11: NEW EDM CALLS FOR MONEY REFORM
The Forum for Stable Currencies has been quick off the mark in organising a new Monetary Reform EDM for the new Parliamentary Session 2003-2004, which ends next November.
This should give us more time to beat the previous record of 28 signatures for last session's EDM 854. EDM 323 is titled Public Credit for Public Purposes. It was tabled by Austin Mitchell MP on 17 December and reads: That this House notes with concern the contrast between the enormous expansion of private credit and the growing debt burden that this imposes on society; further notes that public credit, as measured by the proportion of publicly created money in circulation, has fallen from 20 per cent of the money supply in 1964 to three per cent today; believes that using public credit and increasing the proportion of publicly created money should be used to cut the costs of, and to boost the quantity of, public investment and to allow the Chancellor to fulfil his golden rule without further borrowing; further believes that this can be done without any impact on inflation; and, therefore, urges the Treasury to commission an independent review of the benefits of using the public credit and increasing the proportion of publicly created money.
You can follow its progress on the web at http://edm.ais.co.uk/weblink/html/motion.html/ref =323
"INFLATION" INCONSISTENCY ADMITS INCOMPETENCE
One of the objections received from Ruth Kelly MP at HM Treasury to the Monetary Reform EDM 854 in the last parliamentary session, was that "printing money to fund public expenditure is inflationary".
As Prosperity subscriber Barry Turner replied to his local MP: Ruth Kelly's reply does not indicate that the current arrangements are based on any Law. They are not. These arrangements pre-1950 meant that 50% of the nation's money was created by the government and 50% by the banking system for private investment. Under current arrangements the ratio is about 4% to 96%.
Thus the creation - Ruth Kelly invoked the deterrent term 'printing' - of moderate amounts by the government, for example to provide adequate hospital facilities, would arguably not be inflationary.
This must be seen in the overall context relative to the almost unlimited amount of money printed by the private financial sector which is allowing the nation and the individual to spend seriously ahead of true wealth, into debt.
He raises a good point. Why should politicians and economists endlessly claim that a carefully calculated supply of publicly-created money would be "inflationary", yet, inconsistently, do not extend the same logic to the private banking sector, which creates virtually unlimited quantities of money all the time!
Of course, both forms of money creation can be inflationary. What it comes down to, in both public and private sectors, is proper management.
A government which is afraid to break from a reliance on expensive borrowing and create a supply of cost-free debt-free money - for fear of "inflation" - is condemning itself out of its own mouth, because it is admitting its lack of confidence in its ability to manage the economy properly!
— from Prosperity, November 2003