Only 3% of the UK’s money actually exists, highlights Chris Kennett of Positive Money Portsmouth, which was established in the midst of the recession to raise awareness of the national Positive Money campaign.
Positive Money campaigns for a more stable banking system that works for the people and not the bankers. They argue that as the vast majority of our money is created electronically by banks when they give out loans and mortgages, it creates a fundamentally unstable economy which is addicted to debt, as we saw in the economic crash of 2008.
Back in the old days, a bank would lend out money it actually had, which had been deposited at the bank as savings. However banks can now create fictional money and lend it out many times over. As we saw with Northern Rock, when customers tried to withdraw their money en masse (a “run on the bank”), the money just didn’t exist.
Historically it was illegal for banks (apart from the government’s Bank of England) to print money, because it could leave customers high and dry and ruin the economy through inflation. Unfortunately these laws haven’t been updated since the invention of computers, meaning that while banks can’t get out the printing presses, they can print money virtually by putting numbers into a computer. It’s no surprise then that the house of cards collapsed in 2008.
The Positive Money Portsmouth group started in 2011 with a handful of people and a Powerpoint presentation in Eastney Community Centre. By 2012, Ben Dyson, the founder of Positive Money, came to city to give a talk to a packed-out audience in Friendship House, Southsea. Several other events followed, including a screening of money documentary 97% Owned by the Portsmouth Film Society, which included a Q&A with representatives from amongst others, the Green Party, the union RMT and the Zeitgeist Movement.
Although it seems like we may now be getting over the worst of the recession, calls for reform continue to grow as it is clear that the system remains broken and could crash again. Positive Money argue that just like with notes and coins, only the Bank of England should be entrusted to create electronic money, and for the public interest – to build affordable houses, create sustainable jobs and pay off the national debt.
The campaign had a recent breakthrough when, in November 2014, the House of Commons held its first debate on money creation in 170 years. It’s about time we talked about how money works in our country and pushed for change.