THE City of London is home to many useful and responsible financial institutions. But this respectable facade also conceals a host of less savoury financial enterprises which exist and prosper in a malign and symbiotic relationship with Westminster – neither could survive without the other.
With a few notable exceptions, it is a relationship which is understood, shared, and fostered by the conservative establishment in Scotland. So, when pro-independence politicians asked the Great & The Good for advice on matters financial, they were told to use sterling and to follow the familiar convention. This piece is the warning which should accompany all such financial advice.
The disparate culture of banks – and very profitable financial enterprises which are “The City” – together create an illusion of wealth which replaces the real wealth, power and influence of the former empire and the Industrial Revolution. Without this deception, the United Kingdom would be exposed as a failing state.
Consider just one of the many devices used by Westminster to sustain this illusion – the Monetary Policy Committee (MPC) of the Bank of England. This example is appropriate on two counts because it is the lack of a functioning monetary policy which is presently tearing the UK apart, and its absence was also a major issue of the 2014 referendum.
The MPC was announced by Gordon Brown in 1997 and charged with keeping inflation at or below 2% and setting interest rates to optimise the economy. For 50 years before this, governments had tinkered with interest rates to control inflation. It never did work and never will. A conclave of witch doctors casting chicken bones to foretell the future might have been more successful.
Nor do we really need Einstein to tell us that to keep on doing the same thing and expecting a different outcome is the first sign of insanity.
So there must be some other explanation for why this ritual persists.
The MPC is an important part of the myth which keeps the financial establishment in business. The interests being protected here can be collectively described as the marginally legal business of making money out of money – manipulating the national currency for private profit.
This activity produces nothing tangible in the way of goods and services, amounts to many billions a year, and is an important contributor to the inflationary “money for nothing culture” which the rest of us pay for so dearly.
These financial interests maintain influential lobbyists in the corridors of power and provide many handsome advisory posts and non-executive directorships to retiring ministers of state.
Since the advent of neo-liberalism, politicians have kept their eyes tightly shut to the ascent of money over rational democratic decision-making. Leaving it to the politicians will see the usual suspects haunting the corridors of power in Holyrood just as they do in Westminster.
The basic principles of any monetary policy are simple. All national currencies are authorised solely and exclusively by the state and guaranteed by its citizens. Any other person or entity attempting to originate and place it into circulation is guilty of counterfeiting.
If this is true, then the first layer of obfuscation is the chartering of private banks to issue their own notional credit, denominated in the national currency. This they do in whatever amounts they consider profitable.
Banks are a necessary part of everyday life for the community. There is no reason they should not be private enterprises, but the moment they “create” their own credit as the national currency instead of distributing it as licensed agents of the state, then monetary policy becomes unmanageable and ceases to be an effective tool of government.
WITH political will, this could be corrected overnight. Just as the letter notifying you that your overdraft limit has been automatically generated by an algorithm, so the central bank can control the banks themselves – job done, and the banks revert to being intermediaries lending only as much as is deposited with them. Only then is the Treasury able to control monetary policy.
This in turn virtually abolishes national debt and permits public investment into public assets and infrastructure.
For the state, monetary policy becomes a matter of optimising our physical resources, not of affordability dictated by the cost of so-called borrowing from the present banking system. That is the prerequisite of the rational economic behaviour so conspicuously absent in the UK. No existing political party will even consider such options, but imagine a general election in Scotland following a positive independence referendum – a totally new government of national unity elected from all political persuasions but all pledged to a new constitution.
Such a 21st-century people’s constitution would surely contain all the principles which the people expect their elected representatives to observe in conducting the business of government. If the will of the majority includes the basic principles to exclude corruption of the monetary system at source, then this becomes not just desirable but mandatory.
The place to start is the public consultation by Constitution for Scotland, online at www.constitutionforscotland.scot, where you will find these ideas and many more matters of principle under discussion. It is an interactive website where you can also vote, comment and propose amendments. The more people get involved, the more their views are likely to be listened to.
The constitution spells out the power of the people – use it while we still can!
www.constitutionforscotland.scot is a registered Scottish charity with the aim of advancing participative democracy within the community of Scotland. You can read more than 1000 comments across 15 articles and participate in preparing a Scottish constitution. So why not join in and have your say in how you think an independent Scotland should be governed To interested groups, the Constitution for Scotland team offers a “guest speaker” introduction, demonstration and Q&A session within your own Zoom meeting. Please contact info@constitutionforscotland.scot to arrange
