[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.66,0:00:03.30,Default,,0000,0000,0000,,So, let's start at the beginning.
Dialogue: 0,0:00:03.30,0:00:07.14,Default,,0000,0000,0000,,Back in the 1800s through to the 1840s.
Dialogue: 0,0:00:07.20,0:00:12.34,Default,,0000,0000,0000,,Banks, at that time, actually had the ability to create money.
Dialogue: 0,0:00:12.34,0:00:16.03,Default,,0000,0000,0000,,The way they did this was through printing pieces of paper.
Dialogue: 0,0:00:16.03,0:00:19.98,Default,,0000,0000,0000,,When you put your coins into the banks, they give you a receipt
Dialogue: 0,0:00:19.98,0:00:23.22,Default,,0000,0000,0000,,and that receipt would say you've deposited £5
Dialogue: 0,0:00:23.22,0:00:30.05,Default,,0000,0000,0000,,and because it was more convenient to carry bits of paper around than to carry metal coins around,
Dialogue: 0,0:00:30.05,0:00:32.42,Default,,0000,0000,0000,,people used to use the pieces of paper as though they were money.
Dialogue: 0,0:00:32.42,0:00:35.46,Default,,0000,0000,0000,,They'd actually spend the paper in the shop, and so long as the
Dialogue: 0,0:00:35.46,0:00:39.46,Default,,0000,0000,0000,,shopkeeper knew the bank and trusted the bank
Dialogue: 0,0:00:39.46,0:00:45.09,Default,,0000,0000,0000,,he'd accept the paper. So, basically the pieces of paper that banks were issuing
Dialogue: 0,0:00:45.14,0:00:48.83,Default,,0000,0000,0000,,were treated as money, and they became as good as money.
Dialogue: 0,0:00:48.83,0:00:51.74,Default,,0000,0000,0000,,Now, when the banks caught on to this, they realised that
Dialogue: 0,0:00:51.74,0:00:55.52,Default,,0000,0000,0000,,actually if we just issue more pieces of paper,
Dialogue: 0,0:00:55.52,0:01:00.08,Default,,0000,0000,0000,,with more sums of money written on them and people treat them as money,
Dialogue: 0,0:01:00.08,0:01:02.40,Default,,0000,0000,0000,,then effectively we have the power to create money.
Dialogue: 0,0:01:02.40,0:01:04.02,Default,,0000,0000,0000,,So, the more that we issue
Dialogue: 0,0:01:04.02,0:01:06.53,Default,,0000,0000,0000,,the more we can lend, and the more we can lend, the more interest we can get.
Dialogue: 0,0:01:06.53,0:01:11.14,Default,,0000,0000,0000,,So, you can imagine with incentives like these, it didn't end well.
Dialogue: 0,0:01:11.14,0:01:16.20,Default,,0000,0000,0000,,They created too much money and it started to cause instability in the economy.
Dialogue: 0,0:01:16.20,0:01:18.58,Default,,0000,0000,0000,,It caused banking crises, and after
Dialogue: 0,0:01:18.58,0:01:22.82,Default,,0000,0000,0000,,a number of years of this happening, the government of the day
Dialogue: 0,0:01:22.82,0:01:25.40,Default,,0000,0000,0000,,It was a Conservative Prime Minister,
Dialogue: 0,0:01:25.40,0:01:27.09,Default,,0000,0000,0000,,Sir Robert Peel, stepped in and said,
Dialogue: 0,0:01:27.09,0:01:29.86,Default,,0000,0000,0000,,Well, we can no longer allow banks to issue paper money
Dialogue: 0,0:01:29.86,0:01:32.28,Default,,0000,0000,0000,,because of the problems that it's causing in the economy.
Dialogue: 0,0:01:32.28,0:01:35.22,Default,,0000,0000,0000,,So, they passed this piece of legislation
Dialogue: 0,0:01:35.22,0:01:36.66,Default,,0000,0000,0000,,'The Bank Charter Act'
Dialogue: 0,0:01:36.66,0:01:38.91,Default,,0000,0000,0000,,which said from this point on, only the Bank of England
Dialogue: 0,0:01:38.91,0:01:41.30,Default,,0000,0000,0000,,will have the authority to create paper money
Dialogue: 0,0:01:41.30,0:01:43.03,Default,,0000,0000,0000,,but they missed something out,
Dialogue: 0,0:01:43.03,0:01:45.92,Default,,0000,0000,0000,,because paper money isn't the only way that you can make payments
Dialogue: 0,0:01:45.92,0:01:49.38,Default,,0000,0000,0000,,and with the increasing use of cheques
Dialogue: 0,0:01:49.38,0:01:52.51,Default,,0000,0000,0000,,people had a way of making payments using the numbers
Dialogue: 0,0:01:52.51,0:01:55.58,Default,,0000,0000,0000,,that were in the ledger books at the banks,
Dialogue: 0,0:01:55.58,0:01:58.48,Default,,0000,0000,0000,,the accounting entries. So they had this way of making payments
Dialogue: 0,0:01:58.48,0:02:01.46,Default,,0000,0000,0000,,without actually needing the real paper or metal money.
Dialogue: 0,0:02:01.46,0:02:06.00,Default,,0000,0000,0000,,Over time as we discovered electricity, we got debit cards
Dialogue: 0,0:02:06.00,0:02:10.12,Default,,0000,0000,0000,,electronic fund transfers and internet banking.
Dialogue: 0,0:02:10.12,0:02:14.37,Default,,0000,0000,0000,,To the point now where more than 99% of all the money that changes hands
Dialogue: 0,0:02:14.37,0:02:16.62,Default,,0000,0000,0000,,does so electronically.
Dialogue: 0,0:02:16.62,0:02:21.20,Default,,0000,0000,0000,,The shocking thing is that even though our monetary system now is electronic,
Dialogue: 0,0:02:21.20,0:02:25.26,Default,,0000,0000,0000,,this law has never been updated since 1844,
Dialogue: 0,0:02:25.26,0:02:29.14,Default,,0000,0000,0000,,which means that it's just shy of 170 years out of date.
Dialogue: 0,0:02:29.14,0:02:32.54,Default,,0000,0000,0000,,The law that actually governs our monetary system.
Dialogue: 0,0:02:32.54,0:02:35.98,Default,,0000,0000,0000,,Now, the reason that banks can create money
Dialogue: 0,0:02:35.98,0:02:38.74,Default,,0000,0000,0000,,is that the liabilities, the accounting entries that they create
Dialogue: 0,0:02:38.74,0:02:40.87,Default,,0000,0000,0000,,are what we are using as money.
Dialogue: 0,0:02:40.87,0:02:46.54,Default,,0000,0000,0000,,When you use a debit card, there's no £10 notes
Dialogue: 0,0:02:46.54,0:02:49.37,Default,,0000,0000,0000,,moving from your account to somebody else's account
Dialogue: 0,0:02:49.37,0:02:51.98,Default,,0000,0000,0000,,It's actually just accounting entries between the banks
Dialogue: 0,0:02:51.98,0:02:55.67,Default,,0000,0000,0000,,The Bank of England explains this quite clearly.
Dialogue: 0,0:02:55.67,0:02:58.03,Default,,0000,0000,0000,,They say, 'the money-creating sector in the United Kingdom
Dialogue: 0,0:02:58.03,0:03:00.98,Default,,0000,0000,0000,,consists of resident banks and building societies.
Dialogue: 0,0:03:00.98,0:03:04.30,Default,,0000,0000,0000,,Money-creating organisations issue liabilities that are
Dialogue: 0,0:03:04.30,0:03:06.54,Default,,0000,0000,0000,,treated as a media exchange by others.
Dialogue: 0,0:03:06.54,0:03:09.95,Default,,0000,0000,0000,,and those liabilities are the numbers that you see in your account.
Dialogue: 0,0:03:09.95,0:03:16.30,Default,,0000,0000,0000,,Now, what this has meant is with the rise of electronic means of payment
Dialogue: 0,0:03:16.30,0:03:18.50,Default,,0000,0000,0000,,is that we reached the point where,
Dialogue: 0,0:03:18.50,0:03:21.54,Default,,0000,0000,0000,,[Sir Mervyn King] "Most of the money in our economy
Dialogue: 0,0:03:21.54,0:03:25.03,Default,,0000,0000,0000,,broad money, comprises liabilities of banks in the form of bank deposits."
Dialogue: 0,0:03:25.03,0:03:27.30,Default,,0000,0000,0000,,So, most of the money in our economy comprises
Dialogue: 0,0:03:27.30,0:03:29.70,Default,,0000,0000,0000,,liabilities of banks in the form of bank deposits.
Dialogue: 0,0:03:29.70,0:03:34.54,Default,,0000,0000,0000,,When we talk about 97% of the money supply being created by banks
Dialogue: 0,0:03:34.54,0:03:36.28,Default,,0000,0000,0000,,this is what we are talking about.
Dialogue: 0,0:03:36.28,0:03:40.46,Default,,0000,0000,0000,,This chart. The blue line is the bank-issued money supply.
Dialogue: 0,0:03:40.46,0:03:42.46,Default,,0000,0000,0000,,This is cash down here at the bottom.
Dialogue: 0,0:03:42.46,0:03:47.26,Default,,0000,0000,0000,,So, this is 3% of all the money that exists.
Dialogue: 0,0:03:47.26,0:03:50.54,Default,,0000,0000,0000,,and then this is the 97% of the money supply
Dialogue: 0,0:03:50.54,0:03:52.87,Default,,0000,0000,0000,,that is created by the banking sector.
Dialogue: 0,0:03:52.87,0:03:55.70,Default,,0000,0000,0000,,and this 3% is what is covered by the law.
Dialogue: 0,0:03:55.70,0:03:59.78,Default,,0000,0000,0000,,and this is the 97% that is ignored by the current laws.
Dialogue: 0,0:03:59.78,0:04:02.86,Default,,0000,0000,0000,,I always found it curious that there's this
Dialogue: 0,0:04:02.86,0:04:06.22,Default,,0000,0000,0000,,one part of the state, the police, which is responsible for
Dialogue: 0,0:04:06.22,0:04:10.54,Default,,0000,0000,0000,,hunting down and prosecuting anybody who prints their own money
Dialogue: 0,0:04:10.54,0:04:13.96,Default,,0000,0000,0000,,privately; they call it counterfeiting.
Dialogue: 0,0:04:13.98,0:04:16.06,Default,,0000,0000,0000,,Yet, there's a whole other part of the state,
Dialogue: 0,0:04:16.06,0:04:18.70,Default,,0000,0000,0000,,which actually has more resources and more funding
Dialogue: 0,0:04:18.70,0:04:22.62,Default,,0000,0000,0000,,to do everything possible to encourage banks, private companies
Dialogue: 0,0:04:22.62,0:04:24.34,Default,,0000,0000,0000,,to create money.
Dialogue: 0,0:04:24.34,0:04:28.53,Default,,0000,0000,0000,,and I could never really understand why this contradiction was there
Dialogue: 0,0:04:28.53,0:04:32.22,Default,,0000,0000,0000,,and why it was good for electronic money to be created
Dialogue: 0,0:04:32.22,0:04:36.26,Default,,0000,0000,0000,,by the private banking sector, but bad if anybody is printing paper money.
Dialogue: 0,0:04:36.26,0:04:41.14,Default,,0000,0000,0000,,Now, I stumbled across this interview with Paul Fisher on the BBC
Dialogue: 0,0:04:41.14,0:04:45.90,Default,,0000,0000,0000,,[Paul Fisher] "When you start printing money, you create some value for yourself.
Dialogue: 0,0:04:45.90,0:04:48.82,Default,,0000,0000,0000,,If you can issue a thousand pounds-worth of IOUS to everybody,
Dialogue: 0,0:04:48.82,0:04:50.95,Default,,0000,0000,0000,,you've got a thousands pounds for nothing.
Dialogue: 0,0:04:50.95,0:04:55.91,Default,,0000,0000,0000,,And so we do restrict the ability of people to create their own notes in that way."
Dialogue: 0,0:04:55.91,0:04:57.78,Default,,0000,0000,0000,,[Interviewer] "You're protecting us from ourselves?"
Dialogue: 0,0:04:57.78,0:05:01.75,Default,,0000,0000,0000,,[Paul Fisher] "We're protecting you from charlatans".
Dialogue: 0,0:05:01.75,0:05:05.58,Default,,0000,0000,0000,,[Laughter from audience]
Dialogue: 0,0:05:05.58,0:05:09.30,Default,,0000,0000,0000,,He was talking about counterfeiting, but for me the key phrase is this
Dialogue: 0,0:05:09.30,0:05:13.03,Default,,0000,0000,0000,,'If you can issue a thousand pounds-worth of IOUs to everybody,
Dialogue: 0,0:05:13.03,0:05:15.50,Default,,0000,0000,0000,,you've got a thousand pounds for nothing'.
Dialogue: 0,0:05:15.50,0:05:17.03,Default,,0000,0000,0000,,Now, what banks do when they create loans is
Dialogue: 0,0:05:17.03,0:05:22.06,Default,,0000,0000,0000,,they issue liabilities, IOUs. In the last ten years alone,
Dialogue: 0,0:05:22.06,0:05:26.43,Default,,0000,0000,0000,,banks have issued more than £1 trillion of these new
Dialogue: 0,0:05:26.44,0:05:30.82,Default,,0000,0000,0000,,IOUs, these liabilities. Now, the something that they got for nothing
Dialogue: 0,0:05:30.82,0:05:37.03,Default,,0000,0000,0000,,was £1 trillion worth of debt, of interest-bearing contracts.
Dialogue: 0,0:05:37.03,0:05:40.74,Default,,0000,0000,0000,,This is mortgages, personal loans, business loans.
Dialogue: 0,0:05:40.74,0:05:43.58,Default,,0000,0000,0000,,This is debt from us to the banking sector.
Dialogue: 0,0:05:43.58,0:05:47.70,Default,,0000,0000,0000,,As you've seen this morning, the total interest that has to be paid on that debt
Dialogue: 0,0:05:47.70,0:05:51.74,Default,,0000,0000,0000,,is a transfer from society to the banking sector
Dialogue: 0,0:05:51.74,0:05:56.78,Default,,0000,0000,0000,,of between £108bn to £217bn every single year.
Dialogue: 0,0:05:56.78,0:05:58.78,Default,,0000,0000,0000,,Now, of course, some of this comes back to people
Dialogue: 0,0:05:58.78,0:06:00.98,Default,,0000,0000,0000,,through the interest on savings accounts,
Dialogue: 0,0:06:00.98,0:06:04.74,Default,,0000,0000,0000,,and through the bonuses, the commissions and the taxes that banks pay,
Dialogue: 0,0:06:04.74,0:06:08.58,Default,,0000,0000,0000,,but it's still a huge amount of this is creamed off in the middle,
Dialogue: 0,0:06:08.58,0:06:10.82,Default,,0000,0000,0000,,and it's a massive transfer of wealth,
Dialogue: 0,0:06:10.82,0:06:13.58,Default,,0000,0000,0000,,and it exacerbates inequality.
Dialogue: 0,0:06:13.58,0:06:21.06,Default,,0000,0000,0000,,Now, I think, the economists and the people in government who defend this system
Dialogue: 0,0:06:21.06,0:06:23.30,Default,,0000,0000,0000,,and say it's something we should keep and something useful,
Dialogue: 0,0:06:23.30,0:06:27.14,Default,,0000,0000,0000,,I think they do so because they believe it can be controlled.
Dialogue: 0,0:06:27.14,0:06:29.74,Default,,0000,0000,0000,,and they believe it can be controlled because they are taught
Dialogue: 0,0:06:29.74,0:06:32.38,Default,,0000,0000,0000,,certain stories in Economics courses about the money multiplier
Dialogue: 0,0:06:32.38,0:06:37.01,Default,,0000,0000,0000,,and that the central bank has control over how much money there is in the economy.
Dialogue: 0,0:06:37.09,0:06:39.50,Default,,0000,0000,0000,,We really don't believe it can be controlled
Dialogue: 0,0:06:39.50,0:06:44.12,Default,,0000,0000,0000,,and this is one of the reasons why we've settled on this particular style of reform.
Dialogue: 0,0:06:44.12,0:06:48.22,Default,,0000,0000,0000,,but the reason it can't be controlled. For a start this doesn't look like
Dialogue: 0,0:06:48.22,0:06:52.12,Default,,0000,0000,0000,,a money supply that has been controlled. This is something that's out of control.
Dialogue: 0,0:06:52.12,0:06:55.62,Default,,0000,0000,0000,,but even Mervyn King has said that the Bank of England's key role
Dialogue: 0,0:06:55.62,0:07:00.26,Default,,0000,0000,0000,,has always been to ensure the economy is supplied with the right quantity of money
Dialogue: 0,0:07:00.26,0:07:03.30,Default,,0000,0000,0000,,neither too much nor too little.
Dialogue: 0,0:07:03.30,0:07:07.22,Default,,0000,0000,0000,,'For fifty years, my predecessors struggled to prevent there being too much, so leading to inflation.
Dialogue: 0,0:07:07.22,0:07:11.82,Default,,0000,0000,0000,,I find myself in the opposite situation of having to explain that there is too little money in the economy.'
Dialogue: 0,0:07:11.82,0:07:17.12,Default,,0000,0000,0000,,So, this is the most powerful man at one of the most powerful central banks in the world
Dialogue: 0,0:07:17.12,0:07:22.74,Default,,0000,0000,0000,,admitting that for the last half a century, they have struggled to keep the banks under control,
Dialogue: 0,0:07:22.74,0:07:25.20,Default,,0000,0000,0000,,to keep the money supply under control.
Dialogue: 0,0:07:25.20,0:07:30.38,Default,,0000,0000,0000,,And if you get an admission like this, I think it really shows that the system can't be controlled.
Dialogue: 0,0:07:30.38,0:07:37.12,Default,,0000,0000,0000,,The book actually goes into great detail; probably about sixty pages explaining why the mechanism that
Dialogue: 0,0:07:37.12,0:07:41.38,Default,,0000,0000,0000,,economists believe can control the money supply, no longer work.
Dialogue: 0,0:07:41.38,0:07:47.66,Default,,0000,0000,0000,,But, fundamentally it's because you have this battle between the desire of the banking sector
Dialogue: 0,0:07:47.66,0:07:50.70,Default,,0000,0000,0000,,to create as much money as possible to maximise their profits,
Dialogue: 0,0:07:50.70,0:07:54.94,Default,,0000,0000,0000,,because the more money they create, the more they lend, and the more they lend, the more interest they receive,
Dialogue: 0,0:07:54.94,0:07:59.82,Default,,0000,0000,0000,,and the need of the Bank of England to protect the public interest,
Dialogue: 0,0:07:59.82,0:08:02.90,Default,,0000,0000,0000,,to limit inflation and instability in the economy.
Dialogue: 0,0:08:02.90,0:08:06.51,Default,,0000,0000,0000,,And, these two for the last 50 years at least,
Dialogue: 0,0:08:06.51,0:08:10.62,Default,,0000,0000,0000,,it's been the profit motive of the banks that has won out.
Dialogue: 0,0:08:10.62,0:08:12.42,Default,,0000,0000,0000,,So, what are the consequences of this?
Dialogue: 0,0:08:12.42,0:08:15.95,Default,,0000,0000,0000,,Well, firstly we know that banks create too much money.
Dialogue: 0,0:08:15.95,0:08:19.22,Default,,0000,0000,0000,,They create this money for the wrong things.
Dialogue: 0,0:08:19.22,0:08:25.66,Default,,0000,0000,0000,,So, we see the majority of money, when it's newly created it goes straight into the housing market and into the financial sector.
Dialogue: 0,0:08:25.66,0:08:31.22,Default,,0000,0000,0000,,Very little, about 13%, over the last ten years has gone into non-financial businesses.
Dialogue: 0,0:08:31.22,0:08:36.86,Default,,0000,0000,0000,,So, this is the real economy; the jobs, shops, businesses and factories.
Dialogue: 0,0:08:36.86,0:08:42.95,Default,,0000,0000,0000,,And, about 10% has gone into credit cards, and personal loans, consumer finance.
Dialogue: 0,0:08:42.95,0:08:47.54,Default,,0000,0000,0000,,And this has led to financial crises. As Adair Turner said, and as we saw this morning,
Dialogue: 0,0:08:47.54,0:08:53.12,Default,,0000,0000,0000,,Some of the headlines that have been coming out of the last few days are getting worse and worse.
Dialogue: 0,0:08:53.12,0:08:55.54,Default,,0000,0000,0000,,Britain is experiencing a worse slump than during the Great Depression.
Dialogue: 0,0:08:55.54,0:09:00.66,Default,,0000,0000,0000,,For a while, we've been talking about we're in recovery; growth has been 0.1%.
Dialogue: 0,0:09:00.66,0:09:04.37,Default,,0000,0000,0000,,Now, we're back into the double-dip recession,
Dialogue: 0,0:09:04.37,0:09:07.30,Default,,0000,0000,0000,,and then we're back into recovery again, and now we're back into the triple-dip recession.
Dialogue: 0,0:09:07.30,0:09:09.70,Default,,0000,0000,0000,,This is a real rollercoaster.
Dialogue: 0,0:09:09.70,0:09:15.46,Default,,0000,0000,0000,,Global unemployment will reach a record £200 million in 2013.
Dialogue: 0,0:09:15.46,0:09:22.87,Default,,0000,0000,0000,,200 million people. Is there nothing useful for those people to be doing, given the situation we're in right now?
Dialogue: 0,0:09:22.87,0:09:29.87,Default,,0000,0000,0000,,But, there's not enough money. There's not enough numbers in computer systems created by the banking sector
Dialogue: 0,0:09:29.87,0:09:32.28,Default,,0000,0000,0000,,to allow those people to do something useful.
Dialogue: 0,0:09:32.28,0:09:38.03,Default,,0000,0000,0000,,It's led to massive indebtedness because money is created by banks when they make loans.
Dialogue: 0,0:09:38.03,0:09:40.12,Default,,0000,0000,0000,,So, as the money supply goes up, the debt goes up.
Dialogue: 0,0:09:40.12,0:09:45.70,Default,,0000,0000,0000,,And an entire generation has been priced out of being able to buy a home.
Dialogue: 0,0:09:45.70,0:09:48.34,Default,,0000,0000,0000,,The inequality that we discussed.
Dialogue: 0,0:09:48.34,0:09:51.30,Default,,0000,0000,0000,,The instability, which is really really bad for business.
Dialogue: 0,0:09:51.30,0:09:57.37,Default,,0000,0000,0000,,You'll always hear economists and lobbyists for the banks saying that the current banking system is good,
Dialogue: 0,0:09:57.37,0:09:59.58,Default,,0000,0000,0000,,because it provides credit for business and helps the economy to grow,
Dialogue: 0,0:09:59.58,0:10:08.38,Default,,0000,0000,0000,,but actually we believe that on net this current banking system is really harmful for the business economy and for actual wealth-creation.
Dialogue: 0,0:10:08.38,0:10:11.20,Default,,0000,0000,0000,,It's very environmentally destructive as we've talked about this morning.
Dialogue: 0,0:10:11.20,0:10:13.74,Default,,0000,0000,0000,,And, it's bad for democracy as well.
Dialogue: 0,0:10:13.74,0:10:19.46,Default,,0000,0000,0000,,The banks now have more power to shape the economy through their lending than the whole of government.
Dialogue: 0,0:10:19.46,0:10:22.78,Default,,0000,0000,0000,,But, we have all these MPs scrutinising what the government does,
Dialogue: 0,0:10:22.78,0:10:27.36,Default,,0000,0000,0000,,and only about 80 board members paying attention to what the banks are doing.
Dialogue: 0,0:10:27.36,0:10:32.46,Default,,0000,0000,0000,,And the reason the system's got to this point is because every time something has gone wrong with the current banking system,
Dialogue: 0,0:10:32.46,0:10:38.90,Default,,0000,0000,0000,,the government has stepped in with a safety net or a new support measure to allow the system to continue.
Dialogue: 0,0:10:38.90,0:10:42.30,Default,,0000,0000,0000,,And you've seen this at it's most extreme over the last five or six years.
Dialogue: 0,0:10:42.30,0:10:51.38,Default,,0000,0000,0000,,Now, I want to make the point that some people assume that if the banking system is structured in a certain way,
Dialogue: 0,0:10:51.38,0:10:54.06,Default,,0000,0000,0000,,it's because some wise men have sat down and designed it.
Dialogue: 0,0:10:54.06,0:11:00.59,Default,,0000,0000,0000,,But the current banking system is, without getting into the evolutionist debate here,
Dialogue: 0,0:11:00.59,0:11:04.54,Default,,0000,0000,0000,,there is no signs of intelligent design in the current banking system.
Dialogue: 0,0:11:04.54,0:11:06.82,Default,,0000,0000,0000,,{laughter from audience]
Dialogue: 0,0:11:06.82,0:11:08.78,Default,,0000,0000,0000,,It's evolved over time, and every time there's been a crisis
Dialogue: 0,0:11:08.78,0:11:14.28,Default,,0000,0000,0000,,there's been some new package from the government, some new measure from the Bank of England.
Dialogue: 0,0:11:14.28,0:11:20.70,Default,,0000,0000,0000,,Things like the bailouts, the funding for lending; all these different schemes to keep the system going.
Dialogue: 0,0:11:20.70,0:11:27.33,Default,,0000,0000,0000,,Now, sometimes evolution works out really well, and you get something that is quite beautiful and efficient and effective
Dialogue: 0,0:11:27.34,0:11:29.22,Default,,0000,0000,0000,,Sometimes it doesn't work out that well.
Dialogue: 0,0:11:29.22,0:11:34.34,Default,,0000,0000,0000,,There's no prize for guessing which of these two fish represents the banking sector right now.
Dialogue: 0,0:11:34.34,0:11:41.95,Default,,0000,0000,0000,,So, the thing is you know if you build your house on sand, it's going to collapse.
Dialogue: 0,0:11:41.95,0:11:43.70,Default,,0000,0000,0000,,This is what we have at the moment.
Dialogue: 0,0:11:43.70,0:11:45.62,Default,,0000,0000,0000,,We have a banking system that is really built on sand.
Dialogue: 0,0:11:45.62,0:11:49.98,Default,,0000,0000,0000,,It doesn't matter how much reinforcement, or how much support you do.
Dialogue: 0,0:11:49.98,0:11:52.22,Default,,0000,0000,0000,,It's not enough to go to the occupants and say,
Dialogue: 0,0:11:52.22,0:11:55.78,Default,,0000,0000,0000,,'please tred lightly while you're inside the house, because it's a bit unstable,
Dialogue: 0,0:11:55.78,0:11:58.38,Default,,0000,0000,0000,,and if you could lose some weight that would be great too.'
Dialogue: 0,0:11:58.38,0:12:04.70,Default,,0000,0000,0000,,You have to wipe it away. You have to start again and build something on firm foundations from the ground up.
Dialogue: 0,0:12:04.70,0:12:08.06,Default,,0000,0000,0000,,And, this is what we believe we are doing in the book here.
Dialogue: 0,0:12:08.06,0:12:11.45,Default,,0000,0000,0000,,So, we have this very dysfunctional system,
Dialogue: 0,0:12:11.45,0:12:16.53,Default,,0000,0000,0000,,that isn't really working in the interests of the economy or the interests of society.
Dialogue: 0,0:12:16.53,0:12:24.22,Default,,0000,0000,0000,,My colleague Andrew Jackson, who's done, by far, the largest part of the work on this book, found this quote,
Dialogue: 0,0:12:24.22,0:12:28.12,Default,,0000,0000,0000,,which I think really sums up part of the ethos behind the book.
Dialogue: 0,0:12:28.12,0:12:33.90,Default,,0000,0000,0000,,'Our problems are man-made, therefore the may be solved by man. No problem of human destiny is beyond human beings'.
Dialogue: 0,0:12:33.90,0:12:38.78,Default,,0000,0000,0000,,The monetary system is just a collection of rules and laws and computer systems.
Dialogue: 0,0:12:38.78,0:12:41.54,Default,,0000,0000,0000,,And it's actually remarkably easy to change.
Dialogue: 0,0:12:41.54,0:12:49.37,Default,,0000,0000,0000,,The real challenges are the things like the environmental crisis, the water crisis, the energy crises,
Dialogue: 0,0:12:49.37,0:12:54.46,Default,,0000,0000,0000,,the changes that we're going to see over the next 40 years, the growing population;
Dialogue: 0,0:12:54.46,0:13:00.16,Default,,0000,0000,0000,,those are real tangible problems that we need to find real practical ways of dealing with.
Dialogue: 0,0:13:00.16,0:13:03.50,Default,,0000,0000,0000,,This is just an artificial monetary system.
Dialogue: 0,0:13:03.50,0:13:05.28,Default,,0000,0000,0000,,It's a computer system.
Dialogue: 0,0:13:05.28,0:13:13.62,Default,,0000,0000,0000,,We can't let ourselves be distracted from those big challenges by this artificial, broken, dysfunctional monetary system.
Dialogue: 0,0:13:13.62,0:13:16.03,Default,,0000,0000,0000,,So, what do we do?
Dialogue: 0,0:13:16.03,0:13:19.37,Default,,0000,0000,0000,,Well, I'll take you through these quickly.
Dialogue: 0,0:13:19.37,0:13:22.06,Default,,0000,0000,0000,,And, then we'll go into a bit more detail on each of them.
Dialogue: 0,0:13:22.06,0:13:25.45,Default,,0000,0000,0000,,The first thing is that we need to remove the power of banks to create money.
Dialogue: 0,0:13:25.45,0:13:29.50,Default,,0000,0000,0000,,We need to return that power to a transparent and accountable process.
Dialogue: 0,0:13:29.50,0:13:32.98,Default,,0000,0000,0000,,We have money created free of debt.
Dialogue: 0,0:13:32.98,0:13:36.87,Default,,0000,0000,0000,,We create money only when inflation is low and stable.
Dialogue: 0,0:13:36.87,0:13:43.54,Default,,0000,0000,0000,,We make sure that any new money goes into the real economy instead of into the financial markets and property.
Dialogue: 0,0:13:43.54,0:13:52.10,Default,,0000,0000,0000,,And, we give us, as customers of banks and as members of the public, control and transparency over how our money is actually invested.
Dialogue: 0,0:13:52.10,0:13:55.74,Default,,0000,0000,0000,,First one; removing the power of banks to create money.
Dialogue: 0,0:13:55.74,0:13:58.86,Default,,0000,0000,0000,,I don't want to take you through all the technical details of how this is done.
Dialogue: 0,0:13:58.86,0:14:01.50,Default,,0000,0000,0000,,It's explained quite simply in the book.
Dialogue: 0,0:14:01.50,0:14:08.06,Default,,0000,0000,0000,,but we'll also be releasing, in the next month, a series of videos that go through step-by-step if you prefer to see things visually.
Dialogue: 0,0:14:08.06,0:14:10.98,Default,,0000,0000,0000,,But, just a quick overview.
Dialogue: 0,0:14:10.98,0:14:14.31,Default,,0000,0000,0000,,As I said, banks currently have the power to create money,
Dialogue: 0,0:14:14.31,0:14:18.43,Default,,0000,0000,0000,,because the liabilities that they issue are the money that we use in the economy.
Dialogue: 0,0:14:18.43,0:14:23.67,Default,,0000,0000,0000,,So, money-creating organisations issue liabilities that are treated as media of exchange by others.
Dialogue: 0,0:14:23.67,0:14:26.42,Default,,0000,0000,0000,,We use these liabilities to make payments to each other.
Dialogue: 0,0:14:26.42,0:14:32.38,Default,,0000,0000,0000,,In the current system, we're here using the liabilities of these banks to make our payments.
Dialogue: 0,0:14:32.38,0:14:36.03,Default,,0000,0000,0000,,And what we do through the particular reforms outlined in the book,
Dialogue: 0,0:14:36.03,0:14:40.36,Default,,0000,0000,0000,,is that we actually start using money that is created by the Bank of England.
Dialogue: 0,0:14:40.36,0:14:46.37,Default,,0000,0000,0000,,So, instead of you using a promise to pay from a bank as your way of paying somebody else,
Dialogue: 0,0:14:46.37,0:14:50.66,Default,,0000,0000,0000,,you're actually using real electronic money that is being created by the Bank of England.
Dialogue: 0,0:14:50.66,0:14:54.58,Default,,0000,0000,0000,,What this means for you as a customer of a bank is that you have two options when you get your salary.
Dialogue: 0,0:14:54.58,0:14:59.30,Default,,0000,0000,0000,,You can either say to the bank, 'look, keep it safe for me', or you can say to them,
Dialogue: 0,0:14:59.30,0:15:02.14,Default,,0000,0000,0000,,'I want you to go and invest it for me. I want to get some interest'.
Dialogue: 0,0:15:02.14,0:15:06.87,Default,,0000,0000,0000,,And, if you say you want your money to be kept safe, then this money will be put into a transaction account,
Dialogue: 0,0:15:06.87,0:15:10.12,Default,,0000,0000,0000,,which is effectively the same as a current account now.
Dialogue: 0,0:15:10.12,0:15:12.46,Default,,0000,0000,0000,,But, the difference between a current account and these new accounts
Dialogue: 0,0:15:12.46,0:15:16.78,Default,,0000,0000,0000,,is that your money would actually be at the Bank of England.
Dialogue: 0,0:15:16.78,0:15:20.30,Default,,0000,0000,0000,,It would actually be electronic money stored electronically at the Bank of England.
Dialogue: 0,0:15:20.30,0:15:23.28,Default,,0000,0000,0000,,And, that would actually be yours.
Dialogue: 0,0:15:23.28,0:15:24.70,Default,,0000,0000,0000,,It wouldn't be the banks.
Dialogue: 0,0:15:24.70,0:15:28.20,Default,,0000,0000,0000,,They wouldn't be able to play with it, to invest it, to do anything with it.
Dialogue: 0,0:15:28.20,0:15:33.86,Default,,0000,0000,0000,,This investment account, what you're actually doing there is you're giving your electronic money that was created by
Dialogue: 0,0:15:33.86,0:15:39.90,Default,,0000,0000,0000,,the Bank of England to your bank, so that they can then go and lend it to somebody else.
Dialogue: 0,0:15:39.90,0:15:45.14,Default,,0000,0000,0000,,What this does, through the fairly simple rule changes and a few accounting changes,
Dialogue: 0,0:15:45.14,0:15:52.38,Default,,0000,0000,0000,,this makes banks into what people think they are now, which is intermediaries, middle-men between savers and borrowers.
Dialogue: 0,0:15:52.38,0:15:59.18,Default,,0000,0000,0000,,After this reform, what banks will be doing is taking money from savers and investors,
Dialogue: 0,0:15:59.18,0:16:03.03,Default,,0000,0000,0000,,and actually lending it to borrowers, doing exactly what people think they do now.
Dialogue: 0,0:16:03.03,0:16:05.95,Default,,0000,0000,0000,,So, with banks no longer having the power to create money,
Dialogue: 0,0:16:05.95,0:16:08.91,Default,,0000,0000,0000,,we need to return that power to a transparent and accountable process.
Dialogue: 0,0:16:08.91,0:16:17.14,Default,,0000,0000,0000,,I'm sure everybody is here, because they know we can't trust banks to create money for all the reasons that we've discussed.
Dialogue: 0,0:16:17.14,0:16:21.02,Default,,0000,0000,0000,,But, I guess you wouldn't trust these people either,
Dialogue: 0,0:16:21.02,0:16:26.54,Default,,0000,0000,0000,,because the problem is that politicians have the same incentives to abuse the power to create money as the banks do.
Dialogue: 0,0:16:26.54,0:16:33.06,Default,,0000,0000,0000,,The more of it they create, the more of an artificial boom they can create in the economy to get people to vote for them.
Dialogue: 0,0:16:33.06,0:16:35.54,Default,,0000,0000,0000,,And, that's going to end up badly.
Dialogue: 0,0:16:35.54,0:16:43.06,Default,,0000,0000,0000,,So, the absolute key thing that needs to be done is that you have to separate the decision over how much money is created,
Dialogue: 0,0:16:43.06,0:16:45.45,Default,,0000,0000,0000,,and what that money is used for.
Dialogue: 0,0:16:45.45,0:16:50.38,Default,,0000,0000,0000,,Because as soon as the same person or the same organisation is making those two decisions you have a conflict of interest.
Dialogue: 0,0:16:50.38,0:16:55.50,Default,,0000,0000,0000,,So, what we've suggested is that a new committee, the Money Creation Committe,
Dialogue: 0,0:16:55.50,0:16:58.14,Default,,0000,0000,0000,,which would replace the Bank of England's Monetary Policy Committee,
Dialogue: 0,0:16:58.14,0:17:03.67,Default,,0000,0000,0000,,becomes responsible for deciding how much the money in the economy needs to increase or decrease by,
Dialogue: 0,0:17:03.67,0:17:08.66,Default,,0000,0000,0000,,and the government would be responsible for actually deciding how to get that money into the economy.
Dialogue: 0,0:17:08.66,0:17:15.30,Default,,0000,0000,0000,,The really important thing is that you make sure that this money creation committee is sheltered from lobbyists.
Dialogue: 0,0:17:15.30,0:17:21.50,Default,,0000,0000,0000,,Either from the elected government of the day, who will have their own objectives for what they want the economy to do,
Dialogue: 0,0:17:21.50,0:17:24.22,Default,,0000,0000,0000,,which might not line up with the best interests of the economy,
Dialogue: 0,0:17:24.22,0:17:26.20,Default,,0000,0000,0000,,and from the banks as well.
Dialogue: 0,0:17:26.20,0:17:29.28,Default,,0000,0000,0000,,This whole process needs to be transparent, accountable,
Dialogue: 0,0:17:29.28,0:17:31.67,Default,,0000,0000,0000,,accountable to parliament.
Dialogue: 0,0:17:31.67,0:17:35.06,Default,,0000,0000,0000,,We can't have George Osborne calling up the Money Creation Committee and saying,
Dialogue: 0,0:17:35.06,0:17:40.54,Default,,0000,0000,0000,,'Can you put another £100 billion into the economy, because I really need a recovery before 2015?'
Dialogue: 0,0:17:40.54,0:17:44.95,Default,,0000,0000,0000,,Then, you need to make sure that money is only created when inflation is low and stable.
Dialogue: 0,0:17:44.95,0:17:47.66,Default,,0000,0000,0000,,So, let me show you what happens with the current system.
Dialogue: 0,0:17:47.66,0:17:51.36,Default,,0000,0000,0000,,So, banks increase their lending, which means they are creating more money.
Dialogue: 0,0:17:51.36,0:17:55.20,Default,,0000,0000,0000,,This starts to push prices up, and they think the economy is healthy, so they lend more.
Dialogue: 0,0:17:55.20,0:17:58.22,Default,,0000,0000,0000,,And, they say, 'Wow, look at house prices. We should be lending even more'
Dialogue: 0,0:17:58.22,0:18:01.98,Default,,0000,0000,0000,,And, at this point you're in a bubble, but everybody is convincing themselves that it's not a bubble.
Dialogue: 0,0:18:01.98,0:18:06.06,Default,,0000,0000,0000,,And, this is more or less what has happened to the money supply over the last 40 years,
Dialogue: 0,0:18:06.06,0:18:07.90,Default,,0000,0000,0000,,particularly over the last 10 years.
Dialogue: 0,0:18:07.90,0:18:14.06,Default,,0000,0000,0000,,What would happen with the Money Creation Committee is that they start putting into the economy,
Dialogue: 0,0:18:14.06,0:18:18.46,Default,,0000,0000,0000,,and when it starts to cause prices rises, so it starts to cause inflation, then they stop.
Dialogue: 0,0:18:18.46,0:18:24.95,Default,,0000,0000,0000,,When the inflation goes down, they create money again, and then they stop again until things settle out.
Dialogue: 0,0:18:24.95,0:18:30.70,Default,,0000,0000,0000,,Instead of when the banks are creating money, the more they create the more inflation there is,
Dialogue: 0,0:18:30.70,0:18:32.30,Default,,0000,0000,0000,,and the more they want to create,
Dialogue: 0,0:18:32.30,0:18:37.54,Default,,0000,0000,0000,,because they think, 'house prices are rising, so we can afford to lend more to people to buy houses'.
Dialogue: 0,0:18:37.54,0:18:42.98,Default,,0000,0000,0000,,The Money Creation Committee actually has a responsibility to stop creating money when it causes inflation.
Dialogue: 0,0:18:42.98,0:18:46.70,Default,,0000,0000,0000,,So, it's completely the opposite of what the banks will do in that situation.
Dialogue: 0,0:18:46.70,0:18:53.10,Default,,0000,0000,0000,,We often get the question, 'Isn't all money creation inflationary? Isn't all money creation going to push up prices?'
Dialogue: 0,0:18:53.10,0:18:55.90,Default,,0000,0000,0000,,Well, it really depends.
Dialogue: 0,0:18:55.90,0:19:01.42,Default,,0000,0000,0000,,Because, if you put 40% of all new money that you create into housing and into financial markets,
Dialogue: 0,0:19:01.42,0:19:04.78,Default,,0000,0000,0000,,then you're going to expect prices in those markets to go up.
Dialogue: 0,0:19:04.78,0:19:08.46,Default,,0000,0000,0000,,And, we've seen that with housing. We've seen that with the Stock Market.
Dialogue: 0,0:19:08.46,0:19:12.62,Default,,0000,0000,0000,,I don't know if you've seen the newspaper yesterday, but there was a weird headline.
Dialogue: 0,0:19:12.62,0:19:16.95,Default,,0000,0000,0000,,First, it was, 'This slump is worse than the Great Depression',
Dialogue: 0,0:19:16.95,0:19:20.57,Default,,0000,0000,0000,,and beneath that it's, 'Markets hit 4 1/2 year high.'
Dialogue: 0,0:19:20.57,0:19:23.08,Default,,0000,0000,0000,,It's like why is this, why?
Dialogue: 0,0:19:23.08,0:19:26.75,Default,,0000,0000,0000,,It's a symptom of where thie money is going, particularly quantitive easing.
Dialogue: 0,0:19:26.75,0:19:32.82,Default,,0000,0000,0000,,If you instead put money into non-financial businesses, so into the real economy,
Dialogue: 0,0:19:32.82,0:19:35.62,Default,,0000,0000,0000,,then what you're going to do is stimulate that part of the economy.
Dialogue: 0,0:19:35.62,0:19:40.53,Default,,0000,0000,0000,,You know we have 2 1/2 million people at home doing nothing. They can be employed.
Dialogue: 0,0:19:40.53,0:19:46.78,Default,,0000,0000,0000,,What you actually get is economic activity will increase. So, the economy will grow.
Dialogue: 0,0:19:46.78,0:19:49.50,Default,,0000,0000,0000,,So, not all money creation is inflationary.
Dialogue: 0,0:19:49.50,0:19:56.34,Default,,0000,0000,0000,,It can actually, if it's put into the right parts of the economy, it can help the economy to grow faster than any inflationary pressure.
Dialogue: 0,0:19:56.34,0:19:58.78,Default,,0000,0000,0000,,We need to create money free of debt.
Dialogue: 0,0:19:58.78,0:20:02.28,Default,,0000,0000,0000,,Now, this is one of the most fundamental points of this whole book,
Dialogue: 0,0:20:02.28,0:20:10.95,Default,,0000,0000,0000,,because when 97% of all the money we are using is created by banks when they are making loans,
Dialogue: 0,0:20:10.95,0:20:15.51,Default,,0000,0000,0000,,that means that the more money we want in the economy, the more debt we have to have.
Dialogue: 0,0:20:15.51,0:20:19.10,Default,,0000,0000,0000,,If we've just had a crisis, and we need some new money into the economy,
Dialogue: 0,0:20:19.10,0:20:23.58,Default,,0000,0000,0000,,then the only real way to get it in there is to have the banks increase their lending,
Dialogue: 0,0:20:23.58,0:20:27.62,Default,,0000,0000,0000,,which is why you see such an emphasis now on, 'well, we've got to get banks lending again'.
Dialogue: 0,0:20:27.62,0:20:30.34,Default,,0000,0000,0000,,Even though the crisis was caused by people having too much debt.
Dialogue: 0,0:20:30.34,0:20:34.03,Default,,0000,0000,0000,,And, vice versa if we want less debt in the economy, then we have to have less money,
Dialogue: 0,0:20:34.03,0:20:37.45,Default,,0000,0000,0000,,because as you repay your debts that money is effectively cancelled out.
Dialogue: 0,0:20:37.45,0:20:40.46,Default,,0000,0000,0000,,It's just the reverse accounting process of money creation.
Dialogue: 0,0:20:40.46,0:20:48.90,Default,,0000,0000,0000,,We what actually need is less debt, and we need more money in the economy to get out of this current crisis, this current recession.
Dialogue: 0,0:20:48.90,0:20:52.54,Default,,0000,0000,0000,,That's impossible in the current system. As you see here, the two of them are tied together.
Dialogue: 0,0:20:52.54,0:20:55.18,Default,,0000,0000,0000,,As the money supply goes up, the debt does up,
Dialogue: 0,0:20:55.18,0:21:01.78,Default,,0000,0000,0000,,because the money and the debt is the opposite side of the same accounting entry, the same balance sheet.
Dialogue: 0,0:21:01.78,0:21:08.42,Default,,0000,0000,0000,,So, this what we can expect to see happen if we do have a recovery now with the current system, that the debt will rise.
Dialogue: 0,0:21:08.42,0:21:13.99,Default,,0000,0000,0000,,And, eventually this is going to lead to yet another crisis, but it may be much much worse the next time.
Dialogue: 0,0:21:13.99,0:21:18.20,Default,,0000,0000,0000,,What these reforms do is they separate the creation of money from the creation of debt.
Dialogue: 0,0:21:18.20,0:21:25.87,Default,,0000,0000,0000,,So, when banks are lending, they are actually transferring existing money from a saver to a borrow,
Dialogue: 0,0:21:25.87,0:21:28.28,Default,,0000,0000,0000,,but they are not creating money in the process.
Dialogue: 0,0:21:28.28,0:21:32.95,Default,,0000,0000,0000,,So, the money can be created, and that money can be used to pay off a lot of the existing debt.
Dialogue: 0,0:21:32.95,0:21:37.14,Default,,0000,0000,0000,,And, also because of some of the other changes that need to be made to the accounting,
Dialogue: 0,0:21:37.14,0:21:46.14,Default,,0000,0000,0000,,which are explained in the book, it allows us to pay off nearly a £1 trillion of household and personal debt over the course of about 20 years.
Dialogue: 0,0:21:46.14,0:21:52.95,Default,,0000,0000,0000,,Just think about how much of a complete transformation that will make for the lives of most of the people in this country,
Dialogue: 0,0:21:52.95,0:21:58.22,Default,,0000,0000,0000,,to not have this enormous debt. Personal debt is as high as it's ever been.
Dialogue: 0,0:21:58.22,0:22:03.20,Default,,0000,0000,0000,,And, these changes to the system actually allow this debt to be reduced.
Dialogue: 0,0:22:03.20,0:22:10.22,Default,,0000,0000,0000,,So, instead of having this annual interest charge on the entire money supply of £108bn to £217bn a year,
Dialogue: 0,0:22:10.22,0:22:14.70,Default,,0000,0000,0000,,that could be cut down to possibly half of that, maybe even less.
Dialogue: 0,0:22:14.70,0:22:17.54,Default,,0000,0000,0000,,The fifth thing. We need to put money into the real economy.
Dialogue: 0,0:22:17.54,0:22:23.38,Default,,0000,0000,0000,,We talked briefly about this. There are about four options that you could use to get this money into the economy.
Dialogue: 0,0:22:23.38,0:22:28.58,Default,,0000,0000,0000,,So, you can spend more on public services; put the money into the government.
Dialogue: 0,0:22:28.58,0:22:31.90,Default,,0000,0000,0000,,You can cut taxes. You could pay down the National Debt.
Dialogue: 0,0:22:31.90,0:22:36.50,Default,,0000,0000,0000,,Or, you could actually just divide it up between people and give it directly to people.
Dialogue: 0,0:22:36.50,0:22:42.78,Default,,0000,0000,0000,,We talk in the book about the combination of these that you would probably want to use and why.
Dialogue: 0,0:22:42.78,0:22:48.05,Default,,0000,0000,0000,,And actually paying down the National Debt should be probably the last priority.
Dialogue: 0,0:22:48.05,0:22:53.38,Default,,0000,0000,0000,,But the important thing is that all of these things, if they are done right, will get money into the real economy.
Dialogue: 0,0:22:53.38,0:22:57.78,Default,,0000,0000,0000,,Whereas what we have now is we have banks putting most of the money into housing and financial markets.
Dialogue: 0,0:22:57.78,0:23:02.74,Default,,0000,0000,0000,,And, some of this money trickles out of that market into the real economy.
Dialogue: 0,0:23:02.74,0:23:08.54,Default,,0000,0000,0000,,What we'd like to see is that as the money comes in, as it's created, it goes to government,
Dialogue: 0,0:23:08.54,0:23:12.03,Default,,0000,0000,0000,,and then it comes into the real economy first.
Dialogue: 0,0:23:12.03,0:23:16.14,Default,,0000,0000,0000,,and, then the banks need to borrow that money from people and businesses in the real economy
Dialogue: 0,0:23:16.14,0:23:24.78,Default,,0000,0000,0000,,before they can then lend it back to the real economy, back to businesses or to housing and to the financial markets.
Dialogue: 0,0:23:24.78,0:23:30.70,Default,,0000,0000,0000,,One of the things we would like to see is that this flow of money into the financial markets and speculation,
Dialogue: 0,0:23:30.70,0:23:35.42,Default,,0000,0000,0000,,and trading should really be reduced.
Dialogue: 0,0:23:35.42,0:23:40.78,Default,,0000,0000,0000,,So, we need to give ourselves control and transparency over where our money is invested.
Dialogue: 0,0:23:40.78,0:23:45.03,Default,,0000,0000,0000,,Now, I saw this advert the other day, which really made me laugh.
Dialogue: 0,0:23:45.03,0:23:46.98,Default,,0000,0000,0000,,'Ever wondered where your money goes?'
Dialogue: 0,0:23:46.98,0:23:50.34,Default,,0000,0000,0000,,This is Lloyds TSB saying, 'Have you ever wondered where your money goes'.
Dialogue: 0,0:23:50.34,0:23:55.74,Default,,0000,0000,0000,,[Laughter from audience]
Dialogue: 0,0:23:55.74,0:24:02.22,Default,,0000,0000,0000,,I think they weren't aware of the Move Your Money campaign or how much they were falling into their trap there
Dialogue: 0,0:24:02.22,0:24:06.70,Default,,0000,0000,0000,,because, no, most people don't think about where their money goes,
Dialogue: 0,0:24:06.70,0:24:10.03,Default,,0000,0000,0000,,and that's because the bank never tells you.
Dialogue: 0,0:24:10.03,0:24:12.54,Default,,0000,0000,0000,,So, one of the things that we would do as part of these reforms
Dialogue: 0,0:24:12.54,0:24:19.14,Default,,0000,0000,0000,,is require that if you're putting your money into an investment account, you're giving your money up so that the bank can go and invest it,
Dialogue: 0,0:24:19.14,0:24:25.74,Default,,0000,0000,0000,,that the bank will actually tell you ok, 'we're going to use for the arms trade, for the oil industry,
Dialogue: 0,0:24:25.74,0:24:31.14,Default,,0000,0000,0000,,for Tar Sands, for investing in businesses or investing in commodity speculation'.
Dialogue: 0,0:24:31.14,0:24:38.30,Default,,0000,0000,0000,,Some people, we're not naive, won't care about this. They're not going to be bothered.
Dialogue: 0,0:24:38.30,0:24:44.74,Default,,0000,0000,0000,,But it means that the people who do care what their money is used for, have that option to opt out.
Dialogue: 0,0:24:44.74,0:24:47.30,Default,,0000,0000,0000,,To say, 'I don't want my money to be used in this way'.
Dialogue: 0,0:24:47.30,0:24:51.46,Default,,0000,0000,0000,,And to choose different accounts, where their money will be used differently.
Dialogue: 0,0:24:51.46,0:24:53.98,Default,,0000,0000,0000,,Is it going to be easy to get this through? Of course, not!
Dialogue: 0,0:24:53.98,0:24:58.14,Default,,0000,0000,0000,,There's going to be massive opposition. There's huge vested interests.
Dialogue: 0,0:24:58.14,0:25:05.06,Default,,0000,0000,0000,,And, some of the things that we'll hear over the next few years as these things get out into the mainstream,
Dialogue: 0,0:25:05.06,0:25:11.14,Default,,0000,0000,0000,,things like, 'It'll be inflationary'. If you allow the state to create money, that's going to cause inflation.
Dialogue: 0,0:25:11.14,0:25:13.98,Default,,0000,0000,0000,,Really this is quite an easy one to answer.
Dialogue: 0,0:25:13.98,0:25:16.82,Default,,0000,0000,0000,,Well, which of these two is most likely to cause inflation.
Dialogue: 0,0:25:16.82,0:25:23.54,Default,,0000,0000,0000,,You know banks who want to create as much money as possible, because they maximise their profits by creating more,
Dialogue: 0,0:25:23.54,0:25:29.87,Default,,0000,0000,0000,,or a committee that is responsible for stopping money creation when inflation starts to go up.
Dialogue: 0,0:25:29.87,0:25:32.31,Default,,0000,0000,0000,,It's quite a clear choice.
Dialogue: 0,0:25:32.31,0:25:38.30,Default,,0000,0000,0000,,And they you'll get, 'I'll be hyperinflationary'. We'll end up like Zimbabwe or Germany in the 1920s.
Dialogue: 0,0:25:38.30,0:25:48.12,Default,,0000,0000,0000,,Well, the people making that claim, unfortunately, are very ignorant of what actually happened in Zimbabwe
Dialogue: 0,0:25:48.12,0:25:50.82,Default,,0000,0000,0000,,and what actually happened in Weimer Republic Germany.
Dialogue: 0,0:25:50.82,0:25:58.47,Default,,0000,0000,0000,,Now, in the book there's a whole appendix on Zimbabwe and other examples where there have been hyperinflations,
Dialogue: 0,0:25:58.47,0:26:02.37,Default,,0000,0000,0000,,and other examples where states have created money without hyperinflations,
Dialogue: 0,0:26:02.37,0:26:10.45,Default,,0000,0000,0000,,There's a study that we've quoted in there where they go through all 50 recorded hyperinflations in history,
Dialogue: 0,0:26:10.45,0:26:17.19,Default,,0000,0000,0000,,and found that all of them there's been an economic collapse or a political collapse or a war
Dialogue: 0,0:26:17.19,0:26:19.38,Default,,0000,0000,0000,,before the hyperinflation actually started.
Dialogue: 0,0:26:19.38,0:26:24.75,Default,,0000,0000,0000,,It wasn't just because some central bankers started printing money willy-nilly.
Dialogue: 0,0:26:24.75,0:26:29.14,Default,,0000,0000,0000,,There was some fundamental collapse in the economy, before these hyperinflations started.
Dialogue: 0,0:26:29.14,0:26:35.38,Default,,0000,0000,0000,,So, the idea that this will lead to hyperinflation is very misguided.
Dialogue: 0,0:26:35.38,0:26:38.99,Default,,0000,0000,0000,,You'll hear this one all the time. 'It'll drastically reduce the level of credit.'
Dialogue: 0,0:26:38.99,0:26:41.34,Default,,0000,0000,0000,,We actually heard it from the Independent Commission on Banking.
Dialogue: 0,0:26:41.34,0:26:45.74,Default,,0000,0000,0000,,We asked them what they meant by the word drastic.
Dialogue: 0,0:26:45.74,0:26:50.95,Default,,0000,0000,0000,,Did they mean a 10% or a 50% [decrease]? They didn't really know; they didn't get back to us on that.
Dialogue: 0,0:26:50.95,0:26:57.87,Default,,0000,0000,0000,,We also asked them if we could see their calculations or their modelling or the working out that they'd done
Dialogue: 0,0:26:57.87,0:27:01.78,Default,,0000,0000,0000,,to show it would be drastic, and funnily enough they didn't get back to us on that either.
Dialogue: 0,0:27:01.78,0:27:07.34,Default,,0000,0000,0000,,So, this is just a knee-jerk reaction without really understanding the way the system works.
Dialogue: 0,0:27:07.34,0:27:13.14,Default,,0000,0000,0000,,The savings products at the moment where people have said I don't need my money for the next 6 or 12 months,
Dialogue: 0,0:27:13.14,0:27:18.62,Default,,0000,0000,0000,,already today, there is enough money in those accounts, enough liabilities,
Dialogue: 0,0:27:18.62,0:27:23.46,Default,,0000,0000,0000,,to cover all of the investment that is needed in the business economy,
Dialogue: 0,0:27:23.46,0:27:28.03,Default,,0000,0000,0000,,and to keep people being able to buy houses without pushing house prices up.
Dialogue: 0,0:27:28.03,0:27:33.98,Default,,0000,0000,0000,,There's already enough money out there to provide finance to the bits of the economy that we really need.
Dialogue: 0,0:27:33.98,0:27:40.18,Default,,0000,0000,0000,,There might not be enough money to push house prices up at 200% in ten years.
Dialogue: 0,0:27:40.18,0:27:43.75,Default,,0000,0000,0000,,There might not be enough money to fund all this speculation in the financial markets,
Dialogue: 0,0:27:43.75,0:27:45.78,Default,,0000,0000,0000,,and I think that's a good thing.
Dialogue: 0,0:27:45.78,0:27:49.37,Default,,0000,0000,0000,,And, then you'll hear this one. 'Well, you'll kill Britain's best industry'.
Dialogue: 0,0:27:49.37,0:27:55.53,Default,,0000,0000,0000,,You know, we need the banking sector, because the taxes they pay, pay for our schools, our hospitals.
Dialogue: 0,0:27:55.53,0:27:59.78,Default,,0000,0000,0000,,If not we'd all be scratching out a living in the dirt.'
Dialogue: 0,0:27:59.78,0:28:10.87,Default,,0000,0000,0000,,It's not true. The banking sector; in the year that it paid the most tax in history, manufacturing in this country paid three times more tax.
Dialogue: 0,0:28:10.87,0:28:17.78,Default,,0000,0000,0000,,Does anybody want to take a guess at what this number represents?
Dialogue: 0,0:28:17.78,0:28:22.22,Default,,0000,0000,0000,,It's the number of workers in banking relative to the number of workers in the rest of the economy.
Dialogue: 0,0:28:22.22,0:28:26.14,Default,,0000,0000,0000,,Banking only employs one in every 53 people.
Dialogue: 0,0:28:26.14,0:28:31.53,Default,,0000,0000,0000,,So, for every one person in banking, every one person in this industry that we are protecting,
Dialogue: 0,0:28:31.53,0:28:37.62,Default,,0000,0000,0000,,by not asking them to make changes and not asking them to reform the way that they do business,
Dialogue: 0,0:28:37.62,0:28:43.78,Default,,0000,0000,0000,,there are 52 people in the rest of the economy that are negatively affected by the impacts of this banking sector.
Dialogue: 0,0:28:43.78,0:28:50.62,Default,,0000,0000,0000,,So, these reforms are really for the other 98% of the working population.
Dialogue: 0,0:28:50.62,0:28:54.34,Default,,0000,0000,0000,,for the businesses, for the people with jobs outside of banking.
Dialogue: 0,0:28:54.34,0:29:02.90,Default,,0000,0000,0000,,So, I should probably qualify this. There's nothing personal about what we're doing against banks, or the people who work in them.
Dialogue: 0,0:29:02.90,0:29:07.90,Default,,0000,0000,0000,,It's the industry that's the problem. It's the design of the industry and the effects that it's having.
Dialogue: 0,0:29:07.90,0:29:14.70,Default,,0000,0000,0000,,And, it not about the people in them. It's about changing the rules of the game, and the ways these companies can operate.
Dialogue: 0,0:29:14.70,0:29:17.06,Default,,0000,0000,0000,,And, you'll also hear. 'It's too radical',
Dialogue: 0,0:29:17.06,0:29:22.30,Default,,0000,0000,0000,,which is quite bizarre given that we're just proposing that this law from the 1840s is updated.
Dialogue: 0,0:29:22.30,0:29:27.22,Default,,0000,0000,0000,,I can't imagine the Conservatives of the 1840s were really considered to be radicals.
Dialogue: 0,0:29:27.22,0:29:29.18,Default,,0000,0000,0000,,So, the benefits of reforming.
Dialogue: 0,0:29:29.18,0:29:34.18,Default,,0000,0000,0000,,We get stable money. We get this instead of this.
Dialogue: 0,0:29:34.18,0:29:37.62,Default,,0000,0000,0000,,We get debt falling like this.
Dialogue: 0,0:29:37.62,0:29:43.98,Default,,0000,0000,0000,,Instead of house price bubbles we'll have house prices that will stay flat until earnings have actually caught up,
Dialogue: 0,0:29:43.98,0:29:45.62,Default,,0000,0000,0000,,and they become affordable again.
Dialogue: 0,0:29:45.62,0:29:49.78,Default,,0000,0000,0000,,Unemployment, I just want to give you one example of how ridiculous this current system is to wrap up with.
Dialogue: 0,0:29:49.78,0:29:56.70,Default,,0000,0000,0000,,We have 2.5 million people sat at home, doing nothing, desperately looking for something useful to do for a job.
Dialogue: 0,0:29:56.70,0:30:01.54,Default,,0000,0000,0000,,We also have things that need doing in the economy.
Dialogue: 0,0:30:01.54,0:30:03.07,Default,,0000,0000,0000,,We have schools that need rebuilding.
Dialogue: 0,0:30:03.07,0:30:08.30,Default,,0000,0000,0000,,The government has been dilly-dallying over this school rebuilding programme for the last few years,
Dialogue: 0,0:30:08.30,0:30:13.06,Default,,0000,0000,0000,,saying, 'there's not enough money. We're in a recession. We need to get our public finances under order'.
Dialogue: 0,0:30:13.06,0:30:18.18,Default,,0000,0000,0000,,And, they finally came out and allocated £2 billion for rebuilding schools in England.
Dialogue: 0,0:30:18.18,0:30:21.90,Default,,0000,0000,0000,,Now, £2 billion sounds like a lot of money,
Dialogue: 0,0:30:21.90,0:30:26.34,Default,,0000,0000,0000,,and it's so much money that they've had to borrow it from Private Finance Initiative.
Dialogue: 0,0:30:26.34,0:30:30.95,Default,,0000,0000,0000,,So, they are actually borrowing money that is created through accounting entries from banks,
Dialogue: 0,0:30:30.95,0:30:37.22,Default,,0000,0000,0000,,and paying interest on that, because they haven't got enough money of their own to fund rebuilding of the schools.
Dialogue: 0,0:30:37.22,0:30:41.98,Default,,0000,0000,0000,,Now, the reason for that, according to the BBC is that,
Dialogue: 0,0:30:41.98,0:30:45.62,Default,,0000,0000,0000,,'This arrangement will spare the Department for Education's meagre capital budget,
Dialogue: 0,0:30:45.62,0:30:51.30,Default,,0000,0000,0000,,the annual value of which is being halved over this parliament to £3.8 billion.
Dialogue: 0,0:30:51.30,0:30:55.90,Default,,0000,0000,0000,,So, £3.8 billion pounds for rebuilding schools and keeping this whole education system,
Dialogue: 0,0:30:55.90,0:30:59.90,Default,,0000,0000,0000,,the actual physical infrastructure of this, in order.
Dialogue: 0,0:30:59.90,0:31:06.18,Default,,0000,0000,0000,,Again, sounds like a a lot of money, but this green line at the top here
Dialogue: 0,0:31:06.18,0:31:12.37,Default,,0000,0000,0000,,is how much money has been put into mortgages and consumer finance over the last 20 odd years.
Dialogue: 0,0:31:12.37,0:31:22.28,Default,,0000,0000,0000,,In June 1999, the banks created £4.5 billion of new money in one month to put into the property market.
Dialogue: 0,0:31:22.28,0:31:25.12,Default,,0000,0000,0000,,Into buying existing houses and building a few new ones.
Dialogue: 0,0:31:25.12,0:31:29.28,Default,,0000,0000,0000,,In 2005, they created £7 billion in one month.
Dialogue: 0,0:31:29.28,0:31:35.03,Default,,0000,0000,0000,,In September 2007, they created £16 billion in one month to go into property.
Dialogue: 0,0:31:35.03,0:31:42.22,Default,,0000,0000,0000,,So, in the space of one week, they've created as much money as the government is willing to spend on rebuilding schools in an entire year.
Dialogue: 0,0:31:42.22,0:31:45.95,Default,,0000,0000,0000,,Now, this is crazy. If we give banks the power to create money, this is what they are going to do.
Dialogue: 0,0:31:45.95,0:31:50.06,Default,,0000,0000,0000,,They're going to put it into markets like this instead of doing things that we actually need to do.
Dialogue: 0,0:31:50.06,0:31:56.22,Default,,0000,0000,0000,,As I said before, we can't allow this system to continue working the way it is,
Dialogue: 0,0:31:56.22,0:32:00.03,Default,,0000,0000,0000,,given the real challenges that we're going to face over the next 40 years.
Dialogue: 0,0:32:00.03,0:32:02.58,Default,,0000,0000,0000,,So, this is what the book is about.
Dialogue: 0,0:32:02.58,0:32:05.34,Default,,0000,0000,0000,,It can be heavy-going.
Dialogue: 0,0:32:05.34,0:32:11.03,Default,,0000,0000,0000,,We've had to design it partly for the economists who would normally dismiss these ideas,
Dialogue: 0,0:32:11.03,0:32:15.70,Default,,0000,0000,0000,,but we have tried to write it so that if you don't have that background in Economics,
Dialogue: 0,0:32:15.70,0:32:19.66,Default,,0000,0000,0000,,if you start from the beginning, your knowledge will build up and this will really start to make sense.
Dialogue: 0,0:32:19.66,0:32:27.42,Default,,0000,0000,0000,,And, if you get to the end, then you will know more about the monetary system than 99% of professional economists.
Dialogue: 0,0:32:27.42,0:32:31.38,Default,,0000,0000,0000,,So, this is it. This is what we need to do.
Dialogue: 0,0:32:31.38,0:32:35.78,Default,,0000,0000,0000,,The pressure is really on, because of the real challenges that we are facing.
Dialogue: 0,0:32:35.78,0:32:42.98,Default,,0000,0000,0000,,The movement in this country is by far the strongest in the world.
Dialogue: 0,0:32:42.98,0:32:49.20,Default,,0000,0000,0000,,This is the biggest gathering that I know of for reforming the monetary system.
Dialogue: 0,0:32:49.20,0:32:53.38,Default,,0000,0000,0000,,So, if we don't do it then nobody else is going to push it through.
Dialogue: 0,0:32:53.38,0:32:57.70,Default,,0000,0000,0000,,So, it's really down to us. That's what the rest of this afternoon is going to be about.
Dialogue: 0,0:32:57.70,0:33:01.78,Default,,0000,0000,0000,,How we really change the system.