Nicoletta Forcheri al Convegno M5S Banche e Creazione di Moneta, 4/11/2016 – YouTube

In evidenza

Convegno Banche e creazione di moneta, organizzato dal M5S
Roma, 4 novembre 2016
Con Alessio Villarosa, Daniele Pesco, Carlo Sibilia, Nicoletta Forcher, Nino Galloni, Marco Della Luna, Assgeir B. Torfason, Alessandro Govoni, Fabio Conditi.

Errata Corrige:
Il fallimento della compagnia bancaria dei Bardi avvenne nel 1347 e non a metà del 400

I depositi sono CONVERTIBILI unicamente per il 5% del circolante e NON PER IL 95%

Per le monetine, manca la parola PRO CAPITE: meno di 50 centesimi PRO CAPITE all’Italia rispetto a 40 euro PRO CAPITE ALL’AUSTRIA
Bibliografia:

Teoria della moneta immaginaria da Carlomagno alla Rivoluzione francese, Luigi Einaudi, 1930 https://it.scribd.com/doc/86178882/Einaudi-Moneta-immaginaria

Bank of England, Quarterly: Money in the Modern Economy: an Introduction, 2014 http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q101.pdf

Gli aggregati monetari secondo la BC: https://www.ecb.europa.eu/stats/money/aggregates/aggr/html/hist.en.html

W. Buiter, 2007, Seigneuriage, http://nber.org/papers/w12919

Van Cleve, 1912, Principles of Double Entries Bookeeping, https://archive.org/stream/principlesofdoub00vancrich#page/75/mode/1up

Regolamento CE 1725/2003 di adozione dei principi contabili internazionali, http://www.fondazionenazionalecommercialisti.it/system/files/imce/aree-tematiche/pac/PCI_Reg.%20CE%20n.%201725_03.pdf

Circolare 262 di Bankitalia del 22 dicembre 2005, https://www.bancaditalia.it/compiti/vigilanza/normativa/archivio-norme/circolari/c262/index.html

Asgeir Torfason, 2014, Cash Florw Accounting in Banks, https://gupea.ub.gu.se/handle/2077/35272

Brevi Note sull’erogazione del mutuo, 1 marzo 2012, http://www.tidona.com/pubblicazioni/20120301.htm

KPMG, settembre 2016, Money Issuance, https://assets.kpmg.com/content/dam/kpmg/is/pdf/2016/09/KPMG-MoneyIssuance-2016.pdf

Richard Werner, 2014, How do banks create money, and why can other firms not do the same? An explanation for the coexistence of lending and deposit-taking http://www.sciencedirect.com/science/article/pii/S1057521914001434

La zona franco, estratto tradotto dal sito della Banque de France, https://nicolettaforcheri.wordpress.com/2014/02/04/la-zona-franco-appannaggio-del-signoraggio-coloniale-della-francia/

Alan Lee, The Development of Italian Bookeeping http://www.mgh-bibliothek.de/dokumente/a/a146422.pdf
https://nicolettaforcheri.wordpress.com/2015/09/12/saba-juncker-e-la-partita-doppia/

La conferenza integrale è visibile qua

“INCURSIONI” NELLE ASSEMBLEE DELLE BANCHE

di Alberto Micalizzi

Un lavoro sistematico iniziato da qualche anno da Marco Saba e diventato da due anni un filone fondamentale di ricerca e di azione dell’Istituto di Alti Studi sulla Sovranità Economica e Monetaria (IASSEM) sta portando a formalizzare nei bilanci di diversi istituti di credito la richiesta di contabilizzare la moneta bancaria che gli Istituti creano dal nulla al momento dell’erogazione di prestiti alla clientela.

Il documento allegato è estratto dal Verbale dell’Assemblea di Mediobanca del 28 Ottobre 2016. Questi alcuni passaggi chiave che troverete:

Saba … lamenta che dal bilancio consolidato non risulti quanto denaro virtuale sia stato creato dal Gruppo Mediobanca…..Il socio segnala come detta creazione monetaria andrebbe registrata nei flussi di cassa ….. inoltre, l’accredito di somme ai clienti senza appropriata contabilizzazione virtuale comporta che tutta la massa aggregata del denaro bancario in circolazione non abbia un’origine iniziale certa ed identificabile – violando così anche le norme antiriciclaggio”.

Azioni simili sono state compiute nell’ambito delle assemblee di Unicredit, Intesa Sanpaolo, Cassa di Risparmio di Genova, Banca Centrale Svizzera e saranno portate alle assemblee di altre banche.

Non basta. Lo scorso Luglio 2016 il Tribunale di Genova, primo in Italia, ha accolto la richiesta di valutare il fondamento giuridico della contabilizzazione della moneta bancaria creata dal nulla, nei confronti della banca Carige.

E’ una delle battaglie impari quanto decisive che combattiamo lungo l’aspra dorsale che separa la sfera finanziaria dall’economia reale. Vuol dire portare alla luce una delle tecniche fondamentali che il sistema bancario utilizza per indebitare gli Stati ed il settore privato.

E’ tuttavia una partita intelligente, studiata nei dettagli e condotta con professionalità, che sarà sostenuta con tutti gli sforzi necessari ad ottenere un pronunciamento finale da parte degli organi di Giustizia.

La riconquista di Sovranità Popolare è un processo, non un episodio isolato. Occorre avere una strategia ed una tattica per ciascuna delle postazioni perdute, e che dobbiamo riconquistare.

Post- referendum: arriva la prima mazzata dell’UE

A qualche ora dai risultati del referendum italiano, arriva puntuale e “fresca di stampa” la prima mazzata della Commissione europea e dell’Eurogruppo sul progetto di bilancio italiano. Nella sua relazione1, l’Eurogruppo si dice infatti d’accordo con l’opinione della Commissione che vuole più tasse e più privatizzazioni per il popolo italiano, esercitando un’intromissione inaudita e a tratti sospetta di illegittimità ai sensi dei Trattati stessi, oltre che del tutto anticostituzionale, negli affari interni, fiscali ed economici del nostro paese.

E infatti l’Eurogruppo di stamane concorda con la Commissione europea che:

1. l’Italia è a rischio di non conformità con i requisiti del Patto di Stabilità;

2. il gettito fiscale previsto dal progetto di bilancio è calato dello 0.5% mentre a Bruxelles lo vogliono in aumento dello 0.6% del PIL: più tasse per tutti;

3. i costi per la crisi dei (finti) profughi2 (già ingiustamente attribuite al nostro paese), le spese per le misure di messa in sicurezza e dei terremoti sono causa di ulteriore deviazione dai requisiti richiesti: in poche parole, nessuno sconto e nessuna pietas umana per questioni vitali e tragedie come queste!!!

4. bisogna chiedere all’Italia di utilizzare le sia pur minime sopravvenienze attive e abbattimenti di spese per ridurre il debito nel 2017 (sic);

5. Last but not least: invita a continuare con le privatizzazioni il più possibile, e questo a riprova del fatto che l’UE sta cagando fuori dal vaso assumendo un ruolo di politica economica che nessuno le ha mai attribuito né per delega né per trattato.

La cosa dovrebbe insospettire e mettere sul chi-va-là più di un politico e più di un addetto: nella relazione dell’Eurogruppo sulla disanima dei progetti di bilancio degli Stati membri sotto osservazione per il Patto di Stabilità, ricorre la parola “privatizzazione” solo una volta e solo per il nostro paese… Solo a noi è riservato questo trattamento choc, da anni, più crudele e più impietoso che non a qualsiasi altro Stato membro dell’UE – dopo la prova della Grecia – con la richiesta ESPLICITA di privatizzare tutto il comparto industriale, bancario e demaniale, quest’ultimo per definizione inalienabile…

Il paradosso è che le richieste di privatizzazione e di maggior gettito fiscale sono contrarie persino ai trattati UE stessi: la richiesta di privatizzazione è contraria all’articolo 345 del TFUE che recita “i trattati lasciano del tutto impregiudicato il regime di proprietà esistente negli Stati membri”, articolo di cui la Francia – ma non solo – ha strabusato per decenni nel voler preservare industrie e banche di Stato, privatizzando quando lo ha fatto solo sulla punta della lingua, tutt’al più in un bel misto pubblico-privato con spartizione delle prebende da sfruttamento di risorse naturali di altri paesi e da signoraggio (controllando ad esempio banche dealer come BNP Paribas, e Banca d’Italia, oppure attraverso EDF e Suez Gaz de France) a vantaggio di interi settori governativi dell’Esagono e la sua élite.

Si pensi che già questi settori governativi francesi si avvalgono di una manna avvolta da segretezza ma che per indiscrezioni sarebbe di un bel 500 miliardi di dollari l’anno che finiscono sui “conti d’opérations” del Tesoro provenienti dagli utili d’esportazioni delle colonie africane, costrette al truffaldino sistema di messa a riserva obbligatoria delle valute estere in cambio del franco coloniale africano (CFA3), franco dalla Francia stampato dal nulla e prestato a usura a quegli stessi popoli africani, attraverso le loro tre banche centrali. Si chiama “clause de ratissage”, clausola di rastrellamento, la clausola spiegata sui documenti ufficiali della Banque de France, che impone il rastrellamento di tutte le valute estere di istituti pubblici e privati di quei 14 paesi più le Comore, un vero e proprio saccheggio che priva l’Africa delle sue risorse, un vero e proprio crimine contro l’umanità che un giorno dovrà essere giudicato, ma non il solo, da una vera giuria popolare dell’umanità.

La richiesta di maggior gettito fiscale, più tasse per gli italiani, è invece contraria ai principi enunciati dall’articolo 3, comma 1 del TUE, dove si prefigge il “benessere” dei popoli europei, contraria ai commi 2 e 3 dello stesso articolo che si prefiggono di offrire ai cittadini europei uno “sviluppo sostenibile, basato su una crescita economica equilibrata“, “su un’economia sociale di mercato fortemente competitiva, che mira alla piena occupazione e al progresso sociale”, promuovendo “la coesione economica, sociale e territoriale, e la solidarietà tra gli Stati membri”. E’ poi contrario al principio di progressività e di capacità contributiva dell’articolo 53 della Costituzione, attualmente per niente rispettata visto che il paese si trova in una morsa fiscale massacrante, deleteria e contraria a qualsiasi “crescita economica equilibrata” del paese, e in violazione dei diritti dell’uomo tout court..

Ciliegina sulla torta, in caso di non conformità perdurante per l’anno 2017, scatta l’articolo 126/3 del TFUE4, a mo’ di minaccia ovvero sia le punizioni previste in una relazione della Commissione europea, o qualche altra letterina della BCE magari con tanto di governo tecnico allegato…

Nicoletta Forcheri 5/12/2016

2 Grazie al trattato di Dublino gli altri Stati membri stanno accollando a noi – e alla Grecia – tutte le spese dei profughi, imponendo che il primo paese in cui mette piede il candidato si accolla l’onere della sua presa in carica.

4 Articolo 126-3 del TFUE:

“Se uno Stato membro non rispetta i requisiti previsti da uno o entrambi i criteri menzionati, la Commissione prepara una relazione. La relazione della Commissione tiene conto anche dell’eventuale differenza tra il disavanzo pubblico e la spesa pubblica per gli investimenti e tiene conto di tutti gli altri fattori significativi, compresa la posizione economica e di bilancio a medio termine dello Stato membro. La Commissione può inoltre preparare una relazione se ritiene che in un determinato Stato membro, malgrado i criteri siano rispettati, sussista il rischio di un disavanzo eccessivo.”

PROCESSO DI TRANI: ENTRANO I CAMERIERI

di Alberto Micalizzi

Messi nell’angolo  da un impianto accusatorio solido e circostanziato in un processo per manipolazione di mercato ai danni della popolazione e delle istituzioni italiane, ieri gli imputati di Standard&Poor’s hanno ricorso alla mossa disperata di chiamare come testimone della difesa Luigi Zingales, professore presso l’Università di Chicago, che si è cimentato in un tentativo goffo di sostenere la fondatezza dei giudizi delle agenzie di rating del 2011 e 2012.

Utilizzando una narrativa soprattutto qualitativa, opposta alla precisione quantitativa che ha supportato la tesi del Pubblico Ministero Michele Ruggiero, Zingales ha sostenuto che nell’estate 2011 lo spread sul BTP si impennò a causa di una più generale preoccupazione dei mercati per la crisi greca. Che tale situazione avrebbe creato tensioni sul credito e quindi indebolito le banche.

Forse l’economista era distratto in quanto il punto dell’accusa, dimostrato empiricamente, era che il giudizio delle agenzie di rating sull’Italia era oggettivamente falso in quanto basato sul debito delle banche e del Tesoro italiano verso soggetti esteri. Tale debito non solo non si era deteriorato nel 2011 ma restava uno tra i più bassi rispetto agli altri principali Paesi europei.

Sempre Zingales ha sostenuto poi che a seguito dell’intervento della BCE “Il mondo ha iniziato ad andare molto meglio, ma in Italia il rapporto Debito/Pil ha continuato a crescere. E questo perché il Paese non era in grado di crescere.” Posso solo sospettare che il “mondo” al quale Zingales ha fatto riferimento è il suo mondo, quello delle banche, in questo bisogna riconoscere che ha detto una grande verità…quel mondo è andato decisamente meglio!

Certo, poi sarebbe utile che con un po’ di pazienza ci spiegasse come poteva l’Italia crescere con un vincolo di pareggio di bilancio, con circa 90 miliardi di euro all’anno di interessi sul debito pubblico e senza poter inserire nuova moneta nell’economia reale…ma certamente l’economista andava di fretta e questi in fondo devono essergli sembrati dei banali dettagli.

Fatto sta che ha avuto il pudore di concludere che “S&P dimostra una lungimiranza che non era presente in molti delle istituzioni politiche europee.” Anche qui, come si può dargli torto? Probabilmente anche lui si è accorto che Standard&Poor’s scrive le agende dei Governi, per cui è lapalissiano che le direttive impartite giungano ai membri degli esecutivi politici come qualcosa di nuovo, “che non era presente”…

Che dire? Forse che il rispetto di sé dovrebbe venire prima di qualsiasi altra considerazione… Forse che oggi come ieri c’è chi difende l’Italia e gli italiani a proprie spese, ed a rischio della propria vita e della propria libertà, e c’è chi invece per un tozzo di pane venderebbe l’anima.

Di certo Ezra Pound sbagliò quando definì i politici camerieri dei banchieri…..si era dimenticato di aggiungere gli economisti main-stream…

(20 Gennaio requisitoria e sentenza)

Italia con il SI pattumiera d’Europa

di Multicentro

Un vuoto normativo in Italia  pensato e voluto dal 1992 che ha reso la Magistratura italiana impotente contro la finanza speculatrice caucasica , contro gli  hedge fund caucasici venditori allo scoperto,  che ad una ad una si sono mangiati tutte le banche italiane quotate in borsa e con esse si sono mangiati i risparmi di circa 20 milioni di risparmiatori italiani , 5 milioni di risparmiatori italiani ad ogni ciclico settennale crollo della borsa di Milano (1994, 2001, 2008, 2016) hanno perso i loro risparmi , con conseguente progressivo, dal 1992  impoverimento della nazione. 

UN VUOTO NORMATIVO che non ha impedito di piazzare in Italia la  quasi totalità dei derivati sul tasso con clausola killer banca vince se tasso cala piazzati in Europa , indebitando dal 1992 Tesoro dello Stato italiano , 900 enti locali italiani e 100 mila imprese pubbliche e private italiane , causando perdite già addebitate sui rispettivi conti correnti dal 1992 per 500 miliardi di euro . 

UN VUOTO NORMATIVO che non ha impedito di piazzare in Italia le peggio schifezze finanziarie , da bond emessi da società inesistenti o gia fallite con sede a Londra , di riempire i fondi di categoria,  dove i dipendenti pubblici e privati italiani hanno investito il loro TFR,  di crediti non pagati dai mutuatari di altri Stati. 

UN VUOTO NORMATIVO  che impedisce dal 1992  a Consob ed a bankitalia spa il potere di vigilare , esse non possono vigilare in quanto per loro Statuto non hanno un potere ispettivo , non hanno un potere per andare a vedere chi c’è dietro agli intermediari delle vendite allo scoperto , per andare a vedere se le società  emittenti i bond sono societa esistenti e solide o società già fallite , possono controllare solo la regolarità formale dei documenti presentati . 

 

UN VUOTO NORMATIVO che impedisce dal 1992 di inibire le vendite allo scoperto. 

UN VUOTO NORMATIVO  che ha consentito dal 1992 in Italia e solo in Italia  con l’abolizione delle separazione tra banche di prestito e banche speculative ,con la totale quindi  liberalizzazione della finanza,  a questi hedge fund  di alimentarsi sottraendo alla nazione ed al fisco italiano le quote capitali inconsapevolmente pagate dai mutuatari  dei mutui ipotecari creati dal 1992 in italia e solo in italia con un clic elettronico . 

UN VUOTO NORMATIVO CHE HA CAMBIATO DAL 1992 LA CONTABILITA’ BANCARIA , bilanci bancari redatti dal 1992  al contrario , prima decidendo  i miliardari  dividendi annui che dovevano percepire dal 1992 la  decina di hedge fund caucasici occulti azionisti che dal 2014 è conosciuto che controllino al 90%  attraverso interposte persone fisiche in realtà studi legali, le  banche  quotate italiane,  da cui sono entrati ed usciti varie volte , prima pompandone le azioni , poi facendosi liquidare e poi facendo l’azione contraria ossia vendendole continuamente allo scoperto per farne crollare il corso e guadagnando ogni volta la differenza  tra vendita allo scoperto e successivo riacquisto a prezzo crollato ,  , incassando il controvalore dell’azione pe di MPS,, 87 euro nel 2007, oggi 0,20 centesimi, incassando 86,80 centesimi , esattamente quelli persi dagli ignari piccoli azionisti ed obbligazionisti convertiti in azioni a 0,20 centesimi . 

UN VUOTO NORMATIVO che non ha impedito a questi hedge fund di entrare ed uscire dalle banche italiane , depredandone ogni volta gli aumenti di capitale. 

Un  vuoto normativo che ha impedito p.e. che MPS comprasse dal 2007  banche con già crediti in sofferenza per il 70% , banche italiane in cui a loro volta erano stati scaricati i mutui non pagati da britannici e statunitensi dal 1998 .

 

Un vuoto normativo dal 1992 che non impedirà a MPS ed ad Unicredit di fallire . 

Un vuoto normativo che non impedisce al Ministro del  MEF di confinare  articolate studiate strategie di borsa,  per far cadere la quotazione dei BTP italiani nel 2011,  a mere tesi complottiste.

  Un VUOTO NORMATIVO che,  con il 13 % di disoccupati , il 48% dei giovani senza senza lavoro , 6 milioni di cittadini italiani in povertà assoluta , un bambino su tre figlio di italiani a rischio povertà ,con le accise triplicate dal 1992, dati implacabili, dati ISTAT, mostra  una nazione stremata. 

Passati da quinti produttori mondiali prima del 1992  ad oltre il trentesimo posto se sei depura l’attività bancaria divenuta improvvisamente attività industriale dal 1992, 

UN VUOTO NORMATIVO che consentirebbe alla finanza caucasica alleatasi dal 1992 con un esigua schiera di politici che con la riforma della Costituzione li porrebbe per sempre al governo , di fare dell’ Italia l’indispensabile perenne  PATTUMIERA finanziaria dove scaricare le peggio schifezze finanziarie del mondo.

 

Italia paese unico al mondo , dotato di straordinari beni storici , di case ed immobili di valore su cui la finanza speculatrice può rivalersi esecutandoli,  dotato di straordinari imprenditori capaci di riprendersi ogni sette anni, un paese che la finanza speculatrice caucasica non può permettersi di perdere , dal 1992 la migliore PATTUMIERA  finanziaria  del mondo . 

Un vuoto normativo che probabilmente due Magistrati del 1992 se avessero potuto proseguire le loro indagini  avrebbero evitato  che si formasse .

MPS, l’assemblea

Riceviamo da Muticentro e volentieri pubblichiamo

E’ ormai divenuta prassi dal 2015 nell’ assemblee delle maggiori banche italiane chiedere che sia esibito l’elenco dei delegati ed  i deleganti. 

numero 650 milioni di azioni presenti all’ assemblea del 24 Novembre di  MPS. 

Il 97% degli azionisti presenti ha votato Si all’aumento del capitale di MPS di 5 miliardi di euro . Sembrerebbe pertanto che l’unanimità degli azionisti di MPS abbai votato  Sì, che ossia i milioni di piccoli azionisti di MPS , persone spesso costrette dal 2007 a sottoscrivere azioni o obbligazioni  MPS pur di avere un prestito, siano stati d’accordo a votare Si  all’aumento di capitale

  

La famiglia xxxxi per esempio aveva avuto bisogno nel 2007 -2008 di un prestito di 10 mila euro per tirare avanti. La banca gliene propone 15 mila euro , ma  5 mila devono essere destinate  a sottoscrivere azioni o obbligazioni MPS:  gli azionisti  occulti di MPS , il cd capitale fluttuante , ha già predestinato la banca .

 La famiglia Rossi come circa un altro milione di famiglie italiane si fa convincere:  l’azione MPS nel 2007 è quotata 87 euro , pompata a 87 euro dopo circa un anno di acquisti allo scoperto effettuati dagli stessi hedge fund. Tutta la vogliono,dice il funzionario bancario che ha ricevuto direttive , dal CDA della banca , che ha ricevuto direttive dal Presidente della banca, che ha ricevuto direttive dagli azionisti occulti ,” l’azione MPS salirà ancora , i fondamentali di MPS vedete sono buoni, guardate i bilanci” . I  crediti in sofferenza di MPS nel 2007 sono la metà degli attuali, l’azione è liquida, ossia vendibile. 

Gli ignari sottoscrittori pertanto ci credono cosi come credono alla sottoscrizione dell’ obbligazioni 2008-2016 , ora classificate come tranche junior , ossia quelle che vengono rimborsate dopo che sono state rimborsate tutte le altre, se residuasse qualcosa . 

Un milione di famiglie italiane vengono costrette a firmare queste obbligazioni che ora vengono convertite in azioni,    in   numero  X  di azioni che non valgono più 87 euro per azione,  ma 0,21 centesimi . 

X   azioni che con il voto quasi all’unanimità di ieri , 97% ha detto SI , vengono accorpate in una azione ogni 100. 

Se il Sig. Rossi nella conversione delle sue obbligazioni in azioni avesse ora  n. 600 azioni, con l’accorpamento di una azione ogni 100 azioni , votato ieri all’umanità ieri,  si ritrova con 6 azioni da 0,21 centesimi=1,26 euro . 

 Si ritrova con 1,26 euro. 

La  banca gli aveva fatto investire nel 2007, indebitandolo con un prestito per poterle sottoscrivere ,  cinque mila euro in obbligazioni 2008-2016. 

La banca  o gli azionisti occulti della banca lo avevano costretto a far sottoscrivere 5 mila euro di obbligazioni che ora VALGONO  MENO DI UN ROTOLO DI CARTA IGIENICA. Il Sig. Rossi dovrebbe oggi aggiungere almeno altri 0,40 centesimi se volesse pulirsi il posteriore con quei 5 mila euro che era stato ” invogliato” a sottoscrivere nel 2007. 

Siamo in quattro. Ci si presenta ieri 24 novembre  all’assemblea MPS come azionisti per delega di azionisti dell’ex Banca Mediterranea, capitanati da un Giudice Onorario avv. E.R.. Ciascuno di noi ha circa un azione MPS che ci permette di partecipare all’Assemblea MPS e di intervenire. Rappresentiamo quelli che il Giudice Onorario avv. R. definisce simpaticamente gli “straccioni del Mezzogiorno”, banca prima assorbita da Unicredit e poi in ultimo da MPS con un carico spaventoso di crediti in sofferenza. Un po la storia di Antoveneta assorbita da MPS col suo carico spaventoso di crediti in sofferenza (oltre il 60% dei crediti concessi da Antonveneta erano già in sofferenza quando Antonveneta fu assorbita da MPS, pagandola oltretutto un sproposito , una decina e più di miliardi di euro ).  

MPS non è per gli hedge fund una banca strategica perche fuori dalla maggioranza decisionale di Bankitalia Spa . Maggioranza decisionale in Bankitalia spa , fatti tutti gli sbarramenti al voto, 265 voti su 529  , detenuta da Intesa  Unicredit , Carisbo,  Carige e dalla caucasica  BNL Paribas. Intesa  Unicredit , Carisbo  Carige attraverso interposte persone fisiche in realtà studi legali risultano partecipate per oltre l’80% da una decina di hedge fund speculatori in gran parte caucasici (vanguard , state street, fidelity , Black rock e Black stone  ) e qualcuno misto anglo-americano e caucasico (Jp Morgan Trust , Northern Trust). Compare tra i fondi nel capitale delle cinque suddette banche italiane anche  Norges bank , il fondo sovrano di Svezia e Norvegia , che partecipa dal 1992 al business mondiale della finanza speculatrice in cambio del silenzio . 

Dopo che nel 1973 con l’accordo di libero scambio furono privatizzate le banche commerciali azioniste delle Banche centrali di Svezia e Norvegia , introdotto nel 1973 in Svezia e Norvegia il circuito  Visa e Mastercard ed  il pc ed internet necessari perche il circuito funzioni, abolita la separazione tra banche di prestito e banche speculative per cui in Svezia e Norvegia le banche commerciali iniziarono dal 1973 a creare l’importo dei  mutui ipotecari con un clic portando ad un livello spaventoso i crediti in sofferenza, , dopo circa vent’anni di prosciugamento delle loro economie, nel 1991 un partito populista salì al governo in entrambi gli Stati , nazionalizzando nel 1991 le banche commerciali e reintroducendo la separazione tra banche di prestito e banche speculative. 

 Oggi Svezia e Norvegia partecipano col loro fondo sovrano Norges bank al business mondiale della finanza in cambio del silenzio . 

Subito entrati chiediamo al Presidente di MPS,  dr  Tononi,  l’elenco dei delegati presenti .

 In una precedente assemblea di MPS, in cui aveva partecipato solo il 30% del capitale sociale di MPS e di cui si era riusciti ad avere l’elenco dei delegati compariva che una persona fisica , certo LAZZI GUIDO, fosse il delegato di 350 entità finanziarie straniere . 

 Visionando l’allegato elenco dei deleganti, si scoprì che erano  tutti trust stranieri , ossia hegde fund . 

Gli hedge fund sono gli unici fondi al mondo autorizzati a compiere operazioni allo scoperto ossia senza possedere i titoli ossia eseguono operazioni su titoli che in realtà gli  hedge fund non possiedono ma che prendono in prestito da altre banche o dalle piattaforme di trading on line che sono  di proprietà degli stessi hedge fund come la piattaforma FINECO , piattaforme  che attraggono ignari risparmiatori invitandoli a sottoscrivere azioni per esempio di MPS, UNICREDIT, INTESA,  CARIGE “perchè sono basse, si alzeranno, valgono meno di 2 euro, sono destinate ad alzarsi ” . Titoli azionari  che poi le stesse piattaforme on line,  nella notte , sfruttando la differenza di fuso orario tra borse, prestano agli stessi hedge fund per venderle .E’ sufficiente che quattro cinque hedge fund si coordino ( si coordinano in tempo reale attraverso un sito delle isole vergini britanniche www.investing .com /futures ) e vendano allo scoperto per esempio numero un miliardo di azioni MPS , che il giorno dopo il titolo MPS ovviamente crolla . Gli hedge fund che hanno partecipato a questa antisociale attività guadagnano anche il 700% di quanto puntano e lo realizzano in qualche notte, ossia il tempo per riacquistare nei giorni successivi  sulla borsa di Milano al prezzo crollato il numero (un miliardo) di azioni che deve essere restituito ai soggetti  che li aveva prestati. SE a prestarli era  stata una banca amica e non ignari piccoli risparmiatori attirati nella trappola, le due entita finanziarie (la banca che ha prestato  i titoli e  l’hegde fund che ha ricevuto il prestito di titoli) si dividono il guadagno . Un meccanismo infernale , un ipotizzata criminale truffa commessa da soggetti esteri che distrugge progressivamente le società italiane (bancarie e non ) quotate in borsa .

Viene  chiesto al dr. TONONI Presidente di MPS se conosce LAZZI GUIDO. ” Non  lo conosco”,  risponde. 

Da ricerche effettuate risulta  che LAZZI GUIDO, sia un avvocato di Siena, la solita interposta persona fisica in realtà studio legale che rappresenta al voto gli hedge fund speculatori che entrando ed uscendo dalla banca si mangiano ( previo pompaggio delle azioni  e successive vendite allo scoperto delle stesse), la banca .

 E ‘ l’ occulta parte finanziaria che dal 1992 in italia si mangia ogni circa sette anni la parte bancaria e con essa si è mangiata ad ogni settennale crollo della borsa di Milano (1994, 2001, 2008, e già due volte nel 2016) complessivamente  circa 15 milioni di  piccoli azionisti ed obbligazionisti, impoverendo progressivamente, dal 1992, la nazione: 13 % di tasso di disoccupazione , 48 % dei giovani sotto i 25 anni senza lavoro , 6 milioni di italiani residenti in povertà assoluta, produzione artigianale quasi azzerata.. 

Viene chiesto al Presidente dr Tononi se vi siano altri delegati. Il Presidente ci dice di rivolgerci all’attigua segreteria  che  ci fornisce il nome di un altro delegato : si va a colpo sicuro si chiede se è presente CARDARELLI o TREVISAN , quelli che ci troviamo come delegati  in Intesa ed Unicredit .

 E’ infatti  presente l’avv. TREVISAN  DARIO, dello studio TREVISAN di MILANO di viale Maino, lo stesso a cui appartiene anche l’avv. CARDARELLI  ANGELO. 

Anche l’avv. TREVISAN DARIO è il delegato, nell’assemblea MPS di ieri 24 Novembre 2016,  di circa 400 entità finanziarie straniere presenti in assemblea, Sono tutti hedge fund .

I due , LAZZI GUIDO e TREVISAN DARIO rappresentano da soli il 97%  del capitale di MPS presentatosi ieri in assemblea e con diritto di voto. Su numero  650 milioni di azioni presenti ieri nell’ assemblea MPS , ben numero  643 milioni di azioni sono risultate detenute da sole due persone che rappresentano hedge fund speculatori stranieri .

 

All’assemblea MPS di Ieri si è presentato il 22% del capitale MPS, il quorum minimo necessario per far approvare l’aumento di capitale, per far approvare la conversione delle obbligazioni in azioni e per far approvare l’accorpamento di 100 azioni in un’azione..

I giornali oggi , 25 novembre titolano: “approvato quasi all’unanimità l’ aumento di capitale e la conversione delle obbligazioni in azioni”.

 La gente ovviamente pensa che i circa un milione di piccoli azionisti ed obbligazionisti italiani fossero d’accordo . 

Questo di 5 miliardi di euro è  il terzo aumento di capitale che è stato votato ieri  dopo che i due precedenti aumenti di capitale  di 2 e 3 miliardi di euro in MPS dal 2007 ,  erano già  stati mangiati da continue vendite allo scoperto effettuate da questi hedge fund che entrano ed escono dal capitale della banca . 

Hedge fund speculatori  che costituiscono pertanto un capitale “fluttuante”, purtroppo, ora ci si è resi conti   delle maggiori banche commerciali italiane .  . 

Viene chiesto dal Dr Tononi che sia esibito anche il restante 78% dei delegati e deleganti non presente ieri in assemblea  MPS. 

 

Il sospetto è che anche questo 78% del capitale di MPS  sia rappresentato  dallo studio TREVISAN di Milano che , rappresenta in UNICREDIT ed INTESA , 1991 entità finanziarie straniere , in realtà concentrate in una decina di hegde fund speculatori stranieri.

 Il sospetto è quindi che il sistema del credito italiano sia caduto in mano ad una decina di fondi speculatori stranieri che guadagnano sul crollo della banca , che

 a)impediscono dal 1992,  alla , a tutti gli effetti loro controllata Bankitalia Spa , di vigilare su comportamenti vessatori subiti dalla clientela italiana quali anatocismo nei conti correnti , nei mutui e nei leasing, quali usura , quali truffa su derivati sul tasso con clausola killer banca vince che tasso cala , 

b) che costringono l’inconsapevole Governatore di Bankitalia Spa dal 1992 a variare di suo pungo il tasso al ribasso,   così consentendo una vincita già certa alla stipula sui derivati  alle banche d’affari di  cui detti hedge fund sono azionisti piazzati al tesoro dello Stato, a 900 enti locali italiani ed 100 mila imprese pubbliche e private, provocando 500 miliardi di euro di perdite dal 1992 già addebitate sui loro conti correnti. . 

MPS dal 2007 sembra quindi essere stata scelta dagli hedge fund come banca dove buttare, tramite acquisizioni bancarie , le sofferenze bancarie accumulatasi in altre banche. Essendo banca non strategica per il controllo di bankitalia  spa potrebbe pertanto oggi anche essere dichiarata fallita  per poi essere comprata a meno di un euro per azione dagli stessi hedge fund dal fallimento, azzerando in un colpo 25  mila dipendenti . Gli hedge fund potrebbero addirittura comprare a prezzi stracciati   la good bank di MPS costituita il giorno prima del fallimento a Londra , come fecero con Lehman brothers domenica 15 Settembre  2008.  

  

I precedenti aumenti di capitale di MPS sono stati azzerati anche da scellerati dividendi che i probabili azionisti occulti di MPS,  hanno voluto comunque corrispondersi malgrado vi fosse un livello di crediti in sofferenza tali (ereditati da antoveneta ) che se svalutati adeguatamente e non tenuti al valore nominale , non avrebbe consentito la distribuzione di alcun dividendo.  

Dal 1992 questa  decina di  hedge fund ha stravolto  la contabilità bancaria in italia    facendo in sostanza  redigere i bilanci al contrario : prima vengono decisi ex -ante i miliardari dividendi che  tali  hegde fund  azionisti occulti al 80% delle suddette banche si vogliono corrispondere, poi vengono redatti i bilanci e deciso il livello di quanti crediti concedere alla clientela per ottenere tale livello di dividendi, cosi spingendo i funzionari bancari a concedere prestiti comunque ed a chiunque pur di rispettare il budget di dividendo.

Le banche commerciali  dal 1992 in Italia guadagnano il 100% dell’importo delle  rate dei prestiti e guadagnano dal rientro di fidi auto-liquidanti (fido sbf e fido anticipo fatture ) creati con un clic, ma ampliati a dismisura dal 1992  con lo sconto della stessa fattura in piu istituti . La stessa fattura pur presentata più volte allo sconto , viene pagata una sola volta ovviamente dal cliente  Quando gli hedge fund azionisti occulti decidono di tramutare questi fidi autoliquidanti creati con un clic in beni del cliente , semplicemente non  rinnovano lo sconto di fatture , facendole ritornare insoluti .Ma le garanzie poste a collaterale dei fidi auto liquidanti sono nulle o quasi , in quanto appunto dovrebbero essere auto-liquidanti , ossia dovrebbero auto-estinguersi col pagamento della fattura da parte del cliente .  i crediti sono pertanto irrecuperabili , non valgono il 10% del loro valore nominale. gli hedge fund lo sanno, ma hanno continuato a farsi corrispondere miliardari dividendi decisi ex ante. 

 In un corretta contabilità, i dividendi dovrebbe invece scaturire dalla differenza tra  ricavi realizzati  e costi sostenuti . Non invece decisi ex ante.

Viene chiesto al dr Tononi che sia esibito il libro gironale di MPS che potrebbe dimostrare che anche MPS abbia illegittimamente creato con un clic anche l’importo dei mutui ipotecari ed abbia fatto la scrittura di partita doppia in pari data e di pari importo ad ogni mutuo concesso “crediti alla clientela a debiti della clientela”  , cosi facendo confluire le quote capitali via via pagate dai mutuatari , negli hedge fund azionisti occulti della banca che poi le usano, entrando ed uscendo dal capitale della banca, per far cadere la quotazione della banca stessa . 

Questa decina di  hedge fund dal 2007 ad oggi ha infatti incassato per ogni azione MPS , con continue vendite allo scoperto,  circa 87 euro per azione. 

Il milione di piccoli azionisti ed obbligazionisti , in gran parte famiglie ed imprese italiane ,anche indebitatati per sottoscriverle,  ha perso circa 87 euro per azione, ossia ha perso tutto il capitale . Anche assicurazione Generali che aveva sottoscritto numero 400 milioni di obbligazioni MPS, ieri convertite in azioni che valgono 0,21 centesimi , perderà tutto il capitale investito, mettendo a rischio il sistema assicurativo italiano . 

 

 Per questo la borsa è esattamente un gioco a somma zero: il guadagno dell’hedge fund corrisponde esattamente alla perdita che l’hedge fund riesce a provocare ad un altro soggetto od ad una platea di molti altri soggetti . Cosi ovviamente l’economia non cresce .

 Per questo gli Stati Uniti ed il Regno Unito hanno inibito totalmente dal 2008 l’azione degli hedge fund (reintroducendo la separazione tra banche di prestito  e banche speculative, impedendo con la regola del TICK UP le vendite allo scoperto su titoli di società quotate statunitensi e britanniche, nazionalizzando le compagnie assicurative e le principali banche USA  e del regno unito  ) e le loro economie dal 2008  hanno ripreso a crescere. 

 

Il dr Tononi HA CONCESSO  LA VISIONE del LIBRO GIORNALE di MPS. 

Assicurazioni Generali sta conseguendo dividendi cosi elevati in quanto dal 2009 le hanno fatto sottoscrivere miliardi di euro di CDS , ossia al prossimo imminente crollo della Borsa di Milano quando verrà scoperto che nei fondi di categoria dove i dipendenti italiani hanno investito il proprio TFR, ci ha messo miliardi di euro di mutui non pagati dagli statunitensi e dai britannici nel periodo 1998-2008 impacchettati in CDO ossia in prodotti ad alto rendimento ma con sottostante marcio  e  pertanto i dipendenti pubblici e privati italiani potrebbero perdere il proprio TFR, interverrà Ass. Generali , avendo essa sottoscritto CDS con cui garantisce i CDO. 

Assicurazioni Generali non può fallire in quanto assicurazione. Pagherà allora lo Stato Italiano , ossia i cittadini italiani e la vessazione finanziaria  perpetrata da questa decina di  hedge fund speculatori stranieri che dominano l’Italia dal 1992,  continua . 

Dal 1992, 

Italiani= carne da macello.

STATO ITALIANO= pattumiera della finanza speculatrice internazionale  , dove ossia può essere distribuito dal 1992 qualsiasi genere di schifezza finanziaria (prestiti non pagati cartolarizzati , derivati sul tasso con clausola killer banca vince se tasso cala in uno scenario pre-ordinato di tasso al ribasso pre-ordinato inconsapevolmente dallo stesso Governatore della controllata Bankitalia Spa che ha sempre variato di suo pugno il tasso al ribasso dal 1992 portandolo dal 15% ad oggi che è lo 0,05%;  obbligazioni emesse da società inesistenti o già fallite o convertite in azioni di banche la cui quotazione è crollata da 87 euro  a  21  centesimi di euro ) su cui Bankitalia spa e CONSOB , non possono vigilare in quanto controllate, rispettivamente ,  indirettamente o direttamente dagli stessi hedge fund che hanno confezionano le schifezze ed in quanto nel loro Statuto hanno limitati o nulli poteri ispettivi.

Si scopre dall’assemblea di MPS di ieri che Bankitalia spa non avesse fatto la due dilegence su Antoveneta prima che MPS l’acquistasse , ossia Bankitalia Spa non aveva controllato quanti crediti in sofferenza avesse già Antoveneta , oltre il 60%.  

MPS scelta dal 2007 come pattumiera della finanza speculatrice internazionale. 

La finanza speculatrice internazionale ha sempre bisogno di pattumiere dove scaricare le schifezze finanziarie che crea e che l’arricchisce in modo spropositato a danno di molti 

Necessitano provvedimenti legislativi che riconducano il  sistema del credito italiano alla situazione ante-1992 . 

 

Ogni possibile reato sopra scritto e descritto è sempre inteso come probabile , rimettendo all’illustrissima S.V. la verifica della certezza dello stesso e la punizione degli eventuali ipotizzati colpevoli.

A cura di Muticentro

 

UK Parliament: Money Creation and Society (transcript) 2014

Sorgente: UK Parliament: Money Creation and Society (transcript)

Money Creation and Society 11.18 am Steve Baker (Wycombe) (Con): I beg to move,


That this House has considered money creation and society.

The methods of money production in society today are profoundly corrupting in ways that would matter to everyone if they were clearly understood. The essence of this debate is: who should be allowed to create money, how and at whose risk? It is no wonder that it has attracted support from across the political spectrum, although, looking around the Chamber, I think that the Rochester and Strood by-election has perhaps taken its toll. None the less, I am grateful to right hon. and hon. Friends from all political parties, including the hon. Members for Clacton (Douglas Carswell) and for Brighton, Pavilion (Caroline Lucas) and the right hon. Member for Oldham West and Royton (Mr Meacher), for their support in securing this debate.
One of the most memorable quotes about money and banking is usually attributed to Henry Ford:

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did I believe there would be a revolution before tomorrow morning.”

Let us hope we do not have a revolution, as I feel sure we are all conservatives on that issue.
How is it done? The process is so simple that the mind is repelled. It is this:

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.”

I have been told many times that this is ridiculous, even by one employee who had previously worked for the Federal Deposit Insurance Corporation of the United States. The explanation is taken from the Bank of England article, “Money creation in the modern economy”, and it seems to me it is rather hard to dismiss.
Today, while the state maintains a monopoly on the creation of notes and coins in central bank reserves, that monopoly has been diluted to give us a hybrid system because private banks can create claims on money, and those claims are precisely equivalent to notes and coins in their economic function. It is a criminal offence to counterfeit bank notes or coins, but a banking licence is formal permission from the Government to create equivalent money at interest.
There is a wide range of perspectives on whether that is legitimate. The Spanish economist, Jesús Huerta de Soto explains in his book “Money, Bank Credit and Economic Cycles” that it is positively a fraud—a fraud that causes the business cycle. Positive Money, a British campaign group, is campaigning for the complete nationalisation of money production. On the other hand, free banking scholars, George Selgin, Kevin Dowd and others would argue that although the state might define money in terms of a commodity such as gold, banking should be conducted under the ordinary commercial law without legal privileges of any kind. They would allow the issue of claims on money proper, backed by other assets—provided that the issuer bore

20 Nov 2014 : Column 435
all of the risk. Some want the complete denationalisation of money. Cryptocurrencies are now performing the task of showing us that that is possible.
The argument that banks should not be allowed to create money has an honourable history. The Bank Charter Act 1844 was enacted because banks’ issue of notes in excess of gold was causing economic chaos, particularly through reckless lending and imprudent speculation. I am once again reminded that the only thing we learn from history is that we learn nothing from history.
Thomas Docherty (Dunfermline and West Fife) (Lab): I welcome today’s debate. The hon. Gentleman makes a valid point about learning from history. Does he agree with me that we should look seriously at putting this subject on the curriculum so that young people gain a better understanding of the history of this issue?
Steve Baker: That is absolutely right. It would be wonderful if the history curriculum covered the Bank Charter Act 1844. I would be full of joy about that, but we would of course need to cover economics, too, in order for people to really understand the issue. Since the hon. Gentleman raises the subject, there were ideas at the time of that Act that would be considered idiocy today, while some ideas rejected then are now part of the economic mainstream. Sir Robert Peel spent some considerable time emphasising that the definition of a pound was a specific quantity and quality of gold. The notion that anyone could reject that was considered ridiculous. How times change.
One problem with the Bank Charter Act 1844 was that it failed to recognise that bank deposits were functioning as equivalent to notes, so it did not succeed in its aim. There was a massive controversy at the time between the so-called currency school and the banking school. It appeared that the currency school had won; in fact, in practice, the banks went on to create deposits drawn by cheque and the ideas of the banking school went forward. The idea that one school or the other won should be rejected; the truth is that we have ended up with something of a mess.
We are in a debt crisis of historic proportions because for far too long profit-maximising banks have been lending money into existence as debt with too few effective restraints on their conduct and all the risks of doing so forced on the taxpayer by the power of the state. A blend of legal privilege, private interest and political necessity has created, over the centuries, a system that today lawfully promotes the excesses for which capitalism is so frequently condemned. It is undermining faith in the market economy on which we rely not merely for our prosperity, but for our lives.
Thankfully, the institution of money is a human, social institution and it can be changed. It has been changed and I believe it should be changed further. The timing of today’s debate is serendipitous, with the Prime Minister explaining that the warning lights are flashing on the dashboard of the world economy, and it looks like quantitative easing is going to be stepped up in Europe and Japan, just as it is being ramped out in America—and, of course, it has stopped in the UK. If anything, we are not at the end of a great experiment

20 Nov 2014 : Column 436
in monetary policy; we are at some mid point of it. The experiment will not be over until all the quantitative easing has been unwound, if it ever is.
We cannot really understand the effect of money production on society without remembering that our society is founded on the division of labour. We have to share the burden of providing for one another, and we must therefore have money as a means of exchange and final payment of debts, and also as a store of value and unit of account. It is through the price system that money allows us to reckon profit and loss, guiding entrepreneurs and investors to allocate resources in the way that best meets the needs of society. That is why every party in the House now accepts the market economy. The question is whether our society is vulnerable to false signals through that price system, and I believe that it is. That is why any flaws in our monetary arrangements feed into the price system and permeate the whole of society. In their own ways, Keynes and Mises—two economists who never particularly agreed with one another—were both able to say that currency debasement was the best way in which to overturn the existing basis of society.
Even before quantitative easing began, we lived in an era of chronic monetary inflation, unprecedented in the industrial age. Between 1991 and 2009, the money supply increased fourfold. It tripled between 1997 and 2010, from £700 billion to £2.2 trillion, and that accelerated into the crisis. It is simply not possible to increase the money supply at such a rate without profound consequences, and they are the consequences that are with us today, but it goes back further. The House of Commons Library and the Office for National Statistics produced a paper tracing consumer price inflation back to 1750. It shows that there was a flat line until about the 20th century, when there was some inflation over the wars, but from 1971 onwards, the value of money collapsed. What had happened? The Bretton Woods agreement had come to an end. The last link to gold had been severed, and that removed one of the most effective restraints on credit expansion. Perhaps in another debate we might consider why.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Does the hon. Gentleman agree that the end of the gold standard and the increased supply of money enabled business, enterprise and the economy to grow? Once we were no longer tied to the supply of gold, other avenues could be used for the growth of the economy.
Steve Baker: The hon. Gentleman has made an important point, which has pre-empted some of the questions that I intended to raise later in my speech. There is no doubt that the period of our lives has been a time of enormous economic, social and political transformation, but so was the 19th century, and during that century there was a secular decline in prices overall.
The truth is that any reasonable amount of money is adequate if prices are allowed to adjust. We are all aware of the phenomenon whereby the prices of computers, cars, and more or less anything else whose production is not determined by the state become gently lower as productivity increases. That is a rise in real living standards. We want prices to become lower in real terms compared to wages, which is why we argue about living standards.
20 Nov 2014 : Column 437
Sir William Cash (Stone) (Con): My hon. Friend is making an incredibly important speech. I only wish that more people were here to listen to it. I wonder whether he has read Nicholas Wapshott’s book about Hayek and Keynes, which deals very carefully with the question that he has raised. Does he agree that the unpleasantness of the Weimar republic and the inflationary increase at that time led to the troubles with Germany later on, but that we are now in a new cycle which also needs to be addressed along the lines that he has just been describing?
Steve Baker: I am grateful to my hon. Friend. What he has said emphasises that the subject that is at issue today goes to the heart of the survival of a free civilisation. That is something that Hayek wrote about, and I think it is absolutely true.
If I were allowed props in the Chamber, Mr Speaker, I might wave this 100 trillion Zimbabwe dollar note. You can hold bad politics in your hand: that is the truth of the matter. People try to explain that hyperinflation has never happened just through technocratic error, and that it happens in the context of, for example, extremely high debt levels and the inability of politicians to constrain them. In what circumstances do we find ourselves today, when we are still borrowing broadly triple what Labour was borrowing?
Ann McKechin (Glasgow North) (Lab): I am interested to hear what the hon. Gentleman is saying. He will be aware that the balance between wages and capital has shifted significantly in favour of capital over the past 30 years. Does he agree that the way in which we tax and provide reliefs to capital is key to controlling that balance? Does he also agree that we need to do more to increase wage levels, which have historically been going down in relation to capital over a long period of time?
Steve Baker: I think I hear the echoes of a particularly fashionable economist there. If the hon. Lady is saying that she would like rising real wage levels, of course I agree with her. Who wouldn’t? I want rising real wage levels, but something about which I get incredibly frustrated is the use of that word “capital”. I have heard economists talk about capital when what they really mean is money, and typically what they mean by money is new bank credit, because 97% of the money supply is bank credit. That is not capital; capital is the means of production. There is a lengthy conversation to be had on this subject, but if the hon. Lady will forgive me, I do not want to go into that today. I fear that we have started to label as capital money that has been loaned into existence without any real backing. That might explain why our capital stock has been undermined as we have de-industrialised, and why real wages have dropped. In the end, real wages can rise only if productivity increases, and that means an increase in the real stock of capital.
To return to where I wanted to go: where did all the money that was created as debt go? The sectoral lending figures show that while some of it went into commercial property, and some into personal loans, credit cards and so on, the rise of lending into real productive businesses excluding the financial sector was relatively moderate. Overwhelmingly, the new debt went into mortgages and the financial sector. Exchange and the distribution of wealth are part of the same social process. If I buy an apple, the distribution of apples and money will change. Money is used to buy houses, and we

20 Nov 2014 : Column 438
should not be at all surprised that an increased supply of money into house-buying will boost the price of those homes.
Mr Ronnie Campbell (Blyth Valley) (Lab): This is a great debate, but let us talk about ordinary people and their labour, because that involves money as well. To those people, talking about how capitalism works is like talking about something at the end of the universe. They simply need money to survive, and anything else might as well be at the end of the universe.
Steve Baker: The hon. Gentleman is quite right, and I welcome the spirit in which he asks that question. The vast majority of us, on both sides of the House, live on our labour. We work in order to obtain money so that we can obtain the things we need to survive.
The hon. Gentleman pre-empts another remark that I was going to make, which is that there is a categorical difference between earning money through the sweat of one’s brow and making money by lending it to someone in exchange for a claim on the deeds to their house. Those two concepts are fundamentally, categorically different, and this goes to the heart of how capitalism works. I appreciate that very little of this would find its way on to an election leaflet, but it matters a great deal nevertheless. Perhaps I shall need to ask my opponent if he has followed this debate.
My point is that if a great fountain of new money gushes up into the financial sector, we should not be surprised to find that the banking system is far wealthier than anyone else. We should not be surprised if financing and housing in London and the south-east are far wealthier than anywhere else. Indeed, I remember that when quantitative easing began, house prices started rising in Chiswick and Islington. Money is not neutral. It redistributes real income from later to earlier owners—that is, from the poor to the rich, on the whole. That distribution effect is key to understanding the effect of new money on society. It is the primary cause of almost all conflicts revolving around the production of money and around the relations between creditors and debtors.
Sir William Cash: My hon. Friend might be aware that, before the last general election, my right hon. Friend the Member for Wokingham (Mr Redwood) and I and one or two others attacked the Labour party for the lack of growth and expressed our concern about the level of debt. If we add in all the debts from Network Rail, nuclear decommissioning, unfunded pension liabilities and so on, the actual debt is reaching extremely high levels. According to the Government’s own statements, it could now be between £3.5 trillion and £4 trillion. Does my hon. Friend agree that that is extremely dangerous?
Steve Baker: It is extremely dangerous and it has been repeated around the world. An extremely good book by economist and writer Philip Coggan, of The Economist, sets out just how dangerous it is. In “Paper Promises: Money, Debt and the New World Order”; a journalist from The Economist seriously suggests that this huge pile of debt created as money will lead to a wholly new monetary system.


I have not yet touched on quantitative easing, and I will try to shorten my remarks, Mr Speaker, but the point is this: having lived through this era where the

20 Nov 2014 : Column 439
money supply tripled through new lending, the whole system, of course, blew up—the real world caught up with this fiction of a monetary policy—and so QE was engaged in. A paper from the Bank of England on the distributional effects of monetary policy explains that people would have been worse off if the Bank had not engaged in QE—it was, of course, an emergency measure. But one thing the paper says is that asset purchases by the Bank

“have pushed up the price of equities by as least as much as they have pushed up the price of gilts.”

The Bank’s Andy Haldane said, “We have deliberately inflated the biggest bond market bubble in history.”
Mr Jim Cunningham (Coventry South) (Lab): What is the hon. Gentleman’s view of QE? How does he see it fitting into the great scheme of things?
Steve Baker: As I am explaining, QE is a great evil; it is a substitute for proper reform of the banking system. But this is the point: if the greatest bubble has been blown in the bond markets and equities have been pushed up by broadly the same amount, that is a terrible risk to the financial system.
Mr MacNeil: Surely there is a difference depending on where the QE goes. In an economy that has a demand deficit and needs demand to be stimulated, if QE goes into the pockets of those who are going to spend the money, surely QE can create some more motion in the economy, but if QE goes into already deep pockets and makes them larger and deeper, that is a very different thing.
Steve Baker: Again, the hon. Gentleman touches on an interesting issue. Once the Bank legitimises the idea of money creation and giving it to people in order to get the economy going, the question then arises: if you are going to create it and give it away, why not give it to other people? That then goes to the question: what is money? I think it is the basis of a moral existence, because in our lives we should be exchanging value for value. One problem with the current system is that we are not doing that; something is being created in vast quantities out of nothing and given away. The Bank explains that 40% of the assets that have been inflated are held by 5% of households, with 80% held by people over 45. It seems clear that QE—a policy of the state to intervene deeply in money—is a deliberate policy of increasing the wealth of people who are older and wealthier.
Mr MacNeil: One word the hon. Gentleman used was “moral”, and he touches on what the economist Paul Krugman will say: some on the right see the recession and so on as a morality play, and confuse economics and morals. Sometimes getting things going economically is not about the straightforward “morality” money the hon. Gentleman has touched on. That could be one reason why the recovery is taking so long.
Steve Baker: I am conscious that I have already used slightly more time than I intended, Mr Speaker, and I have a little more to say because of these interventions. All these subjects, as my bookshelves attest, are easily

20 Nov 2014 : Column 440
capable of being explained over hundreds of pages. My bottom line on this is: I want to live in a society where even the most selfish person is compelled by our institutions to serve the needs of other people. The institution in question is called a free market economy, because in a free market economy people do not get any bail-outs and do not get to live at somebody else’s expense; they have to produce what other people want. One thing that has gone wrong is that those on the right have ended up defending institutions that are fundamentally statist.
Douglas Carswell (Clacton) (UKIP): I congratulate the hon. Gentleman on bringing this important subject to the attention of the House. Does he agree that, far from shoring up free market capitalism, the candy floss credit system the state is presiding over replaces it with a system of crony corporatism that gives capitalism a bad name and undermines its very foundations?
Steve Baker: I am delighted to agree with my hon. Friend—he is that, despite the fact I will not be seeing Nigel later. We have ended up pretending that the banking system and the financial system is a free market when the truth is that it is the most hideous corporatist mess. What I want is a free market banking system, and I will come on to discuss that.
I wanted to make some remarks about price signals, but I will foreshorten them, and try to cover the issue as briskly as I can—it was the subject of my maiden speech. Interest rates are a price signal like any other. They should be telling markets about people’s preferences for goods now compared with goods later. If they are deliberately manipulated, they will tell entrepreneurs the wrong thing and will therefore corrupt people’s investment decisions. The bond and equity markets are there to allocate capital. If interest rates are manipulated and if new money is thrown into the system, prices get detached from the real world values they are supposed to be connected to—what resources are available, what technology is available, what people prefer. The problem is that these prices, which have been detached from reality, continue to guide entrepreneurs and investors, but if they are now guiding entrepreneurs and investors in a direction that takes them away from the real desires of the public and the available resources and the technology, we should not then be surprised if we end up with a later disaster.
In short, after prices have been bid up by a credit expansion, they are bound to fall when later the real world catches up with it. That is why economies are now suffering this wrecking ball of inflation followed by deflation, and here is the rub: throughout most of my life, the monetary policy authorities have responded to these corrections by pumping in more new money—previously through ever cheaper credit, and now through QE. This raises the question of where this all goes, and brings me back to the point my hon. Friend the Member for Stone (Sir William Cash) provoked from me: that this might be pointing towards an end of this monetary order. That is not necessarily something to be feared, because the monetary order changed several times in the 20th century.
We have ended up in something of a mess. The Governor said about the transition once interest rates normalise:

“The orderliness of that transition is an open question.”

20 Nov 2014 : Column 441
I believe the Governor is demonstrating the optimism appropriate to his role, because I think it is extremely unlikely that we will have an orderly transition once interest rates start to normalise. The problem is basically that Governments want to spend too much money. That has always been the case throughout history. Governments used to want to fund wars. Now, for all good, moral, decent, humanitarian reasons, we want to fund health, welfare and education well beyond what the public will pay in taxes. That has meant we needed easy money to support the borrowing.
What is to be done? A range of remedies are being proposed. Positive Money proposes the complete nationalisation of the production of money, some want variations on a return to gold, perhaps with free banking, and some want a spontaneous emergence of alternative moneys like Bitcoin.
I would just point out that Walter Bagehot is often prayed in aid of central banking policy, but his book “Lombard Street” shows that he did not support central banking; he thought it was useless to try to propose any change. What we see today is that, with alternative currencies such as Bitcoin spontaneously emerging, it is now possible through technology that, within a generation, we will not all be putting our money in a few big mega-banks, held as liabilities, issued out of nothing.
I want to propose three things the Government can practically do. First, the present trajectory of reform should be continued with. After 15 years of studying these matters, and now having made it to the Treasury Committee, I am ever more convinced that there is no way to change the present monetary order until the ideas behind it have been tested to destruction—and I do mean tested to destruction. This is an extremely serious issue. It will not change until it becomes apparent that the ideas behind the system are untenable.
Secondly, and very much with that in mind, we should strongly welcome proposals from the Bank’s chief economist, Andy Haldane, that it will commission “anti-orthodox research”, and it will

“put into the public domain research and analysis which as often challenges as supports the prevailing policy orthodoxy on certain key issues.”

That research could make possible fundamental monetary reform in the event of another major calamity.
Thirdly, we should welcome the Chancellor’s recent interest in crypto-currencies and his commitment to make Britain a “centre of financial innovation.” Imperfect and possibly doomed as it may be, Bitcoin shows us that peer-to-peer, non-state money is practical and effective. I have used it to buy an accessory for a camera; it is a perfectly ordinary legal product and it was easier to use than a credit card and it showed me the price in pounds or any other currency I liked. It is becoming possible for people to move away from state money.
Every obstacle to the creation of alternative currencies within ordinary commercial law should be removed. We should expand the range of commodities and instruments related to those commodities that are treated like money, such as gold. That should include exempting VAT and capital gains tax and it should be possible to pay tax on those new moneys. We must not fall into the same trap as the United States of obstructing innovation. In the case of the Liberty Dollar and Bernard von NotHaus, it

20 Nov 2014 : Column 442
seems that a man may spend the rest of his life in prison simply for committing the supposed crime of creating reliable money.
Finally, we are in the midst of an unprecedented global experiment in monetary policy and debt. It is likely, as Philip Coggan set out, that this will result in a new global monetary order. Whether it will be for good or ill, I do not know, but as technology and debt advance, I am sure that we should be ready for a transformation. Society has suffered too much already under the present monetary orthodoxy; free enterprise should now be allowed to change it.

11.45 am

Mr Michael Meacher (Oldham West and Royton) (Lab): I, too, strongly congratulate the hon. Member for Wycombe (Steve Baker) on securing this debate, which everyone recognises is vital and which has not been debated in this House for 170 years, since Sir Robert Peel’s Bank Charter Act 1844. The hon. Gentleman drew that fact to my attention when we were last speaking in a similar debate. That Act prohibited the private banks from printing paper money. In light of the financial crash of 2008-09 and the colossal expansion of money supply that underpinned it—no less than a twenty-two-fold increase in the 30 neo-liberal years between 1980 and 2010—the issue is whether that prohibition should be extended to include electronic money.
It is unfortunate that it is so little understood by the public that money is created by the banks every time they make a loan. In effect, the banks have a virtual monopoly—about 97%—over domestic credit creation, so they determine how money is allocated across the economy. That has led to the vast majority of money being channelled into property markets and the financial sector. According to Bank of England figures for the decade to 2007, 31% of additional money created by bank lending went to mortgage lending, 20% to commercial property, and 32% to the financial sector, including to mergers and acquisitions and trading and financial markets. Those are extraordinary figures.
Mr Jim Cunningham (Coventry South) (Lab): Given what my right hon. Friend has just said, is there not an argument, in this situation of unlimited credit from banks, for the Bank of England to intervene?
Mr Meacher: My hon. Friend anticipates the main line of my argument, so if he is patient I think I will be able to satisfy him. Crucially, only 8% of the money referred to went to businesses outside the financial sector, with a further 8% funding credit cards and personal loans.
Mr MacNeil: I hear what the right hon. Gentleman says about money going into building, housing and mortgages, but is that not because the holders of money reckon that they can get a decent return from that sector? They would invest elsewhere if they thought that they could get a better return. One reason why the UK gets a better return from that area than, say, Germany is that we have no rent controls. As a result, money is more likely to go into property than into developing industry, which is more likely to happen in Germany.
20 Nov 2014 : Column 443
Mr Meacher: I very much agree with that argument. Again, I assure the hon. Gentleman that I will return to that matter later in my speech. He is absolutely right that the reason is the greater returns that the banks can get from the housing and rental sector. Our rental sector, which is different from that in Germany and other countries, is the cause of that.
It is only this last 16%—the 8% lent to businesses and the 8% to consumer credit—that has a real impact on GDP and economic growth. The conclusion is unavoidable: we cannot continue with a system in which so little of the money created by banks is used for the purposes of economic growth and value creation and in which, instead, to pick up on the point made by the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), the overwhelming majority of the money created inflates property prices, pushing up the cost of living.
In a nutshell, the banks have too much power and they have greatly abused it. First, they have been granted enormous privileges since they can create wealth simply by writing an accounting entry on a register. They decide who uses that wealth and for what purpose and they have used their power of credit creation hugely to favour property and consumption lending over business investment because the returns are higher and more secure. Thus the banks maximise their own interests but not the national interest.
Secondly, if they fail to meet their liabilities, the banks are not penalised. Someone else pays up for them. The first £85,000 of deposits are covered by a guarantee underwritten by the state and in the event of a major financial crash they are bailed out by the implicit taxpayer guarantee—
Steve Baker rose—
Mr Meacher: Let me finish, and I will of course give way.
The banks have been encouraged by that provision into much more risky, even reckless, investment, especially in the case of exotic financial derivatives—
Mr Jim Cunningham rose—
Mr Meacher: Members are beginning to queue up to intervene, but let me finish my point first.
The banks have been encouraged even to the point at which after the financial crash of 2008-09 the state was obliged to undertake the direct bail-out costs of nearly £70 billion as well as to provide a mere £1 trillion in support of loan guarantees, liquidity schemes and asset protection arrangements.
Steve Baker: I wholly agree with the right hon. Gentleman. The moral hazard problem is absolutely enormous and one of the most fundamental problems. However, the British Bankers Association picked me up when I said it was a state-funded deposit insurance scheme and told me it was industry-funded. I think the issue now is that nobody really believes for a moment that the scheme will not be back-stopped by the taxpayer.
Mr Meacher: As always, I am grateful for the intervention from the hon. Gentleman—let me call him my hon. Friend, as I think that on this issue he probably is.
20 Nov 2014 : Column 444
Mr Jim Cunningham: On the question of banks investing in the property market, does my right hon. Friend think we could learn anything from the United States and the collapse of Fannie Mae? Are we in a similar situation?
Mr Meacher: Again, that takes me down a different path, but there is considerable read-across.
Douglas Carswell: The right hon. Gentleman has been absolutely magnificent in diagnosing the problem, but when it comes to the solution and passing power away from banks, rather than passing the power upwards to a regulator or to the state, would he entertain the idea of empowering the consumer who deposits money with the bank? Surely the real failure is that the Bank Charter Act 1844 does not give legal ownership of deposits to the person paying money into the bank. The basis of fractional-reserve banking is the legal ownership the bank has when money is paid in. If we tackle that, the power will pass from the big state-subsidised corporations and banks outwards to the wider economy.
Mr Meacher: I have great sympathy with what the hon. Gentleman is saying—
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab) rose—
Mr Meacher: One at a time, please. I was going to say a little bit more than that I had sympathy with what the hon. Member for Clacton (Douglas Carswell) said.
I will argue that the capacity to regulate an increasingly and exceedingly complex financial sector is not the proper way, and I will propose an alternative solution. I am strongly in favour of structural changes that enable people to achieve greater control over the money that they have contributed.
Ms Abbott: I was intrigued to hear my right hon. Friend mention depositor protection. Is he saying that he is against any form of depositor protection?
Mr Meacher: The protection of deposits is up to £85,000 and is underwritten by the state.
Ms Abbott: Is my right hon. Friend against?
Mr Meacher: I am neither for nor against. I am making the point that the arrangement encourages the banks to increase their risk taking. If they are caught out, for each depositor £85,000 is guaranteed by the state. I agree with the hon. Member for Wycombe that we need much wider structural change. It is not a question of tweaking one thing here or there.
The question at the heart of the debate is who should create the money? Would Parliament ever have voted to delegate power to create money to those same banks that caused the horrendous financial crisis that the world is still suffering? I think the answer is unambiguously no. The question that needs to be put is how we should achieve the switch from unbridled consumerism to a framework of productive investment capable of generating a successful and sustainable manufacturing and industrial base that can securely underpin UK living standards.
Two models have hitherto been used to operate such a system. One was the centralised direction of finance, which was used extremely successfully by several Asian countries, especially the south-east Asian so-called tiger

20 Nov 2014 : Column 445
economies, after the second world war, to achieve take-off. I am not suggesting that that method is appropriate for us today. It is not suited to advanced industrial democracies. The other method was to bring about through official “guidance” the rationing of bank credit in accordance with national targets and, where necessary, through quantitative direct controls. In the post-war period, that policy worked well in the UK for a quarter of a century, until the 1970s when it was steadily replaced by the purely market system of competition and credit control based exclusively on interest rates. In our experience of the past 30 or 40 years, that has proved deeply unstable, dysfunctional and profoundly costly.
Since then there have been sporadic attempts to create a safer banking system, but these have been deeply flawed. Regulation under the dictates of the neo-liberal ideology has been so light-touch—by new Labour just as much as by the other Government—that it has been entirely ineffective. Regulation has been too detailed. I remind the House that Basel III has more than 400 pages, and the US Dodd-Frank Bill has a staggering 8,000 pages or more. It is impossibly bureaucratic and almost certainly full of loopholes. Other regulation has been so cautious—for example, the Vickers commission proposal for Chinese walls between the investment and retail arms of a bank—that it missed the main point. Whatever regulatory safeguards the authorities put in place faced regulatory arbitrage from the phalanx of lawyers and accountants in the City earning their ill-gotten bonuses by unpicking or circumventing them.
Mr Ronnie Campbell (Blyth Valley) (Lab): My right hon. Friend is always very good on these subjects. Would I be going too far if I were to suggest that we should nationalise the City, nationalise the banks and run ourselves a Government on behalf of the people?
Mr Meacher: Public ownership of the banks is a significant issue, but I am not going to propose it in my speech. It would be a mistake to return RBS and Lloyds to the private sector, and the arguments about Barclays and HSBC need to be made, but not in this debate. I shall suggest an alternative solution that removes the power of money creation from the banks and puts it in different hands to ensure better results in the national interest.
Against that background, there are solid grounds for examining—this is where I come to my proposal—the creation of a sovereign monetary system, as recommended by several expert commentators recently. Martin Wolf, who, as everyone in this House will know, is an influential chief economics commentator for the Financial Times, wrote an article a few months ago—on 24 April, to be precise—entitled, “Strip private banks of their power to create money”. He recommends switching from bank-created debt to a nationalised money supply.
Lord Adair Turner, the former chair of the Financial Services Authority, delivered a speech about 18 months ago, in February 2013, discussing an alternative to quantitative easing that he termed “overt money finance,” which is also known as a from of sovereign money. Such a system—I will describe its main outline—would restrict the power to create all money to the state via the central bank. Changes to the rules governing how banks operate would still permit them to make loans, but would make it impossible for them to create new money in the

20 Nov 2014 : Column 446
process. The central bank would continue to follow the remit set by the Chancellor of the Exchequer, which is currently to deliver price stability, which is defined at the present time as an inflation target of 2%. The central bank would be exclusively responsible for creating as much new money as was necessary to support non-inflationary growth. Decisions on money creation would be taken independently of Government by a newly formed money creation committee or by the existing Monetary Policy Committee, either of which would be accountable to the Treasury Committee. Accountability to the House is crucial to the whole process.
Mr Jim Cunningham: Going back to the question I asked my right hon. Friend earlier, what would be the role of the Bank of England?
Mr Meacher: I will come on to explain that. The Bank of England has an absolutely crucial role to play. If my hon. Friend listens to the last bit of my speech, he will get a full answer to that question.
A sovereign money system thus offers—if I may say this—a clear thermostat to balance the economy, which is notoriously lacking at present. In times when the economy is in recession or growth is slow, the money creation committee would be able to increase the rate of money creation, to boost aggregate demand. If growth is very high and inflationary pressures are increasing, it could slow down the rate of money creation. That would be a crucial improvement over the current system, whereby the banks either produce too much mortgage credit in a boom because of the high profit prospects, which produces a housing bubble and raises house prices, or produce too little credit in a recession, which exacerbates the lack of demand.
Lending to businesses is central to this whole debate.
Derek Twigg (Halton) (Lab): I want to take my right hon. Friend back to when he mentioned accountability to Parliament and the Select Committee. Could he enlarge on that point? On accountability, what powers would Parliament have to ensure that his proposal was being followed through properly and the rules were being laid down?
Mr Meacher: The purpose of accountability to the Treasury Committee would be to enable Parliament fully to explore the manner in which the money creation committee or the Monetary Policy Committee was working. I would anticipate a full three-hour discussion with the leading officials of those committees before the Treasury Committee, and if necessary they could be given a hard time. Certainly, the persons in this House who are most competent to deal with the matter would make clear their priorities, and where they thought the money creation committee was not paying sufficient attention to the way in which it was operating, and they would suggest changes. They would not have the power formally to compel the money creation committee to change, but I think the whole point about Select Committees, which are televised and discussed in the media, is that they have a very big effect. That would be a major change compared with what we have at present. Like all systems, if it is inadequate it can be modified, changed and increasingly enforced.
20 Nov 2014 : Column 447
Sir William Cash: With reference to the Treasury Committee, does the right hon. Gentleman see a potential role for some form of joint Committee, perhaps with the Public Accounts Committee, whose origins are to do with taxation and spending? Does he think that broadening scrutiny a little in that direction might be helpful so that we get the full benefit of the all-party agreement of both Committees?
Mr Meacher: That is a helpful intervention. Although it is a relatively big part of what I am proposing, it is not for me to suggest exactly what the structure of accountability should be. I would be strongly in favour of increasing it as the hon. Gentleman proposes. Until this House is content that it has a proper channel of accountability which is effective in terms of the way our financial system is run, we should bring in further changes to the structure of accountability as may be necessary, such as along the lines that he suggests.
On lending to businesses, the experience that we have had in the past half-decade has been very unsatisfactory. Under a sovereign monetary system, the central bank would be empowered to create money for the express purpose of that funding role. The money would be lent to banks with the requirement that the funds were used for productive purposes, whereas lending for speculative purposes—for example, to purchase pre-existing assets, either financial or property—would not be allowed. The central bank could also create and lend funds to other intermediaries—the hon. Member for Wycombe referred to this—such as regional or publicly owned business banks, which would ensure that a floor could be placed under the level of lending to businesses, which would be a great relief to British business, guaranteeing support for the real economy.
To avoid misunderstanding, I should add that within the limits imposed by the central bank on the broad purposes for which money may be lent, lending decisions would be entirely at the discretion of the lending institutions, not of the Government or the central bank.
I believe that a sovereign monetary system offers very considerable advantages over the current system. First, it would create a better and safer banking system because banks would have an incentive to take lower levels of risk, as there would be no option of a bail-out or rescue from taxpayers and thus moral hazard would be reduced. Secondly, it would increase economic stability because money creation by banks tends to be pro-cyclical, as I explained, whereas money creation by the central bank would be counter-cyclical. Thirdly, sovereign money crucially supports the real economy, whereas under the current system 83% of lending does not at present go into productive investment. I underline that three times.
Ann McKechin: My right hon. Friend said that the aim would be to reduce risk and for banks to be more cautious, but if we are to encourage innovation in manufacturing, would we not require an investment bank at state level that could fund the riskier levels of innovation to ensure that they get to market, because they are not at the point where they would be commercially viable?
Mr Meacher: That is an extremely important point and, again, I strongly support it. The current Secretary of State for Business, Innovation and Skills has been

20 Nov 2014 : Column 448
struggling to introduce a Government-supported business investment bank and has recently announced something along those lines. I think that should be greatly expanded. The book by Mariana Mazzucato, which I hope most of us have read, “The Entrepreneurial State”, shows the degree to which funding for major innovation, not just in this country but in many other countries which she cites, has been financed through the state because the private sector was not willing to take on board the risk involved. One understands that, but one does need to recognise that the role of the state is extremely important, and under a Labour Government I would like to see something like this being brought in.
Ian Murray (Edinburgh South) (Lab): My right hon. Friend makes a tremendous case for money creation and what we should be considering in this House, but I wonder whether there is also a cultural issue. Many businesses and lenders tell me that there is a cultural problem in the United Kingdom for businesses, particularly entrepreneurial businesses that we have heard about from my hon. Friend the Member for Glasgow North (Ann McKechin), with regard to giving away equity rather than creating debt—funding businesses through equity rather than debt. Other countries throughout Europe that are incredibly successful at giving away equity rather than creating debt have much more growth in their entrepreneurial economy.
Mr Meacher: That is perfectly true, and my hon. Friend makes an important point. The proposals that I am making would support that. There is a very different climate in this country, largely brought about by the churning in the City of London where profits have to be increased or reach a relevant size within a very short period, such as three or six months. Most entrepreneurial businesses cannot possibly produce a decent profit within that period, so the current financial system does not encourage what my hon. Friend wants. These proposals would make money creation available to those we really want to support much more fully than at present.
Fourthly, under the current system, house price bubbles transfer wealth, as we all know, from the young to the old and from those who cannot get on the property ladder to existing house owners, which increases wealth inequality, while removing the ability of banks to create money should dampen house price rises and thus reduce the rate of wealth inequality.
My fifth and last point, which I think is very important, is that sovereign money redresses a major democratic deficit. Under the current system, around just 80 board members across the largest five banks make decisions that shape the entire UK economy, even though these individuals have no obligation or mandate to consider the needs of society or the economy as a whole, and are not accountable in any way to the public: it is for the maximisation of their own interests, not the national interest. Under sovereign money, the money creation committee would be highly transparent—we have discussed this already—and accountable to Parliament.
For all those reasons, the examination of the merits of a sovereign monetary system is now urgently needed, and I call on the Government to set up a commission on money and credit, with particular reference to the potential benefits of sovereign money, which offers a way out of

20 Nov 2014 : Column 449
the continuing and worsening financial crises that have blighted this country and the whole international economy for decades.

12.13 pm

Mr Peter Lilley (Hitchin and Harpenden) (Con): It is a pleasure, as always, to follow the right hon. Member for Oldham West and Royton (Mr Meacher), who gave us a characteristically thoughtful and radical speech. I do not necessarily start from the same premises as him, but what he says is an important contribution to the debate, on the securing of which I credit my hon. Friend the Member for Wycombe (Steve Baker). He has done the House and the country a service by forcing us to focus on the issue of where money comes from and what banks do. He did so in an insightful way. Above all, he showed that he sees, as our old universities used to see, economics as a branch of moral sciences. It is not just a narrow, analytical, economic issue, but a moral, philosophical and ultimately a theological issue, which he illuminated well for the House.
A lot has been made of the ignorance of Members of Parliament of how money is created. I suspect that that ignorance, not just in Members of Parliament but in the intellectual elite in this country, explains many things, not least why we entered the financial crisis with a regulatory system that was so unprepared for a banking crisis. I suspect that it is because people have not reflected on why banks are so different from all other capitalist companies. They are different in three crucial respects, which is why they need a very different regulatory system from normal companies.
First, all bankers—not just rogue bankers but even the best, the most honourable and the most honest—do things that would land the rest of us in jail. Near my house in France is a large grain silo. After the harvest, farmers deposit grain in it. The silo gives them a certificate for every tonne of grain that they deposit. They can withdraw that amount of grain whenever they want by presenting that certificate. If the silo owner issued more certificates than there was grain kept in his silo, he would go to jail, but that is effectively what bankers do. They keep as reserves only a fraction of the money deposited with them, which is why we call the system the fractional reserve banking system. Murray Rothbard, a much neglected Austrian economist in this country, said very flatly that banking is therefore fraud: fractional reserve banking is fraud; it should be outlawed; banks should be required to keep 100% reserves against the money they lend out. I reject that conclusion, because there is a value in what banks do in transforming short-term savings into long-term investments. That is socially valuable and that is the function banks serve.
We should recognise the second distinctive feature of banks that arises directly from the fact that they have only a fraction of the reserves against the loans they make: banks, individually and collectively, are intrinsically unstable. They are unstable because they borrow short and lend long. I have been constantly amazed throughout the financial crisis to hear intelligent people say that the problem with Northern Rock, RBS or HBOS, or with the German, French, Greek and other banks that ran into problems, was the result of their borrowing short and lending long, and they should not have been doing it, as if it was a deviation from their normal role. Of course banks borrow short and lend long. That is what

20 Nov 2014 : Column 450
banks do. That is what they are there for. If they had not done that they would not be banks. Banking works so long as too many depositors do not try to withdraw their funds simultaneously. However, if depositors, retail or wholesale, withdraw or refuse to renew their short-term deposits, a bank will fail.
If normal companies fail, there is no need for the Government to intervene. Their assets will be redeployed in a more profitable use or taken over by a better-managed company. But if one bank fails, depositors are likely to withdraw deposits from other banks, about which there may also be doubts. A bank facing a run, whether or not initially justified, would be forced to call in loans or sell collateral, causing asset prices to fall, thereby undermining the solvency of other banks. So the failure of one bank may lead to the collapse of the whole banking system.
The third distinctive feature of banks was highlighted by my hon. Friend the Member for Wycombe: banks create money. The vast majority of money consists of bank deposits. If a bank lends a company £10 million, it does not need to go and borrow that money from a saver; it simply creates an extra £10 million by electronically crediting the company’s bank account with that sum. It creates £10 million out of thin air. By contrast, when a bank loan is repaid, that extinguishes money; it disappears into thin air. The total money supply increases when banks create new loans faster than old loans are repaid. That is where growth in the money supply usually comes from, and it is the normal situation in a growing economy. Ideally, credit should expand so that the supply of money grows sufficiently rapidly to finance growth in economic activity. When a bank or banks collapse, they will call in loans, which will reduce the money supply, which in turn will cause a contraction of activity throughout the economy.
In that respect, banks are totally different from other companies—even companies that also lend things. If a car rental company collapses, it does not lead to a reduction in the number of cars available in the economy. Its stock of cars can be sold off to other rental companies or to individuals. Nor does the collapse of one rental company weaken the position of other car rental companies; on the contrary, they then face less competition, which should strengthen their margins.
The collapse of a car rental company has no systemic implications, whereas the collapse of a bank can pull down the whole banking system and plunge the economy into recession. That is why we need a special regulatory regime for banks and, above all, a lender of last resort to pump in money if there is a run on the banks or a credit crunch, yet this was barely discussed when the new regulatory structure of our financial and banking system was set up in 1998. The focus then was on consumer protection issues. Systemic stability and the lender-of-last-resort function were scarcely mentioned. That is why the UK was so unprepared when the credit crunch struck in 2007. Nor were these aspects properly considered when the euro was set up. As a result, a currency and a banking system were established without the new central bank being given the power to act as lender of last resort. It has had to usurp that power, more or less illegally, but that is its own problem.
This analysis is not one of those insights that come from hindsight. Some while ago, Michael Howard, now the noble Lord Howard, reminded Parliament—and

20 Nov 2014 : Column 451
indeed me; I had completely forgotten—that I was shadow Chancellor when the Bill that became the Bank of England Act 1998 was introduced. He pointed out that I then warned the House that

“With the removal of banking control to the Financial Services Authority…it is difficult to see how…the Bank remains, as it surely must, responsible for ensuring the liquidity of the banking system and preventing systemic collapse.”

And so it turned out. I added:

“setting up the FSA may cause regulators to take their eye off the ball, while spivs and crooks have a field day.”—[Official Report, 11 November 1997; Vol. 300, c. 731-32.]

So that turned out, too. I could foresee that, because the problem was not deregulation, but the regulatory confusion and the proliferation of regulation introduced by the former Chancellor, which resulted from a failure to focus on the banking system’s inherent instability, and to provide for its stability.
This failure to focus on the fundamentals was not a peculiarly British thing. The EU made the same mistakes in spades when setting up the euro, and at the very apogee of the world financial system, they deluded themselves that instability was a thing of the past. In its “Global Financial Stability Report” of April 2006, less than 18 months before the crisis erupted, the International Monetary Fund, no less, said:

“There is growing recognition that the dispersion of credit risk by banks to a broader and more diverse group of investors, rather than warehousing such risk on their balance sheets, has helped to make the banking and overall financial system more resilient…The improved resilience may be seen in fewer bank failures and more consistent credit provision. Consequently, the commercial banks…may be less vulnerable today to credit or economic shocks.”

The supreme irony is that those at the pinnacle of the world regulatory system believed that the very complex derivatives that contributed to the collapse of the financial system would render it immune to such instability. We need constantly to be aware that banks are unstable, and are the source of money. If instability leads to a crash, that leads to a contraction in the money supply, and that can exacerbate and intensify a recession.
Bob Stewart (Beckenham) (Con): I am listening carefully to my right hon. Friend. Does that mean that the banks are uncontrollable, as things stand?
Mr Lilley: No; they can and should be controlled. They are controlled both by being required to have assets, and ultimately by the measures that Government should take to ensure that they do not expand lending too rapidly. That is the point that I want to come on to, because a failure to focus on the nature of banking and money creation causes confusion about the causes of inflation and the role of quantitative easing.
As too many people do not understand where money comes from, there is confusion about quantitative easing. To some extent, the monetarists, of whom I am one, are responsible for that confusion. For most of our lifetime, the basic economic problem has been inflation. There have been great debates about its causes. Ultimately, those debates were won by the monetarists. They said, “Inflation is caused by too much money—by money growing more rapidly than output. If that happens, inevitably and inexorably, prices will rise.” The trouble was that all too often, monetarists used the shorthand

20 Nov 2014 : Column 452
phrase, “Inflation is caused by Government printing too much money.” In fact, it is caused not by Government printing the money, but by banks lending money and then creating new money at too great a rate for the needs of the economy. We should have said, “Inflation follows when Governments allow or encourage banks to create money too rapidly.” The inflationary problem was not who created the money, but the fact that too much money was created.
The banks are now not lending enough to create enough money to finance the growth and expansion of the economy that we need. That is why the central bank steps in with quantitative easing, which is often described as the bank printing money. Those who have been brought up to believe that printing money was what caused inflation think that quantitative easing must, by definition, cause inflation. It only causes inflation if there is too much of it—if we create too much money at a faster rate than the growth of output, and therefore drive up prices—but that is not the situation at present.
Mr MacNeil: The right hon. Gentleman is giving a very good explanation of the different circumstances in which money is created. He has spoken about the morality, and about quantitative easing. When there is demand, what is his view of the theory of helicopter money, and where that money gets spread to?
Mr Lilley: As a disciple of Milton Friedman, I am rather attracted to the idea of helicopter money; I think it was he who introduced the metaphor, and said that it would be just as effective if money were sprayed by a helicopter as if it were created by banks. Hopefully, as I live quite near the helicopter route to Battersea, I would be a principal recipient. I do not think that there is a mechanism available that would allow us to do that, but I am not averse to that in principle, if someone could do it. My point is that the banks, either spontaneously or encouraged by the central bank through quantitative easing, must generate enough money to ensure that the economy can grow steadily and stably.
Mr MacNeil: Could it not be argued that increasing welfare payments would be a form of helicopter money, because the people most likely to spend money are those with very little money? If we put money in the pockets of those who have little money, it would be very positive, because of the economic multiplier; the money would be spent, and would circulate, very quickly.
Mr Lilley: There are far better reasons for giving money to poor people than because their money will circulate more rapidly—and there is no evidence for that; I invite the hon. Gentleman to read Milton Friedman’s “A Theory of the Consumption Function”, which showed that that is all nonsense. There are good reasons for giving money to poor people, namely that they are poor and need money. Whether the money should be injected by the Government spending more than they are raising, rather than by the central bank expanding its balance sheet, is a moot point.
All I want to argue today is that we should recognise that the economy is as much threatened by a shortage of money as it is by an excess of money. For most of our lifetimes the problem has been an excess, but now it is a shortage. We therefore need to balance in either occasion

20 Nov 2014 : Column 453
the rate of growth of money with the rate of growth of output if we are to have stability of prices and stable economic activity. I congratulate my hon. Friend the Member for Wycombe on bringing these important matters to the House’s attention.

12.30 pm

Austin Mitchell (Great Grimsby) (Lab): I welcome this debate and congratulate hon. Friends on securing it, because we have not debated this matter for over 100 years, and it is time we did so. This House and the Government are obsessed with money and the economy, but we never debate the creation of money or credit, and we should, because, when it comes to our present economic situation and the way the banks and the economy are run, that is the elephant in the room. It is time to think not outside the box, but outside the banks; it is time to think about the creation of credit and money.
I speak as a renegade social creditor who is still influenced by social credit thinking; I do not pledge total allegiance to Major Douglas, but I am still influenced by him. As has just been pointed out, 93% of credit is created by the banks, and a characteristic of what has happened to the economy since the ’70s is the enormous expansion of that credit. I have here a graph from Positive Money showing that the money created by the banks was £109 billion in 1980. Thanks to the financial reforms and the huge increase in the power of the banks since then, by 2010 that figure had risen to £2,213 billion, whereas the total cash created by the Government—the other 3%—had barely increased at all. Since 2000 we have seen the amount of money created by the banks more than double.
That has transformed the economy, because it has financialised everything and made money far more important. It has created debt-fuelled growth followed by collapse. It is being controlled by the banks, which have directed the money into property and financial speculation. Only 8% of the credit created has been lent to new businesses. The Government talk about the march of the makers, but the makers are not marching into the banks, because the banks are turning them away. Even commercial property is more important than makers. That has created a very lop-sided economy, with a weak industrial base that cannot pay the nation’s way in the world because investment has been directed elsewhere, and a very unequal society, which has showered wealth on those at the top, as Piketty shows, and taken it away from those at the bottom.
A very undesirable situation is being created. We have built an unstable economy that is very exposed to risk and to bubble economics, thanks to the financialisation process that has gone on since 1979. The state allocates all credit creation to the banks and then has to bail them out and guarantee them, at enormous expense and with the creation of debt for the public, when the bubble bursts and they collapse.
Some argue—Major Douglas would have argued this—that credit should therefore be issued only by the state, through the Bank of England. That would probably be a step too far in the present situation, given our present lack of education, but we can and should create the credit issued by the banks. We can and should separate the banks’ utility function—servicing our needs, with cheque books, pay and so on—and their speculative

20 Nov 2014 : Column 454
role. The Americans have moved a step further, with the Volcker rule, but it is not quite strong enough. In this country we tend to rely on Chinese walls, which are not strong at all. I think that only a total separation of the banks’ utility and speculative arms will do it, because Chinese walls are infinitely penetrable and are regularly penetrated.
We can limit the credit creation by the banks by increasing the reserve ratios, which are comparatively low at the moment—the Government have been trying to edge them up, but not sufficiently—or we could limit their power to create credit to the amount of money deposited with the banks as a salutary control. We could tax them on the hidden benefit they get from creating credit, because they get the signorage on the credit they create. If credit is created by banknotes and cash issued by the Government, the Government get the profit on that—the signorage. The banks just take the signorage on all the credit they issue and stash it away as a kind of hidden benefit, so why not tax that and give some of the profit from printing money to the state?
Martin Wolf, in an interesting article cited by my right hon. Friend the Member for Oldham West and Royton (Mr Meacher), has argued that only central banks should create new money and that it should be regulated by a public credit authority, rather like the Monetary Policy Committee. I think that that would be a solution and a possible approach. Why should we not regulate the issue of credit in that fashion?
That brings us back to the old argument about monetarism: whether credit creation is exogenous or endogenous. The monetarists thought that it was exogenous, so all we have to do is cut the supply of money into the economy in order to bring inflation under control. That was a myth, of course, because we cannot actually control the supply of money; it is endogenous. The economy, like a plant, sucks in the money it needs. But that can be regulated by a public credit authority so that the supply matches the needs of the economy, rather than being excessive, as it has been over the past few years. I think that that kind of credit authority needs to be created to regulate the flow of credit.
That brings me to the Government’s economic policy. The Government tell us that they have a long-term economic plan, which of course is total nonsense. Their only long-term economic plan is slash and burn. The only long-term economic planning that has been done is by the Bank of England.
Mr MacNeil: To quote Harry S. Truman, the worst thing about economists is that they always say, “On the other hand”. The hon. Gentleman talks about limiting and regulating how much money is to be sucked in by the economy, but who would decide that? The difficulty is that although the economy might be overheating in a certain part of the country, such as the south-east of England, it could be very cool in others, such as the north of Scotland. What might be the geographical effects of limiting the money going into the economic bloodstream if some parts of the plant—I am extending his metaphor—need the nutrients while other parts are getting too much?
Austin Mitchell: The hon. Gentleman often asks tricky questions, but this one is perfectly clear-cut. The credit supply for the peripheral and old industrial parts of the

20 Nov 2014 : Column 455
economy, which include Scotland, but also Grimsby, has been totally inadequate, and the banks have been totally reluctant to invest there. I once argued for helicopter money, as Simon Jenkins has proposed, whereby we stimulate the economy by putting money into helicopters and dropping it all over the country so that people will spend it. I would agree to that, provided that the helicopters hover over Grimsby, but I would have them go to Scotland as well, because it certainly deserves its share, as does the north of England. However, I do not want to get involved in a geographical dispute over where credit should be created.
The only long-term plan has been that of the Bank of England, which has kept interest rates flat to the floor for six years or so—an economy in that situation is bound to grow—and has supplemented that with quantitative easing. We have created £375 billion of money through quantitative easing. It has been stashed away in the banks, unfortunately, so it has served no great useful purpose. If that supply of money can be created for the purpose of saving the banks and building up their reserve ratios, it can be used for more important purposes—the development of investment and expansion in the economy. This is literally about printing money. Those of us with a glimmering of social credit in our economics have been told for decades, “You can’t print money—it would be terrible. It would be disastrous for the economy to print money because it leads to inflation.” Well, we have printed £375 billion of money, and it has not produced inflation. Inflation is falling.
Steve Baker rose—
Austin Mitchell: I am sorry—I am mid-diatribe and do not want to be interrupted.
It has proved possible to print money. The Americans have done it—there has been well over $1 trillion of quantitative easing in the United States. The European Central Bank is now contemplating it, as Mr Draghi casts around for desperate solutions to the stagnation that has hit the eurozone. The Japanese, surprisingly, did it only last week. If all can do it, and if it has been successful here and has not led to inflation, we should be able to use it for more useful and productive economic purposes than shoring up the banks.
If we go on creating more money through quantitative easing, we should channel it through a national investment bank into productive investment such as contracts for house building and new town generation. Through massive infrastructure work—although I would not include HS2 in that—we can stimulate the economy, stimulate growth, and achieve useful purposes that we have not been able to achieve. This is a solution to a lot of the problems that have bedevilled the Labour party. How do we get investment without the private finance initiative and the heavy burden that that imposes on health services, schools, and all kinds of activities? Why not, through quantitative easing, create contracts for housing or other infrastructure work that have a pay-off point and produce assets for the state?
I mentioned the article in which Martin Wolf advocates the approach of the Monetary Policy Committee. That is how we should approach this. I welcome this debate because it has to be the beginning of a wider debate in

20 Nov 2014 : Column 456
which we open our minds to the possibilities of managing credit more effectively for the better building of the strength of the British economy.

12.44 pm

Zac Goldsmith (Richmond Park) (Con): I want to put on record my gratitude to my hon. Friend the Member for Wycombe (Steve Baker) for having initiated this debate, and to his supporters from various parties. Having heard his speech—or most of it; I apologise for being late—I am even more satisfied that it was right to cast my vote for him to join the Treasury Committee.
My hon. Friend has introduced an incredibly important debate. As we have heard, this issue has not been debated here for well over a century. We would not be having it were it not for the fact that we are still in the midst of tumultuous times. We had the banking crash and the corresponding crash in confidence in the banking system and in the wider economy, and now, partly as a consequence, we have the problem of under-lending, particularly to small and medium-sized businesses. This subject could not be more important.
The right hon. Member for Oldham West and Royton (Mr Meacher)—I will call him my right hon. Friend because we work together on many issues—pointed out at the beginning of his speech that this issue is not well understood by members of the public. As I think he said later—if not, I will add it—it is also not well understood by Members of Parliament. I would include myself in that. I suspect that most people here would be humble enough to recognise that the banking wizardry we are discussing is such a complex issue that very few people properly understand it.
Bob Stewart: I totally associate myself with my hon. Friend’s comments about ignorance and include myself in that. It seems to me that the system is broken. The banks will not lend money because the Government have told them that they have to keep reserves. We do not like quantitative easing because that means that the banks are not lending. There is something very wrong with the system. It is not a case of “if the system isn’t broke, don’t fix it”, but “the system is broke, and someone’s got to fix it”.
Zac Goldsmith: My hon. Friend makes a valuable point that I will come to later.
If Members of Parliament do not really understand how money is created—I believe that that is the majority position, based on discussions that I have been having—how on earth can we be confident that the reforms that we have brought in over the past few years are going to work in preventing repeated collapses of the sort that we saw before the last election? In my view, we cannot be confident of that. The problem is the impulsive position taken by ignorant Members. I do not intend to be rude; as I said, I include myself in that bracket. For too many people, the impulse has been simply to call for more regulation, as though that is going to magic away these problems. As my hon. Friend the Member for Wycombe said, there are 8,000 pages of guidance in relation to one aspect of banking that he discussed. The problem is not a lack of regulation; it is the fact that the

20 Nov 2014 : Column 457
existing regulations miss the goal in so many respects. Banking has become so complex and convoluted that we need an entirely different approach.
When we talk to people outside Parliament about banking, the majority have a fairly simple view—the bank takes deposits and then lends, and that is the way it has always been. Of course, there is an element of truth in that, but it is so far removed from where we are today that it is only a very tiny element.
Steve Baker: My hon. Friend mentions the idea of straightforward, carry-through lending. When people talk about shadow banking, they are usually talking about asset managers who are lending and are passing funds straight through—similarly with peer-to-peer lenders. I am encouraged by the fact that when people are freely choosing to get involved with lending, they are not using the expansionary process but lending directly. Whereas the banks are seen simultaneously to fail savers and borrowers, things like peer-to-peer lending are simultaneously serving them both.
Zac Goldsmith: That is a really important point. There is a move towards such lending, but unfortunately it is only a fringe move that we see in the credit unions, for example. It is much closer to what original banking—pure banking or traditional banking—might have looked like. We even see it in some of the new start-ups such as Metro bank; I hesitate to call it a start-up because it is appearing on every high street. Those banks have much more conservative policies than the household-name banks that we have been discussing.
Most people understand the concept of fractional reserve banking even if they do not know the term—it is the idea that banks lend more than they can back up with the reserves they hold.
Guy Opperman (Hexham) (Con): My hon. Friend mentioned Metro, whose founder is setting up a bank—in which I should declare an interest—called Atom in the north-east. It is one of some 22 challenger banks of which Metro was the first. I missed the opening of the debate, so I have not heard everything that has been said, but I do not accept that it is all doom and gloom in banking. Does he agree that these new developments are proof that the banking system is changing and the old big banks are being replaced with the increased competition that we all need?
Zac Goldsmith: I certainly agree with the sentiment expressed. I am excited by the challengers, but I do not believe that it is enough. Competition has to be good because it minimises risk. I know that my hon. Friend the Economic Secretary has dwelt on and looked at this issue in great detail.
Even fractional reserve banking is only the start of the story. I will not repeat in detail what we have already heard, but banks themselves create money. They do so by making advances, and with every advance they make a deposit. That is very poorly understood by people outside and inside the House. It has conferred extraordinary power on the banks. Necessarily, naturally and understandably, banks will use and have used that power in their own interests. It has also created extraordinary risk and, unfortunately, because of the size and interconnectedness of the banks, the risk is on us. That

20 Nov 2014 : Column 458
is why I am so excited by the challengers that my hon. Friend has just described. As I have said, that is happening on the fringe: it is right on the edge. It is extraordinary to imagine that at the height of the collapse the banks held just £1.25 for every £100 they had lent out. We are in a very precarious situation.
When I was much younger, I listened to a discussion, most of which I did not understand, between my father and people who were asking for his advice. He was a man with a pretty good track record on anticipating turbulence in the world economy. He was asked when the next crash would happen, and he said, “The last person you should ask is an economist or a business man. You need to ask a psychiatrist, because so much of it involves confidence.” The point was proven just a few years ago.
The banking system and the wider economy have become extraordinarily unhinged or detached from reality. I would like to elaborate on the extraordinary situation in which it is possible to imagine economic growth even as the last of the world’s great ecosystems or the last of the great forests are coming down. The economy is no longer linked to the reality of the natural world from which all goods originally derive. That is probably a debate for another time, however, so I will not dwell on it.
Mr MacNeil: The hon. Gentleman is making a good point that we should remember. It was brought home to me by Icelandic publisher Bjorn Jonasson, who pointed out that we are not in a situation where volcanoes have blown up or there have been huge national disasters, famines or catastrophes brought on by war; as a couple of the hon. Gentleman’s colleagues have said, this is about a system failure within the rules, and it is worth keeping that in mind. Although there is much gloom in relation to the banking system, in many ways that should at the same time give us some hope.
Zac Goldsmith: The hon. Gentleman is right, but a growing number of commentators and voices are anticipating a much larger crash than anything we have seen in the past few years. I will not add to or detract from the credence of such statements, but it is possible to imagine how such a collapse might happen, certainly in the ecological system. We are talking about the banking system, but the two systems are not entirely separate.
We had a wake-up call before the election just a few years ago. My concern is that we have not actually woken up. It seems to me that we have not introduced any significant or meaningful reforms that go to the heart of the problems we are discussing. We have been tinkering on the edges. I do not believe that Parliament has been as closely involved in the process as it should be, partly because of the ignorance that I described at the beginning of my speech.
I want to put on the record my support for the establishment of a meaningful monetary commission or some equivalent in which we can examine the pros and cons of shifting from a fractional reserve banking system to something closer to a full reserve banking system, as some hon. Members have said. We need to understand the pros and cons of such a move, how possible it is, and who wins and who loses. I do not think that many people fully know the answers.
20 Nov 2014 : Column 459
We need to look at quantitative easing. I think that hon. Members on both sides of the House have accepted that it is not objective. Some believe that it is good and others believe that it is bad, but no one believes that it is objective. If the majority view is that quantitative easing is necessary, we need to ask this question: why not inject those funds into the real economy—into housing and energy projects of the kind that Opposition Members have spoken about—rather than using the mechanism in a way that clearly benefits only very few people within the world of financial and banking wizardry that we are discussing?
The issues need to be explored. The time has come to establish a monetary commission and for Parliament to become much more engaged. This debate is a very small step in that direction, and I am very grateful to its sponsors. I wish more Members were in the Chamber—I had intended to listen, not to speak—but, unfortunately, there have not been many speakers. This is a beginning, however, and I hope that we will have many more such debates.

12.55 pm

Mark Durkan (Foyle) (SDLP): I rise to endorse the very significant points made by hon. Members. In particular, I pay tribute to the hon. Member for Wycombe (Steve Baker) for securing the debate and for opening it so strongly. From hearing him speak in Public Bill Committees on banking reform and related questions, I know that he is dubious about our having almost feng shui arguments on the regulatory furniture when there are fundamental questions to be asked about the very foundations of the system. He amplified that point in his speech.
My right hon. Friend the Member for Oldham West and Royton (Mr Meacher) made the point that the whole approach to quantitative easing—several Members have questioned it at a number of levels—proves that the underlying logic of sovereign money creation is feasible and workable. It is strange that some of the people who would dispute or refute the case for sovereign money creation sometimes defend quantitative easing in its existing form and with its current features.
In many ways, quantitative easing has shown that if we are to use the facility of the state—in this situation, the state’s main tool is the Bank of England—to alter or prime the money supply in a particular way, we could choose a much better way of doing so than through quantitative easing. It is meant to have increased the money supply, but where have people felt that in terms of business credit, wages or the stimulus that consumer power can provide?
When we look back at the financial crash and its aftermath, we can see evidence—not just in the UK, but in Ireland and elsewhere—showing that much of what we were told about the worth or the wealth of various sectors in the economy up until the crash has turned out to be vacuous, while the poverty lying in its trail has been vicious. The worth or the wealth was not real, but the poverty is real. People in organisations such as Positive Money in the UK or Sensible Money in Ireland are therefore saying, rightly, that politics—those of us charged with overseeing public policy as it affects the

20 Nov 2014 : Column 460
economy—need to have more of a basic look at how we treat the banking system and at the very nature of money creation.
As someone who grew up in Northern Ireland, I am very used to the idea of having different banknotes—banks issuing their own money—but we do not think much about that, because we think that all that happens in the Bank of England or under its licence. As a member of the Financial Services Public Bill Committee and the Financial Services (Banking Reform) Public Bill Committee, it seems to me that although it has been recognised that some regulatory powers should go back to the Bank of England, the arrangements for regulation and the Bank of England’s role are still very cluttered.
In fact, in trying to correct the regulatory deficiencies that existed before the crash, there is a risk that we have perhaps created too many conflicting and confusing roles for the Bank of England. Given the various personages, different roles and job descriptions that attach to some of those committees, it seems to me that there is potential for clutter in the Treasury. The common denominator and reference point in the range of different committees and bodies and the things they do, is the Treasury. When the Treasury exercises its powers, influences judgments, and informs the criteria and considerations of those different committees under the Bank of England, there is not enough scrutiny or back play through Parliament.
I endorse the points made by other hon. Members about ensuring more accountability, whether through more formal reference to the Treasury Committee or some other hybrid, as suggested in an intervention on the right hon. Member for Oldham West and Royton. There should be more parliamentary insight—and definitely parliamentary oversight—on these matters. We cannot suddenly be shocked that all the confidence in various regulatory systems turned out to have been badly placed. That was our experience the last time, when people who now criticise the previous Government for not having had enough regulation were saying that there was too much regulation and calling for more deregulation.
If we in this Parliament have produced a new regulatory order, we must be prepared to face and follow through the questions that arise. It is not good enough to ensure that the issue returns to Parliament only the next time there is a crisis, when we will have to legislate again. We should do more to be on our watch. The hon. Member for Wycombe and other hon. Members who secured this debate have done us a service. We want more of a parliamentary watch window on these issues.
There is a necessary role for banks in the creation of money and quantitative easing, but we must entrust them with the right role and with the appropriate controls and disciplines. That is fundamental. It is not good or strong enough that we leave it to the whims of the banks and their lending—supposedly reinforced and stimulated by quantitative easing—to profile the performance of the economy.
If quantitative easing works on the basis of the Bank of England, through the asset purchase facility, essentially using money that it creates under quantitative easing to buy gilts from a pension fund whose bank account is with RBS—which in essence is owned by the Bank of England—then RBS’s bank account with the Bank of England goes up by the value of that gilt purchase. Simultaneously, the bank account of the pension fund

20 Nov 2014 : Column 461
goes up by that amount, and we are told that the UK money supply has increased. Yes, in theory the pension fund can purchase other assets—is that what is happening?—but while 1% of the big money holders and players appear to have been advantaged through quantitative easing, where is the trickledown to the rest of the economy? It is not there.
The sovereign money creation model seems to be primed much more specifically on a view of the total economy and providing a broad, stable and more balanced approach to stimulus and economic performance. We have had the slowest recovery coming out of a recession with quantitative easing. I do not say that to get some voice-activated reaction from the Government about how good the recovery and performance is, but in broader historical terms it is the slowest recovery, which also leaves questions about quantitative easing.
We heard from the Prime Minister about red warning lights on the dashboard of the world economy, and I wonder whether he would ever say that, to his mind, those warning lights include the degree to which global banks are now playing heavily in derivatives again, and there needs to be more action. That raises issues not just of regulation at national level, but at international level.

1.5 pm

Catherine McKinnell (Newcastle upon Tyne North) (Lab): I congratulate the hon. Member for Wycombe (Steve Baker) on his thoughtful and thorough opening speech, as well as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on his remarks. In their absence I also congratulate the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Clacton (Douglas Carswell) on securing today’s important debate.
This debate follows a significant campaign by Positive Money, which has raised important issues about how we ensure financial stability, and how we as parliamentarians and members of the public can gain a greater understanding of the way our economy works, in particular how money is supplied not just in this country but around the world.
Some important questions have been highlighted in the debate, although not all have been answered. There are questions about how money is created, how money or credit is used by banks and others, how our financial system can be more transparent and accountable, and particularly how it can benefit the country as a whole. That latter point is something that Labour Members have been acutely focused on. How do we re-work our economy, whether in banking or in relation to jobs and wages, so that it works for the country as a whole?
It is worth reflecting on our current system and what it means for money creation. As the hon. Member for Wycombe set out eloquently in his opening speech, we know that currency is created in the conventional sense of being printed by the Bank of England, but commercial banks can create money through account holders depositing money in their accounts, or by issuing loans to borrowers. That obviously increases the amount of money available to borrowers and within the wider economy. As the Bank of England made clear in an article accompanying its first quarterly bulletin in 2014:

“When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance. At that instant, new money is created.”

Bank loans and deposits are essentially IOUs from banks, and therefore a form of money creation.
20 Nov 2014 : Column 462
Commercial banks do not have unlimited ability to create money, and monetary policy, financial stability and regulation all influence the amount of money they can create. In that sense, banks are regulated by the Prudential Regulation Authority, part of the Bank of England, and the Financial Conduct Authority. Those regulators, some of which are—rightly—independent, are the stewards of “safety and soundness” in financial institutions, especially regarding banks’ money-creating practices.
Banks are compelled to manage the liabilities on their balance sheets to ensure that they have capital and longer-term liabilities precisely to mitigate risks and prevent them from effectively having a licence to print money. Banks must adhere to a leverage ratio—the limit on their balance sheets, compared with the actual equity or capital they hold—and we strongly support that. Limiting a bank’s balance sheet limits the amount of money it can create through lending or deposits. There are a series of checks and balances in place when it comes to creating money, some of which the Opposition strongly supported when we debated legislative changes in recent years. It remains our view that the central issue, the instability of money supply within the banking system, is less to do with the powers banks hold and how they create money than with how they conduct themselves and whether they act in the public interest in other ways too.
We believe the issues relate to the incentives in place for banks to ensure that loans and debts are repaid, and granted only when there is a strong likelihood of repayment. When the money supply increases rapidly with no certainty of repayment, that is when real risks emerge in the economy. Those issues were debated at great length when the Financial Services (Banking Reform) Act 2013 made its way through Parliament, following recommendations from Sir John Vickers’ Independent Commission on Banking and the Parliamentary Commission on Banking Standards, which considered professional standards and culture in the industry. The 2013 Act created the Prudential Regulation Authority and gives regulators the power to split up banks to safeguard their future, to name just two examples of changes that were made. However, we feel that it did not go far enough.
The Opposition’s concern is that the Government’s actions to date in this area have fallen short of the mark. They have failed to boost sufficient competition in the banking industry to raise those standards and to create public confidence in the sector. As hon. Members with an interest in this area know, we tabled a number of amendments to try to strengthen the Bill, and to prevent banks from overreaching themselves and taking greater risks, by ensuring that the leverage ratio is effective. That goes to the heart of many of the issues we are debating today. The Government rejected our proposals to impose on all those working in the banking industry a duty of care to customers. That would help to reform banking so that it works in the interests of customers and the economy, and not solely those of the banks. Those are the areas on which we still feel that reform is needed in the sector.
It is clear from this debate that there is a whole range of issues to consider, but our focus is that the banks need to be tightly and correctly regulated to ensure that they work for the whole economy, including individuals

20 Nov 2014 : Column 463
and small and large businesses. That is the key issue that we face at present. Only when the banks operate in that way and work in the interests of the whole economy will we find our way out of the cost of living crisis that so many people are facing.
I thank hon. Members for securing this very important debate and for the very interesting contributions that have been made from all sides of the House. I am pretty certain that this is not the end of the conversation. The debate will go on.

1.12 pm

The Economic Secretary to the Treasury (Andrea Leadsom): I too congratulate hon. Members on securing this fascinating debate. It is long overdue and has allowed us to consider not just what more we can do to improve what we have but whether we should be throwing it away and starting again. I genuinely welcome the debate and hope that many more will follow. In particular, I pay tribute to my hon. Friend the Member for Wycombe (Steve Baker), who now sits on the Treasury Committee on which I had the great honour to serve for four years. I am sure that his challenge to orthodoxy will have been extremely welcomed by the Committee and by many others. I wish him good luck on that.
Steve Baker: May I just say how much I am enjoying my hon. Friend’s place on the Committee? I congratulate her on her promotion once again.
Andrea Leadsom: I am grateful to my hon. Friend.
My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) gave a fantastic explanation that I would commend to anybody who wants to understand how money is created. He might consider delivering it under the financial education curriculum in schools. It was very enlightening, not least because it highlighted the appalling failure of regulation in the run-up to the financial crisis that is still reverberating in our economy today. All hon. Members made interesting points on what we can do better and whether we should be thinking again. I pay tribute to the right hon. Member for Oldham West and Royton (Mr Meacher) for his good explanation of the Positive Money agenda, which is certainly an idea worthy of thought and I will come on to it.
Money creation is an important and complex aspect of our economy that I agree is often misunderstood. I would therefore like quickly to set out how the system works. The money held by households and companies takes two forms: currency, which is banknotes and coins, and bank deposits. The vast majority, as my hon. Friend pointed out, is in the form of bank deposits. He is absolutely right to say that bank deposits are primarily created by commercial banks themselves each time they make a loan. Whenever a bank makes a loan, it credits the borrower’s bank account with a new deposit and that creates “new money”. However, there are limits to how much new money is created at any point in time. When a bank makes a loan, it does so in the expectation that the loan will be repaid in the future—households repay their mortgages out of their salaries; businesses repay their loans out of income from their investments.

20 Nov 2014 : Column 464
In other words, banks will not create new money unless they think that new value will also in due course be created, enabling that loan to be paid back.
Ultimately, money creation depends on the policies of the Bank of England. Changes to the bank rate affect market interest rates and, in turn, the saving and borrowing decisions of households and businesses. Prudential regulation is used if excessive risk-taking or asset price bubbles are creating excessive lending. Those checks and balances are an integral part of the system.
I agree fully that the regulatory system was totally unfit in the run-up to the financial crisis. We saw risky behaviour, excessive lending and a general lack of restraint on all sides. The key problem was that the buck did not stop anywhere. When there were problems in the banking system, regulators looked at each other for who was responsible. We all know that the outcome was the financial crisis of 2008. I, too, see the financial crisis as a prime example of why we need not just change but a better banking culture: a culture where people do not spend their time thinking about how to get around the rules; a culture where there is no tension between what is good for the firm and what is good for the customer; and a culture where infringements of the rules are properly and seriously dealt with.
I will touch on what we are doing to change the regulations and the culture, but first I will set out why we do not believe that the right solution is the wholesale replacement of the current system by something else, such as a sovereign monetary system. Under a sovereign monetary system, it would be the state, not banks, that creates new money. The central bank, via a committee, would decide how much money is created and this money would mostly be transferred to the Government. Lending would come from the pool of customers’ investment account deposits held by commercial banks.
Such a system would raise a number of very important questions. How would that committee assess how much money should be created to meet the inflation target and support the economy? If the central bank had the power to finance the Government’s policies, what would the implications be for the credibility of the fiscal framework and the Government’s ability to borrow from the market if they needed to? What would be the impact on the availability of credit for businesses and households? Would not credit become pro-cyclical? Would we not incentivise financing households over businesses, because for businesses, banks would presumably expect the state to step in? Would we not be encouraging the emergence of an unregulated set of new shadow banks? Would not the introduction of a totally new system, untested across modern advanced economies, create unnecessary risk at a time when people need stability?
Steve Baker: I do not actually support Positive Money’s proposals, although I am glad to work with it because I support its diagnosis of the problem. Of course, this argument could have been advanced in 1844 and it was not. I have not proposed throwing away the system and doing something radically new; I have proposed getting rid of all the obstacles to the free market creating alternative currencies.
Andrea Leadsom: I am grateful to my hon. Friend for pointing that out. I must confess that before the debate I was puzzled that such an intelligent and extremely

20 Nov 2014 : Column 465
sensible person should be making the case for a sovereign monetary system, which I would consider to be an extraordinarily state-interventionist proposal. I am glad to hear that is not the case. In addition, of course, bearing in mind our current set of regulators, presumably we would then be looking at a committee of middle-aged, white men deciding what the economy needs, which would also be of significant concern to me.
Mr Meacher: Before the Minister leaves the question of a sovereign monetary system, which she obviously totally opposes and to which she raised several objections that I cannot answer in an intervention, does she not believe that the system of bank money creation is highly pro-cyclical and has enormously benefited property and financial sectors to the disadvantage of the vast range of industries outside the financial sector?
Andrea Leadsom: As I said, I sincerely congratulate the right hon. Gentleman on raising this matter; it is certainly worthy of discussion, and I look forward to him responding to some of my arguments. I agree that where we were in the run-up to the financial crisis was entirely inappropriate, and I will come to some of the steps we have taken to improve—not throw away the baby with the bathwater—what we have now, rather than throwing it away and starting again.
I know that some of my hon. Friends and Opposition Members have a particular concern about quantitative easing—I have made it clear that I do too—specifically about how we might unwind it. However, they must agree that at least it can be unwound, unlike the proposal for “helicopter money”, which would seem to be a giant step beyond QE—a step where money would be created by the state with no obvious way to rein it back if necessary.
If the tap in my bathroom breaks, rather than wrenching the sink off the wall, I would prefer to fix the tap. As Martin Wolf said last week,

“nobody can say with confidence”

how a monetary system should be structured and what laws and regulations it should have. Given that and the economic tumult across the world, we should be devoting our energies to fixing the system we have—mending the problems but keeping what works. For that reason, the Government have taken significant steps to improve the banking sector, making sure it fulfils its core purpose of keeping the wheels of the economy well oiled.
We are creating a better, safer financial system, with the Financial Policy Committee, created in this Parliament, focused on macro-prudential analysis and action. As the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) pointed out, the FPC has been given counter-cyclical tools to require more capital to be held and to increase the leverage ratio and the counter-cyclical capital buffers when the economy is over-exuberant in order to push back against it—as the previous Governor of the Bank of England said, to remove the punch bowl while the party is still in full flow. That is incredibly important. We are also reducing dependence on debt. Since the financial crisis, the UK banking system has been forced significantly to strengthen its capital and liquidity position, and it is continuing to do so.
20 Nov 2014 : Column 466
I must stress, however, that regulation alone will never be enough, which is why the Government are promoting choice, competition and diversity. I am delighted that 25 new banks are talking to the Prudential Regulatory Authority about getting a bank licence. We are also making strong efforts to promote the mutual sector; to enhance the capacity of credit unions to serve the real economy better; to enable booster funding for small businesses; to help families; and to improve customer service. We have put in place schemes to help the transmission of money from banks to customers, including the funding for lending scheme, which has lowered the price and increased the availability of credit for small and medium-sized businesses. As I think the hon. Member for Newcastle upon Tyne North said, we have also created the British business bank, which is helping finance markets work better for small firms, and are investing much resource and effort to build that up and help businesses in our economy.
We also have a programme of measures to increase competition in the SME lending market, including flagship proposals to open up access to SME credit information, which will help challengers to get in on the act, and to have banks pass on declined applications for finance to challenger banks. In addition, we now have an appeals process whereby small businesses turned down for funding can get a second chance, which has secured an additional £42 million of lending since its launch. These are all measures to help small businesses access finance. Then, to mitigate the problem of house price bubbles, we are putting in place supply-side reforms to promote home building and home owning, as well as measures enabling the PRA to limit the amount of lending that households can take on.
I agree with Members on both sides of the House, however, that we should not be content with the system as it stands. We must seek to improve it and make it function better. In Mark Carney, we have an excellent central banker who has the experience and knowledge to put the right reforms in place and see them through. As he says:

“Reform should stop only when industry and society are content, and finance justifiably proud.”

In the medium to long term, we need to create a culture where research and analysis do not shy away from going against the orthodoxy. As hon. Members across the House have said, we need to consider alternatives, and we should be having that discussion; it is healthy to do so, because that is how to make progress. For that reason, the call from Andy Haldane, the Deputy Governor of the Bank of England, for a broader look at new and existing monetary ideas is exactly right.
Mr Meacher: I am pleased the Minister thinks that alternative ways of improving the monetary system should be explored. Will she support the idea of a setting up a commission to examine the alternatives, as recommended by the hon. Member for Richmond Park (Zac Goldsmith), as well as by me—so there is some cross-part support on this? Is that not an idea whose time has come?
Andrea Leadsom: I think that an organisation such as the Treasury Committee, of which my hon. Friend the Member for Wycombe is member, would be entirely the right place to have such a discussion, and of course we

20 Nov 2014 : Column 467
also had the Vickers commission, which looked at what went wrong and what measures could be put in place, and the Parliamentary Commission on Banking Standards, which specifically addressed the issue of incentives and motivations in banking. I would not normally advocate the establishment of great new commissions; we already have the bodies to look further at different orthodoxies, and as Andy Haldane has said, the Bank itself will be looking at, and encouraging, the exploration of alternative views.
Of course, we also need to continue embracing innovation, both in the “software” of how payments are made and in the “hardware” of new currencies, such as crypto-currencies and digital currencies—both could open up competition and give customers greater choice and access to funding—but we must do so with caution. In November, we published a call for information inviting views and evidence on the benefits and risks of digital currencies so that digital currency businesses can continue to set up in the UK and people can expect to use them safely.
I am the last person who could be described as statist, but I accept that we must always be ruthless in our determination to regulate new ideas that come to the fore, because as sure as night follows day, as new ideas come in, through shadow banking, new lending ideas and so on, some people will seek to manipulate new schemes and currencies for fraudulent purposes. I am absolutely alive to that fact. It is important, therefore, that the Government carry out the necessary research.
The Government believe that the current system, modified and improved with far greater competition, can service the economy best. However, reform is vital. Again as Andy Haldane puts it:

“Historically, flexing policy frameworks has often been taken as a sign of regime failure. Quite the opposite ought to be the case”.

We need banks to lend—to young families wanting to buy houses and repay out of future labour income rather than relying on the bank of mum and dad, and to businesses wanting to seize opportunities, gain new markets and create jobs and growth. We have an existing system that offers a forward-looking and dynamic framework in which tomorrow’s opportunities are not wholly reliant on yesterday’s savings and which builds on banks’ expertise in assessing risk and making the lending decisions we badly need. During my 25 years at

20 Nov 2014 : Column 468
the heart of the industry, I saw the sector at its best, but sometimes sadly also at its worst. We are trying to remedy the worst, but let us also keep the best.

1.29 pm

Steve Baker: This debate has been a joy at times, and I am extremely grateful to right hon. and hon. Members who helped me to secure it. The right hon. Member for Oldham West and Royton (Mr Meacher) made clear his support for sovereign money. One of the great advantages of such a system is that it would make explicit what is currently hidden—that it is the state that is trying to steer the monetary system—and if such a system failed, it would at least be clear that it was a centrally planned monetary order that had failed.
The hon. Member for Clacton (Douglas Carswell) talked about the ownership of deposits, and I was glad to support his private Member’s Bill. I am reminded of the intervention from the hon. Member for Hackney North and Stoke Newington (Ms Abbott), who talked about deposit insurance. One of the problems, as seen in Cyprus in the context of depositor “bail-ins”, is that deposits are akin to a share in a risky investment vehicle, so a little more clarity about what a deposit means and what risks depositors take could go a long way.
My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) highlighted one of the greatest controversies among free marketeers—whether or not fractional reserve deposit taking is legitimate.
The hon. Member for Great Grimsby (Austin Mitchell) mentioned Major Douglas, which he will have seen put a smile on my face. Major Douglas was dismissed as a crank, even by Keynes who dismissed him in his writing as a “private”. This highlights the fact that the possible range of debate is enormous.
I would like to leave my final words with Richard Cobden, the Member representing Stockport back in the time when this was also a big issue. He said:

“I hold all idea of regulating the currency to be an absurdity; the very terms of regulating the currency…I look upon to be an absurdity”.

The currency, for him,

“should be regulated by the trade and commerce of the world.”

I wholeheartedly agree.
Question put and agreed to.
Resolved,

That this House has considered money creation and society.