19th March is Budget day and we are gathering in London to promote Bradbury Pound. Our aim is not to protest but to educate ordinary citizens, mainstream journalists, the police and any MPs or Lords who are brave enough to come and speak to us. So what exactly is Bradbury Pound? Read on…
It has been a few months since we launched our campaign to “Revive Bradbury”, the parallel currency issued by the British government at no interest just days before the start of the First World War.
We recognise that the Bradbury Pound was used by the government of the time as a rescue tool for banks, as it feared the outbreak of war would lead to runs on deposits, but we argue that its creation created a historical precedent, never seen before or since, of a government having the power to issue currency based on the credit of the nation.
As word of our campaign spread, many Members of Parliament began receiving letters from their constituents asking questions about Bradbury Pound. So far, without exception, they have simply passed the questions on to the Treasury for comment, rather than answering the questions themselves.
In other words, “Poor voter, don't ask me to have a conversation with you, I have better things to do, so here's the cliché answer from Sajid Javid instead.”
Chancellor of the Exchequer Sajid Javid
In his canned response, then-Economic Secretary to the Treasury Sajid Javid said of the revival of the Bradbury Pound:
Although the separation of fiscal and monetary policy is a key feature of the UK's economic policy framework, this separation is not permitted. Printing money to achieve fiscal objectives, such as financing Government investment and spending, would be inconsistent with the Monetary Policy Committee's price stability objective and would undermine confidence in the UK's monetary policy framework. Furthermore, if the central bank printed money, it would breach Article 123 of the Treaty on the Functioning of the European Union, which prohibits direct government borrowing from a central bank.
Separation of fiscal and monetary policy
Before we consider each of Sajid Javid's points, let's first provide some definitions.
Fiscal policy refers to how a government uses its money – where it gets its money from and what it spends it on.
Monetary policy refers to controlling the money supply and therefore inflation.
According to Sajid Javid, keeping the two separate is a “key feature” of the UK's economic policy framework.
This separation will be achieved by giving the Bank of England's Monetary Policy Committee the responsibility to manage monetary policy completely independent of the UK government. Their sphere of accountability to the government and taxpayers will be on their 2% inflation target, which they have failed to meet in recent years. The only consequence of this failure will be that the Governor of the Bank of England will have to write to the current Chancellor of the Exchequer once a month to tell him how sorry he is.
The lack of accountability doesn't end there. Despite being fully owned by taxpayers, the Bank of England is free to operate as a private wholesale bank in the interest of all its clients, including the UK government. The bank's other clients are unknown, a commercial secret exempt from the scrutiny of freedom of information laws.
Thus, a “key feature” of British economic policy is that the City of London is British sovereign, because it has complete control over the UK's money supply (and therefore credit) through a Monetary Policy Committee made up mainly of City of London bigwigs and entirely unaccountable to anyone but itself.
Confidence in the UK monetary policy framework
Javid also said that if the government “printed money” to fund its own fiscal targets – its own spending – it would undermine confidence in the UK's monetary policy framework.
One question that must be asked at this point is: whose credibility is being undermined?
The answer is obvious: “markets,” a catch-all term for vast networks of computer programs run by hedge funds and investment banks. Since the City of London became computerized, “markets” are not human; they never have been human. So it's a bit of a stretch to claim that markets can have “trust.”
Hedge fund managers and investment bankers all tell their clients that their computer programs are completely different from other programs — in fact, they're all pretty much the same, so when one person “lose[s]confidence” and runs away, the others all run away — quickly and simultaneously.
That is why successive prime ministers and their offices have spent all their time trying to satisfy the “market.”
Violation of Article 123
But Javid's most clever answer was his argument that the Bradbury pound could not be revived because it would be illegal under certain European treaties for the government to borrow directly from the central bank.
This subtle technique can be identified by the use of two words: “quantitative easing.”
Here's how it works:
Governments need money. In the current system, governments borrow money by issuing bonds and selling them on the “market.” These bonds are then held by market participants (hedge funds, investment banks, pension funds, and other speculators) and the government receives cash in return.
The Bank of England then uses the newly printed money to buy back the bonds from speculators.
After all, governments just borrowed newly printed money from the central bank. Not “directly”, to be sure, but clearly able to “circumvent” the EU treaties.
The difference between money and credit
Sajid Javid's standard answer is just a laundry list of excuses for why the government doesn't go against “the market” and use the Bradbury Pound precedent to create the monetary base needed to rebuild the UK as a functioning nation-state. The key point Sajid Javid fails to understand is that a national credit policy such as the Bradbury Pound negates the need for governments to borrow at all. It answers the simple question: “Why would a sovereign government borrow its own currency at interest from private banks?”
The recent actions of our government show that they have no interest at all in the future. Their only interest is now, and possibly the next few years, and the profits of the corporations that supported their campaigns.
Surely the principle that should drive all government policy is that it is our duty to future generations to do everything in our power to leave our country and the world in a better state than we inherited it?
The economic ideology that drives them is monetarism, and to monetarists, state credit policy is anathema.
Herein lies the key difference between a monetary system and a system based on national credit. In a monetary system like ours, the debt we owe is of the past. We borrowed money from third parties in the past and must pay it back with interest, even if it means a billion people die in the process. This is why we “don't have enough money” to properly fund the NHS, education or energy infrastructure.
In a national credit system like the Bradbury Pound, the debt we incur is to the future. It is a debt to our own descendants. It bears no interest. It bears only optimism about the future and a willingness to build it for the next generation.
If this means something to you, please join us in London on the 19th. If you can't make it, please help us out by carrying out some of the tasks in the “How to get involved” section in the “Fact Box” above.
Printable map of meeting point Available here.
