Let’s Have a Public Inquiry on Money
Adrian Byrne, Manchester Positive Money Coordinator
The time for a public inquiry on money, finance and their effects on society in the 21st century is fast approaching. The last time the British government established a commission to investigate whether the banking and financial system was helping or hindering the British economy was in 1929 – after the 1929 stock market crash which caused the Great Depression.
Nowadays, we live in the era of the Great Recession caused by the 2008 financial crisis. An era defined by austerity for the ordinary citizen but quantitative easing for financial institutions. An era defined by banks, who over-extended themselves before the financial crisis lending far too much money in the property market which created a bubble that burst, to now not lending enough for productive investment in the economy. This is despite the Bank of England committing to holding short-term interest rates low for a seemingly indefinite period.
What is going on?
One thing is for sure – this era hurts the ordinary citizen; so can we do better than accept the current financial system? American politicians, both Republican and Democrat, are currently calling for a public inquiry with the “Centennial Monetary Commission Act of 2015” to examine monetary policy, evaluate alternative monetary regimes, and recommend a course for monetary policy going forward. British politicians should be calling for a similar commission in the UK. The time is right.
Credit must be given to the Conservative MP for Wycombe, Steve Baker, for raising a debate on money creation and society in the House of Commons in November 2014. Whilst being a good start, this was just a debate, and a poorly attended one at that, not a public inquiry. Moreover, there is currently a Bank of England and Financial Services Bill before the House of Lords and it is due before the House of Commons in 2016. However, although this bill strengthens financial regulations, it preserves the current structure of the monetary system and does not investigate issues that affect the real economy and wider society such as investment in national infrastructure and local businesses; societal inequality and the social contract; and short-termism versus sustainable economic growth. Only a public commission can investigate these issues, raise concerns and educate all of us regarding money, finance and their effects on society in the 21st century.
According to the Bank of England, around 97% of all money in the UK economy is in the form of bank deposits, which are created when banks make loans. These banks are afforded the extraordinary privilege of creating and allocating this money; a position which is underwritten by taxpayers as the financial crisis made clear. Their profits are privatised but their losses are socialised.
The decisions taken by these banks and the Bank of England have significant distributional socioeconomic effects so it is right and just that they should be subject to democratic scrutiny. It is time for a public inquiry on money.
Sign the Positive Money Petition for a Money Commission