Captain Mainwaring's building society? Letter in The Times

David Wighton writes in The Times (UK) on business, etc, and on Saturdays his full length photo - from big black shoes to a reasonable head of hair - stands full length half-a-page high in the Money section. I'm not sure why this happens.  I always like to know who is writing the articles and a head and shoulders shot is a bit more human than a passport mugshot, but soles to scalp? Is he taking up clothes modelling? I don't get it. 

At the other extreme The Economist doesn't even let you know the names of its writers. I don't get that either. Now, The Economist is a great journal and a good read for anyone wanting to keep track internationally on a weekly basis. Apart from having to cut down some time spent reading, one of the reasons I stopped subscribing to The Econ was the anonymity of writers. Can't readers make up their own mind about the argument if they know who the author is? If we read an article on mansion tax we want to know if the author is a government minister or not. If we read The Economist about the latest on phone hacking shouldn't we want to know the origin? It could be someone who is under arrest on suspicion of the offence. Besides, one does get to trust certain writers - after all, these are they who confirm my prejudices, so it is always a comfort to follow them.  Why would the press hide its authors? Anonymous editorials have their place...but every article?


Anyway, forgive the diversion, David Wighton has set off a run of letters after his Saturday article (March 1oth) referring to Capt Mainwaring of Dad's Army (BBCtv). I followed on and here's my offering in today's edition:

The Editor

The Times

Dear Sir

Surely Captain Mainwaring always used the word ‘bank’ when describing his place of work? But Richard Heller (letters March12) in saying that Captain Mainwaring ‘received money… kept some of it in cash or on call and lent the rest…’  seems to be describing an early form of building society.  The truth behind the  ‘model of banking’ he refers to, was that it allowed the creation of credit under the fractional reserve system and multiplied the received money, thus lending out far more than originally received, but within prudent guidelines. 

A change since Captain Mainwaring’s time, is that the prudence of old style local banking was overwhelmed by loan targets from head office and was one cause of the system collapsing.

Sincerely,

Charles Bazlinton

Author: The Free Lunch – Fairness with Freedom

New talk on Free Lunches: land, credit creation, banks, citizen's dividend...

For a 30 minute audio of a talk recently given on Free Lunches (what they are / how they arise / who gets them...) click: Researches into Free Lunches: Making land and credit creation work for the common good  


Free download.
posted by Charles Bazlinton. Author The Free Lunch - Fairness with Freedom buy on Amazon or on:
http://www.the-free-lunch.com/thebook/order.htm 

1. A Free Lunch for homeowners from a by-pass ? 2. What credit creation does for bank salaries

New by-passes raise land rents unfairly

In the Financial Times this week:

From Mr Charles Bazlinton.

Sir, With reference  to Analysis, February 23, may I point out one of the land rent situations that is not taxed by government? Savills, the surveyors, published a study in June 2011 that showed how residential property values within 24 bypassed towns rose by between 9 per cent and 30 per cent (average 15.3 per cent) due to the new bypasses, “in addition to other general market-led price movements”.

Here is a case of land rents arising and accruing unfairly to freeholders. Despite the fact that both freeholders and renters similarly pay various taxes to build the bypass, it is only freeholders who see raised value in the land of their homes. When they sell, they then bank the gain, which could be seen as a “tax clawback” (see Ricardo’s Law: House Prices and the Great Tax Clawback Scam by Fred Harrison).

The article also suggests that managers of large companies have the ability to extract rents due to “dispersed shareholders”. Additionally, in the banking industry it is surely the monopolistic creation of credit with its resulting flow of interest that is the source of the stupendous remuneration.

FT Link: Letter 1st March 2012

The link to Savills' article: Get a bypass and boost your house price. 

To find out more about credit creation and how banks use their monopoly the Prof Richard Werner YouTube interview Banking and the Economy is a good place to start (about 7 minutes). 

posted by Charles Bazlinton, Author, The Free Lunch - Fairness with Freedom Buy on Amazon

Gillian Tett on the financial zoo fence?

Gillian Tett  is by training a social anthropologist and maybe this is what adds a special flavour to her columns in the Financial Times, et al. In a recent article she broke away from current 'shock! horror!' news  (Euro/Greece/GDP-Debt ratios/AAA Ratings/etc,) and wrote a page in last weekend's FT magazine on the merits of small, local community banks and their prevalence in the US  'thousands of tiny local banks', whose 'assets under $1bn represent less than 11% of banking assets, they provide 40% of  of the loans the banking industry makes to small businesses'.   


There is confirmation that the local bank sector is strong in the UK with the results from 'one of Europe's healthiest lenders' Handelsbanken as reported in the FT recently. 
'Our strategy is to grow organically. We're not open to acquisitions. It's not important to be large. Our focus is to have the most satisfied customers' (Par Boman, CEO). Hey! any anthropologists out there to take note?


All this looks promising for the possibility of a local bank in Hampshire, UK, where the idea was aired last autumn in Winchester. Prof Richard Werner (Univ of Southhampton) & Prof Neil Marriott (Univ. of Winchester) were reported as supportive of a local bank. Wolfgang Neumann, spoke of the German experience of local banking. 


Gillian Tett, anthropologist seems to end the article on large banks vs local banks sitting on the financial zoo fence: 'Whether these banks make sense from an economic point of view?'  [Ed. Come on GT! Don't you mean: 'Do big banks make economic sense?']. Richard Werner's paper gives clarity for anyone wanting more on the UK local banking situation.   The New Economics Foundation also is a good source on local banking. 
posted by Charles Bazlinton.
 AMAZON LINK :The Free Lunch - Fairness with Freedom

Helping pension schemes & more on Green QE

The Bank of England is to feed £50bn into the banking system under its latest QE scheme. This is greeted with 'dismay by the pension industry' (see BBC News) as it fixes annuity returns with very low interest rates and it knocks final salary pensions schemes further into the red. 


We are obviously in a fix and it is helpful to read banking expert Richard Werner in the latest Policy News from the Centre for Banking Finance and Sustainable Development: He writes of solar roof panels and says that Green QE could be directed to pay for these photovoltaic schemes which would help households, installation firms, the economy and the environment. He says the Bank of England could create the money for free. 'Why should they charge, since they created the money out of nothing in the first place?'


He also has Green QE advice for the government's Green Deal  £16bn energy efficiency programme that could help local authorities with their funding and also help pension funds generate better income. Read CBSFD Policy News about it and much more - now on the Free Lunch Website.
Posted by Charles Bazlinton author of The Free Lunch- Fairness with Freedom, the book written before the economic crisis erupted, with solutions that would help prevent it happening again.  


  

QE: White Vanilla or Green?

We have been fed Quantitative Easing (ordinary White Vanilla) since 2009 but Professor Richard Werner says it is not effective - money is just not flowing into the UK economy. He says that the last measure of money supply M4 for Q4/2011 was down 3-4% which is the worst on record. (Posted on: Policy News Vol 3, Issue 1. 7 Feb 2012   See also the Centre for Banking Finance & Sustainable Development). The food is not getting to the patient and the patient is not recovering because of it. It is not  surprising that the economy is languishing when, as Werner says, the banking system is 'moribund' and is a 'bottle neck passing as a banking system'. White Vanilla QE is just building up banks' reserves - too bad about the economy.  


Werner has much insight into QE. In Japan a decade ago  he coined the phrase to mean 'credit creation' putting money purposefully into the productive parts of the economy to boost growth. The Japanese authorities first ignored the idea, then did what the Bank of England are doing now. Werner said it wouldn't work in Japan then, and he said it wouldn't work in 2009 when the BofE started it in the UK, and it hasn't. Werner hopes, along with Caroline Lucas MP for Brighton who made a plea for Green QE in a speech in the House of Commons yesterday, that Green QE will be taken seriously by the Coalition Government and the BofE. 


Werner outlines energy efficiency measures and Photo-Voltaic roof panels as just two measures to be used for 'Kick-starting the Govt's Green Deal'.  This should lead to growth in the economy, more jobs and help the environment at the same time. 
posted by Charles Bazlinton. Visit the website www.the-free-lunch.com to hear Caroline Lucas' House of Commons speech (See: Audios)

Cut income tax / vat / etc this way

Link to this short video from the Welsh Parliament to see Mark Drakeford MP clearly explain land value taxation as an alternative to other taxes. 


Example: In London the Jubilee Line extension raised land values around the station by £10bn. A small land tax would have paid for the scheme. It would also have compensated the owners of land/property where values may have been blighted by the scheme - their land value tax would have automatically dropped. 
Read The Free Lunch- Fairness with Freedom which has a section on the benefits of dropping income tax and such, and bringing in land value tax. 

A new slavery: How Progressive Capitalism degenerated into Neo-Feudalism

At the Levy Institute on 10th February (New York) Prof Michael Hudson will deliver some extraordinary insights into the current crisis of capitalism. This is timely, and concise too. Here is a potted summary: 

He contrasts the dynamic of industrial capitalism, named “Economy of Abundance” by Wharton Business School, Professor Simon Patten, with 'current innovations in modes of financial attack'. 

He sees the history of capitalism as various stages:

1. Industrial Capitalism has given way to
2. Finance Capitalism, which in turn has passed through
3. Pension-Fund Capitalism since the 1950s, and a
4. U.S.-centered Monetary Imperialism since 1971 when

    a) fiat dollar creation became the world’s monetary base 

        (mainly to finance US global militry spending) and fiat   

        dollar credit made possible 

   b) the Bubble Economy after 1980, and its sub-stage of

   c) Casino Capitalism. These were economically radioactive

        decay stages that resolved into

   d) Debt Deflation after 2008 and now are settling into a

        leaden
5. Debt Peonage and the austerity of
6. Neo-Serfdom.

Thus says Hudson, the end product of capitalism has become a Neo-Rentier Economy – something that Industrial Capitalism set out to replace. Capitalism was a Progressive Era from the late 19th century to early 20th century. Politically, the thrust of industrial capitalism was toward democratic parliamentary reform, so as to break the stranglehold of landlords on the national tax system and lawmaking. 

But today’s finance capital is inherently oligarchic, because it seeks to capture the government – and especially the Treasury, central bank and the courts – to enrich (indeed, to bail out) the banking and financial sector. A financial class now plays the role that landlords used to play: a class living off special privilege. Most economic rent now ends up being paid as interest, interrupting the circular flow between production and consumption.

Hudson warns that debt peonage (slavery through debt i.e. neo-feudalism) is the way today’s trends seem to be leading.

Link here for the talk. 'The Neo-Rentier Economy' 

Posted by Charles Bazlinton author The Free Lunch - Fairness with Freedom which concludes that Citizenisation is the way forward: A concept which puts the choices of the individual and their family and grouping as the priority for new policy making. This view enables a clear understanding of which new direction is needed after the clarity of seeing the state of affairs  that Michael Hudson so clearly describes.  

Credit creation: The dangers of the privatised money supply

Martin Wolf's article in the Financial Times 25 Jan The World's hunger for public goods highlights what must be provided (usually by the state) so that society can progress. He says free markets cannot provide on their own such public goods as security, an educated population, public health, law, infrastructure, et al.  Public goods are ever more needed with progress.


He writes that, unfortunately, the free market economy  as we know it, is unstable through the ability to expand credit without limit at zero cost. This credit expansion determines the money supply and thus: 'instability is baked in the cake'. Economic stability is a public good that does not happen by itself. Wolf points out that the dire economic consequences we are suffering are a good reason for government intervention. He backs this with reference to Milton Friedman. He quotes Tyler Cowen (author: The Great Stagnation) on how to fund public goods.


We are allowing endemic instability to continue because we are not challenging the fundamental premise of the banking system: the private creation of the money supply. A very few private individuals (top bankers) are personally profiting because they are allowed to play with this dangerous toy which produces an unstable financial system for us all, characterised by booms and crashes. Where is the open debate that government should  take control of the creation and allocation of the money supply?


Is economic stability as fundamental as clean water, or not? If an epidemic developed through an infected  water supply an emergency would be declared to get to the root of the problem and stop it happening again. Is the mis-allocation of credit so slow acting that it is obscured as a cause? Maybe public discussion is suppressed? Become enlightened: Link to Prof Richard Werner's short YouTube video interviews on credit creation, the money supply and how a new stability could be found. 


The book The Free Lunch - Fairness with Freedom examines  the interfaces between the individual, the market and the funding of public goods. To buy see Amazon. 

Monetary Reformer in House of Commons

Ben Dyson and Positive Money  have posted a  YouTube video by Steve Baker MP Wycombe showing how most people don't understand how money works and what he doing about it. Good news that such a good communicator is in the Commons.
See also Ben Dyson: this recent YouTube interview shows what is happening on the monetary reform scene in the UK.

A policy roar for Ed Miliband?

The Citizen's Income Trust (CIT) has just published its latest newsletter 2012-1 at http://www.citizensincome.org/
From the website: 
'One of the reasons for current interest in a Citizen’s Income and in benefits reform generally in UK is that at the moment there is little financial incentive to take a part-time job, even if that would fit with someone’s caring responsibilities. With a Citizen’s Income the situation changes considerably, to the advantage of the household’s income, carers’ ability to care for dependents, and the economy'.


Read more about the Trust's researches into various levels of the Citizen’s Income:
 'which is an unconditional, non-withdrawable income for every individual as a right of citizenship...
'Both of these schemes are revenue neutral, that is, the income tax rate won’t need to rise...


The CIT is a tireless promoter of this reform which any politician who wants to gain some leadership for positive thinking could surely dare to openly welcome? They say that Ed Miliband is struggling for a cause that would identify him as the originator of it, (apparently some of his ideas are being taken on by the Coalition and even acknowledged as theirs by voters).


Lord Glasman in the New Statesman (9 January 2012) writes 'Ed is going to have to show some leadership and courage'. What's holding Ed back from calling for a Citizen's Income? Might Ed 'Timidband' disprove the 'overcautious' summary of his first year as Labour leader with a policy roar that would out-trump Iain Duncan Smith's welfare reforms and identify Ed  M with every citizen? and help the ailing economy to boot?

In the book The Free Lunch - Fairness with Freedom the  Citizen's Income is called the Citizen's Royalty which gives the idea of a right to something that actually originates with the citizen. LINK:  Read the book and follow the reasoning.   

posted by Charles Bazlinton 

  

McCarthy & Stone: Bad timing in property deals

McCarthy & Stone is a privately owned company which builds retirement homes. A news item in the FT today McCarthy back to profit after housing crash   tells another interesting story of mis-timing in the property market (see this blog for April 5th, 2011 about Taylor Wimpey). 

Dorset Business (March 2009) reported that in 2005, the business traded at a value of under £600m on the stock market when during that “boom time” it was selling 2,000 units a year. It was taken into private ownership for £1.1bn in 2006 by a consortium led by HBOS which included property investors Simon and David Reuben and Sir Tom Hunter (Josephine Moulds, Daily Telegraph  29 Jan 2007).


In 2007 Building.co.uk reported that HBOS was looking to sell most of its stake in McCarthy & Stone just five months after the above £1.1bn deal. HBOS needed the cash to buy housebuilder Crest Nicholson in early 2007. This was at about the peak of the property boom and whilst good timing for the sellers of McC & S and CN shows that some of the big shots on the buying side had not read or heeded what Fred Harrison with his analysis of the 18-year property cycle had written: such as The Power in the Land 1983; Boom & Bust 2005; Ricardo's Law 2006. 


McC & S was lumbered with massive debt taken on at the time of the 2006 deal.  They had to stop construction for a year from mid-2008. Michael Ball who in 2009 was McC&S's Chief Financial Officer is reported in the FT as saying at the time: 'in 2006 the group had not expected such a severe housing crisis' . Click on the link for a review on Fred Harrison's later book 2010 The Inquest . Essential reading for politicians and property people. 
    
posted by Charles Bazlinton. The Free Lunch - Fairness with Freedom which deals with land and property issues 

Un-addle the brain on banking

George Hollingbery is a UK Tory MP from Hampshire. Recently, he expressed some unusual points of view in a Portsmouth press article . 'I admit that I'm having doubts about capitalism'. Hollingbery has created and run some successful businesses, but is 'increasingly sympathetic to those who protest about capitalism and, in particular, bankers'.  He is in a dilemma about banking wealth-creation compared with ordinary wealth-creation. His problem is summarised: That a banker can earn more in a single year than he was ever likely to sell one of his businesses for despite lots of hard work and providing work for others. 


Amid all the anti-banker background noise very little is articulated about the banking system that enables bankers to reward themselves so grandly. The media don't know or won't tell, but it really is quite simple. 


1. The private banking system has grasped for themselves the monopoly to provide the national money supply.

2. This allows bankers to create a fountain of credit for any profitable venture that they spot. As they hit the computer keyboard and create the currency for the credit a little more of the money supply is made. The banking books instantly balance (loans to match deposits) because the loan they create ends up somewhere in the banking system as a deposit. 


3. Banks charge interest on the loan and so a spout of profit gushes from the original money fountain.The bank may also share in the profits of the venture they lend to. The lending that brought the world financial system to its knees was to highly speculative financial 'products' which exist mostly on computer screens and bear only a tenuous relationship to the real world.  


4. In allowing bankers the privilege to make the money supply we have not said 'use this for the common good'  - we have let them carry on and meanwhile buried our heads in the sand. This has caused our brains to addle. 


5. Summary: Prof Richard Werner says we have never had a discussion about the privatisation of the money supply. Click on this YouTube link.

6. Un-addle the brain:Study the 6 short videos ; go to website Positive Money 


7. Buy the book, The Free Lunch - Fairness with Freedom for what could happen if banking profits flowed for the good of to create  The Citizen's Royalty or Dividend.  Use the 'Look inside' feature: page 131.


8. Look at what George Hollingbery said about The Free Lunch when he was the key speaker at the book's launch.

Werner at Occupy London LSX: Drop university fees

Why do students need to pay fees for their university education? Richard Werner a leading international banking professor said at St Paul's Occupy LondonLSX site on 8th December that education could be free of charge if the government followed the no-usury law of the Bible. Werner said that the tax burden of £80 billion per annum  for the UK's interest bill is quite unnecessary. Hence the possibility of new wealth through a debt-free interest-free money system.


He wove a fascinating story for an attentive audience in Tent City University. St Paul's bells chimed on, police cars wailed, passers-by diverted into the tent, listened and joined the discussion:  'a wonderful talk' said one; another said he had never heard such a clear explanation of the current economic mess. 


Werner surprises you. You think you have understood his drift pretty well and then he slips in on your blind side with a whole new area of understanding and learning that gives dramatic colour to his expositions. Hey! He is talking about banking and money supply of all things!  With a fascinating narrative, this time out of English history starting at 1120 AD, he illustrated yet again that unless we tackle at the most fundamental level where we get our money supply from, and how we allocate it, we are doomed to yet further cyclical economic disruptions.  


Starting with King Henry I at Winchester and its treasury and hazelwood tally sticks he showed how this created the  government money supply without interest. The 'no usury' rule of the Bible, Werner says, means none other than 'no interest'. Forget clever and convenient interpretations like 'no excessive interest'. 'No interest' means: no interest. Then on to the later role of goldsmiths who charged interest on their imaginary loans of gold (actually bits of paper that they declared were as good as the gold which may or may not have been in their vaults), which gradually usurped the role of interest-free tally stick money. Then the usurping role of William from Holland, the deposition of the rightful King James II and, with the help of bankers from Amsterdam, the setting up of the Bank of England in 1694, which consolidated and made fully legal the doubtful goldsmith banking practices. [As Rebecca Fraser has it in 'A People's History of Britain' (Pimlico 2002), with the founding of the Bank of England the country now had very deep pockets to fund the war with King Louis of France who lost and settled up at the Treaty of Ryswick].


Werner touched on the Corporation of London with its ancient rights, unique in England, and confirmed by the same William and Mary in 1690. He said that the Corporation is still a very privileged body based in a money-creating system which makes 98% of our money supply and allocates it to its own profit-maximising ends. This City is a strange enclave that is somehow not really a part of England - the Queen is not allowed to enter the City boundaries without the Lord Mayor of London. 


It looks as though the Bishop of London is actually grasping the nettle of this financial cataclysm. He would have gained much clarity from Werner's 'sermon' in Occupy's Tent City University in the shadow of St Paul's that day.
posted by Charles Bazlinton
The Free Lunch- Fairness with Freedom


      

Richard Werner on the euro

Today on BBC Radio World Service Prof Werner reiterates what he has been saying for some time: Countries under pressure such as Greece, Italy, Spain need not get funds at 7% from the bond market when their old bonds expire. The commercial banks of each these countries should lend their own governments funds at 3.5%, by creating the credit for them.  Governments need not enter the bond market for funds, the mechanism is already there to avoid this more expensive option.


Werner says that the economic situation is getting muddled with a quite separate political agenda: to advance the power of the EU state. He says that no country in the EU will go bust if the ECB doesn't want it to go bust.
posted by Charles Bazlinton.    

FT letter 12 Dec 2011: Debt-free public investment

In the Financial Times today:
A debt-free way of public investment

From Mr Charles Bazlinton.

Sir, Just over a year ago Martin Wolf wrote a column “The Fed is right to turn on the tap ” (Comment, November 9 2010) commenting on the likely effect of “quantitative easing”. He thought it would be “a leaky hose” and “have a modest economic effect” and he has been vindicated in the UK.

Despite the Bank of England having created money and massively bought up government debt with it, the hope that the cash received would somehow translate into new bank lending has not happened. Mr Wolf also stated: “The essence of the contemporary monetary system is creation of money, out of nothing, by private banks’ often foolish lending.”

So when is the penny going to drop with the coalition government so that a public agency is set up to direct newly-created money to productive, non-inflationary purposes? The creation of such money used for new infrastructure in particular could be issued debt-free and interest-free.

Why on the one hand do we ask private banks to provide loan funds, at interest, for public investment, but we do we not ask the government to direct some of the Bank of England’s new money, debt-free, directly into such investment?

Our current system benefits private banks, but burdens us with taxes. Surely we are missing two great opportunities: to make money creation democratically accountable and, when used for public investment, debt-free?

posted by Chares Bazlinton. 

Author: The Free Lunch- Fairness with Freedom available on Amazon

Prof Richard Werner, Lord Glasman, Anthony Thompson

Yesterday at St Paul's OccupyLSX
Richard Werner's subject was: 
The last successful invasion of Britain and how to win the country back
He went on to Hub Wesminster (NZ House) to speak at the Good Banking Forum run by the New Economics Foundation (nef), where


Lord Maurice Glasman gave a key speech. Snippets:

On modes of capitalism 

1 Promiscuous

2 Fidelity 

On the local banking theme & the real vs virtual worlds 

1. Places matter

2. People & relationships matter

Another speaker there was Anthony Thompson Chair of Metro Bank. This is the first new High Street bank in the UK for 150 years. In the USA 200 new banks start up each year. Guess what? It is difficult to raise capital for banks in the UK....

More on these events to follow.

posted by Charles Bazlinton    author  The Free Lunch - Fairness with Freedom

Richard Werner at OccupyLSX St Paul's

One observation on UK Chanclleor George Osborne's Autumn Statement (leader in The Times) is that there is 'the recognition that the drought in lending is a serious threat to growth'. Let's get back to first principles by quoting from Prof Richard Werner a world leading champion for democratically accountable credit creation.  

Note: Credit creation has to happen  for lending to happen and for any sort of growth to happen, sustainable or not.

Here is Werner in his book 
New Paradigm in Macroeconomics p339-341.
The fundamental principles of monetary policy... are not difficult... : to minimise inflation and maximise real economic growth, credit should be created and allocated primarily for productive purposes. Consumer credit and speculative credit will result in consumer price or asset price inflation and hence should be avoided.

Werner states that the current credit creation institutions may not be the way forward for the above good outcomes:  
Allowing privately-owned central banks [e.g. the US FED] , for instance, is unlikely to be the right type of incentive structure to ensure alignment of sectarian and overall interests. But even publicly-owned central banks  [e.g.the Bank of England] will not be sufficient, if they can obtain a large degree of de facto independence.
Once the facts of credit creation and its potential are more widely known, democratic processes can be used to decide upon the goals that should be achieved and the most suitable mechanism to achieve them. A clever use of institutional design and credit allocation will allow far more ambitious goals to be implemented than has so far been the case. Not only recessions, unemployment and boom-bust cycles, but also poverty and destitution can in principle be eliminated.

Werner mentions possibilities that a 'democratically accountable credit control mechanism' might achieve:

• environmentally sustainble, stable economic growth
• environmentally friendly energy sources
• the creation of green urban spaces and leisure areas
• research and investment in the above
• a credit for each child administered for specific purposes such as education 

On page 172 Werner summarises some of his researches:
We conclude that bankers had managed to do what kings, emperors and alchemists had failed to do - they were creating money.  They had found the philosopher's stone.
p358 note 19
When governments needed money and could not raise taxes further, they believed they had no choice but to borrow from bankers. But of course the bankers were doing nothing that the kings and rulers could have done themselves. ...In the case of lending to kings, this meant that bankers could exert influence on national policies. Bankers were the masters who created and allocated purchasing power.
 
The world-wide Occupy movement is now rallying support for a fundamental rethink of finance and banking. All Occupiers and supporters have in Richard Werner's findings and suggestions the key to achieving that change. Werner is booked in to St Paul's Tent City University at OccupyLSX for a talk on Thu Dec 8th 11.30am. 
(Message to George Osborne: Send a friend to listen in.)


See the Richard Werner interviews on YouTube 

Posted by Charles Bazlinton. Author of The Free Lunch - Fairness with Freedom  

Occupy Cambridge & Richard Werner on tuition fees

Occupy Cambridge students who highjacked David Willetts' address this week at Lady Mitchell Hall might like to look over the following excerpts from Prof Richard Werner's book: New Paradigm in Macroeconomics (Palgrave Macmillan 2005). Werner is Chair of International Banking, Southampton University:

Educational reform, endorsed by neoclassical thinking has saddled students with substantial debt. Psychologists have found that this is a main source of depression among students. (pp14-15)

Werner suggests:

'Every childbearing family could, for instance, be paid $100,000 for each child born,...administered... for specific purposes. Such a policy would not be inflationary: among all inputs into the production function, human resources are by far the most important. Therefore this is the best example of productive credit creation, as long as resources are also spent on a high level of education.'  (pp340-341)

If GDP is to grow, education must be encouraged. If education is to grow, students must not be deterred by tuition fees. These were his views during last year's student protests (see this blog for 27 & 29 November 2010): 

Richard Werner is an advocate of debt-free money creation by governments with the money created being allocated to ends that will bring productive non-inflationary and sustainable growth. The current way of the world is that banks create and allocate credit according to their own private commercial aims and these often are not helpful in producing sustainable economic conditions – as we have seen since 2007.

The  choices we have now are: Do we mend the old broken system with inevitable failure repeating ahead? Or make a new system which would build national economies in as sustainable way? One way to encourage this is to invest in freely available education funded so that it does not involve a life time burden of debt. Better to create state money to help students make their own productive way in life, than let banks create credit to blow away in speculation in volatile assets which is no help in promoting true national wealth.

 ‘Interest-free’ loans are a little like what we have now where special rates and terms apply to student loans. Werner is not in favour of these (although better than interest bearing loans), as future governments could easily raise interest rates, leaving us with no lasting improvement. What is needed are debt-free grants not needing repayment. 

Making you as a student personally liable for high tuition fees is not the only way of funding education. Debt free money can be created for your education.  Nothing to pay back and no interest. True.

But the banks won't like it. Also true. 
See also Positive Money and look at YouTube interviews with Werner.

Posted by Charles Bazlinton.

Author of  The Free Lunch - Fairness with Freedom buy on Amazon

St Paul's London OccupyLSX

At the Tent City University outside St Paul's Cathedral, London yesterday I gave a talk with an interwoven discussion from a very attentive audience. The topic was the concept of the free lunches available on this planet. What are they? Who gets them? How might they be shared more fairly? 

Firstly: Land brings a huge value for owners. Value accumulates on land because of the particular location of every plot and is driven by the success of the surrounding community. A desirable school will drive up 'house+land' prices in an area so that the very teachers who create the educational excellence cannot afford to buy a home in the area! The value is nothing to do with the owner of any 'house+land' package.  All the owner can do is  improve the house and so add 'house value'.  The taking of some of the land value 'community inspired free lunch' for taxation, in place of income and other taxes is needed for fairness. The community which endowed the value would get value back.

Secondly:  Credit is a marvellous device that has been around a very long time. It enables people to plan and enact constructive projects sooner than otherwise. Because of human creativeness and co-operation, surplus wealth leading to human progress is relatively easy to produce. But  creation of credit is needed for this. Credit flow depends on a settled society and trust between people - in a war zone where society is hardly functioning, credit would be difficulty to get hold of. Thus the community, like in the case of land value, is the essential source of the credit and not the bank that demands the interest. The government could and should be the source of all credit money, just as it is the source of note and coin money which only comprises about 3% of the money needs. It could grant credit for public investment free of debt and free of interest. It could ban any credit towards speculative activity.  Take away these dangerous toys, then the economy would settle productively and a free lunch would flow to citizens through the saving of interest charges paid by goverment to banks as is the case now.

Currently banks merely seize the business opportunity and with the government's grant of their monopoly power create the credit and cook up another debt-laden free lunch for themselves.  And look what a mess they keep getting us into! This latest economic collapse since 2007 is merely the worst of many in the history of the modern economy. Many more will follow, because the UK government  is trying desperately to get the banks it has taken over, into some sort of shape so they can wreak their havoc yet again.

Some at Tent City yesterday were concerned about governments getting the power to create credit. Surely  democratically controlled credit creation and allocation under Parliament must achive a better outcome? [25 Nov: Banks would become retail outlets for local credit needs with credit at wholesale rates provided centrally.]

What will come out of the current crisis? The old wild capitalism again with 'banking as normal'? The rule of dictatorial oligarchs? Or will we reclaim the use of credit creation power back from incompetent banks, back into the hands of the people? 


It seemed to me on my first visit to an Occupy site that these people are waiting, they are waiting in some discomfort, but  peacefully and they will hear and listen and debate with anyone. They don't look as though they are going away soon. Ultimately they await politicians who alone can initiate a serious search for a solution. 

posted by Charles Bazlinton. Author: The Free Lunch - Fairness with Freedom

Richard Werner - new audio download

An audio download of the YouTube interview with Prof Richard Werner Banking and the Economy is now available. At The Free Lunch website click on Audio  

posted by Charles Bazlinton  Author: The Free Lunch - Fairness with Freedom  - buy it on Amazon

Occupy London - Big Society in the making?

Strange how the challenge of the world-wide Occupy movement has got such a resonance with The Free Lunch - Fairness with Freedom . Look on page 129 of the book (read the page on-line on the link). Written in 2002 on New Labour's 'Big Tent' idea: 

This book proposes a different view. Instead of a 'big tent' providing for all the people, we need as many 'tents' as there are people...people need to be asked: How would you like to be empowered? As an individual? As a family? In a group?

Now 9 years later in a fascinating way the individual tents representing Occupiers have arrived there because they have reached the end of the road with the existing financial/economic system with its continuing unfairness. Something better is expected. The Free Lunch has the same theme.

The individuals that make up this movement - it is not traditional party politics - are acting in the free way that The Free Lunch would help make more possible.  The book is citizen-centred. Read about the Citizen's Royalty. Despite his recent denials David Cameron needs to look more carefully and see how the Big Society might actually be working out beside St Paul's Cathedral. Perhaps Labour is seeing it first and running with it? 

Link to buy the book
Posted by Charles Bazlinton

The amazing Kristen Christian LA USA - lesson for Occupy London?

Copies of The Free Lunch - Fairness with Freedom are now in the St Paul's Occupy London Starbooks library. A common theme of press reporting on Occupiers is that 'they don't know what they want'. Obviously not true as far as Robin Smith is concerned, but reading The Free Lunch will show  various but connected ways of getting to a fairer society as well Robin's.  


You wait for years for a peaceful mass protest for fairness and then two come along at once! Ms Kristen Christian  in Los Angeles who owns an art gallery, started a Facebook campaign a few weeks ago calling for 5 Nov to be  'Bank transfer day': DROP mainline banks/JOIN a credit union. In the US 650,000 new accounts have opened for credit unions in 1 month (whole year 2010 = 600,000).  Kristen is not affiliated with Occupy but it shows that there can be  something extraordinarily powerful going around which chimes well with Occupy. 


In the UK, credit unions are hobbled by law and are not permitted to act as full banks - they are people's banks but could be so much more powerful and relevant if given the same powers as ordinary banks. Credit Unions keep out of speculative investment, distribute profits to members & lend small scale at reasonable interest rates but these worthy aims in the UK are severely hampered. Economist and sometime international banker Prof Richard Werner explains in a paper that the UK legislation means that  'they cannot compete on level grounds with banks'.


He says there appears to be a powerful lobby group 'that has been influential in the creation of legislation' on credit unions. He fingers the banks who have a monopoly on the creation of credit and who want to keep this 'most lucrative activity' almost wholly to themselves. Interesting topic for Occupy London.
See YouTube interview with Prof Werner:  Banking for the Big Society - means small local banks
Posted by Charles Bazlinton. 
   

Insider's view on Occupy London from St Paul's

Robin Smith has been living from his red tent 'Real Reform' at Occupy London at St Paul's for some time. For an insider's view read his blog and catch a flavour of life there. e.g. See Nov 3rd 'Rebirth'. 


posted by Charles Bazlinton 

The St Paul's debates?

The Rev Paul Nicolson in a 6 minute video speech on Saturday 30 Oct addressed the Bishop of London and  the Dean of St Paul's Cathedral with a succinct message as to the reasons of economics, finance and the need for just plain ordinary fairness behind the 'Occupy London' protest.  LINK HERE.

A couple of hundred tents were erected outside a cathedral a couple of weeks ago. Did Canon Giles Fraser and Dean Graeme Knowles think on October 1st that they would both be out of a job on November 1st? The Church of England is tripping up over its inept handling of the tent village and getting a hammering in the media for not getting it. 


A thousand cities worldwide now have protest camps following the first one in Zucchini Park, in the first Occupy Wall Street camp. This is all quite extraordinary according to the ways things usually happen. The movement is overwhelmingly peaceful. These are ordinary people helping each other to make an effective protest. But one centre of power has been found wanting in its handling of what they had assumed to be an easily deflectable disruption. A mere buzzing midge that would disappear with a quick squirt of 'health and safety' legislation sprayed into the annoying situation. 


A most disappointing thing seems to be that they did not invite the outside protestors to come inside to debate matters which they seemed to have a common cause about with the Cathedral. What a chance missed not to established modern day Putney Debates of 2011.  


Perhaps the Church can regain its poise and display a new momentum for justice and fairness? The Revd Paul Nicolson's speech must be a good place to start. He points out: ' the enormity, the magnitude of the economic injustice that has happened and is happening now' as he says to 'Dear Bishop and Dear Dean'... 'you have lost your sense of proportion'.


Read The Free Lunch - Fairness with Freedom for a reasoned way of solving what many of the protesters are camping out about.


Jonathon Porritt on The Free Lunch: ‘I have indeed enjoyed this book…it makes a really important contribution to a much neglected area of debate within the broader sustainable development terrain...contains very fresh thinking.’


Posted by Charles Bazlinton.