Vol.1 No.12, 01 October 2001
The Bromsgrove Group: Statement of Belief, and other items
One of the six 'pillars' of SANE policy proposals is that of monetary reform. The statement below by the Bromsgrove Group embodies the core of these proposals. The group draws its membership from academics and leaders of public life in the UK.
The case for monetary reform in South Africa has been documented by our chairman, John Roux, in a paper entitled "Monetary Reform - The Key to Economic Justice". It may be obtained from the Publications section.
THE BROMSGROVE GROUP
STATEMENT OF BELIEF
The supply of money into the economy is the big issue which governs all the issues. The present economic system is debt-based. This means that virtually all money is supplied to the economy as a debt to be repaid, with interest, to the banking system.
Governments rely upon the majority of people going into debt to the banking system simply to create enough money to supply the economy. Governments, too, must borrow from the banking system to fund public expenditure. Taxpayers must then pay back the debt and interest repayments.
As a consequence of this debt-based economic system, we see the indebtedness of people, families, and countries growing daily. The present debt-based economic system perpetuates debt slavery, and this is ultimately destructive of society, the environment, and the planet.
The banking system creates money out of nothing. We are concerned at the claim that there is no money to fund vital public services, industries and social and environmental projects, when this money, at source, is created out of nothing. Governments should be able to supply money, debt-free, without having to borrow from the banking system. "Debt-free" means that it does not have to be repaid.
The debt-based economic system must be challenged and alternatives constructed. The economy needs a supply of money debt-free. Therefore;
Money must be based on the real wealth of society: people, skills and materials, not on debt. The supply of money must relate to these physical facts not to the requirements of the banking system.
Money is the means of exchange for the goods and services produced by this real wealth. It is not a commodity itself.
The purpose of an economic system is to provide goods and services as, when and where required in order to satisfy human needs.
Money must be our servant not our master.
Money, at source, is created out of nothing, so there is no need for it to be scarce.
Whatever is physically possible and socially desirable can be made financially possible.
The present economic system can, and will, be changed for the better. Consequently;
That the government via a democratically accountable authority undertakes the creation of a supply of money, debt-free, into the economy.
This authority should spend, not lend, a supply of money into circulation on the basis of proven need. This will reduce the overall burden of debt in society, break reliance upon the banking system for the supply of money, and open potential for limitless change.
Association in the Bromsgrove Group is open to individuals and organisations which support this statement of belief.
Respect is paid to the different options for change represented by different members within this statement of belief.
The group meets once a year and exchanges information, inspiration, and support regularly.
One of SANE Views' list members, J Walter Plinge, submitted this snippet of information (concerning a modest $3 trillion) generated by the US through the 'fiat' creation of money by banks. This displays another dimension of needed monetary reform at the international level.
BUYING THE WORLD
With money pulled from a hat.
The trade deficits started modestly in 1975," wrote Richard Stimson (Playing with the Numbers: How So-called Experts Mislead us about the Economy", 1999) and here are some late figures on that.
To date the US has bought a modest $3 trillion worth of the world's finest commodities with money conjured up with the help of a magic wand. Today the US is buying the globe at the rate of over a billion dollars a day. And the best part is that the US can conjure up and lend US dollars from nothing, but gets paid back in uranium, gold, copper, oil, grains, vegetables... all sorts of nice things. The question remains unanswered: why do southern countries fall for this stuff? This link may help explain things:
In Focus: Multilateral Debt Burden by Soren Ambrose http://www.foreignpolicy-infocus.org/briefs/vol5/v5n04debt.html
From, Free Trade and Fiat Money Fun
J. Walter Plinge
The following report provides further support to a desperately needed reform in the global monetary system
SCHRÖDER CALLS FOR DEBATE ON CURRENCY SPECULATION
By Haig Simonian in Berlin and Tony Barber in Frankfurt - 4 September 2001
Chancellor Gerhard Schröder has called for Germany and France to lead a debate on speculative international capital flows, thereby putting one of the main demands of the anti-globalisation movement on the European political agenda.
Speaking on the eve of an informal dinner in Berlin on Wednesday night with French president Jacques Chirac and premier Lionel Jospin, Mr Schröder said there was a need to recognise "weak spots" in the international financial system, such as offshore centres, hedge funds and derivatives.
"So I want to discuss with our European and especially French partners how we can react to these relatively autonomous speculative financial flows," he said. The chancellor stopped short of supporting Mr Jospin's recent espousal of the so-called "Tobin tax". The tax, proposed by James Tobin, the American economic Nobel laureate, would put a levy on turnover in currency markets. The anti-globalisation movement has suggested the proceeds of such a tax could be used for global poverty relief.
Addressing an international economic conference organised by his Social Democratic party, Mr Schröder noted serious shortcomings with the Tobin tax. "For example, how do you distinguish speculative financial flows from those related to genuine trade finance?" he asked.
But the chancellor's comments, ahead of a meeting of EU finance ministers in Belgium and a separate gathering of Social Democratic leaders in Sweden this month, marked an important shift in Germany's willingness to recognise the objections of the anti-globalisation movement.
Describing the Tobin tax as one of many instruments which could be used, Mr Schröder said such issues needed to be discussed by Europe's finance ministers "with all clarity".
Only last week, Hans Eichel, the finance minister, rejected the Tobin tax on practical grounds at a meeting with Laurent Fabius, his French opposite number.
Mr Schröder's remarks also contrasted with criticisms from Ernst Welteke, the Bundesbank president.
In a speech prepared for delivery on Tuesday in Dublin, Mr Welteke said the Tobin tax would come at too high a cost. "Foreign trade in goods and services is bound to suffer as well. In the end, the wealth-enhancing international division of labour will be hampered."
Mr Welteke said that, in times of economic distress, a Tobin tax would be ineffective because profits from speculative capital movements would far outweigh the cost of any sensible tax on transactions. He also praised the increasing integration and liquidity of world financial markets, saying this made them more attractive to international investors.
Mr Welteke made clear the Bundesbank regarded any attempt by governments to "throw sand in the wheels of the foreign exchange market" as unrealistic.
The chancellor's remarks - and notably his clear distinction between collectivist European social values and the more individualistic US ethos -were also in line with his markedly greater emphasis on social issues of late. With national elections only a year away, such themes, geared to the SPD's core centre left supporters, have become increasingly prominent in recent speeches.
© Copyright The Financial Times Limited 2001.
A number of SANE Views list members sent responses to SANE Views #10 on the topic of African Economic Rights by Norman Reynolds. He has informed me that he these have unfortunately disappeared from his PC. Could those people who sent feedback to his e-mail address [email protected] please resend it to him.
Aart Roukens de Lange
telephone: +27-(0)21-689 4003
telefax: +27-(0)21-686 1560
email: [email protected]
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