by Kieron McFadden
If you have read my other essays in this series (see side bar) you will now be well versed in the anatomy of the problem with our modern money system and how urgent is the need to correct its inadequacies.
Understanding the mechanics of a catastrophically inept system enables us, at last, to see exactly how and why life is rendered needlessly wearisome for millions and downright untenable for millions more, and to realise just how bleak will be our prospects if we fail to grasp this particular nettle and halt our slide into the global economic abyss. On the plus side, understanding the cause of a problem opens the door to eliminating the problem.
The questions we must ask ourselves are: is this astoundingly inept system really the best we can do? Is it really beyond the wit of man to work out something that serves him better?
If Man can, within a few centuries, elevate his civilisation from the "everybody knows" that the Earth is flat to landing men on the Moon, or from treating ailments with leeches to advanced micro-surgery, then is he really incapable of supplanting the monetary equivalent of leeches and the flat-Earth theory with something smarter?
The answer on all counts is an emphatic "no!" There are three interrelated reasons why the current system was not long ago abandoned as an utter failure and none involves any degree of workability. The first is that the only people who actually benefit from it, the international loan sharks and their cohorts, don't want it changed.
The second is that just how appallingly badly it works in practise has been kept cleverly and thoroughly obscured and wrong reasons and wrong people blamed for the various economic and social disasters it has caused. If we imagine how the art of medicine might have lagged behind and ultimately undermined other attempts to advance had medieval leech farmers managed to protect their vested interests and suppress the deployment of more workable technology, we find a useful analogy of our current economic plight.
Thirdly, people are willing to put up with the status quo because they assume that what we've got is the best we can hope for; and they make that assumption because in their experience thus far nobody has ever put a more workable alternative forward for their consideration.
However, there is a rational and desirable alternative to a money system run for the sole benefit of the international loan sharks and the agonized detriment of everyone else. All that is now required is the willingness to use it.
This brings us neatly to the other, brighter side of the Monetary Reform (MR) coin: when we examine the possibilities presented by the implementation of a true money system rather than the elaborate system of usury that masquerades as a money system, we discover that our prospects for stability, prosperity and monetary justice are remarkably rosy.
Man, the utterances of his defamers to the contrary, actually has a lot of things going for him right now: highly advanced technology, unprecedented levels of scientific know-how, computers, global communications, a sense of global community, fantastic productive capability and many more.
Unfortunately a sane money system isn't among them and this constitutes a rather horrendous omitted basic that considerably nullifies the beneficial potential of his achievements. It throws the whole drive towards the creation of a truly worthy civilisation off the rails and, if we do not act with some sense of urgency to correct matters, will propel it over the lip of the nearest ravine.
Lamentably, the present system has been inflicted upon us for so long that its chaos has become the norm. It has consequently become difficult for people to believe that very much better than this can be expected of human affairs. Given our history to date, any attempt to demonstrate the attainability of a stable and well run economy can, by comparison with the woeful condition of the status quo, appear Utopian. It is a telling indictment of the status quo and of Man's loss of confidence in his ability to do anything about it, when the contention that maybe we could make a better job of economics is regarded as a Utopian daydream.
Yet, given our current very high level of technological know-how, the accumulated experience of many thousands of years of civilisation and the sincere desire of many millions of people armed, at last, with a correct analysis of precisely why our economic life has been thrown so dreadfully out of kilter, it is neither Utopian nor unreasonable to expect to see a well managed and stably prosperous world. All that stands between us and such a world is the implementation of a decent monetary system and even here what is lacking is neither know-how nor historical experience; merely honesty and common sense - and, frankly, an intolerance on our part of poor political, social, economic and organisational performance. One does, after all, tend to wind up with what one is willing to put up with.
Those with a vested interest in the continuation of our current money/banking system will not wish the victims of their fraud to see the opportunities opened up by the restoration of honesty and full democratic accountability to the simple process of money creation. Vested interests are doing very nicely, thank you, out of chaos and human misery and do not want things to change just because millions of us ordinary folk could be happier and more secure or that millions of Third World children might not have to endure the slow painful torture of death by starvation.
There is, for those vested interests, the hideous prospect that when people realise that they do not have to put up with high unemployment, powerless and inept government, sham democracy, declining services, a crumbling standard of living, endemic debt, monetary conquest and enslavement and all the other ills that result from a corrupt and inherently unworkable money system, they are certain to refuse to tolerate it a moment longer.
Moreover, when the many honest people in government realise that the economic tools for sound, indeed creative, administration are simply lying there just waiting for someone to pick them up and use them, they are unlikely to wish to remain the unwitting proxies of banking interests.
In the end, of course, whether you will demand improvement or accept the continuing blight upon your hopes and your children's hopes is your choice. But in order to choose, you must first be able to see the alternatives.
You have a right to know that a way out of our economic mess exists. That way out is neither complex nor difficult, given the will to avail ourselves of it. For once, this alternative is not something that can be foisted upon man either by trickery or force. To work, it requires your understanding, your support and your participation.
It is this that I am going to attempt to show you in this booklet, by taking a brief look at how a proper money system can be expected to work in the service of all honest men rather than a small, corrupt clique of global loan sharks.
The Basic Reform
Currently, as my other essays have outlined for you, virtually all of the money in the economy is supplied by the banking sector as interest-bearing debt. Banks create money out of thin air, lend it to private, commercial, mortgage or government borrowers and then demand that it be paid back at interest.
From this hidden corruption of the purpose and function of money spring the many economic ills of which we are all so well aware. When this basic hoax is understood, we discover that chaos is not some natural condition of human affairs and neither does it derive from some flaw in human genes, the will of fickle gods or the futility of existence: it has a cause that is entirely rectifiable. When you remove the cause of chaos in a particular area of human endeavour, the chaos evaporates. And so it is with the chaos that currently exists in the economic sphere.
Correction of this flaw is very simple and well within our capabilities: the privilege of money creation must, as a matter of urgency, be removed from the banking sector and restored to government. Government, and government alone, must satisfy all the economy's needs for money by creating it and then spending it into the economy never lending it.
This a very uncomplicated change but one with far-reaching benefits to everyone. Even the banking sector will benefit in that it will become more honest.
Money is Man-Made
We have become so used to continual money shortage, ever-rising debt, unemployment, business failure, declining services, recession and all the rest, that we think of such things in much the same way we think of natural disasters such as hurricanes and earthquakes. We believe we have economic troubles because there is "not enough money to go around," as if money were a somewhat scarce natural resource.
But money is not a natural resource. Human beings create it and determine the level of its supply and of all the things Man creates it is just about the easiest there is.
The fact is someone has to create money and get it into circulation and then increase the money stock as the economy expands. That currently banks create new money out of nothing and lend it to us, whereupon we spend it into circulation and pay a toll for the privilege, does not mean either that it is a very clever system or that it enjoys the status of holy writ that we should never dare contemplate changing.
In fact when one looks for an adjective to describe the current system, the word imbecilic comes to mind. An endemic shortage of money accompanied by a massive surfeit of debt is a man-made problem created by men, specifically a small coterie of international banking families and their allies, carefully never exposed by a compliant media and further hidden behind a smoke screen of complexity.
The fact is government can just as easily - indeed far more easily - create new money and add it to the money stock by spending it directly into circulation debt-free. Money created and put into circulation in this way obliges no-one to carry a debt so that it can exist and no spiral of worsening money shortage and increasing debt is created.
This is uncomplicated common sense. It beggars belief that this is not being done. We would all be spared a great deal of stress, anxiety, debt, instability, uncertainty, bankruptcy, hardship and many of our fellow human beings even hunger and war if it were.
And nobody can give a single good reason why we should not do it.
Strong Government
Government's failure to correct matters and its willingness to continue to "administer" a crumbling system with a built-in design fault, renders it an accessory to the crime. This is certainly a situation where ignorance, where it exists, is no excuse. Our leaders and officials are duty bound, if their intent is really to serve their communities to the best of their ability, to study, understand and implement monetary truths and where they fail to do so they rightly deserve our outrage.
Given the opportunities reform presents to government any reluctance to do so is hard to comprehend. Government stands to benefit from monetary reform as greatly as the population it serves: it will have, for the first time in modern political history, an economic system based on sound, honest money to work with and administer and it will find itself at a responsive rather than recalcitrant and contrary helm: the pitfalls, hidden traps, confusions, complexities and dysfunctional mechanics of the current system will be gone. And so too, consequently, will government's perpetual embarrassment at its own apparent ineptitude.
Perhaps no-one has ever concisely defined government's job or stated what is the product of its endeavours against which success or failure can be measured. If we can define it in a nutshell as the creation of a safe environment in which all honest human beings can flourish and prosper, then monetary reform will provide government with the tools to do its job far better - if to date it has been able to do its job at all!
Government will be able to ensure stability and just rewards for its population. It will, if it uses the reformed system wisely, be able to slash taxes, eliminate debt and extricate itself from the perpetual "money shortage" that so sabotages the efforts of modern administrations. It will find itself with the means to support industry where needed, to embark upon a rebuilding of infrastructure, to steadily eliminate poverty, slash unemployment. To deliver on its promises and bring about stability, sustainable growth and a revival of the nation's stricken fortunes will become possible in deed as well as word and government will receive the enthusiastic support, rather than the disillusion and resentment, of its people. And that is strong government!
Such a bold, sweeping statement sounds like every politician's unattainable dream, particularly when compared with the dreadful mess in which he is presently obliged to operate. And every voter's dream too.
But that is precisely what is on offer.
Goals
Once we restore money's proper function of facilitating the distribution among people of the abundance our advanced civilisation is able to produce, the shape of the world will depend very largely on what people want it to be like. This is in stark contrast to the current scene where the vast majority of human beings do not live in the kind of world they want and, making the best of the world they've got, have probably given up hope of ever being able to do so.
How government will work with honest money will depend upon how astute are its planners and leaders. What its priorities will be when it finds itself in command of a more responsive economic helm will depend on the mandate it receives from its electorate. It is not for me to say what people will or should want, what their priorities will or should be, and thus what mandate will be given to post-reform governments, neither can we accurately predict how far we can further extend our know-how and technical expertise in pursuit of our goals.
However, what we can predict is that Man will be able to pursue his goals on a far more level economic playing field and within a far more stable and benign fiscal environment than is currently permitted to exist.
Imagine...
What would happen if people, businesses and government did not have to carry vast amounts of debt in order for the money supply to exist? What would happen if we removed shortage of money as an impediment to economic activity? What would then be the limit to what we can create and have, in other words to our wealth?
We can fully appreciate this when we consider just how corrosive is the ever increasing cost of debt servicing. Money committed to servicing debt, whether through the installments we are committed to pay on our loans and mortgages or interest on our credit cards and overdrafts is money which we cannot use as a medium of exchange with which to purchase goods and services and which instead is siphoned off as a steady stream of profit to the lending institutions.
Businesses have loans, overdrafts and mortgages they must service and the cost of that debt servicing is passed onto us through their prices and so debt pushes up the price of almost everything we buy.
Government pays billions annually in interest on the national debt and that cost raises our taxes or eats into the money government can spend on service provision. Local councils too are in debt and the cost of servicing that debt is passed onto us through our council tax. Virtually every bill we pay, be it water, electricity, gas, telephone and so on is similiarly inflated by a debt component.
Moreover the local council, central government, water, electricity, gas and telephone companies et al and every business that sells us goods or provides a service themselves buy goods and services in the process of manufacture or production - goods and services whose prices are inflated by debt - and that cumulative added cost is passed onto us as consumers. Worse, this is a deteriorating situation in that the debt burden distributed through the economy is increasing, rendering debt servicing an ever larger component of cost!
If debt servicing increases as a proportion of total income, the remainder of that income which can be spent on goods and services - actual spending power - becomes proportionally smaller. What we experience across the economy as a result is a worsening scarcity of spending power.
Imagine a factory that makes clay pots. It is able and willing to produce enough clay pots for everyone in the nation to own a clay pot and not just any old clay pot but a well-made, unbreakable clay pot. Everyone in the country wants to own a high quality clay pot but the country is a bit short of circulating money and only half the population can lay their hands on enough money with which to buy one. The factory is therefore only able to sell half the clay pots it is able to produce - from its point of view there is only a demand for half the number of clay pots it can make. However everyone wants one so it is not demand that is wanting but the consumer's ability to express his demand in the way demand is expressed, through bidding money for the product. Alternatively the factory can produce inferior quality clay pots more cheaply so that more people can afford to have one - and lo and behold there is a "demand" for low quality clay pots. The impediment to the factory being able to distribute quality clay pots so that everyone can have one is not lack of willingness, inability to make clay pots, lack of clay, lack of people to man the factory or lack of desire on behalf of the consumer. It is merely lack of money with which the consumer can bid for the product. Yet, given the ability, resources and willingness to produce clay pots and the consumer's desire for them, it makes no sense at all that everyone cannot have one!
There is a breakdown, then, in the distribution among people of expertise, resources, materials and products and it is money which is supposed to facilitate, not hinder, that distribution. The obvious solution is to increase the quantity of money in circulation so that consumers can lay hands on enough of those tokens of exchange we call money to be able to express their demand for a high quality clay pot. The factory would then become able to sell the clay pots it is able to produce, to all the people who want clay pots.
Unfortunately the current system of money creation does not quite work like that. As my other essays show, the shortfall of spending power on the part of the consumer derives from the practise of creating money as interest-bearing debt. In such a debt-money system, as soon as one tries to increase the stock of circulating money through the process of lending it into circulation at interest, one actually increases the shortfall in consumer spending power!
The trick then is to correct this flaw in the process of money creation, to create and issue money without a debt behind it so that as the money stock increases, consumer spending power increases.
The limit to our wealth would then become what we have the physical and human resources, know-how and desire to do. That is a far higher limit than the one currently being set artificially low by an engineered shortage of money. And it is the only limit that should exist.
If our goal is a stable, smooth-running economy that rewards honest endeavour so as to maximise human, material and technical resources in the service of real human need, then supplying that economy with its means of exchange through the mechanics of lending is manifestly inadequate to the task. In fact it is a recipe for the very disasters and decline we see all around us.
Supplying the economy with money debt-free, however, is another matter entirely.
Government Supply of Money
Let us, then, imagine a government elected to power on a popular platform of monetary reform. Our new government would implement the basic reform: the removal from private lending institutions of the right to create new money and to charge, for their own immense profit, everyone else for the use of it; it would restore to elected government of the exclusive responsibility of creating and spending into circulation all new money required by the economy.
Ironically, by establishing a system whereby government creates money and spends it into circulation one is doing what most people assumed was happening already! This incorrect assumption is probably why the behaviour of the economy never quite seems to make sense, why it appears erractic and confounds our efforts to predict and the sums never quite seem to add up. Yet the fact of the matter is that government currently creates and spends into circulation - in the form of notes and coins - only around 3% of our total money stock.
Unbeknownst to us a very different money system, entering very different factors and influences into the economic sphere, has been in use for some considerable time: banks currently create and lend into circulation the remaining 97% and for that 97% to remain in circulation businesses, home-owners and government must carry (at a usurious rate of interest) the debt that enables it to exist.
Our reforming government, however, will merely increase the aforementioned 3% to 100% - some in the form of notes and coins and the rest in the form of electronic number money according to the economy's relative needs for either form - and make it illegal for banks to create any new money at all.
This then is not a new idea, it involves merely doing more of what the government is already doing, creating money and spending it into circulation. The only change is that it will satisfy thereby all the economy's need for money, rather than restricting itself to satisfying a tiny bit of that need and leaving the bulk of the job to the banks.
In either system money is created and put to use. However, when money supply is conducted by the banking sector, the banking sector profits by levying a huge charge - called interest - for a service that requires relatively little endeavour: entering numbers into computers. Government on the other hand, seeking no personal gain, provides money as a service to the economic community.
Government supply of money is immeasurably cheaper in other words, not only in a financial sense but, as we have seen with the debt-money system, in terms of removing the imbalances, stresses, poverty and decline inflicted needlessly upon the people.
When one looks this over closely one sees that, administratively, this is a simplification that involves relatively small amounts of adjustment and change. The biggest adjustment required is to our assumptions and thinking and the biggest change will involve embracing new high levels of productive possibilities for the economy as a whole.
Banks Will Still Bank
None of this means that banks will be completely forbidden ever to lend money. It simply means they will not be able to create new money in order to lend it but will only be able to lend money that already exists: that is, real money sitting as deposits in their customers' accounts or their reserves.
In effect one is removing from banking a function - money creation - that does not belong to it and restoring that function to the organisation - government - to which it does rightfully and logically belong.
The functions that do rightfully belong to banking - safeguarding, managing and investing their customers' money - will remain with banking.
The banking sector will, of course, no longer be in a position of mastery over government and the economy but this again is a function that does not belong with the banking sector, which like any other industry or sector has no right to a privileged place in the governance of any nation, but belongs with government and, once we achieve the status of real democracy, ultimately with the electorate.
Banking meanwhile will become what it should rightfully be: an industry providing a service for which it charges a fee and which profits or fails to profit on its performance in providing that service. That service of looking after other people's money might come not to involve money lending as its dominant function because any economy adequately supplied with debt-free money by government will not suffer anything like the current pressure placed upon industry, consumer and government to borrow.
The removal of a flagrant and destructive dishonesty from banking practise - the lending at interest of money that did not previously exist to people who largely only need to borrow because the lending at interest of previously non-existent money is the means of money supply - would restore banking to the status of honest business. As such it would be due all the rights and freedoms to which any honest producer of a labour, product or service is due and in a thriving democracy such rights and freedoms will be broad and many.
The People Decide What's Fair
The first task of our new, reforming government will be to remove as quickly as possible from the shoulders of people the twin burdens of high taxation and high levels of debt. The aim to which that task is directed is to enable people - all people - to get busy and flourish and prosper as quickly and with as little needless encumbrance as possible.
Punitive levels of tax and crushing levels of debt are, simply, oppressive evils that people bear as a direct result of a debt-money system and are neither "natural" nor unavoidable as my other essays have explained. That we have been forced to endure them for a very long time is no reason people should be made to endure them a moment longer than necessary.
So as to alleviate the debt burden, restore monetary justice and end the unjust profit and privilege of monetary fraud, government can call a moratorium on all existing debts that are based upon the lending of money created by lending institutions out of thin air.
This would not include the lending of money previously existing as valid deposits and the government will act to fully safeguard and guarantee the current, deposit and savings accounts of all individuals and businesses as well as honouring its debts to pension funds.
A fully open public debate will be held in which the matter of the honesty and ethics of lending non-existent money and the justice of the indebtedness resulting there from will be examined. The people will be asked to consider whether the wealth and power amassed by banks through lending money that does not exist constitute ill-gotten gains and whether, morally, people should be asked to continue repaying such loans.
Utilising all the channels of communication made available to us by modern technology, by dropping all overt or covert censorship of ideas and opinions so that all shades of opinion have free expression and by refusing itself to utter knowing falsehoods or issue misleading statements, it is entirely feasible for government to make such debate possible. Through a referendum, the public will then finally decide which and how much of these debts, if any, should be declared null and void and which, if any, should be honoured. Government will be bound to honour the public's decision. If the public vote for such debts to be honoured then repayment of them will resume. If the public decide such debts are invalid, then they will be cancelled.
It is our contention that cancellation of much of the nation's debts would have a considerable positive economic impact on the lives of ordinary people, of industry and of the government that serves people and industry. For example, the vast majority of mortgage holders would assume outright ownership of their properties with no further mortgage payments to make while government, saved many billions a year in payment of interest on its debts, will be able to use that saved money to reduce the tax burden, improve services or some combination of the two. With removal from banks of the right to lend money into circulation the debts would not be built back up again and a far lower level, perhaps even a negligible level, of indebtedness would become the norm.
It is not hard to imagine the lifting of stress and anxiety from the shoulders of millions of citizens that would result from the declaration of such debt as legally null and void: it would have the effect of converting the circulating money stock into debt-free money, money that can now be used exclusively to perform its proper function: the exchange among people of goods and services.
This appears to go against our instincts: it is natural and honourable to wish to honour one's debts. But that assumes the lender lent us money that he had in some way earned or legitimately acquired, that the debts in other words are debts in the sense that we understand debt. This is not so in the bizarrely unique case of bank lending where the money lent was created out of nothing simply by writing, so to speak, numbers in a ledger. Cancellation of such debt would end a massive injustice to millions of borrowers who must in effect labour to create real wealth and deliver it into ownership of the banking sector whose only "contribution" in exchange is to create debt for others to carry. Such lenders would not be disadvantaged by a refusal to pay them money they did not in fact have to begin with.
Others have differing views as to how monetary reform should be carried out or the speed at which a transition from a debt-money system to a true money system should be brought about. Mine is a moral as well as pragmatic stance. One winds up with what one is willing to tolerate and I see only folly in continuing to compromise with dishonesty. To continue to leave repayment of such dishonestly engineered debts in place would be, in effect, to leave the banking sector, particularly the faceless men who have ultimate ownership of it, with a continual stream of ill-gotten gains, a growing reservoir of unearned wealth and considerable financial power with which to affect the course of economic events. Put simply, it just ain't right and the sooner we as a community cease to tolerate what just ain't right, the sooner we can move our civilisation up to as new plateau of honesty and true, equitable, justice for all.
There might, while we are about it, be other areas of possible injustice the population would wish to consider: namely the legitimacy of the massive ownership of land, farms, industries and other assets acquired by the interwoven banking and multi- national corporate interests on the strength of a fraudulent and unfair control of the money supply.
For example banks, to suit their own purposes, have been able to crash companies, farms, industries or even entire economies simply by manipulating the money supply, often thereafter buying up their assets for pennies on the pound; the massive power of the multi-nationals, which dwarfs many elected governments and holds many more to ransom, has arisen upon its alliance with the banking sector and its resultant easy access to the financial power of bank credit; and the whole process of globalisation and world governance, upon which its victims - the people - were never consulted, has been entirely engineered by those same banking/corporate interests.
The central principle is that it is both perfectly reasonable and absolutely essential if we are to achieve a fully open, just and democratic society to have all this debated openly and those affected by it - the people themselves - to decide what is fair and what is not.
Reform must be a fully democratic, communal undertaking, all views should have the right to full expression and the final decision, whatever our own views on the matter, must belong to the electorate. If this spirit of openness, full democracy and participation in a communal endeavour is carried forward, any decision can be later amended by a similar process if some more optimum course of action becomes obvious.
A Lot More Spending Power
The release of spending power occasioned by the freeing of large chunks of people's incomes, government tax revenue and business earnings from a commitment to servicing debt would be considerable.
Business, relieved from the debt that is a large component of its costs, would find true solvency far easier to achieve. At the same time the main source of the upward pressure on prices - the ever increasing cost of debt servicing - would be alleviated. Government, no longer obliged to pay billions of tax payers' money per year in interest on the national debt, will have that money to spend on providing service to the tax payer instead. And the consumer would find the portion of his income that had hitherto been siphoned off into the coffers of the money lenders is now his to spend as he wishes on real goods and services, both improving the quality of his life and stimulating commerce.
The Spectre of Inflation?
It is claimed that empowering government to simply "print" and spend new money into the economy will be inflationary. This is the main argument that the beneficiaries of the current system put forward to discourage the notion of government performing the job of money creation. It is simply not true and if we buy it we are buying a thin excuse for leaving the private banking corporations with the highly profitable privilege of debt-money creation.
The mere fact of restoring to government the duty of money creation will not of itself cause inflation. There will not be inflation if the rate of increase of money supply keeps pace with the rate of increase of economic activity. If new money is spent in the direction of factually stimulating and nurturing increased production, and is not spent into the economy in excess of the increase in production, there will be no inflation. This presents government with almost limitless scope for judicious spending.
Government is quite capable of monitoring prices, incomes and the spending power of the currency and if inflation occurs, it is quite capable of noticing it long before it reaches even a few percentage points. So are the media, government watchdogs, opposition parties, consumer groups, trades unions, employers' associations and in fact just about everybody.
Rising prices, declining monetary value and so on will provide clear evidence that government has, for whatever reason, gotten its sums wrong. Government will be obliged to correct an inflationary situation and can easily do so by holding off on money creation until the situation stabilises or by withdrawing money from circulation, for example by levying a temporary tax and expunging the money so collected. That way, if it is needed, a more gradual increase in consumer spending power could be achieved, creating a rise in consumer demand for goods and services with which industry can keep pace as it expands production to satisfy it.
We think the need for such a tax unlikely, except perhaps as an emergency measure to correct an extreme over-supply of money by government. The formula for dealing with any manifest inflation becomes quite simple: increase production and reduce government spending.
Moreover, Parliament can, if the electorate so empowers it, enact laws rendering incumbent government indictable for permitting inflation to run uncorrected above certain (low) levels.
The calculation of how much new money government is authorised to create and spend (but not how it is spent) could become the job of a new Crown agency legally constituted to be immune from party politics or political influence yet still working under the spotlight of public scrutiny.
Such options would be the subject of democratic choice and one envisages a scenario in which different parties each put forward their own programmes for reform with their own proposed safeguards and fail-safes and the public chooses between them.
Once money itself is straightened out, inflation becomes no longer the hideous spectre it has been until now. It can be understood, its indicators read and correctly interpreted and it can be handled very easily. More importantly, an astute and responsible government will be able to avoid it entirely.
A Government Watchdog.
Another safeguard can be provided by setting up a government watchdog to scrutinise the actions of the various agencies concerned with government creation of new money and its general handling of the economy in the new era.
Such a watchdog would have no executive, legislative or judicial powers but its function would be to advise government and its agencies, as well as the public, and to report directly to the public on the government's financial conduct, issuing warnings where such conduct is found to be undesirable or potentially harmful to the nation.
Such a body would be controlled by private citizens, its managing committee perhaps drawn from the leading groups and individuals in the monetary reform field and employers', employees' and consumers' representatives. Its constitution would stipulate the same degree of impartiality expected of the judiciary and the only vested interest its members would be permitted to have would be the vested interest of any private citizen in a stable economy marked by smooth exchange between producer and consumer.
Government would have no powers to interfere with the body's appointment of members, deny it access to information or in any way interfere with the publication of its observations. Government would be obliged however, by law, to provide sufficient funding for the Watchdog to operate.
We will have thereby an organisation exterior to and separate from government, able to keep government, the media and the general public accurately informed as to the government's handling of the economy.
Protecting The Citizen From Harm
Government should act to protect anyone unfairly disadvantaged by this change in our affairs, whether on the matter of property ownership or some other concern, establishing a judicial body that will review each case on its merits and then compensate for unjust loss, where applicable.
Such protection would include the legitimate functions and viability of banking and the welfare of employees of the finance industry.
Access to such justice should be free to any citizen and government should err on the side of generosity. The whole purpose of reform is to establish a more workable system that is to the advantage of all honest people and effective measures must be taken to protect from loss or harm or victimisation those who act and have acted in good faith. There is no room in this reform for the punishment of anyone - not even the bankers, whom we only wish to admit to the ranks of honest men.
Re-building the Nation's Productive Base.
It is conceivable that, as the nation's productive base has been decimated to a degree far more catastrophic than the public have been told by decades of monetary mis-management, a considerable rise in consumer spending power occasioned by cancellation of unjust debt could result in a rise in demand for imported goods.
This would of course upset the nation's balance of trade, render us a net debtor with the international community and devalue the purchasing power of the national currency abroad.
Once again it is well within government's capability to monitor the situation. If needed, it can levy a tariff on imports so as to keep the buying of foreign goods at a sensible level where any spending abroad is backed by the production of tradeable goods at home. What is left of the home market can thereby be protected whilst existing industries are rebuilt and new industries created.
The buying or selling of goods between nations using money as the medium of exchange nevertheless boils down to the exchange of goods or services for goods and services and any nation wishing to acquire goods and services produced by other nations must have industries capable of producing goods and services other nations will wish to buy.
A nation, ultimately, is only as wealthy as it can itself produce products for its own consumption and/or exchange with other nations. For a nation, like any individual, to become wealthy by any other means involves conquest, theft, enslavement, fraud or some other criminality or parasitism.
Reconstruction of the nation's productive base would be a high priority for any new reformist government but, with monetary reform and control of a debt-free money supply, the means to catalyse such a transformation will be at government's disposal. Home industries, freed from the excessive burden of debt, will at the same time be at a considerable advantage in both the home and international market place, in terms of production costs and prices, over competitors based in nations still labouring under the weight of a debt economy.
Harmony
Industry distributes consumer spending power through wages, salaries, fees, commissions and so on. If industry wishes to produce and sell more and make healthy profits it must sell its products at prices that enable it to do so. To secure those prices from the consumer it must provide the consumer, through the paying of wages and salaries, with sufficient spending power to enable the consumer to meet them.
Industry as a whole, if it is to prosper, has a vested interest in ensuring the payment of wages sufficient for the consumer to likewise prosper. Industry and its employees have always had this common interest but it has been obscured by the presence of industry's and the consumer's debt burden, which removes spending power from circulation, forcing industry to try to keep its wages bill below the level that would enable the consumer to pay the prices it needs to secure. At the same time the consumer has been forced to seek wages in excess of what industry is able to pay.
The effect has been to completely disrupt and distort the smooth distribution of spending power upon which economic life depends and place employer and employee into a state of competition with one another, where there should be harmony, partnership and common interest. It is this factor that lies at the root of much of the industrial strife, poverty amidst plenty and social injustice of the last few centuries.
Removing from industry and consumer the unnecessary burden of borrowing into existence, at interest, their own means of exchange will assist the establishment of that state of harmonious common interest.
Lower Costs, Increased Profitability
It is not hard to imagine the opportunities for business to flourish in an economy with low taxation and negligible levels of debt.
Most producers endure two unnecessary costs: excessive taxation and the excessive repayment of debt. Those costs have to be covered by adding them into the prices charged the consumer. Once they are removed, there will be scope for a considerable reduction in prices relative to the consumer's available spending power.
Provided enough money is put in circulation to satisfy the needs of commerce, enabling it to charge for its products prices that accommodate all its costs and a healthy level of profit, industry will be greatly more able to operate with a profit and re-invest from profits. The need to borrow to invest or to run on bank loans and overdrafts will very largely disappear. Running into long-term debt will become a true indicator of poor business management rather than a virtually unavoidable normal business practice.
More Money Needed
Unburdening both consumer and producer of hindrances to production and smooth exchange will enable greater levels of demand to be expressed by the consumer and met by the producer. An increase in economic activity will result. The increased amount and variety and quality of goods and services of all kinds being exchanged among people will require new money to be created by government and spent debt-free into circulation so as to keep pace with economic expansion.
Thus money will work as a facilitator of economic activity and not as a facilitator of economic plunder by the banking sector. Government will be able to fulfil a role that aligns with its true function yet presently always eludes it: to stimulate and support, rather than stifle and hinder, the economy.
Monetary reform presents government with what Abraham Lincoln called its "greatest creative opportunity".
In essence, the demand for new money occasioned by economic growth provides government with a second source of revenue quite in addition to what it raises through taxation. This is debt- and tax-free revenue.
On what government will spend that new money will depend on its mandate and its stated priorities. The amount of new money the government has at its disposal will depend upon its adroitness in facilitating an increase in the quantity and quality of goods and services in the market place. The better a government does, the more it - and the population - will be rewarded by having more money to spend.
Increased Tax Revenues/Lower Taxes
Production will increase as industry seeks to meet the consumer's improving ability to express demand. Increased production will increase the distribution through wages, salaries, fees, commissions and so on of consumer spending power. This in turn will facilitate the expression of more demand, stimulating more production, employment and distribution of wages. Increased production, employment, sales and profits will result in an increase in government tax revenues.
This will enable a prudent government to bring down the tax rate whilst increasing total tax revenues: and this is the prize for any government able to sensibly balance these two factors.
Where local or central government borrows to finance the building of some public amenity, which it does frequently and in increasing amount in the current system, the effect of interest payments on such borrowing over a number of years is to greatly inflate the overall cost of it. For example a new market financed with £20 million of borrowed money that is paid back at 5% interest over 20 years will cost in total £40 million and that doubled cost is borne by the tax payer.
After reform, government will no long need to borrow money to finance projects and will instead find the money from existing revenues or the revenue provided by the demand for new money. The result will be a considerable reduction to the tax payer of the cost of financing government services, providing government with a further opportunity to increase service provision and reduce taxes.
Local and central government is a consumer of equipment, fuel, stationery, raw materials, contractors' services and so on and in the present economy the debt component places an upward pressure on the price of its purchases. This in turn places a pressure upon government either to "economise" by reducing services or to raise local and central taxes to cover increasing costs or, of course, a combination of the two. The tax payer therefore tends to find he is paying more and more tax for less and less service both at central and local government level. After monetary reform, the continual inflation of costs for both government and its suppliers that is occasioned by debt servicing will have been removed.
The aggregate effect of reduced costs, removal of government's obligation to repay annual interest on its borrowing and increased revenues resulting from increased production present considerable scope for reducing the people's tax burden whilst at the same time making significant improvements in service provision.
It has been estimated that government may be able to reduce taxation by as much as 12p in the pound without any loss of services - in fact whilst improving services. We suspect that in the long term the reduction of the tax burden may be considerably more than that. This will be particularly so if government's emphasis is upon reducing taxation, in our view a correct emphasis because the tax burden alone operates as a massive suppressor both of consumer spending power and industry's viability and it effectively penalises production.
Alleviating the tax burden will establish a new right for producers: the right to keep that which has been honestly earned.
There may be other areas where government can increase the efficiency, fairness and viability of tax collection, and further bolster that new right: for instance, by the abolition of income and other taxes and the instituting of a single purchase tax through which all government tax revenue can be collected.
The existing complex system of overt and covert taxation acts to hide from the tax payer the full extent to which he is denied the right to keep and direct the expenditure of what he has earned and a single purchase tax will make the extent to which he is taxed very clear, as it should be. However, such reform, being tax reform, is beyond the scope of a purely monetary reform campaign.
Current punitive levels of taxation, occasioned by government debt and escalating debt-derived costs, will become a thing of the past. The process of more and more tax for less and less service will be reversed. The point will be reached where the citizen as consumer or producer no longer experiences taxation as a burden or imposition but instead as a fair and affordable payment for valuable services rendered.
Vanishing Debt
Oppressive levels of individual, business and government debt likewise penalise our efforts to become more productive. Arising from the fact that money is supplied to the economy as debt, interest payments on such borrowing amount to a toll or tax we must pay for for using our own means of exchange. Each time we use such money - that is, electronic, cheque or credit card money we pay a fee for the privilege and so it costs us money to use our money! The only money that does not cost us money when we use it is notes and coins because this is supplied free of such tolls by the government.
After reform, all money will operate as government-supplied notes and coins do at present, in that it will carry no debt burden and we will be charged no toll for the privilege of using it.
It is unlikely that all borrowing will cease, particularly for larger consumer items, but the level and frequency of borrowing will drastically decline. Any rise in the general level and cost of borrowing, either by the consumer or industry, would be taken as an indicator of a possible under-supply of money which the government would be expected to scrutinise and, if proven necessary, correct.
What borrowing remains in a post-reform economy will be of already existing money. It should in fact become possible for people to save over a manageable number of years, the money required to buy their own homes.
Mortgages
When we examine the current high cost of housing we discover that around 60% of the entire money stock is created by mortgage borrowing. Property prices are inflated by the injection of massive amounts of borrowed money into the property market. By pushing up prices the lenders necessitate even higher levels of borrowing, all of which is to their immense profit but enslaves everyone else to a lifetime of paying off the interest. A £70,000 home ultimately costs the home-owner around £200,000 and both sums are ridiculous when one examines what it actually cost in labour and materials to build that home - as is the fact that in order to acquire one home a mortgage borrower often has to shell out the money for two or even three homes!
All of this means that property prices can be expected to drop to far lower levels that actually reflect the cost to the builder - himself saddled with fewer debt, tax and other costs - of building the property and making a reasonable profit when he sells it and real supply, demand and competition within the property market.
In case anyone is alarmed by the prospect of the house for which he paid £70,000 dropping in price to some fraction of that amount, he should reflect that if his mortgage has been cancelled he will now own the house outright and all the money he makes when he sells it will be his and any subsequent property he buys will also be commensurately lower in price.
If we remove the debt component that pushes up a property price into the stratosphere and take into account the real cost of building it and a reasonable profit when selling it and factor in increased consumer spending power, the ending of the money scarcity that obliges people to borrow rather than to save, and freedom from taxation, real home ownership becomes an attainable reality.
Indeed, if there is a situation in which the consumer is unable to save over a realistic number of years, or borrow without taking on a life-time of high-interest debt, the money needed to acquire a home, government should review the money supply to see if an increase is needed.
Growth
Currently, economic growth is debt-driven. Companies seek to expand sales to capture the consumer's perpetually scarce spending power and stay ahead of their expanding debts. They centralise, "rationalise", shed labour and mechanise, bulk market and bulk produce as cheaply as possible as they are caught between the conflicting pressures of consumer spending power inadequate to meet the prices they need to charge and the inexorable rise of their debt-derived costs.
As a result industry finds itself embroiled in commercial warfare in which it is driven to compete ever more frantically in a ferocious market and to sell, re-sell and sell again to consumers who are persuaded by a relentless storm of marketing psychology, tricks and gimmicks to want what industry is able - within existing strictures - to produce.
This is a theatre of operations which, like any war, leaves little room for planning for the needs of future generations, ethics, compassion or human sensibilities. Such things are not, of course, lost to Man but his decent motivations are contradicted by the "market forces" of a system that was never designed either to serve them or permit their expression.
Real human need extends wider and deeper than the ownership of mobile phones or the consuming of brightly packaged beefburgers. A system that cannot meet the full spectrum of human need and for which the spectrum of needs it can meet perpetually narrows is not only pointless it is a liability. In the current climate, concern for the real needs of people as whole human beings, of the need for community, a stake in the nation's future, for meaningful work, the overall quality of living, a judicious regard for the needs of future generations and the ability of the environment to sustain life increasingly become luxuries "no-one can afford."
The reckless genetic tampering with the food chain, destruction of the rain forests, the continual downgrading of services such as Health, Education or the railways, the plunder of the Third World or the destruction of whole communities or whole sectors by the closure of productive industries are among a vast number of cases in point.
Reform will, as the money supply is increased debt-free, enable an ever wider band of diverse human need to be expressed and, provided the physical means exist, to be met. Producers will still compete to provide the best service, prices, product and so on but they will be able to compete within a framework of adequate rather than scarce consumer spending power.
They will also compete on a more level playing field because in a debt economy an unfair advantage in the market place is secured by he who has unlimited access to bank lending. Indeed, the manipulative influence of the money lenders who can decide who will receive loans and live or be denied loans and die, to control the fortunes of industries and businesses by their lending policies or even manipulate the money supply in order to acquire control of the nation's assets, will be neutralised.
Removal of the debt basis of the money supply will, without eliminating competition or returning us all to a pre-industrial and entirely fictitious Utopia, remove these distortions, end commercial warfare and replace it with sane competition and render economic growth a matter of discovering and catering for real human need.
Money is the means by which human beings express demand. When money is restored to that sole function, real human need will finally have a means of expression unalloyed by extraneous factors and the supplying of real human need will have a means by which it can be properly rewarded.
Money will, as the venerable Abraham Lincoln pointed out, become the servant of humanity, not its master and growth will be driven by the supplying of need rather than the servicing of debt.
Quality Driven Growth
Our use of the term economic growth in the context of a post-reform epoch should not therefore be confused with the debt-driven growth and mass junk production of the current era.
Monetary reform will provide the consumer with increased spending power, and spending power that will rise to match the increase of goods and services on the market in terms of quantity and diversity and quality.
The new economy will be far more able to respond to consumer need. If the consumer wants junk products, shoddy furniture, shoes that fall apart, cars that rust, kettles designed to break down and food of dangerously low nutritional value, then that is what the economy will provide. We suspect that given the choice this is not, by and large, what human beings want and, given the means to express it, their demand will be for something much better.
The current prevalence of junk production derives from the widening gap between consumer spending power and industry's costs, which forces the consumer increasingly to buy cheap and the producer increasingly to produce cheap. An increase in consumer spending power and a narrowing to zero of the gap between it and industry's costs will provide the consumer with sufficient spending power to begin, if he wishes, to be able to express a demand for improved quality and durability.
To produce a poorly made kettle using cheap materials and minimal labour costs so much. To produce a kettle of superior quality made with better materials, using more labour and taking all necessary measures to protect the environment during the production process obviously costs the producer more and that greater cost is reflected in the greater price he must charge the consumer. Similarly a rail network that transports people to their destination in comfort and safety cost more to build and run than one which skimps on comfort and safety.
The producer will be able to obtain from the consumer the price he needs to charge for an improved quality of product if the consumer's spending power rises to match it and the consumer's spending power will match it if sufficient money is circulated.
To improve the production of a product so as to safeguard the environment and make the product more durable and thus less wasteful of resources, even while the numbers of that product produced do not rise or even fall, is an increase in production because the effort to improve product quality and environmental safeguards involves an increase of labour, or in the activity of the machines that serve Man.
Similarly any extra activity involved in improving a service, cleaning up or protecting the environment or entering more care or craftsmanship into the production process involves economic growth but growth in the direction of quality rather than quantity bereft of quality.
It is within the power of government to assist - if assistance is needed - this move in the direction of improved quality. If we take food production as an example, government can set the minimum standards acceptable for food quality and nutritional content and insist that all food at least meets them. It can then gradually raise those standards at a pace the food industry can accommodate until an agreed upon optimum standard for food is achieved. If such an upgrading of food standards results in a rise in the industry's costs and thus food prices, such a rise would not be evidence of inflation because it has resulted from an increase in production through a change for the better in the finished product.
It is conceivable that an overall rise in costs may not result at all because at the same time a reduction of costs due to reduction of industry's debts and tax burden will be occurring. However such an overall increase in production unmatched by an increase in consumer spending power would create an overall relative scarcity of money in the economy which would show up in a slowdown in sales, reduced profits and a downward pressure on wages and a fluctuation (increase) in the value of the currency, which government would detect and correct by increasing the money supply accordingly. Through this process government could guide and assist a rise in general food quality, with a view to the eventual replacing of mass-produced, genetically altered, nutritionally bereft and chemically contaminated food by wholesome, tasty and nutritious food.
A vast improvement in the condition of our farmland and our environment would result, alongside a general improvement in the population's physical and mental health: the reduction of many diet-related diseases, mental and emotional disorders, allergies, dental problems and deficiencies. This would enable millions to be saved from the national health bill, a saving that would enable government to cut taxes accordingly and thus create a further saving to inustry and the consumer.
In a similar way, government could gradiently raise the minimum standards of environmental safeguards or foster the growth of new industries and sources of employment devoted to the prevention and cure of environmental damage.
At the same time new-money revenue can be directed as aid and subsidies towards assisting the revival of currently ailing or moribund industries. Our farming industry would probably be high on our list of priorities: it makes no sense for us to import food we can produce ourselves or be dependent for our food supply on foreign sources whilst our own farms lie in ruins. The decimation of our farming industry is a crime any government simply must correct as matters of human decency, national survival and common sense.
Monetary reform and an end to commercial warfare removes both a major cause of environmental decline and the major impediment to efforts to reverse that decline. It provides us with the crucial economic tool whose omission has hampered our efforts to ensure our own global survival.
Interest Rates
Raising and lowering interest rates are currently used as a clumsy mechanism to control the supply of borrowed money to the economy. Where money is no longer loaned to the economy by private banks the use of interest rates to control its supply it will become redundant. And so too will end the inordinate power of the banking sector to control our economic fortunes.
Interest rates will revert to what they should be: an incentive to savers and investors and a charge paid by borrowers for the temporary use of savers' and investors' money, with a mark-up that rewards the bank sensibly for managing such transactions.
In the post-reform epoch, where borrowing is in any case at far lower levels, interest rates will no longer have the overriding importance or impact that they have today and will be negotiated as a binding contract between borrower and lender, with the banks competing with one another in the market place to provide to saver and borrower the most attractive rate.
Calculating Money Requirements
An accountable Crown Agency will monitor prices, sales, profits, the purchasing power of the currency and overall economic activity. It will calculate therefrom the economy's need for money: the rectifying of any shortfall in money supply by creating new money and spending it into circulation or the rectifying of inflation by, if needed, withdrawing money from circulation. It will then duly authorise government to create new money or withdraw money from circulation.
It will be able, as it becomes expert in monitoring the economy and extrapolating from trends, to reliably predict future growth and thus achieve a smooth rate of supply of new money that minimises to barely perceptible levels any swing between money surplus and money shortage.
If government can manage the economy so as to keep it continually expanding, it will thereby ensure that it continually has new money to spend. For example if the economy were to expand by, say, five percent each year, requiring an increase each year of five percent over the previous year's money stock, then government will not only have a regular budget of new money to spend, but the amount of that additional spending power will increase annually.
The electorate will come to expect zero inflation, no recessions, a stable value for money, low taxation rates, plus all the benefits of regular expenditure by government of new money on public works. Moreover governments will be judged by their performance in this regard.
Sovereignty
He who controls the money supply of a nation, controls that nation. There can be no true sovereignty for any nation unless that nation's own government controls the nation's money.
Modern governments are hopelessly in debt and hopelessly dependent for their money supply upon the money lenders. If they step out of line their creditors can start calling in their loans or refuse to grant new loans. When a nation's money supply depends almost entirely upon the granting of loans, the prospect of the economic depression such an attack would cause is too gruesome for any government to contemplate. Governments do what their creditors tell them to do. Money power sets an international banking plutocracy above elected national government.
Yet this banking power and the apparent powerlessness of government rest entirely upon the smoke and mirrors involved in money creation and depend upon governments and their people remaining ignorant of the fact that it is smoke and mirrors. Banking leverage only remains possible while we continue to accept the status quo of money creation.
In other words it is we who, knowingly or otherwise, provide banking with the gun it holds to our own heads.
The moment people get the idea that they do not have to allow banks to create their money supply, do not have to borrow it into circulation and do not have to pay through the nose for its use and as soon as they realise that it is in numerous ways easier and immeasurably less expensive to have government create that money, banking's power over governments ends.
Thus monetary reform, in that it establishes elected government as the agency in control of our money, will restore to the nation true sovereignty that was lost long ago and we shall see in operation perhaps for the first time in our history true, factual democracy rather than the appearance of democracy veneered, so as to fool us, over a far different reality.
Government that no longer depends on borrowing to maintain the money supply is no longer beholden to creditors who can dictate its policy. It becomes master of its own destiny, bound by the mandate on which it was elected and no longer influenced by unelected and faceless money lenders.
National Solvency
The nation will no longer trade from a position of insolvency and be forced to export in order to obtain foreign revenue. The nation will be able to produce goods to satisfy its own needs for those goods and export its surpluses and thus achieve a balance of trade.
Government will no longer have to go cap-in-hand to giant multi-national corporations for investment but will be able to boost existing industry or foster the development of new industries by judiciously directing the expenditure of its own new money rather than relying on the "investment" of borrowed money.
The more it can get the wheels of industry going, the more it can assist the creation of needed and wanted goods and services of all kinds, or itself provide needed and wanted services to the population, the more demand for an increase in the money stock it will create...and the more money it will have to spend.
Instead of looking for ways to cut service provision, government will have a vested interest in increasing service provision.
European Union
Whether the people want monetary and political union with Europe will be a matter for the people to decide. However the reduction of taxation, near elimination of debt, renewal of infrastructure, full employment and national solvency of the post-reform world will render impotent the current bogus arguments in favour of union.
Most certainly the nation will have no need of the central but carefully never mentioned agenda of monetary union: control through the mechanics of lending of all European peoples from a single central bank in Germany.
Monetary Union, PR and disinformation to the contrary, cannot and will not deliver prosperity, stability or human freedom because it merely sets in concrete the very monetary folly that has so weakened and bankrupted European nations and delivers ultimate power to the very faction that has financed so many of Europe's wars.
The nation, restored to the position of an economic powerhouse, will be beyond persuasion that it needs such a union because the very prosperity, stability and freedom that union purports to deliver will already have been achieved.
Moreover, rescued from the control of its own creditors, and itself in possession of a full understanding of how the money scam operated, a free press will no longer be obliged to dissemble or propagandise a pro-union argument so as to further the aims of hidden money powers.
The proper, open and balanced debate the people so far have been denied will become possible.
Pension Funds
Currently pension funds lend money to government by buying government bonds, which are glorified government IOUs that are after a period of time redeemed by government at interest. The bonds are bought with real funds amassed from the contributions of ordinary people and the government later redeems the bonds with money taken from people in taxes. After MR government will honour all such bonds, redeeming them with new debt-free money until all such outstanding debts are repaid. As government will no longer be borrowing money, pension funds will then look for new areas and new ways in which to invest their billions and put their investors' money to work.
Employment
Production is the basis of human morale. To be able to give something in exchange for what he receives is the basis of man's integrity and to deny him the right to give as well as receive is, eventually, to render him criminal. One can conceive of no greater disservice to Man than to crush his morale by denying him the right to produce, or crush his self-respect by denying him the dignity of playing his part in the process of exchange.
This does not imply that production must be enforced or arduous or that work cannot be personally interesting or rewarding or that leisure is undesirable.
One only has to drive down any street and observe the somewhat neglected, knocked-about state of our environment, natural or otherwise, to know that there is much that needs to be done. Far from there not being enough work to go around, it is probably lack of human resources that will prevent everything getting done that needs to be done. Priorities will therefore have to be assigned and the huge backlog in the nationally self-sufficient production of goods and services, cleaning up and environmental repair, creation of amenities and so on tackled step by step in order of priority.
There is no reason why anyone has to be out of work unless he chooses to be, once we remove the money-shortage impediment to production. We cannot expect government to handle everything all at once but we expect in a relatively short period of time, through the elimination of debt, reduction of taxation, expenditure of new debt- and tax-free money on amenities, services and support for industry that we have outlined above, a condition of full employment to be restored. We see no prospect of humanity ever running out of things to do, new goals to achieve, new discoveries to make, new realities to create or new worlds to conquer. Man will only ever run out of meaningful work when he runs out of dreams.
Crime and Drugs
There are other factors and other agencies at work in the creation of our crime-and-drugs epidemic. Although they are intimately connected with the social control ambitions of the money powers they are beyond the scope of a purely monetary reform work.
The causes of crime and the related phenomenon of drug abuse are not exclusively economic but a dire economic situation provides a fertile ground in which crime and social decay can germinate.
It is true to say that a man becomes criminal at the point where he loses his self respect. The infliction upon millions of inexorable debt and insolvency, the removal from many of much hope for meaningful employment, the stress placed upon families by money problems, the immersion of increasing numbers of people into money difficulties, the increasing bleakness of the human landscape, the decline of education which affects people's ability both to assimilate information and to reason, redundancy, failed enterprise, the modern near impossibility of being both rich and honest, anxiety, sheer desperation, the exploitation of sexual urges by both the media and the unprincipled entrepreneurs who thrive in the increasingly degraded and amoral climate occasioned by all out commercial warfare, all work to erode man's self respect, sense of hope and belief in his own abilities.
In such a chaotic and degraded "civilisation" it is hardly surprising that crime thrives.
Monetary reform will bring about a money system that more fully rewards honest endeavour and which removes the twin suppressors of debt and taxation from people's efforts to prosper. It will end commercial warfare and restore full employment. It will enable the nation's downward economic and social spiral to be reversed. It will enable man to create a better social climate in which to live.
Nobody can claim the post-reform world will be perfect. It will however be a considerable improvement on the status quo. And it will provide a climate in which we can set about reversing the trend of drug abuse and crime, with some hope of meaningful progress in restoring to many their lost self respect.
The Third World
One thing which distinguishes Man far more than the follies and cruelties upon which the press and psychiatrists are so determined to fixate his attention is his compassion for his fellows. At this writing there is a considerable weight of public opinion that demands the international bankers cancel outstanding Third World debt and so alleviate the humanitarian catastrophe that has befallen the developing world.
However there is no proposal to cancel the mechanism of covert economic subjugation that caused this monstrous injustice to be foisted upon half of humanity. If the debt-money system remains in place globally, even if the banks are persuaded to "forgive" Third World debts, such nations will within a generation find themselves back where they started: up to their eyeballs in unrepayable debt and in a condition of virtual slavery.
Third World nations are in debt financially to the developed world and this gives a completely false picture of the physical reality. Third World nations, driven to export in order to repay interest on their loans, have impoverished their own peoples, who enjoy little benefit from their own production. What those people produce has enriched the "creditor" nations in terms of real food, real resources and real manufactured goods and they have received only paper debts in exchange for that munificence.
If we look at the exchange between the developed world and the Third World in terms of real goods, we discover that the flow is predominantly one-way and in terms of real wealth Third World nations have paid their debts many times over and are considerably in credit with the developed world. Monetary reform will restore ethics and justice to the international arena, and the covert plunder of Third World nations will cease.
Third World nations - or indeed any nation - have an opportunity to act now and break this vicious cycle of debt and the global hegemony of the banks and multi national corporations that derives therefrom, that has brought starvation to so many people.
Their solution is for their governments to stop borrowing money from the banks and start creating and spending into their economies their own national currencies debt-free and to supply in this way all their economies' needs for money.
The solution is so simple it beggars belief. There is no good reason for a people not to benefit from what they themselves create and to trade their surpluses for what they do not themselves produce, no reason for them to go hungry, no reason for them to go without the infrastructure and amenities basic to civilised living.
All they have to do is responsibly create their own money and then spend it in their home economy.
Open Government
For the successful operation of a system whereby government creates and spends into circulation all the economy's money needs, one thing is essential: open government and complete transparency.
Whatever agency is given the task of calculating money requirements, its calculations must be fully and unequivocally open to full public scrutiny. Secrecy in how the figures are calculated and the amassing and evaluating of data upon which the calculations are based must become illegal and officials held accountable in the courts for violations of such law. And no official, no matter how high his office, must be above the law.
Whatever agency - and this may well be a separate agency from the above - has the job of monitoring the economy's prices, monetary stability, industrial profitability, sales levels and consumer standard of living so as to supply the data upon which money supply calculations are based must likewise conduct its job under the full glare of public scrutiny with no exceptions and no immunity to law.
Such agencies would be answerable to Parliament for errors in their calculations as evinced by the presence of inflation, recession or instability in the value of money. Parliament in turn will be answerable for its conduct to the people. Similarly all matters concerning government spending policies must be fully transparent and open to public view.
Whoever controls a nation's money supply has absolute mastery over that nation. By ensuring that the government which controls the money supply is democratic government we ensure absolute mastery over ourselves.
Benign, honest and open government is not a luxury. It is in fact an indispensable prerequisite to the long-term survival of our civilisation and its societies.
If The Worst Happens
The current system cannot be sustained indefinitely because it is inherently flawed. If we extrapolate current trends of mounting debt and insolvency, debt driven growth, rising taxes, environmental destruction, global fiscal chaos, growing poverty, human misery and popular disaffection and so on into the future the conclusion is obvious: it just isn't going to "get better" because it can't and sooner or later something has to give.
It would be wise for us to reform our money system before that happens but if the worst is, through our default, allowed to happen, government at least has a ready-made solution for economic collapse:
Immediately cancel the borrowing into existence of the money supply.
Immediately assume the exclusive right to create and spend into circulation all the money needed by the economy.
Collapse can be turned into boom very quickly and nobody need suffer.
The solution is so simple only insane government will ignore it.
Spending New Money into Circulation
Extra money needed by an expanding economy will enter circulation when government spends it. Government will spend, indeed will be obliged to spend, the exact amount of money authorised by the Crown agency charged with the job of calculating the economy's money requirements. Exactly what government spends its authorised quota of new money on will be for government to decide.
That new money can take the form of cash, by virtue of the government printing notes and coins and spending them on something. Government can also pay its employees, contractors, suppliers and so on by the simple fact of the Treasury writing cheques, or electronically crediting their accounts. Once the new money has entered the pockets of people, as notes and coins, or their bank accounts as numbers in the credit column, it can be spent by them. Thus the new money, by the simplest process, will enter circulation as people spend it and it will be distributed through the economy through the normal process of production and exchange.
Opportunities
How might the new money work to the benefit of all? What might government spend it on?
Well, there is hardly an existing service that could not be drastically improved - and at no cost to the tax payer - by a utilisation of the new revenue and countless infrastructure and other projects just begging to be done. Where the money is spent will depend on the priorities on which government was elected. The two which probably spring most readily to people's minds are the National Health Service and state pensions.
It is entirely possible for government to reduce the burden on the NHS through improving the nation's health, particularly through stimulating an improvement in the currently dire state of our food. However if more needs to be spent to improve the service and the lot of those who work within it, then government has a means to do it, an expenditure of new money that will stimulate the entire economy.
State pensions, likewise, can be improved without any need to increase taxation rates or take money from some other area of service. Increased tax revenues and the expenditure of new money provide ample scope for government to bring pensions up to an acceptable and just level. The provision of increased pensions will cost the nation nothing yet at the same time relieve millions of people of a great deal of hardship. Moreover it will stimulate demand as the beneficiaries spend it. The pensioners need the money and industry needs the increased business, so why not?
As we will all, if we are survivors, reach pension age sooner or later, we all have a vested interest in this. It is outrageous that many pensioners are forced to live in penury while the simple remedy for so much suffering lies neglected because there is no political will to implement a rational and honest money system.
However we are not talking about a little bit of tinkering here and there in an effort to lift a little of people's burdens. We are talking about the absolutely serious intent to lift our whole society to a new high level of productiveness and material and social well-being: to that end monetary reform provides government with vast creative opportunities. In addition to far lower taxes, far lower debt and far greater tax revenues, new debt-free revenue can be used to dramatic effect.
Huge Scope, Zero Cost
Let us imagine some huge, ambitious and expensive project that would greatly improve our fortunes, the scope of which, however much it is desirable and to the benefit of the nation, the government could not even consider under current monetary conditions.
Such a project could be the rebuilding of some industry such as our shipyards, coal, steel, electronics, aviation or whatever, the introduction of new industries such as motor vehicles that run on cheaper and healthier alternatives to petrol, a massive education programme, the building of spanking new public transport systems, wholesale conversion to alternative power sources, rejuvenation of farming or even further massive cuts in taxation. Our hypothetical project can be anything you want to imagine, provided that by survey it has been established as needed and wanted and to the benefit of the nation.
Let us for the sake of argument imagine the cost of such a project is going to be £30 billion and it will take five years to build, an average cost of £6 billion per year.
Under the present system government, if it could confront such an undertaking, would have to finance the project by a huge increase in taxes, or a huge reduction in the tax revenue allocated to existing services or borrow it from banks and other investors.
If the government decides to borrow the money at, say, 5% interest over 20 years, the total cost when the loan plus interest are repaid in full will be £60 billion. That cost will be borne by the tax payer. In other words the tax payer - or, through higher charges, the user of the new facility - will pay £60 billion for a project worth £30 billion and half of what is paid will only benefit the money lenders. The cost may turn out to be considerably higher if government, as governments do when they continually fail to balance their books in an economy perpetually short of money, fails to keep up its loan repayments and has to ask the lender to reschedule the loan.
But how would it work in the post-reform era? Well, for one thing the £30 billion project will be relatively less expensive in any case because costs will be lower due to far lower debt and lower taxes. For the sake of argument though let us assume that government still needs to raise £30 billion but it is now forbidden to borrow and does not want to increase taxes, in fact is working hard to reduce taxation rates, and does not want to take the money from any of the many services it is providing for the population.
It now has a new source of revenue: new money. If we imagine the economy is expanding at an average rate of 5% per annum - a modest projection for an economy relieved of its tax and debt burdens - as a result roughly £30 billion pounds of new money must be created and spent into circulation each year. From that new money government can decide to allocate £6 billion per annum per year for five years to finance its new project.
The project therefore can get done. After five years, there it is, a done deed, a new shipyard complex, transport system, alternative power source or whatever, an asset for the nation providing employment for hundreds or thousands of people. Its cost to the tax payer? Zero.
Once it is complete there are no interest charges to pay, no capital sum to repay and so nothing for the user or tax payer to pay in that regard. The completed project's only costs from there on out are running and maintenance costs and so it in effect works rather like any natural resource. Even its routine running costs could be covered, if government wished, by further allocations from new-money revenues and thus the new service could be provided to the population completely free of charge!
I leave to your imagination what this would mean for industry, national resurgence as an economic power, the tax payer and the user of the completed project.
Food For Thought
I hope this illustrates the point that what is socially desirable and physically possible should be made financially feasible.
Once the stops of inadequate money supply and the scarcity-think that have been so ingrained in us are removed, we shall find that the limits to what we can do are far less than we have been allowed to believe.
By understanding and using money correctly an honest, open government can steadily move the society forward and upward in a direction the society actually wants to go. This is government in a supportive role, serving the population that elected it by fully facilitating the realisation of maximum human productive potential.
Money is just money. It isn't very complicated. All we have to do is use it rather than letting those who create it use us.
Technically, with just what we know at this moment, we have the physical means of creating unprecedented abundance and to distribute that abundance efficiently so that all men can share in what generations of thinking, inventive human beings have made possible.
Look it over.....
Kieron Mcfadden
