Can we live without growth? The Role of Money in the Real World with Andrew Wyon from PositiveMoney.
Andrew began with the startling result of a Positive Money Poll which revealed 85% of MPs don’t know where money comes from! He went on to examine our economy and who controls the growth of money. There has been a steady rise in house prices in the past 20 years, though they took a slight dip after the 2008 financial crisis. Mortgage lending outstripped the rise in house prices until 2008 but then slumped dramatically. Some 97% of our means of payment are just figures in our Bank account. Private banks (the high street banks most of us use) lend money they haven’t got and charge us for using it.
Gross Domestic Product (GDP), the estimated size of the economy including all goods and services, was reckoned to amount to £2,000 billion in 2018. Given a 2% growth this figure doubles in 35 years but says nothing about our use of resources, waste and pollution. Increasing GDP means that our exploitation of finite natural resources, like iron, copper and bauxite, also increases. We can work better without adding to GDP by improvements in technology and by developing the creative economy.
In contrast to the relentless pursuit of growth, a stable economy would be one in which renewable resources are replenished, any pollution is limited to the Earth’s capacity to absorb it, and resources are extracted so as not to damage ecosystems. Governments believe they need a growing economy to create employment, to tackle poverty and inequality, to ensure that companies can share out their profits, and to support Government finances and to repay debts.
So what is wrong with our present system? Private bank loans are used to create money which increases debt and encourages them to lend recklessly, knowing that governments will bail them out, so making instability inevitable. In a downturn governments are tempted to cut services to avoid more public debt, a situation we have suffered for the past decade.
Positive Money propose the following alternative to the present system: Only the State to issue money; money given to government with no debt (known as Sovereign Money); private banks become managers but current accounts are held safely by Bank of England; banks could then go bust like other businesses; investors accept risk but specify where their money is invested: a higher risk would result in higher interest.
Positive Money campaigns for a money and banking system that enables a fair, sustainable and democratic economy. To find out more visit www.positivemoney.org