Says Ben Dyson of Positive Money Campaign Group
Let’s get the bad news out of the way first. (Don’t worry – there’s good news to follow!).
The Bad News
We’re about to start feeling the real human impact of a crisis caused by the fractional-reserve banking system. The economic situation is going to get worse – probably much worse. Other countries (especially Spain) will be asking for bailouts within the next 2-3 months. Spending cuts will kick in in the next few weeks – many local council employees have already been warned that there will be job losses after Christmas.
Last year was essentially the eye of the storm. The first part of that storm hit in 2007-2009. We’re now about to hit the second half. Unfortunately, we still haven’t recovered from the damage of the first attack, so we’re very unprepared for this second wave of the crisis. The authorities still think that we can solve a debt crisis by adding more debt. That ranges from politicians shouting that ‘we need to get banks lending again’, even though the people that they lend to are already under a mountain of unsustainable debt, through to the IMF and European Central Bank (ECB) offering further bailouts (i.e. more debt) to help Greece and Ireland rescue their banks.
Unfortunately, even positive economic growth does not mean we’re out of danger, since economic growth under the current system usually come hand in hand with a growing total level of debt. That increase in debt will lay the foundations for the next collapse.
Very simply, there’s no chance of a recovery without complete overhaul of the monetary system. At the very best, we could keep the economy on life-support for a few more years, but it’s more likely that 2011 will be the year when the proverbial really does hit the fan. This shouldn’t be a surprise. The current monetary system, which makes us absolutely dependent on debt provided by commercial banks, is guaranteed to collapse sooner or later. We’re at the end of the line right now.
The Good News
The good news is that we have a solution to all these problems. We’ve outlined how it works in plain English, and even in draft legislation (soon to be updated). It’s quick and easy to implement, and it is genuinely the only realistic solution to our current financial problems, as it’s the only proposal that does not advocate piling more debt upon an already collapsing mountain of debt. Very simple, it involves making two changes to the monetary system:
– Alter the banking system so that bank lending no longer creates new money (in the form of bank deposits – the numbers in your bank account). This is remarkably simple to do, and requires just a few changes to the computer systems at the Bank of England and a few changes to the rules governing banking.
– Instead of allowing profit-seeking banks to create money, we now give that power and responsibility to an independent (but accountable) body such as the Monetary Policy Committee, who create that money as debt-free ‘positive’ money, and give it to the government to funnel into the economy via tax cuts or government spending. Money created in this way actually reduces the overall burden of debt, while money created under the existing fractional-reserve banking system always increases the burden of debt.
We’ve sent a copy of this proposal to both Mervyn King and the Independent Banking Commission (see our submission here), and will be spending the next 12 months making more people aware that there is a solution, so that when things really start to collapse, we have a chance to fundamentally repair the system.
The Bad News is Good News
As unappealing as is the threat of economic collapse, we might need a serious threat of economic collapse to get the economists at the FSA and Bank of England to realise that the current fractional-reserve banking system needs to be scrapped entirely.
We’ve had this destructive, socially-harmful debt-based money system for centuries, and it’s got us to where we are today. It redistributes money upwards to the richest people and has benefited a small cartel of banks massively, at the expense of the other 97% of us. It’s holding us back, economically and socially, and right now it’s the greatest barrier between us and a better quality of life. It’s time to let it go and replace it with a money system that works in the interests of society as a whole, rather than just in the interests of the banks.
In that sense, the approaching economic collapse is something we should welcome.
The challenge is to get the authorities to realise there’s a solution before the situation deteriorates beyond control. This month we’ll be launching something that should do exactly that – watch this space.
You can discuss this on the Positive Money blog.
Best wishes for the new year,
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