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New Money as Credit
“Labour accepts that private financial institutions like
banks should be allowed to issue new money as credit”
The full significance of this statement, correctly understood and
widely
known, would fundamentally change the whole global economy.
The existing the banking system originated in England in 1694,
when King
William gave permission for the bankers to be the source of part
of
England's currency. They formed the Bank of England with an Act
of
Parliament called the Tonnage Act, which remains on the statute
book.
Times have changed since then and with the advent of the personal
computer,
a new industry has come into existence, the credit industry and
with it,
electronic money. Money now exists as computer entry to replace
ledger
entry.
The people have always been encouraged to believe that the bank
of England
is 100 per cent reliable and part of our national heritage, such
as the
Monarchy. Safe as the Bank of England etc. But the Bank of England
established upon the Royal right to issue new money as credit, has
always
been very secretive and protected by the Official Secrets Acts.
The Bank of England has needed to be autocratic and independent
of
Parliament, in order to have absolute control over the rate at which
new
money is put into circulation. Full independence was only obtained
in recent
years under Labour, so that now, inflation can be kept under tight
control
by adjusting interest rates.
Because interest has to be paid on new money the rate at which
new money is
created and issued can be controlled, by how much it costs to do
so.
People ignore the fact that new money is credit, which did not
exist until
the credit was accepted as a loan of money. People also ignore the
fact that
by diluting the currency with credit the currency gradually turns
into debt.
Using debt as our currency has two major disadvantages.
Perhaps the most important, is total inability to establish any
sort of
yardstick, by which to measure the value of credit. This value is
pure
guesswork and guessing becomes a fine art and almost a science.
Such
expertise provides ‘insider’ knowledge and creates a thin
upper stratum of
society, which although purely parasitic, creams off enormous wealth
without
making any contribution to the creation of the wealth. A practice
correctly
designated as theft, although held in the highest esteem in contemporary
society.
The other disadvantage of credit, is that credit has attached to
it, a tax
in the form of interest. Credit is expensive stuff to use and also
credit
must be repaid to the banks as money. The banks who allow you to
have credit
to use as money will not accept credit as money from you.
Economics is the study and practice of the creation of goods and
services
and their distribution for the benefit of the consumer. The only
difficulty
we have with economics, lies in the problem of distribution. Distribution
beyond a barter system, depends upon a reliable means of exchange.
Credit
can never be a reliable means of exchange. That is the trouble with
global
economics. Today, there is no reliable means of exchange any longer
in
existence. The world has a dire shortage of money and a vast surfeit
of
debt. We need to restore to Government the sole right to create
and issue new money and demand the right to see that it is done
correctly.
Doctor Edward C Hamlyn MBChB
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