Growing the Campaign 27 th Jan 2014 Peter Verity

Growing the Campaign 27th Jan 2014 Peter Verity (Co-ordinator – Sheffield group of Positive Money supporters)

Welcome – who are we? • Positive Money is a movement to democratise money and banking so that it works for society and not against it • money created through a democratic and transparent body • money created debt-free • new money spent first in the real economy • banks not allowed to create money • www.positivemoney.org.uk

Overview • Review of where we are [20mins] • local, national, international • Competing schools of thought [40 mins] • An analytical framework of reform ideas • How to get the message across [30 mins] • Interactive!

Review of where we areSheffield group • First meetup Oct 2011 • 2nd ‘annual report’ covers Oct 2012 to Dec 2013 • Streetstall team - 9 people – room for more! • Green Fair, Town Hall (2), Fargate (2) • Events • ‘Question Time’ with Ben Dyson • screening of 97% owned • talks to Transition, Occupy etc. • Mailing list grown from 66 to 150

Review of where we areNational organisation • Publications • Modernising Money (book), Sovereign Money (booklet) • Social media, rapid growth • Youtube channel (½ million views) • Mailing list: 15,000 • Facebook: >19,000 followers • Annual supporters’ conference March 1st • places still available • Politicians • Welsh Assembly cross-party group on monetary reform • adopted as Green Party policy

Review of where we areInternational • International Movement for Monetary Reform (IMMR) • Currently 22 organisations worldwide • 19 established, 3 in infancy • Switzerland ‘people’s initiative’ requires 100,000 signatures in 18-month period (36,500 already) • Iceland – investigating full reserve banking

Objective for 2014 • To ATTRACT and INFORM understanding-seekers • “People who want to understand how the world and the systems in it work, and so want to understand the money system and its role in the 2008 financial crisis.” • Should be public knowledge where money comes from • More help needed with • Street stalls • Tell your friends. Website. Facebook. Mailing list • Discussion (to 7:50)

Competing schools of thought • Positive Money – the wider context • money = credit • ‘real’ money • public money (Positive Money) • alternative currencies • transitional • Pros and cons – unbiased(?) • Personal views

money = credit • “Banks create money out of thin air and lend it to us at interest” • Status quo : 97% • Fiat – “let it be” • Money is created on demand • “a wonderful thing” (Ann Pettifor) • catalyst for enterprise, growth, prosperity • potentially infinite • Downsides • unstable • bubble/crash • non-productive uses (75%) • asset inflation (eg. Housing). Financial speculation • bank lending to business still falling (Nov 13)

money = credit Downsides • interest (usury) • transfers real wealth from the bottom 90% to the top 10% • high levels of private debt • household, mortgage, business • misaligned risk/reward • too big to fail : private gain, public loss • Keynes • increase in money supply causes an increase in production • “we can do what we can do” [with unlimited credit]

Competing schools of thought 2 1 Money = credit Real money

‘Real’ money(ironic) • Money ≠ credit : Permanent : Loanable Funds (supply/demand) • Money has intrinsic value • money as a commodity : Austrian school : gold/silver • finite/inflexible supply • Monetarism • ‘natural’ level of production (long run) • increase in money supply increases prices / devalues money

‘Real’ money • Gold – especially in USA • American constitution (Ron Paul) • “No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts” • ‘fiat’ money unconstitutional • inflation redefined as increase in the quantity of money • Islam : Gold Dinar • Youtube videos – millions of hits • Mike Maloney: ‘The hidden secrets of money’ • Peter Schiff, Max Keiser

‘Real’ money • Pro • popular, intuitive • natural reaction to bank ‘credit’ money • Con • inflexible supply constrains economic growth • who owns most of the gold? • 20% central banks, rest private

Competing schools of thought 3 Public money 2 1 Money = credit Real money Means of exchange Store of value

Public money • Notes and coins (3%) • Permanent • Created by BoE, value credited to Treasury • £2-4bn per year • Positive Money • ‘Fiat’ digital • expandable • Permanent • loanable funds • banking the way most people think it already works • Public • democratic control • £40-80bn per year public benefit

Public money • Positive Money • Pro • stable money supply, based on the needs of the economy • reduced burden of personal, household, govt. debt • align risk and reward • allow banks to fail without jeopardising payments system • Con • Too radical a change? • Hoarding by public or banks? • cf. peer-to-business lending 5%-15% • Restricts [excessive] growth? • environmentalists vs. business • regulatory body vs. market • Neutrality of BoE and/or MPC?

Public money • Monetary Policy Committee remit unchanged • 2% CPI inflation • “to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries”

Public money • Full reserve banking • Money = credit, but 100% backed by reserves • Chicago Plan revisited (IMF) • LSE lecture Nov 2013 (Youtube) • Pros & Cons similar to Positive Money

Competing schools of thought Alternative currencies 4 3 Public money 2 1 Money = credit Real money

Alternative Currencies • Community based, not legal tender • Backed by Sterling • Totnes, Brixton pounds etc. • Not backed • LETS • Bitcoin and others (cryptocurrencies) • Credit commons

Alternative Currencies • Pro • Stimulate local demand • Community resilience • Not dependent on big banks, or state • Con • Scaleable? • How to pay for public sector? • How is new money created? Who benefits?

Competing schools of thought Alternative currencies 4 3 Public money 5 Transitional 2 1 Money = credit Real money

Transitional • Regulations / Restrictions • Basel 3 : higher capital ratios (by 2018) • Banking Commission : ringfencing (by 2018) • Banking competition : smaller banks = higher reserves • Bank credit ‘tight’ for foreseeable future • Continued need for injections of state money • Direct to the public and/or the Treasury (not to finance sector) • Quantitative Easing for the People (QEP) • Anatole Kaletsky • Sovereign Money (Positive Money) • Overt Monetary Finance (Adair Turner) • “dramatically increased” fractional reserve

Transitional • Pro • Easy – no structural changes • Support by central bankers? • Con • Regulation won’t stick

Competing schools of thought • Conclusion • Strong desire for change • Lots of ideas – old and innovative • Biggest ‘threat’ to PM : public mistrust of fiat money • No perfect system! (pros & cons) • asset/exchange ; market/state/community • Mission – get people onto 1st step • Where does money come from • Discussion (to 8:30)

Getting the message across Three steps to understanding :- 1. Where does money come from? 2. Why is that bad?............................. 3. What should we do about it?...........

Getting the message across Asset Liability Money Debt Liability Asset ignoring competition between banks

Getting the message across • “97% of money is created by private banks and lent to us at interest” • Don’t understand • Understand, but don’t really believe it • Believe it, but don’t think Positive Money is the answer • None of the above

Thanks for listening • Voluntary donations (suggested £3) • Books (£10) and handouts (free) • Sign-up sheet • Next meeting Feb 24th • “Debt or Delusion” : is the National Debt a curse or a blessing? • Continue in pub?

Growing the Campaign 27 th Jan 2014 Peter Verity