97% Owned - Positive Money Directors Cut

To join the campaign to democratise money see http://www.positivemoney.org.uk/97percent

When money drives almost all activity on the planet, it's essential that we understand it. Yet simple questions often get overlooked - questions like: where does money come from? Who creates it? Who decides how it gets used? And what does that mean for the millions of ordinary people who suffer when money and finance breaks down?

97% Owned is a new documentary that reveals how money is at the root of our current social and economic crisis. Featuring frank interviews and commentary from economists, campaigners and former bankers, it exposes the privatised, debt-based monetary system that gives banks the power to create money, shape the economy, cause crises and push house prices out of reach. Fact-based and clearly explained, in just 60 minutes it shows how the power to create money is the piece of the puzzle that economists were missing when they failed to predict the crisis.

Produced by Queuepolitely and featuring Ben Dyson of Positive Money, Josh Ryan-Collins of The New Economics Foundation, Ann Pettifor, the "HBOS Whistleblower" Paul Moore, Simon Dixon of Bank to the Future and Nick Dearden from the Jubliee Debt Campaign, this is the first documentary to tackle this issue from a UK-perspective, and can be watched online now.

NARRATOR: How is money created, where does
it come from? Who benefits? And what purpose

does it serve?

SHOUTING: Back off you f*ing Nazi!

What is the money system? What is the money
behind the money system?

NARRATOR: For centuries the mechanics of the
money system have remained hidden from the

prying eyes of the populace. Yet its impact,
both on a national and international level,

is perhaps unsurpassed, for it is the monetary
system that provides the foundations for international

dominance and national control.

CHANTING: Whose streets? Our streets!

NARRATOR: Today, as these very foundations
are being shaken by crises, the need for open

and honest dialogue on the future of the monetary
system has never been greater.

This economic crisis is like a cancer. If
you just wait and wait, thinking this is going

to go away, just like a cancer it's going
to grow, and it's going to be too late. What

I would say to everybody is, get prepared.
This is not a time right now for wishful thinking

that the government is going to sort things
out. The governments don't rule the world:

Goldman Sachs rules the world.

"We're on the verge of a perfect storm".

NARRATOR: In opposition lie corrupt and entrenched
interests that lurk in the corridors of power,

for whom there are no reasons to relinquish
privileges that they feel are justly deserved.

DAVID CAMERON: Has he got a reform plan for
the NHS? [SHOUT: No!] Has he got a police

reform plan? [No!] Has he got a plan to cut
the deficit? [No!]

SPEAKER OF THE HOUSE OF COMMONS: Order! Misorder!
Order! Try to calm down and behave like an

adult, and if you can't, if it's beyond you,
leave the chamber. Get out. We'll manage without

you!

"This is the zombie banks' protected feeding
station."

There's no coincidence that boom and bust
became a real cyclical issue around about

the 1700s when William Paterson founded the
Bank of England.

"Eat her! Eat her now!"

SPEAKER OF THE HOUSE OF COMMONS: This is intolerable
behaviour as far as the public is… No, it's

not funny! Only in your mind is it funny.
It's not funny at all, it's disgraceful.

CHANTING: Revolution! Revolution!

NARRATOR: The system is inherently unstable
as a result of the international power it

provides to the dominant parties, for at the
heart of it lies the idea of ‘How can I

get something for nothing'.

Statistical analysis has found that every
time an empire begins to near its own demise,

you'll find that its currency will be debased.

There is no guide to how this whole system
operates. To give you an example, a researcher

at the BBC working on a Robert Peston documentary
went to the Bank of England and said, "Can

you give me a guide to how money is created?"
And they just said, "no".

NARRATOR: This documentary will investigate
and explain this ever changing system, and

the impact it has both on a national and international
level.

In 2010 the total UK money supply stood at
2.15 trillion pounds.

2.6 % of this total was physical cash, £53.5
billion.

The rest, £2.1 trillion, or 97.4% of the
total money supply was commercial bank money.

The 3% of money is created through the central
bank and that money essentially, if you created

a £10 note you could sell that to a bank
to put into their ATM and the bank would have

to repay that £10 or buy it for £10. There
would be no interest charged on that money

but that money is then essentially transferred
to the Treasury and it's a form of fundraising

for the government. It's called seigniorage.

When the Bank Of England creates a 10 pound
note, it cost it about 3 or 4 pence to actually

print that note and it sells it to a high
street banks at face value, so 10 pounds,

and the profit, the difference between printing
the note and actually selling it for 10 pounds

goes directly to the treasury. So, in effect
all the profit that we get on creating physical

money, bank notes, goes to the treasury and
it reduces how much taxes we have to pay.

Over the last 10 years, that's raised about
18 billion pounds.

NARRATOR: In 1948 notes and coins constituted
17% of the total money supply. This was one

contributing factor in the government's ability
to finance post-war reconstruction. This included

the establishment of the NHS.

In only 60 years notes and coins have shrunk
to less than 3 %

Prior to 1844 bank notes were created by private
banks and the government did not profit from

their creation.

In the 1840s there was no law to stop banks
from creating their own bank notes. So they

used to issue paper notes as kind of a representative
of what you had in the bank account. Instead

of you taking your heavy metal coins out of
the bank and then going and paying somebody

with them you could get your paper which said
how much money you had in the bank and you

could give that to somebody and they could
use that to go and get the heavy metal coins

from the banks. Now overtime these paper notes
became as good as money. People would use

paper notes instead of going and getting real
money from the bank and obviously as soon

as the banks realised that what they were
creating had become the dominant type of money

in the economy, they realised that by creating
more of it they could generate profits. They

can just print up some new notes, lend it
and get the interest on top of them. And they

did that up until the 1840s. In the 1840s
they pushed it just a little bit too far and

that caused inflation, destabilised the economy.
So in 1844, the conservative government of

Robert Peel actually passed a law that took
the power to create money away from the commercial

banks and brought it back to the state. So
since then the Bank of England has been the

only organisation authorised to create paper
notes. Since then everything has gone digital

and what we now use as money is digital numbers
that commercial banks can create out of nothing.

The problem was that they did not include
in that legislation the deposits, the demand

deposits, held in banks by individuals or
electronic forms of money which essentially

what those demand deposits are. Today most
of the money in circulation is electronic

money, it's bank demand deposits that sit
in our accounts. So in a way the legislation's

got to catch up with the developments in electronic
money and the way that banks actually operate.

NARRATOR: Money held in bank accounts are
called demand deposits. This is an accounting

term the banks use when they create credit.
Banks follow the same process when they create

loans. All money held in bank accounts, is
an accounting entry.

The reality is now that most money is not
paper and it's not metal coins, its digital.

It's just numbers in a computer system. It's
your Visa debit card, it's your electronic

ATM card. It's this, its plastic. Its numbers
in a computer system, you move money from

one computer system to another, it's all a
big database and this digital money is what

we are now using to make payments with, it's
what we actually use to run the economy.

I think a lot of people in the UK probably
think that the government or the central bank

is in control of most money in circulation
and issues new money into circulation, but

that's not the case. It's private banks that
create the vast majority of new money in circulation

and also decide how it's allocated.

NARRATOR: The official terminology for this
accounting entry is commercial bank money.

When banks issue loans to the public, they
create new commercial bank money. When a customer

repays a loan, commercial bank money is destroyed.
The banks keep the interest, as profit.

There's a lot of misconceptions about the
way banks work. There was a poll done by the

Cobden Centre where they asked people how
they thought banks actually operated. Around

30% of the public think that when you put
your money into the bank it just stays there

and its safe and you can understand why because
every child has a piggy and you spend it.

So a lot of people keep this idea of banking,
it's somewhere safe to keep your money so that

it's there whenever you need it. Another,
the other 60% of people assume that when you

put your money in that money is the same being
moved across to somebody who wants to borrow

it. So you have a pensioner who keeps saving
money her entire life and then her life savings

have been lent to some young people who want
to buy a house. But actually banks don't work

like that.

At the moment in the UK money creation and
control is largely in the hands of private

banks. About 97 to 98% of money that's created
is created as bank "debt money", you can call

it, when banks issue money into circulation
as loans essentially. This is a very poorly

understood fact.

It's not a conspiracy theory, it's not a crackpot
theory, it's the way the Bank of England describes

the process. When banks make loans they create
new money.

A few economists will realise the way the
money system works but if you don't realise

the way that money works and you think that
everyone saving is going to work well for

the economy. What really happens once you
understand the way the money system works

is that if everybody starts saving, the amount
of money in the economy shrinks and we have

a recession. So most economists don't have
this full picture. They don't understand all

the elements of the system. They rely on assumptions,
on received knowledge without actually going

into the details, and money is the centre of
the economy. If you don't understand where

it comes from, who creates it and when it
gets created then how can you understand the

entire economy?

When the vast majority of money that we use
now is not cash but its electronic money then

whoever's creating the electronic money is
getting the proceeds of creating that money

and obviously creating electronic money is
much more profitable than creating cash because

you don't have any production cost at all.
So while we've got £18 billion over the course

of the decade in profit from creating cash,
the banks have actually created £1.2 trillion.

Between 1998 and 2007 the UK money supply
tripled. £1.2 trillion pounds was created

by banks, whilst £18 billion was created
by the Treasury.

A lot of people think when I say this or when
you say this or when Positive Money say this

that we are all a bunch of nutters. But on
the 9th of March in 2009, the governor of

the Federal Reserve, Ben Bernanke gave the
first ever broadcast interview, the governor

of the central bank of the United States of
America had ever given and the day before

that he bailed out AIG which is an insurance
company, not even a bank actually to the tune

of about a US$160 billion. So the journalist
says to him: "Now Mr. Bernanke where did you

get $160 billion to bail out AIG?"

JOURNALIST: Is that tax money that the Fed
is spending?

BERNANKE: It's not tax money. The banks have
accounts with the Fed, much the same way that

you have an account in a commercial bank.
So to lend to a bank we simply use the computer

to mark up the size of the account they have
with the Fed. So it's much more akin, although

not exactly the same, to printing money than
it is to borrowing.

I found that talking on the door step from
August last year around to August 2009 around

to general election 8-9 months I suppose knocking
on the doors, is that we tried to explain

how the money system works, there's an almost
in-built refusal of people to accept that

such a bizarre situation could actually exist.
"Ah no, it can't possibly. What do you mean?

It can't...banks can't...banks don't create
money out of thin air. That's ridiculous.

They can't do that. They lend out their depositors'
money." Most people have an idea of how money

is. They are used to their own way of handling
money and they try and implement their own

idea of how their small household economy
works into the national economy. And of course

it just doesn't work out, it just doesn't
work out at all.

NARRATOR: By 2008 the outstanding loan portfolio
of bank created credit, also known as commercial

bank money, stood at over £2 trillion.

As recently as 1982 the ratio of notes and
coins to bank deposits was 1:12. By 2010 the

ratio had risen to 1:37, that is for every
pound of treasury-created money,

there were 37 pounds of bank-created money.

In the 10 years prior to the 2007 crisis,
the UK commercial bank money supply expanded

by between 7 to 10% every year.

A growth rate of 7% is the equivalent of doubling
the money supply every 10 years.

DYSON: The amount of money they're creating
out of nothing is just incredible, £1.2 trillion

in the last 10 years. That money is being
distributed according to the priorities of

the banking sector, not the priorities of
society.

The banking sector itself grew from 1980,
$2.5 trillion to $40 trillion by assets. In

1980, global bank assets were worth 20 times
the then global economy. By 2006 they were

worth 75 times according to the UN.

NARRATOR: As the following chart shows, total
bank assets of UK banks as a percentage of

GDP remained relatively stable at 50-60%,
up to the end of the 1960s. After that they

shot up dramatically.

And the real money in the world to be made
today is not by producing anything at all.

It's simply by forms of speculating. Basically,
making money from money. That's the most profitable

and by far and away the biggest form of economic
activity that exists in the world today.

NARRATOR: Today, banks are no longer restricted
by how much they can lend, and as such how

much new credit they can create out of nothing.
They are restricted solely by their own willingness

to lend.

DYSON: The issue with allowing banks to create
money, there's two main issues. Firstly, the

fact that they create this money when they
make loans. So it guarantees that we have

to borrow all our money for the economy from
the banks.

NARRATOR: As such, to have a healthy, growing
economy the government needs to put in place

strategies to allow for ever-increasing debt.

The only way the government can create additional
purchasing power is by getting itself and

us, into more debt.

DYSON: The second big issue with allowing
the banks to create money is that they have

the incentive to always create more.  They
create more money if they issue a loan.

They get the bonuses, the commissions and
the incentives to lend as much as possible.

You have to develop a sales culture.  What

did they do?  They recruited an amazing guy
– a lovely guy – Andy Hornby, who came

from Asda, to turn the bank into a supermarket
retailing operation.

If you trust bankers to control the money

supply, the money supply will just grow and
grow and grow, as will the level of debt,

until the point where it crashes, when some
people can't repay the debt and then they'll

stop lending.

You hear politicians and journalists saying,
we've been living beyond our means; we've

become dependent on debt.  We need to reign
in our spending and live within our means.

It's not possible in the current system. 
The reason why everyone is in debt now is

not because they have been recklessly borrowing. 
We haven't borrowed all this money from an

army of pensioners who've been saving up their
whole lives.  Money in the current system

is debt.  It's created when the banks make
loans.  So the only way, in the current system,

that we can have any money in the economy
– the only way we can have money for business

to trade – is if we've borrowed it all from
the banks.

And it's the very opposite of what the Tory

Party is arguing today, which is that you
have to create savings before you can help

the National Health Service.  And it's because
economists have completely confused those

things, both in monetary policy terms, but
also in economic thinking, and because most

people still harbour the old fashioned view
that you need savings before you can invest,

that we have the mess that we're in today. 
Now, one of the reasons why we find it difficult

to understand the banking system and credit
creation is that we leave school without any

money and we go and get a job working as an
apprentice to a plumber. We work really hard

all month and at the end of the month somebody
puts money in our bank, and so for us the

logic is: you work and then you get money
– you get savings.  In reality you would

never have got that job if credit hadn't been
created in the first instance.  It's a really

important conceptual misunderstanding and
it isn't something that the public just is

guilty of.  Economists don't understand this
stuff.

ANNE BELSEY: Money doesn't just come out of

economic activity.  A lot of people have
come across - kind of assume - that if you

have got businesses, and you've got people
doing things, that somehow money somehow emerges

out of the process of people doing things,
making things and growing things, selling

things and producing things, that somehow
money just emerges.  It's not. It's like

oiling a car. You have to put it in.

When I see David Cameron talking about how
we need an economy not based on debt, but

we need an economy based on savings, he just
doesn't know what he's saying.  It's ridiculous.

It's absolutely absurd and it shows his complete
lack of understanding of how our money system

actually works.

You know, it's a paradox under the current
system.  If we as the public go into further

debt, then that's going to put more money
into the economy and we're going to have a

boom.  When you have a boom, it's easier
to borrow, so people get into even more debt.

And eventually this cycle continues. It gets
easier and easier to get into debt until some

people get over-indebted and then they default. 
They can't re-pay their mortgage.  That's

what happened first in sub-prime America. 
And then it brings through a wave of defaults,

which will ripple across the entire economy. 
The banks go insolvent.  Then we're into

a financial crisis and then the banks stop
lending.  They were excessively lending in

the boom and then they stop lending and that
makes the recession even worse.  People lose

their jobs and then they become even more
dependent on debt just to survive, basically.

You know we have a system where we have to
borrow in order to have an economy.  We have

to be in debt to the banks.  That guarantees
a massive profit for the banks.

NARRATOR: This is the boom-bust cycle.

GORDON BROWN: "And I've said before, Mr Deputy
Speaker, no return to boom and bust."

NARRATOR: Net bank lending must forever increase.

We are paying interest on every single pound.

Even if you think the money belongs to you,
somebody somewhere is paying interest on that

money.

The banking system has such a huge impact
on the world, but only because it supplies

our nation's money supply.  We have to protect
them. We have to subsidise them.  We have

to allow them to continue, because the disaster
of a bank collapse, affects us all in a huge

way.  Anyone who says that we shouldn't have
bailed out the banks doesn't quite understand

the nature of our monetary system.  That's
like eliminating a huge chunk of our money.

But also, bailing out the banks is perpetuating
a system which is never going to work anyway.

So whatever we do, we are always going to
have this cycle until we separate how money

is created and the activities of banking. 
Then the banks could do as they wish.  They'd

be a normal business like everyone else.

There's a major democratic issue here as well. 
You have these private, profit-seeking banks

creating up to 200 billion pounds a year and
pumping that into the economy wherever they

want, basically, wherever it suits them, whether
they're pumping it into these toxic derivatives,

or putting money into housing bubbles, just
making housing more expensive.  200 billion

pounds in 2007 of new money coming into the
economy, created out of nothing; and where

that gets spent determines the shape of our
economy effectively.  So if we are going

to allow anybody to create new money out of
nothing, then we should at least have some

democratic control over how that money's used. 
I mean, would we rather have had that money

used for health care, or to deal with some
of the environmental issues, or to reduce

poverty, or would we rather have it to make
houses more expensive so none of us can afford

to live in a house.

You can see it as a subsidy, a special super
subsidy to the banks, for the right to create

money, which should be for the benefit of
the public and spent through a democratic

process.

Banks are the most heavily subsidised businesses
in the world, specially protected by governments.

While the money runs out for the rest of us,
the largest private banks still thrive.

This is because they get the biggest subsidy
of them all: the licence to print money.

Hard to believe?  Martin Wolf, the Chief

Economics Editor of the Financial Times, said
it recently: "The essence of the contemporary

monetary system is the creation of money out
of nothing by private banks' often foolish

lending…"

You heard that right.  Private banks create
money out of nothing.  Then, they loan it

to us and ask for interest on top.  If you've
ever wondered why the bank buildings around

the world soar higher than any palace or spire
ever did, you now have the answer.

But the banks don't simply print money using

secret printing presses in their basements. 
They don't have to.  Like so many other things

these days, printing money has now gone digital.

With the popular use of debit cards, electronic
fund transfers and internet banking, only

3% of the money in the UK is now made of paper
and metal coin.  The other 97% is entirely

on computers.  Electronic money is convenient
for everyone, but it's especially convenient

for the private banks, since they own, run
and control the entire digital money system.

And what do they do with this special privilege?

Do they channel new money, the blood supply
of the nation, towards the things we need

like hospitals, schools, universities and
public transport?

Not if it doesn't make a profit for them.

Instead, they use their licence to print money
to gamble on the financial markets and push

house prices out of reach of ordinary people
by pumping hundreds of billions of pounds

into risky mortgages.  This is exactly how
the banks caused the financial crisis and

now the rest of us are being asked to pay
for it.

If we can't afford to run hospitals and build

schools, can we really afford to subsidize
the financial industry?  Should we have to

live with less so the bankers can have more?

This is ludicrous and it's time to put a stop
to it.  The private banks can't be trusted

to hold the reigns to our entire economy.

We need to take away the banks' power to create
money out of nothing.  This will stop them

from causing yet another financial meltdown
and allow us to afford the crucial services

that we as a society need.

If you want a growing economy, under the current
set-up, we have to have growing debt.  This

is something very, very few people really
understand, especially the politicians who

are managing the economy, which is a scary
thought.

NARRATOR: As the money supply grows, more

money is available, which can be invested
in productive avenues.  However, it can also

be used to gamble and drive up asset prices.

NARRATOR: Inflation is a rise in the general

level of the prices of goods and services
in an economy over a period of time.  When

the general price level rises each unit of
currency buys fewer goods and services.

As the money supply grows, and there is more
currency available, more money is available

for investment, which can lead to growth,
but more money is also available for purchases

of goods and speculation, which leads to inflation.

Essentially, inflation is what happens when
too much money is chasing too few goods and

services, so there is too much money for the
actual output of the economy.

In the seven years between the years 2000

and 2007 the money supply doubled and the
essential bank, the Bank of England was under

the impression at this time that they had
it under control, because they were saying

that prices weren't going up that much. 
Of course they were only looking at prices

in your local corner shop.  They weren't
looking at the price of housing and housing

is the biggest expenditure that most people
will make.

Increasing house prices, it may make you feel

like you're becoming wealthier, but as your
wealth increases, the effect is that your

children's wealth is actually decreasing. 
So in fact there is no net gain in wealth,

because your children are going to have to
pay even more when they want to buy a house.

So in effect, there is no net increase. 
They are going to have to earn even more.

They are going to have to go into even more
debt.  So, rising house prices do not create

additional net GDP value to the economy.

Actually what they do, is re-distribute wealth
towards those people who already have houses

i.e. wealthier people and remove it from poorer
people who can't afford to get on the housing

ladder, so it's another example of a very
regressive policy to allow house prices to

simply inflate.  It makes everybody feel
kind of like things are going well and people

spend money on other stuff.  They take equity
out of their houses.  But it's not creating

new jobs.  It's not enhancing the quality
of the economy.  It's not helping our balance

of trade.  It's not helping the public deficit. It's
a zero sum game.

NARRATOR: As of August 2011, 85.5% of consumer

bank lending was secured as mortgages on dwellings.

If you have somebody creating money that can
only be spent on one thing, which is housing,

then the price of that thing is going to go
up.  Between 2000 and 2010 they created over

a trillion pounds of new money - 500 billion
pounds just in the three years before the

crisis.  That's why house prices went up
they way they were.  There's nothing special

about houses.  It was just all this funny
money being pumped into that market.

If money is spent into the economy, a lot

of money goes into houses, for example into
mortgages, that's an increase in the amount

of money in the economy, without a corresponding
increase in activity, in output, in GDP.

It's non-GDP based spending.  That's what
causes inflation.  In the UK we've had it

in spades.  We've had this massive housing
boom.  The main cause for the housing boom,

in my opinion, is the huge amount of speculative
credit created by the banks, to go into houses.

If houses were cheaper, they would be easier
to build.  More of them would be built.

There would be less huge houses, with hardly
any people in them.  London would not be

the centre of a kind of very rich speculative
orgy, where all the richest people in the

world want to get a property in London, because
it's seen as a great asset.  Houses would

be seen as places to live primarily, rather
than seen as places to invest.  The important

thing to think about is, if you are a bank
and you've got to make a loan, you have choices.

You can give that loan to a small business
and you'll know that the risk to you of that

loan failing, defaulting, is actually quite
high, because that small business, the owners

of that business, have limited liability,
which means if that business goes bust, you

as a bank get nothing back, essentially. 
So that's kind of high risk, compared to loaning

your money to somebody with some collateral,
with a house behind them, like a mortgage.

So there's a simple incentive for banks to

prefer putting money into housing than into
a small business. Now that's a real problem

if you widen that out across a whole economy,
because it means there's an incentive to put

money into speculative rather than productive
investment.  So again, we have to think about

how we create our monetary system that is
more balanced between those two kinds of speculative

and productive investment.  The government
is showing enormous reluctance to regulate

the housing market and to again regulate the
amount of money that banks put into houses.

We don't decide who creates credit for what.

No, we leave that to a couple of chaps in
a bank to decide, basically.

Now, inflation can be avoided if the amount
of money that goes into the economy is regulated

in a way that it doesn't exceed the actual
activity that's happening in the economy.

Now, the best way to do that, in my opinion,
is to make sure that money is issued into

the economy only for productive investment,
for productive goods and services, so money

goes in to help a small business to start
up which creates jobs, which creates additional

purchasing power which means there's no inflation.
You have to have a system where credit is

put into productive avenues, where credit
is put into building high speed rail links,

where credit is put into building houses rather
than giving people money to inflate the price

of houses. So it's quite simple, really in
that way, and the current system is simply

set up not to do that, basically.

The creation of money by private banks for
non-productive usage causes real inflation

and as such it is a tax on the purchasing
power of the medium of exchange.

The figures for the UK are quite stark actually,
the average median real incomes (for the bit

in the middle) for most people declined over
the last 8 years. There are now in quite sharp

decline as we go into recession, the sharpest
really since, it looks like, since about the

1930s, put it that way, so real income is
declining.

NARRATOR: Bank created fiat currency allows
the private banks to suck wealth from the

economy and over time results in a gradual
decrease in the standard of living. As people

become poorer, they become even more dependent
on debt. And this at a time when efficiency

and machination have improved dramatically.

If you go back to the 1960's and we were expected
to, we were looking forward to an age of leisure,

television programmes saying, what are people
going to do with their spare time? And now

we have got more people working harder than
ever. Spending more than ever, which looks

great, you know, everyone is spending more,
but if you're not actually benefitting from

what you're spending, if you having to spend
the money on childcare costs on commuting

costs and so forth. Costs that people didn't
in the past used to have to pay because you

could walk to work and one member of the family
was able to stay at home and be a permanent

homemaker, then you're not actually any better
off. Everyone is under such enormous pressures

nowadays, you know, I am conscious that my
four nephews and nieces are facing difficult

times. They're just going to find themselves
having to work very hard just to keep a roof

over their heads, to get a roof over their
heads.

People are getting poorer in real terms, it's
because prices are always going up because

all this new funny money is being pumped into
the system by the banks and they're creating

all this debt so at the same time as prices
are going up and things are getting more expensive,

we're getting further and further into debt
and our wealth and the return that we get

from actually working is getting less and
less all the time. You can't deal with poverty

when you have a financial system and a money
system that distributes money from the poor

to the very rich; any distribution that you
try and do in the opposite direction is effectively

pissing in the wind. If you look at issues
like increasing inequality, one obvious way

to tackle inequality is to have, say for example,
a redistributive tax system. You tax the rich,

you give some money to the poor. You move
a bit of money down the scale. That's all

very well but if you completely overlook the
fact that there's another redistributive system

which is taking money from the poor and giving
it to the rich, then you're not really going

to tackle this inequality and the way a debt-based
money system works, it guarantees that for

every pound of money there's going to be a
pound of debt. That debt is typically going

to end up with the poor, the lower-middle
classes, those people end up with the debt

and they end up paying interest on that money
which then goes back to the banking sector

and gets distributed to the people working
in the city or in Wall Street. What this system

does overall is it distributes money from
the poor to the rich essentially, distributes

money from the poorer regions of the UK back
to the City of London and it also distributes

money from all the small businesses, all the
little factories around the UK and distributes

that money back into the financial sector.

We have a system, where by, the activity of
actually supplying occurs under the very same

roof as the same organisation that is responsible
for profiting from putting together borrowers

and lenders i.e. a bank. So, a bank creates
our nation's money supply as well as making

loans for profit.

NARRATOR: The government cannot allow the
banking system to fail, because if it did,

over 97% of all money would disappear. This
is why in the event of a crisis, the risk

is transferred to the taxpayer. But even during
normal times banks receive numerous guarantees

and benefits beyond the right to create money.

Bill, by the way, I know the Bank of America
is a very big bank, it happens that I have

32 dollars there myself. Just between us what
assurance do I have that this money is safe?

Well, all deposits up to ten thousand dollars
are insured by the federal government in Washington.

That's my guarantee? Yes. Have you heard that
the federal government is about 280 billion

dollars in the hole?

NARRATOR: Banks receive large safety nets
from the government. The taxpayer guarantees

£85,000 as deposit insurance. And the Bank
of England provides liquidity insurance, in

case a bank runs out of reserve currency.

It's questionable whether we're going to get
out of this recession or whether we'll just

keep ticking along the way the way that we
are now. However if we do, then when we come

out of this recession and when growth starts
again, look at what happens to debt, it will

rise and it will keep rising and the faster
the economy is growing, the faster the debt

will rise and then give it another 3 to 5
years, we'll be back where we were, the debt

will become too much, people will start defaulting
again. It's kind of the system that we're

locked into now is that we can't grow the
economy without growing the debt and the debt

is the very thing that will bring down the
economy. The only option going forward is

to reform it, to stop banks from creating
money as debt. By fixing the monetary system

we can prevent the banks from ever causing
another financial crisis and we can also make

the current public service cuts and the tax
rises and the increase in national debt unnecessary.

NARRATOR: The current monetary system allows
the banking sector to extract wealth from

the economy, whilst providing nothing productive
in return.

Why is it that we've got all this technology,
all this new efficiency and yet it now requires

two people to finance a household whereas
in the 50's it only needed one person working

and the reason for that is not because these
washing machines and everything are more expensive,

it's because of all the debt and because it's
effectively the banking sector is creaming

it off from everybody else. So a growing banking
sector is not a good thing. If the banking

sector is growing, it's either that it's becoming
less efficient or it's becoming a parasite

on the rest of the economy. We can talk about
the banking sector becoming 4%, 5%, 6% of

GDP, what's happening to the rest of the economy?
It's becoming 96, 95, 94% of GDP. We've got

to get switched on to this now. If we want
to have a chance of tackling any of the other

big social issues, you got to figure out the
money issue.

The poorest in the world pay for crises even
when they've not benefitted from the often

reckless and speculative booms, like the housing
boom in Ireland that preceeded that crisis.

You know over the last 30 years, we've seen
income differentials increase so that the

rich have got much, much richer and ordinary
people haven't, they've stayed the same or

they've got poorer and one of the ways that
the economy was kept going was by providing

cheap credit, was by providing debt to those
very people who couldn't really afford things

anymore, so they kept buying and when it collapses
it's those same people that have to pay once

again even though in many ways there were
the victims the first time.

NARRATOR: As a result of the crisis the Bank
of England has bought corporate debt and repackaged

it at lower rates of interest. Yet the average
person is being asked to pay more than ever

to borrow on overdrafts and credit cards.

Debts between the very wealthy or between
governments can always be renegotiated and

always have been throughout world history,
there not anything set in stone. Generally

speaking, when you have debts owed by the
poor to the rich that's suddenly, debts become

a sacred obligation more important than anything
else. The idea of renegotiating them becomes

unthinkable.

NEWSREADER: Can you pin down exactly what
would keep investors happy, make them feel

more confident?
ALESSIO RASTANI: That's a tough one, personally

it doesn't matter, see I'm a trader, I don't
really care about that kind of stuff.

CHANTING: Pay your taxes!

BANKER TO PROTESTER: "Were you born in England?"

ALESSIO RASTANI: If I see an opportunity to
make money, I go with that. For most traders,

we don't really care that much how they're
going to fix the economy, how they're going

to fix the whole situation, our job is to
make money from it and personally I've been

dreaming about this moment for three years.
If you know what to do, you can make a lot

of money from this. I have a confession which
is, I go to bed every night I dream of another

recession, I dream of another moment like
this. I dream of another recession, I dream

of another moment like this. You can make
a lot of money from it.

GIRL: Bruno, Virginia hurt somebody real bad,
you oughtta hate her .

CROWD: Incoming!

The way in which you can look across Europe
now and see that the new prime minister of

Greece, not elected, essentially imposed,
Papademous, former employee of Goldman Sachs,

the new prime minister and finance minister
of Italy, Mario Monti, former employee of

Goldman Sachs, the new president of the European
Central Bank, former employee of Goldman Sachs,

you see these people popping up absolutely
everywhere.

VOICEOVER: That's the way to change what we
have, take all power and all freedoms away

from the people and collect everything into
the hands of one small group with absolute

power. From the people, without the people,
against the people.

What's been interesting out of all this I
suppose is the question of democracy that's

been opened up very starkly in Europe, that
you have a government of bankers essentially

imposed on you. Its bankers who more or less
got us into this mess to put it rather crudely

but that's a good first approximation to it
and then you say, ok, bankers are the people

who therefore are going to get us out of it
and incidentally there going to run your country

now. There's a serious question of democracy
that has opened up here.

By the way, the banking crisis drove more
than a 100 million people back into poverty.

The mortality statistics of people who go
into poverty rise hugely for a whole range

of reasons, so the banking crisis isn't just
about becoming poorer, it was about killing

people as well. And guess what? We haven't
really got to the bottom of it, we never held

anybody to account and we haven't done the
radical reforming job that we really needed

to do because we mistakenly thought: if we
destabilise the position any further, it'll

make matters worse and guess who took the
decisions, all the people who were there in

the first place.

"I think you ought to know, the business of
one of these businessmen is murder."

"Their weapons are modern, their thinking:
two thousand years out of date."

What does a progressive financial system look
like? And I want to hear what some of you

think. Who thinks, for example, that we should
ban banks from creating money?

Control over how money is created and what
it's used for is, it's a democratic issue.

You currently have the banking sector, profit
seeking banking sector, you know, not accountable

to anybody other than themselves who are creating
up to 200 billion pounds a year of new spending

power and deciding where in the economy that
goes.

Monetary reformers believe that that entire
money supply should be for the benefit of

the public and should never be created by
a private organisation as debt.

Democratising the money supply, what that
means is putting the power to issue and allocate

money back into hands of people and taking
it away from private organisations, institutions

that don't actually represent the people,
that aren't democratically accountable to

the people, the banks aren't democratically
accountable to the people; they're accountable

to their shareholders and their shareholders
only. Now they're underwritten by us, by the

taxpayer but they're not accountable to us.
That doesn't make any sense at all. So, if

you democratise the monetary system, you are
subjecting it to the same kinds of discipline

as the education system, as the health service
and other key, publicly needed services. There

is no reason that money should be viewed as
any different. It is a fundamentally important

service that everybody needs. I can't survive
without enough money, nobody can. So it cannot

be controlled purely by this small elite of
big banks, as it is in the UK. We do need

a different system.

We believe that the activity of supplying
a nation with money should be completely separate

from the activity of banking.

What we need to do now is update that law
from 1844 to make the digital money [into]

real money. It could be electronic money,
but it needs to be classified as money.

We just want banks to be like every other
private organisation, private company in the

economy to be subject to market discipline.

The problem is that now we're in this hybrid
model where we have no control over how they

spend the money, but also we're reliant on
them to create our money.

We're all constantly in debt, we'll be in
debt pretty much for the rest of our lives

and the younger generations have it even worse
than the older generations.

I've just been reading a report from the United
Nations environment programme and they say

we need US$2 trillion a year. Two trillion
- can you imagine what two trillion is? It's

a lot of money. $2 trillion a year to finance
the greening of the economy, to move away

from poisonous carbon which is poisoning the
atmosphere to alternatives to carbon.

When the banks collapsed in 2007-9, we found
according to the Bank of England, not me,

the Bank of England tells me that we raised
14 trillion dollars in a year to bail out

the banks so against that 2 trillion dollars
a year to bail out the ecosystem is no big

deal.

This kind of model doesn't make any sense
either from an orthodox free market perspective

because these banks are monopolists effectively
they monopolise credit creation so they don't

obey the rules of any free market discipline.
Yet at the same time, they are not producing

socially or environmentally beneficial outcomes
along any real scale.

All that money does is to enable us to do
what we can do and once we get our heads around

that we can make money work for what we need.

The power to create money is so powerful;
you got to be very concerned about who has

that power. If it's somebody who's going to
benefit from creating the money, then they're

going to have the incentive to create more
than the economy actually needs. The same

would probably happen if you give that power
to politicians. You know you can't trust a

politician to be trying to please voters and
to have power over creating money at the same

time. It's a real conflict of interest. The
only thing you really can do is to give it

to somebody who has no conflict of interest,
an independent, transparent, accountable body.

NARRATOR: Money could be allocated according
to the needs and desires of the population,

systems could be put in place to allow for
direct democratic allocation of funds either

wholly or partially. A framework and rules
could be established to incorporate up to

date economic theory into how much money should
be created, and for what types of purposes.

The Government would no longer be able to
get access to large sums of money to pursue

armed conflict, if this was not sanctioned
by the populace.

We would be able to see exactly what they're
doing with the power to create money. We would

be able to see how much they're creating and
where that money is going. And that is pretty

much the only way we can get control over
the power to create money and stop it being

abused.

The Money Reform Party was established in
2005 just after the 2005 general election.

The idea of the Money Reform Party was that
we would have this basic core issue that people

would agree with. They might disagree on other
issues, that's fair enough, there are different

ways of going about it but that was the idea
was to go for what you might call the lowest

common denominator to attract people with
disparate views. Getting elected to Parliament

is not the issue, it's getting the issue of
money reform into the public domain, so people

will begin to talk about it.

Banks should not be able to gamble with your
money without your permission, so what they

would need to do is to offer two types of
account: One is a safe, we call it a ‘transactions

account'. Put your money in there, the bank
doesn't lend it, they don't put it at any

risk whatsoever. The other is an investment
account where you put your money in for a

certain period of time and then the bank takes
that away and they invest it. What happens

when you use these two types of account is
that in the event that a bank fails, the money

in the safe account is still there, it's not
at risk. So you just move all the safe accounts

to a bank that is still healthy and then those
people who put their money in the investment

account, they don't lose everything but they
have to wait for the standard liquidation

procedures to find out how much of the assets
of the banks will be returned to them and

it means that the government then never needs
to bail out a bank. Banks can be allowed to

fail.

The system would actually be how people think
it is, that when you put your money in the

bank, it's really safe or at least they used
to think perhaps before the 2008 crisis. There's

a spectrum of opportunities there that we're
just not exploring at the moment and that's

what's upsetting me that we're not even experimenting
when we know that the system we have now is

fundamentally flawed. We've just had the biggest
crisis since the second world war, since the

1930's really. We know we have a system where
the creators of money are underwritten by

us anyway. It's kind of the worst of both
worlds the situation we have at the moment

which is why we need to start thinking of
genuine alternatives.

So when we're talking about what life is going
to be like in the post reformed system, it

doesn't mean that you can't borrow, it doesn't
mean that you have to save up for 50 years

before you can buy a house. It does mean that
you might not be able to buy a house that's

10 or 12 times your income but on the flip
side, it means that the house that you want

to buy probably shouldn't cost you 10 or 12
times your income. Houses should be affordable

as should everything else. You'll still be
able to get a mortgage; you'll still be able

to get finance for a car. Businesses will
still get investment. It just means that debt

won't be so high, it won't be such a huge
feature of people's lives.

NARRATOR: The issue of monetary reform has
historically been a very sensitive issue because

of the incredible power, wealth and privileges
it bestows. In an age where analytic thought

and a scientific approach are held in such
high esteem, there is no justifiable argument

for keeping the mechanics and implications
of the monetary process such a taboo subject.

As democratic citizens we have the right to
demand a monetary system, which is both stable

and beneficial to society

The banking lobby is very powerful. I suspect
that they won't be in favour of these kinds

of models although ultimately one could argue
that's it's a much more stable footing for

banks.

There's this cosy relationship between the
government and the banks. In the middle of

the crisis, I spoke to somebody who was working
in the Treasury in the middle of the crisis

and he said pretty much every second person
that you spoke to was working for one of the

big banks. So when it comes to a decision
about whether you let one of these toxic banks

fail or whether you rescue it, what kind of
recommendation are you going to get from somebody

who works in that bank.

"This is the zombie banks' protected feeding
station."

NARRATOR: Banks balance sheets are now 4 times
GDP at 6 trillion pounds; they are holding

the public hostage. Their wealth has become
so great through gaming the financial system

that we are at a tipping point whereby a single
bank could now take down the entire economy.

"Eat her, eat her now, eat her, she's a public
sector worker, eat her, suck her blood, drink

her dry!"

It is a political issue, ultimately, because
the reforms that are required can only be

achieved by Parliament. We don't need a very
big act of Parliament. All it has to do is

basically prevent the clearing banks from
creating currency based on the debt of their

borrowers, that's it. You stop that.

We can't let the banks go back to business
as usual because if they do, then all we're

going to see is more debt, more poverty, more
inequality and another crisis in 5 or 10 years,

which we're going to have to pay for again.