A better world is possible - Global Commons Institute

Copyright Bruce Nixon 2010. All rights reserved. This electronic copy is provided free for personal, non-commercial use only.
www.brucenixon.com
the money-must-grow imperative compels people to make money in socially and environmentally
damaging ways
diverts economic effort and enterprise towards making money out of money, the rising values of
existing assets, and away from productive activities that provide valuable goods and services
exerts a systematic bias in favour of the people, organisations and nations who should be managing
it on behalf of us all
erodes the credibility of political democracy after 200 years of progress
is a major source of opposition to globalisation in its present form, and thereby a threat to world
peace and security.
Adapted from: James Robertson’s article, quoted above
As a means of raising money for public purposes such as investment in infrastructure – roads, tramways, the
Underground and railways for example - and new hospitals, schools, colleges and universities, money created
by debt is inevitably more expensive. New Labour’s approach to funding was to channel costly private
investment finance into public infrastructure and services thus avoiding the figures appearing in the
government budget but costing the taxpayer far more.
“Whoever puts new money into circulation profits from its value minus the cost of producing it, and also
decides who will have first use of the money for what purposes. If almost all the money in circulation starts as
debt which has to pay interest and eventually has to be repaid in full, additions to the money supply will
automatically be accompanied by increased indebtedness in society, and money transactions will cost more
than if all money circulated debt-free” James Robertson.
A different way of creating money
It is ironic that even more debt is being created to provide stimulus packages and hence combat the global
recession. This additional debt, created to provide stimulus packages and combat the global recession, would
be completely unnecessary if national reserve banks, not commercial banks, created the required funds. In
the case of the UK for example, it has been estimated that additional public revenue of about £45bn a year
could be collected if the Bank of England took over responsibility for creating new money.
This of course is heresy. Total restructuring of the banking system is needed to make this possible. Clearly
there are enormous vested interests at stake. However, it is interesting to note that the UK Bank of England
has already started doing this, using the euphemism, “quantitative easing” to start pumping £75bn into the
economy. As James Robertson points out, in a democratic society one would expect the national bank and
the government not commercial banks to be in charge of the money supply. Money should be seen as a
common resource, not the preserve of commercial banks.
This is how such a change would work:
1. Commercial banks are prohibited from creating new money.
2. National central reserve banks, as agencies of state, in our case the Bank of England, take over
responsibility for creating all new money free of interest. This would also include supplying the
major component of public money that consists of bank-account money mainly held and
transmitted electronically.
3. The national reserve bank gives the money as debt-free public revenue to the government, to
spend into circulation to achieve national objectives agreed by Parliament. This process of
restricting money creation to what is required to achieve agreed national objectives, would
prevent political abuse through heavy spending in the run up to elections.
133