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Banking and Finance  » New Money As Credit

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 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

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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.

About the author:

www.monetaryreform.org