As Douglas Carswell MP reports, I will be supporting him next week as he introduces a ten-minute rule bill to begin reform of banking. As he writes:
It’s the current system of scam banking that has given us today’s credit shortage. It’s the crony corporatism we have now that so damaged capitalist economies – bringing about a massive extension of state power. Under my plan, you would still have credit – but credit that was backed by real savings. And by virtue of being backed by someone else’s savings (or deferred consumption), that credit could only provide for investment in increased economic output that was sustainable.
The comments on his post remind me of the scene in one of the Matrix films, where Neo meets the Architect and the monitors show his various reactions of disbelief…
The unspeakable truth is that the present system of money and banking is fundamentally statist and that is why it is failing. Consider this description of the banking system, extracted from Money, Bank Credit and Economic Cycles:
- The whole system is planned by the central bank.
- Banks are commonly excluded from general bankruptcy proceedings.
- Bank failures are prevented by socializing the costs of their failure.
- The entire system rests on the government monopoly on currency.
- The system is based on the privilege granted to banks of creating loans out of nothing by holding only a fractional reserve on deposits.
- Legally, banks enjoy privileges otherwise only granted to governments.
- A vast and inordinately complex set of regulations applies to banks.
- There is little or no supervision of government intervention in bank crises and in many cases, intervention is determined ad hoc, disregarding principles of rationality, efficiency and effectiveness.
- My maiden speech
- What is wrong with banking, part 1: the legal nature of banking contracts
- Ten plans for financial reform
This Bill will be controversial. Bring it on.