You might think the Bank of England makes the money that is used to oil the wheels of the economy. You’d be wrong. The BoE creates only around 2.8% of the money in circulation. The rest is created out of thin air by commercial banks as debt.
Debt is built into the system – so just remember this when a politician says we have a ‘debt problem ‘.
Of course, this system gives banks a hugely privileged position in society – they get to decide much of what goes on, they get bailed out when things go wrong, they get the poshest buildings to work in (look around you) and the biggest remuneration at the top…
Is there an alternative? Yes, it’s called sovereign money whereby money is created centrally to the benefit of everyone, eg through a mechanism such as ‘basic income’.
At least 2 early US presidents perceived the problems of the debt-based system inherited from the British – Andrew Jackson and Abraham Lincoln. It may be a coincidence that both suffered assassination attempts.
To understand more, go to Positive Money, which has detailed proposals for moving towards a debt-free currency.
- There is also an excellent article on the subject by Christopher Noakes in the July 2016 issue of The Beacon magazine.
- Featured image is of the Bank of England.