuperation.

Comments

KALIYA FRANKLIN - ABOUT 5 DAYS AGO

It is extremely troubling to see that the author of this piece cites ‘hypermobility’ as a potential diagnosis gateway to benefits.

This demonstrates a lack of understanding on the author’s part not only of the latest research about inherited connective tissue disorders and how they differ from ‘normal hypermobility’ in their role as a physician, but also ignorance of the DWP’s own information provided about such conditions in relation to benefit eligibility. This information is easily and freely available, routinely used by DWP decision makers and authored by the international expert in JHS/EDS Professor Rodney Grahame. Professor Grahame is a previous chair of the medical advisory board for DLA/AA. The difference in the spectrum of hypermobility and its potential disabling impact is clearly outlined in the first two paragraphs of the DWP information.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/321674/a-z-adult-medical-conditions-jun-14.pdf

MOGGY PL – ABOUT 5 DAYS AGO

If you’re anything like me you’ll be climbing the walls by now with that over-used phrase so loved by the ConDems and the media – and physicians it would see,: welfare dependency. We need to challenge and expose some of these nonsense soundbites for what they are.

Think about that expression ‘welfare dependency’ for a moment. When you analyse it you realize it’s the most ridiculous expression on earth. I mean what is normally meant by welfare? What do you understand by it? I understand it to mean looking after the health and well-being of my fellow human beings. Dictionary definitions will say ‘the health, happiness, and fortunes of a person or group’ and ‘statutory procedure or social effort designed to promote the basic physical and material well-being of people in need.’

So being dependent on that or at least that concept is a good thing, isn’t it? Of course, successive governments are using it to mean ‘benefit dependency’ but again, put this phrase under scrutiny and its absurdity is all too evident. Benefits are only, after all, the means to living, eating, clothing, shelter, warmth. Show me a person who isn’t dependent on these things. Are MPs, CEOs, bankers, physicians, or any other wealthy individuals you care to mention somehow immune from this sort of dependency? Of course not.

Successive governments are using the phrase ‘dependency’ in the sense of addiction, with all its negative connotations. If you think about it, it is actually the wealthiest in society who are more ‘addicted to a culture of dependency’ – a phrase governments, and especially the Coalition, like to bandy about a lot. Can it be called dependency at all when it is essential for living?

Let’s face it, if we substitute the word ‘welfare’ for the one of ‘oxygen’ – (we’re all oxygen-dependent ) – we expose the phrase for its utter stupidity.

Last night there was a programme on ITV3 ‘The Secrets Of The Workhouse’. One of Brian Cox’s ancestors had a brain injury and another sort of disability but he was in the lowest category for the workhouse – Class 10 – ‘the malingerers’. Yes, that’s right, he wasn’t believed even though he was disabled. Brian Cox was outraged at the human indignity. What Brian Cox didn’t realize that this exact pernicious thinking still permeates this rotten system today. Which is why I support a Citizen’s Income where work is defined in the widest possible sense: voluntary work, the arts, education, caring, bringing up children are all valued ‘careers’ and where everyone is valued for their contribution to society.

SAM BARNETT-CORMACK – ABOUT 5 DAYS AGO

The author is entitled to their opinion. I disagree with a great deal of it, and think that anecdote is presented as more authoritative than is reasonable, but the author is entitled to their opinion.

However, it is rank intellectual dishonesty for CPS to present this as some sort of significant evidence in an ongoing debate that gives fuel to people harassing disabled people – I know people who have been harassed by strangers with taunts and threats based on the idea that they are ‘faking’ to get benefits. The way this piece has been presented on social media by CPS is intellectually dishonest and socially irresponsible.

C

ANONYMOUS – ABOUT 5 DAYS AGO
If you’re anything like me you’ll be climbing the walls by now with that over-used phrase so loved by the ConDems and the media – and it seems – some physicians: welfare dependency. We need to challenge and expose some of these nonsense soundbites for what they are.

Think about that expression ‘welfare dependency’ for a moment. When you analyse it you realize it’s the most ridiculous expression on earth. I mean what is normally meant by welfare? What do you understand by it? I understand it to mean looking after the health and well-being of my fellow human beings. Dictionary definitions will say ‘the health, happiness, and fortunes of a person or group’ and ‘statutory procedure or social effort designed to promote the basic physical and material well-being of people in need.’

So being dependent on that or at least that concept is a good thing, isn’t it? Of course, successive governments are using it to mean ‘benefit dependency’ but again, put this phrase under scrutiny and its absurdity is all too evident. Benefits are only, after all, the means to living, eating, clothing, shelter, warmth. Show me a person who isn’t dependent on these things. Are MPs, CEOs, bankers – physcians! – or any other wealthy individuals you care to mention somehow immune from this sort of dependency? Of course not.

Successive governments are using the phrase ‘dependency’ in the sense of addiction, with all its negative connotations. If you think about it, it is actually the wealthiest in society who are more ‘addicted to a culture of dependency’ – a phrase governments, and especially the Coalition, like to bandy about a lot. Can it be called dependency at all when it is essential for living?

Let’s face it, if we substitute the word ‘welfare’ for the one of ‘oxygen’ – (we’re all oxygen-dependent ) – we expose the phrase for its utter stupidity.

C

ANTHONY TURTLE – ABOUT 5 DAYS AGO

I’m in agreement with Ms Franklin, about the author’s lack of understanding, a lack of understanding that also extends to the DWP, unless I’ve been wrongly diagnosed.

I have Osteoarthritis, the DWP guide says I should have been perfect within 2 years of a knee replacement, but I still have considerable pain in that knee.

If pain was quantifiable, measurable in the way that blood pressure or temperature is, then we could prove that we hurt 24/7 at a level of 12 on a scale of 10!

COMMENT ON THIS

ABI B – ABOUT 5 DAYS AGO

I agree with the above comment. I have EDS type three (Hypermobility type) with complex features.

For example my right shoulder fully dislocates at least ten times every twenty four hours. This has been witnessed and noted by medical staff. And that is just one example of the many joints I dislocate or subluxate daily. (Ranging from wrists to ankles).

I have a huge array of systemic issues ranging from recurring idiopathic anaphylaxis to serious autonomic dysfunction.

I’d like to know how EDS Hypermobility type could ever in a million years be thought of as a ticket to benefits. How dare you. I would give it away in a heartbeat if I could.

And my young daughter has inherited it. The thought of her living a life like mine …yeah, woohoo, fab, maybe she’ll get benefits (!!?!)

You can’t ‘fake’ a blood pressure of 70/45, blue sclera, and three dislocated joints.

I’m appalled by this article. My life is often a living hell. And guess what. I *work*. I have tailored my career to being seated and part time but I was determined.will not publish your email address or share it with anyone.

ANONYMOUS – ABOUT 5 DAYS AGO

I have SPMS, a full time WC user – I have to take drugs to stay awake, I need assistance for most of my basic needs. You ,my dear, are spewing verbal diarrhea. Yet another abled bodied Tory making up trash as they see fit.As for the drug user and his quip about benefits? You have obviously missed the sarcasm in his comeback? You were expecting him to burst in to tears and be inconsolable? I would love to be able to have a job, any job. To be part of the world. I am housebound , even the doctor makes visits to me, my neuro via pkone. But that’s okay I’m on benefits and happy , being diasabled is a perfect cover for me being lazy and work shy…

Cyone.

TIDD KIDD – ABOUT 5 DAYS AGO

This is pure Mansel Aylward. Is this UNUM-sponsored crap STILL doing the rounds, 20 years on? The author talks about benefits as a way of life, but this unoriginal twaddle comes courtesy of a company that was banned in several States of the USA as ‘benefit deniers’.

(By the way – the “sign in with Twitter” button doesn’t work. I’ve done it twice and still I’m not signed in HERE.)

DONNA WICKS – ABOUT 5 DAYS AGO

The comments made about Joint Hypermobility Syndrome being a ticket for potential benefits are quite ludicrous. Pain is an essential part of the diagnostic criteria of Joint Hypermobility Syndrome and is therefore is not ‘JHS with associated pain’! This professionals skills and knowledge needs updating quite urgently! Most educated professionals now know (through research and evidence base) that JHS is not simplistic and does not just involve flexible joints. The term flexible means hypermobile so not sure what the person is arguing there but JHS is known to multi-systemic and often complex…especially if not diagnosed at an early stage and interventions given which help to reduce any potential for disability. Joint Hypermobility SYNDROME is a syndrome!….a whole collection of symptoms apply. JHS is argued by some to be the same at Ehlers-Danlos Syndrome -hypermobility type. Please advise the professional to have a look at this website

www.hypermobility.org

 

There he/she will see that it is far more complex than they described. Many sufferers have to put up with ignorant professionals who actually cause disability because of their lack of knowledge and willingness to engage interventions at an early enough stage. All pain conditions also involve a complex interplay of psychosocial issues which need to be addressed alongside the symptoms presented by the primary issues. As with MS you can have 2 patients with a JHS who share exactly the same symptoms but 1 of whom manages their condition positively (and may be in work…many are!) and 1 who copes poorly and exhibits what this professional calls ‘sickness or illness behaviour’.

 

This professional appears to have singled out JHS as being a diagnosis given by lazy doctors who are taking the path of least resistance so the patient can claim benefits. This is not just incorrect and disrespectful to colleagues but narrow-minded. Doctors should not be able to hide behind their reports. That flies in the face of the need for professionals and patients to work together but also suggests we should return to a culture of ‘doctor knows best’ and that they should not be asked to explain the rationale for their findings. It would also allow ignorant doctors to write completely inaccurate reports with no where for vulnerable and often very broken people who need a period of time to learn how to live positively and to return to paid employment where possible. The Hypermobility Syndromes Association is all about self-management….many of our volunteers go back to paid work but some of our members cannot work due to pain or fatigue or other issues relating to the complexity of their condition.

 

At one stage I was medically retired from nursing with an original diagnosis of JHS and I find this really insulting that possibly I was ‘looking for benefits’. Donna Wicks, CEO.

COMMENT ON THIS

MOGGY PL – ABOUT 5 DAYS AGO
If you’re anything like me you’ll be climbing the walls by now with that over-used phrase so loved by the ConDems and the media – and physicians it would see,: welfare dependency. We need to challenge and expose some of these nonsense soundbites for what they are.

Think about that expression ‘welfare dependency’ for a moment. When you analyse it you realize it’s the most ridiculous expression on earth. I mean what is normally meant by welfare? What do you understand by it? I understand it to mean looking after the health and well-being of my fellow human beings. Dictionary definitions will say ‘the health, happiness, and fortunes of a person or group’ and ‘statutory procedure or social effort designed to promote the basic physical and material well-being of people in need.’

So being dependent on that or at least that concept is a good thing, isn’t it? Of course, successive governments are using it to mean ‘benefit dependency’ but again, put this phrase under scrutiny and its absurdity is all too evident. Benefits are only, after all, the means to living, eating, clothing, shelter, warmth. Show me a person who isn’t dependent on these things. Are MPs, CEOs, bankers, physicians, or any other wealthy individuals you care to mention somehow immune from this sort of dependency? Of course not.

Successive governments are using the phrase ‘dependency’ in the sense of addiction, with all its negative connotations. If you think about it, it is actually the wealthiest in society who are more ‘addicted to a culture of dependency’ – a phrase governments, and especially the Coalition, like to bandy about a lot. Can it be called dependency at all when it is essential for living?

Let’s face it, if we substitute the word ‘welfare’ for the one of ‘oxygen’ – (we’re all oxygen-dependent ) – we expose the phrase for its utter stupidity.

Last night there was a programme on ITV3 ‘The Secrets Of The Workhouse’. One of Brian Cox’s ancestors had a brain injury and another sort of disability but he was in the lowest category for the workhouse – Class 10 – ‘the malingerers’. Yes, that’s right, he wasn’t believed even though he was disabled. Brian Cox was outraged at the human indignity. What Brian Cox didn’t realize that this exact pernicious thinking still permeates this rotten system today. Which is why I support a Citizen’s Income where work is defined in the widest possible sense: voluntary work, the arts, education, caring, bringing up children are all valued ‘careers’ and where everyone is valued for their contribution to society.

Cyone.

ROBERT CHEESEMAN – ABOUT 5 DAYS AGO

I too am a doctor and worry about the author’s apparent failure to recognise that part of this ‘subconscious amplification of symptoms’ can be a reflection of poor mental health rather than an attempt to manipulate a system. The author should be well aware as a physician that those suffering from chronic diseases, such as hypermobility syndromes, are at greater risk of mental health problems. It appears that the extension of the author’s logic then is that there is a failure of physicians to manage the mental health of patients with chronic disease making them more likely to suffer from ‘subconscious amplification of symptoms’, a possible outcome that the author doesn’t acknowledge at any point during their piece. Better physician management of mental health issues may remediate many of issues that appear to offend the author.

I would go further and suggest that it is not the physicians job to concern themselves with whether the welfare state is supporting a given individual or not. A physician should remain objective about optimising the health of a patient and when required provide a factual statement of a patients state of health, including mental health – no more, no less. It is the job of policy makers and social services to determine who is entitled to what. To become embroiled further risks trust not only with an individual doctor, but with the profession at large.

That said, seeing the impact of welfare done well and comparing it to welfare gone wrong does highlight issues with the system. There is legitimate room for clinicians to inform the welfare policy debate, but that should not be based upon the ideological beliefs of a given individual or like minded group. You must remember that everyone is different and the ability to cope with identical conditions will vary from person to person. That is the nature of human existence. But while additional financial support for one person over another may not be the answer, there has to be recognition of the fact that some people will need more support and encouragement than others. The complete welfare package should be constructed – including facilitating alternative work arrangements, such as working from home.

CO

ANONYMOUS – ABOUT 5 DAYS AGO

Try living with knees that randomly dislocate and bend the wrong way when walking, try moving in a chair and dislocating a hip, try draining saucepan and ending up with full thickness burns to your hands and arms due to my shoulders giving out, try dropping a kettle all over myself and having full thickness burns on my feet and ankles and try getting around on crutches when your shoulders cannot physically stay in their sockets to carry the kettle or saucepan yet are expected to carry my body weight. Try standing on a hot day or for any period of time and then autonomic dysfunction sets in and everything spins or you sweat, get so dizzy you can’t stand or do anything except hope you either die or it stops soon, try not being able to eat or drink properly without feeling or being sick. Try living one day as me and then try imagining having to deal with idiots saying such ignorant things. There is a very real difference between being flexible and having Ehlers Danlos Syndrome type 3 (hypermobility type) for me I spent half my life in hospital, everything hurts because it has to work so much harder to try and stay in place, the muscles are constantly fighting the joints. It is so sad that somebody who has obviously spent so much time and money on education to become doctor is still so ignorant.

COM

ANONYMOUS – ABOUT 5 DAYS AGO

I commend the author for raising this debate and from what I can see Mrs Franklin’s response highlights the medical bind. The description of hyper mobility in the link provided states it occurs in 10-20% of the population and that one of the two diagnostic criteria is purely subjective, whether the patient says they are in pain or not. The document also highlights associations with several other conditions, major exacerbaters of which are physiological deconditioning (e.g. PoTs). So what happens over the years is that one small group of patients who absolutely need disability support (here with the classic Ehlers Danlos) get extended into, if we follow Mrs Franklin’s argument, 20% of the population who have become medicalised.

The ferocity of Mrs Franklin’s reply also provides good reason why I can see medics and others keep their heads down and just sign the forms.

View Comments (2)

COMMENT ON THIS

one.

PERCY VON BRAUN – ABOUT 4 DAYS AGO

Oh anon, if you think that’s “Ferocious” you should see what actual anger looks like.

There’s not been a “Medicalisation” of 20% of the population – You might notice that 20% of the poulation aren’t in pain, and thus aren’t diagnosed with hypermobility. If the only thing that you’ve ever read about hypermobility syndrome is the link provided, then I can see how you’d be confused, but visiting hypermobility.org might help – The Ehlers-Danlos syndromes aren’t the only painful hypermobility conditions, there’s also osteogenesis imperfecta, Marfan’s syndrome, Loeys-Dietz syndrome, and since EDS3 is now just called “Joint Hypermobility Syndrome” it can get a bit confusing. A lot of people who have one of the named syndromes, basically, end up with just a diagnosis of “Chronic pain on a background of joint hypermobility”, and then their other symptoms (The fragile skin, cardiac trouble – POTS isn’t a matter of “deconditioning”, I’ve got a resting heart rate of 45 and spend ten hours a week in the pool, but still fint if I stand up too fast – slow digestive tract and things like that) just get treated on an as-and-when-needed basis.

I think you need to read Ms Franklin’s comment again, and think a bit harder.

Also, feel free to have a deconstruction of the article as well

http://biteyzebra.wordpress.com/2014/09/12/a-rebuttal-to-the-physician-at-the-centre-for-policy-studies/

TRIA HALL – ABOUT 3 DAYS AGO

Somehow, I’m not surprised you chose to stay anonymous, with a comment like your last. At least Kaliya (who is not, by the way, a Mrs) has the integrity to put her own name to her comments.

EDS/HMS patients don’t need to be stigmatised any more than we have been for the last decade or more. I’ve been assaulted four times in five years because I use a wheelchair yet don’t “look sick”, but I have more than 80 joint dislocations a day, full and partial, and am on more pain medication than the average palliative cancer patient because of that.

A study from 2013 came up with the result that 95% of people with EDS/HMS seen in English & Welsh rheumatology departments had gone five or more years undiagnosed or misdiagnosed before it was determined that they had EDS/HMS (I group the two together because the experts have a fair consensus that they are simply different points on a spectrum, which is more or less visible if you look at any given group of people with hypermobility and chronic pain). The trouble here is that there are a great many other symptoms that many doctors who know about the joint issues with EDS/HMS don’t even think about. There’s a reason most EDS patients are treated by multidisciplinary teams – and there are more of us than the published figures would suggest.

Oh, and physiological deconditioning can cause POTS, but in EDS patients it usually isn’t the main cause – that would be our unusually stretchy blood vessels, due to the collagen issue involved. So passive-aggressively suggesting we’re all lazy or deconditioned – not the case, since muscle strength is a greater part of reducing dislocations in EDS/HMS patients and we usually undergo a great deal of physio and hydrotherapy if we’re getting proper treatment and help at all – is a laughably clueless thing to come out with. Talk to a cardiologist who knows about EDS and dysautonomia – preferably one who works in a hospital with an EDS specialist, they’ll be more knowledgeable in the specific area – and they would tell you that in a moment. Many people with connective-tissue disorders deteriorate drastically from a point of actually having been fitter and more active than the norm. It’s harsh, but unfortunate, and a fact of our biology.

Please, if you’re going to attack a group of people like that, do think about what you’re saying and do your research properly, first.

ANONYMOUS – ABOUT 5 DAYS AGO

I am thoroughly disgusted that a well educated person (a doctor no less) can be so monumentally stupid!!
His assertions that being sick is a “career choice” purely for the disability benefits is outstandingly scurrilous.
I am also a well educated person and yet I LOST my career due to ill health. Something I have never truly come to terms with, as my career was everything to me (never married, never had children).
I now have the specter of the work capability assessment and Atos hanging over every single day.
This person obviously hasn’t the faintest idea the hatred and harm his opinions may incite

I leave it there as I could rant for hours on this topic. It strikes very close to home and I am apoplectic that someone who should know better, is so damn idiotic and careless.

ANONYMOUS – ABOUT 5 DAYS AGO

I am thoroughly disgusted that a well educated person (a doctor no less) can be so monumentally stupid!!
The assertions that being sick is a “career choice” purely for the disability benefits is outstandingly scurrilous.
I am also a well educated person and yet I LOST my career due to ill health. Something I have never truly come to terms with, as my career was everything to me (never married, never had children).
I now have the specter of the work capability assessment and Atos hanging over every single day.
This person obviously hasn’t the faintest idea the hatred and harm his opinions may incite

I leave it there as I could rant for hours on this topic. It strikes very close to home and I am apoplectic that someone who should know better, is so damn idiotic and careless.

yone.

JAYNE LINNEY – ABOUT 5 DAYS AGO

There is a reason GPs are named such they are General Practitioners; many who see a patient for 5 minutes and prescribe antibiotics for everything!

Of course the above is demeaning for many good GPs, just as the article above demeans the majority of disabled people’ particularly those of us with ‘Invisible’ disabilities.

Given the level of information I receive daily regarding such invisible disabilities, I doubt GPs have the time, even where they have the inclination to read all reports; however sweeping comments such as the author uses demonstrate that ignorance

It has long been my thinking that Policy Makers would gain far better insight into disability issues if they engaged with the wider disabled community; and selected their ‘experts’ more appropriately. This article demonstrates precisely why.

COMMENT ON THIS

GREG WOOD – ABOUT 5 DAYS AGO

Not impressed that this author is afraid to identify himself. What sort of physician is he – or she? These ideas are quite old now: about a decade old in fact, and the debate has moved on.

B PRICE – ABOUT 5 DAYS AGO

There is a very simple solution to this. Give every individual the basic amount of money to live on (in the manner of child benefit going to all children). Then the fortunate well people can all choose whether to subsist or live a decent life whilst the ill can at least live stigma free.

COMMENT ON THIS

FRANKS DAD – ABOUT 3 DAYS AGO

The trouble is, this is so unscientific. Any patient with any illness can be written off as being a malingerer. This article does nothing to enable practitioners to differentiate between fraudulent and genuine cases. As far as the recommendations – assessments could include advice regarding what level of regularity and strenuousness of work related activity the claimant could manage.

CO

 

THE SOCIAL ENTERPRISE IDEA TO REVOLUTIONISE THE HOUSING MARKET WITH YOUR SUPPORT

March 27, 2014

Anyone interested in  setting up a housing co-operative to buy housing to then rent to our members along the lines of the idea below ?

 

My idea is to simply set up an organisation which would continuously seek crowdfunding (& possibly commercial mortgages) for redeemable shares offering (at present) about 3-4% which would be used to purchase rentable homes, primarily in the first time home owner end of the market. The redeemable shares would enable savers currently offered laughable savings rates by the banks to be able to use this as a safe and reliable method of  savings offering much better returns than banks.

 

The tenants to which these homes would be rented  would also share in the profit their rent ultimately generates as it pays off the purchase cost.

 

If the funds borrowed to 100% fund the purchase are fully repaid by means of charging rent, at the end of a term similar to an average type of mortgage of, say 25 years, then at that point the organisation would own the asset outright. It would obviously then be able to offer a portion of the value of that asset to the tenant.

 

This portion would accrue from the moment the tenant commences paying rent and would be available to the tenant whenever he leaves  which could be at any time. He does not have to remain any longer than any initial short tenancy.

 

The tenant would always be paying a ‘market’ rent the same as any other tenant. But he would be getting something back that no other tenant ever does. He will be getting back a portion of the rent he has paid which he can then use as his deposit to go and buy his own home with an ordinary mortgage if he so wishes.

 

This model would thus enable a person with no capital whatever to accrue a deposit for their own home purchase, or even use this organisation to end up either a long leaseholder on  low rent if he wished to remain in the property. It could almost be viewed as a means of just turning an ordinary rental into a (different) type of mortgage for the ultimate purchase of a home.

 

It offers a means of home ownership which dis-enfranchises no-one and whereby any tenant turns progressively into an owner – without the need for the sort of credit checks idiots and banks use, large mortgage  deposit or rip off mortgage expenses.

 

If set up as the legal concept of a Co-op, it is legally allowed to ask the public to invest in redeemable shares which  would pay an interest rate which might currently be 3%.

 

This is just a brief description of the idea, obviously there is a lot of detail to ramble on about, but I’ll leave that for  the moment as it isn’t needed until people want to know more and join.

 

Oh, by the way. I have spent a lot of time doing all the maths and the idea does work. You can have a look for yourself if you are interested & contact me.

 

With the help of the crowdfunding crowd, we can cut the legs of those greedy bankers and eventually take all their mortgage business away from them so that every penny people pay to live in a home goes directly towards actually paying for that home and not the huge profits for  greedy bankers.

 

This idea has wings; it could take off and fly !

 

 

 

 

 

BANK ROBBERY – HOW BANKS STEAL FROM EVERYONE

February 1, 2014

Article from the Positive Money Website – the campaign to reform the corrupt and self evidently broken monetary system

http://www.positivemoney.org.uk/wp-content/uploads/2012/06/Banking_Vs_Democracy_Web.pdf

Written By: Andrew Jackson and Ben Dyson 

Special thanks to: Anthony Molloy

Produced with the support of The JRSST Charitable Trust

© February 2012 Positive Money

PRIVATISATION BY STEALTH

The common misconception of how banks work is

that they take people’s savings and lend them out

in the form of loans. In this vision, banks merely

operate as the middlemen between savers and

borrowers, but this is simply not what happens.

When a bank makes a loan it does not take the

money out of anyone else’s account. Instead, it

simply creates a new account for the customer and

types a number into it.

When a customer is approved for a loan (of say

£1,000), she signs a contract with the bank obliging

her to pay back £1,000 plus interest over a period

of time. According to accounting conventions, the

£1,000 loan can then be recorded as an asset of the

bank. At the same time the bank opens an account

for the customer and types £1,000 into it. As the

bank owes the customer this money, it is recorded

on the liabilities side of the bank’s balance sheet. By

this process, the bank has simultaneously created

new money in the borrowing customer’s account

and a corresponding debt. The bank’s new asset

(the debt) balances out the new liability (the newly

created money) so that in accounting terms, the

books balance.

The customer now has £1,000 of new money to

spend on whatever they choose. No money was

taken out of anyone else’s bank account. New

money has been created out of nothing.

In the UK, over 97% of the entire money supply was

created in this way and exists in the form of ‘digital’

money, numbers in the bank accounts of members

of the public and businesses.

NO ACCOUNTABILITY TO CUSTOMERS

Unlike pension funds, banks are not required to

disclose how they will use their customers’ money.

As 97% of the UK’s money supply is effectively held

with banks, this allows them to allocate a larger

sum of money than either the entire pension fund

industry or the elected government itself. Conse-

quently the UK economy is shaped by the invest-

ment priorities of the banking sector, rather than

the priorities of society.

Just five banks hold 85% of the UK’s money, and

these five banks are steered by just 78 board

members whose decisions shape the UK economy.

This is a huge amount of power concentrated in very

few hands, with next to no transparency or account-

ability to wider society.

******

It is common knowledge that anyone found printing

their own bank notes can expect to find the police

kicking down the door at two o’clock in the morning.

However, it has only been illegal for individuals and

companies to create their own £5 or £10 notes since

1844.

Prior to 1844, the state had a legal monopoly only

over the creation of metal coins dating from the

time when this had been the only form of money.

But keeping lots of metal and carrying it around was

inconvenient so customers would typically deposit

their metal coins with the local jeweller or goldsmith

who would have secure storage facilities. Eventually

these goldsmiths started to focus more on holding

money and valuables on behalf of customers rather

than on actually working with gold, and thereby

became the first bankers.

A customer depositing coins would be given a piece

of paper stating the value of coins deposited. If the

customer wanted to spend his money, he could take

the piece of paper to the bank, get the coins back,

and then spend them in the high street. However,

the shopkeeper who received the coins would then

most likely take them straight back to the bank. To

avoid this hassle, shopkeepers would simply accept

the paper receipts as payment instead. As long as

the bank that issued the receipts was trusted, busi-

nesses and individuals would be happy to accept the

receipts, safe in the knowledge that they would be

able to get the coins out of the bank whenever they

needed to.

Over time, the paper receipts came to be accepted

as being as good as metal money. People effectively

forgot that they were just a substitute for money

and saw them as being equivalent to the coins.

The goldsmiths then noticed that the bulk of the

coins placed in their vaults would be gathering dust,

suggesting that they were never being taken out.

In fact, only a small percentage of all the deposits

were ever being claimed at any particular time. This

opened up a profit opportunity—if the bank had

£100 in the vault, but customers only ever withdrew

a maximum of £10 on any one day, then the other

£90 in the vault was effectively idle. The goldsmith could lend out that extra £90 to borrowers.

However, the borrowers again would choose to use

the paper receipts as money rather than taking out

the metal coins from the bank. This meant that the

bank could issue paper receipts to other borrowers

without necessarily needing to have many—or even

any—coins in the vault.

The banks had acquired the power to create a substitute for money which people would accept as being money. In effect, they had acquired the power to create money: perhaps this is when the goldsmiths became real bankers.

The profit potential drove bankers to over-issue

their paper receipts and lend excessive amounts,

creating masses of new paper money quite out of

proportion to the actual quantity of state-issued

metal money. As it always inevitably will, blowing

up the money supply pushed up prices and destabi-

lised the economy (of the many crises, particularly

galling was the Bank of England having to borrow £2

million from France in 1839). In 1844, the Conserva-

tive government of the day, led by Sir Robert Peel,

recognised that the problem was that they had

allowed the power to create money to slip into irre-

sponsible private hands and legislated to take back

control over the creation of bank notes through the

Bank Charter Act. This curtailed the private sector’s

right to print money (and eventually phased it out

altogether), transferring this power to the Bank of

England.

However, the 1844 Bank Charter Act only addressed

the creation of paper bank notes. It did not refer to

other substitutes for money. With growth in the use

of cheques, the banks had found another substitute.

When a cheque is used to make a payment, the

actual cash is not withdrawn from the bank. Instead,

the paying bank periodically communicates with the

receiving bank to settle any net difference remaining

between them once all customers’ payments in both

directions have been cancelled out against each

other. This means that payments can be made even

if the bank has only a fraction of the money that

depositors believe they have in their accounts.

Following on in the spirit of financial innovation,

after cheques came credit and debit cards, elec-

tronic fund transfers and internet banking. Cheques

are now almost irrelevant as a means of payment

but over 99% of payments[b] (by value) are made

electronically.

Today the electronic numbers in your bank account

do not represent real money. They simply give you a

right to demand that the bank gives you the physical

cash or makes an electronic payment on your

behalf.

In fact, if you and a lot of other customers

demanded your money back at the same time—a

bank run—it would soon become apparent that

the bank does not actually have your money.

For example, on the 31st of January 2007 banks held

just £12.50 of real money (in the form of electronic

money held at the Bank of England) for every £1000

shown in their customers’ accounts. Even among

those who are aware that what banks do is more

complicated than merely operating as middlemen

between savers and borrowers, there is a wide-

spread belief that banks are obliged to possess a

sum corresponding to a significant fraction of their

liabilities (their customers’ deposits) in liquid assets,

i.e. in cash or a form that can be rapidly converted

into cash. In fact, such laws were emasculated in

the 1980s in response to lobbying from the industry

(although some effort is now being made to

re-impose such rules in the aftermath of the crisis).

When a run starts (like the one on Northern Rock

on the 14th September 2007) it becomes almost

impossible to stop.

Once the bank has paid out any cash which it holds in the branch to individuals (and transferred all of its reserves to other banks) other depositors will have to wait for the bank to sell off its remaining assets before they see their money.

And because the bank has to sell these assets

quickly, it will find it hard to receive a fair price.

Because of this it is unlikely the proceeds from these

sales will cover the value of their deposits and other

liabilities, and therefore most customers are likely to

lose a large proportion of their savings. Because this

type of personal ruin is a tragedy and, even more

importantly, because one bank run is likely to lead

to others (as confidence in the banking system falls

through the floor) the government insures deposits,

guaranteeing some level of payback in the event of

bank failure. Thus, because the system is inherently

unstable, and because almost all of our money

exists on banks’ balance sheets, the banking sector

has to be underwritten and rescued by the taxpayer,

all as a result of the failure of legislation to keep up

with technology and financial innovation since 1844.

******

When money is created, it can be put into the

economy in two ways: it can either be spent in

exchange for goods and services or lent out. When

banks create money, they put most of it into the

economy through lending. Exactly who this newly-

created money is given to is crucial because it will

determine the shape of the economy.

Over the decade leading up to the 2008 financial

crisis, the amount of money lent out by banks

tripled but this steep rise is largely accounted for by

loans advanced for the purposes of buying property

and for financial speculation. The amount dedicated

to productive investment remained more or less

constant throughout this period meaning that the

proportion of the money supply that was dedicated

to enhancing production steadily waned.

*****

Between November 1982 and November 2006 the

banking sector increased the money supply—by

creating new money through lending—by an

average of 10% a year.

Between November 2007 and November

2008, £258 billion of new money was created. If

government were to increase the money supply

at this rate, it would be accused of following the

policies of Zimbabwe, but because few people

understand that banks create money via lending,

this is completely overlooked.

This huge growth in the money supply is hardly

surprising when we consider the incentives that

banks have to increase their lending. In confident

times, all of a banker’s incentives push him to

lend as much as possible: by lending more, they

maximise short-term profits and, more specifically

their own bonuses, commissions and prospects

of promotion and profits. There is no reward for

bankers who are prudent and choose not to lend

or only lend judicious sums. In short, the supply

of money into the economy depends on the confi-

dence and incentives of bankers rather than what is

best for society as a whole.

Investing in machinery to make factories

more efficient is productive investment whilst

lending to buy existing property through mortgages

is non-productive as it simply pushes up house

prices without increasing production.

The £1.16 trillion of new money created by

the banks over the last ten years could have been

used to: pay off the national debt (which currently

stands at around £977 billion); invest in public

transport, hospitals, schools or renewable energy;

or exempt the poorest ten per cent of the popula-

tion from tax. Instead, it has been used by the

banking sector to fuel a housing bubble that has

made buying a home unaffordable for all but the

very rich.

The last few years have proven the business model that enables banks to create money is fundamentally unstable, requiring rescue by the government from time to time.

When this happens, taxpayer funds are diverted

from public spending and spent on salvaging failing

corporations. This further reduces the power of

government to do what it was democratically

elected to do, weakening democracy in the process.

By handing the power to create money over to

the banks, the government reduces its revenue,

compromises its capacity to carry out the activities

that it has been mandated to carry out and under-

mines the potential of the democratic system to

change society for the better.

THE HIDDEN TAX THAT BANKS POCKET

Giving banks the power to create money results in

two hidden and undemocratic ‘taxes’ being levied

on the public.

The first of these ‘taxes’ is inflation, when increases

in the amount of money in the economy feed

through into higher prices. If the money supply

is increased quickly then the new money pushes

up prices, especially in housing to where much of the new lending is destined.

Of course, it is now banks that create the vast

majority of new money. They have increased the

amount of money in the economy at an average of

10% a year between 1981 and 2007, (by lending)

and pumped this money mainly into the housing

market.

As a result, house prices shot out of the

reach of ordinary people, whereas those who got

the ‘first use’ of the money (by borrowing first)

received most of the benefit. Meanwhile those who

were not already on the housing ladder became

significantly poorer, in real terms, because the

relative cost of housing doubled in just 10 years

(between 1997 and 2007).

Consequently, the inflation caused by allowing banks to create money is also effectively a ‘tax’ accruing to the banks (through their increased interest income on ever greater mortgages) and those who borrow early on (to buy property and other assets).

The second of these hidden taxes corresponds to

interest. Because banks create 97% of the UK’s

money supply, essentially through making loans,

the entire money supply is ‘on loan’ from the

banking sector. For every pound created, somebody

somewhere goes one pound into debt and starts

paying interest on it. By virtue of their power

to create money, banks have the right to collect

interest on nearly every pound in existence.

A hidden tax collected by private corporations

because they have a power that most people would

consider—and believe—to be a prerogative of the

state can hardly be considered democratic.

Written By: Andrew Jackson and Ben Dyson

Special thanks to: Anthony Molloy

Produced with the support of The JRSST Charitable Trust

© February 2012 Positive Money


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