Could These 3 Simple Changes to Banking Fix the Economy?

If someone told you that a mountain of personal debt could be cleared via 3 simple changes to the way that money and banking works, would you like to know how? Would you like to see a more stable economy, with more jobs, less personal and government debt? Would you like to see money created free of debt and going into the real economy and support businesses, instead of getting trapped in financial and property markets?
This video explains how 3 simple changes to the way that money and banking works would make all this (and much more) possible.

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Help us caption & translate this video!

[bennconner]

This is literally what Guernsey already dose, with a significant amount of success. The government has no debt, the average standard of living is high and the tax rates are low. Although the banks still have the power of fractional reserve banking, which means they can still find away to claw back more power in the future.

[ChongKeeTan]

Another thing I would add to the list is a way to tie money creation to Earth's carrying capacity. E.g., if you use the money to cut down trees, then even if that produces more goods and jobs, it should have the effect of limiting future economic growth. Otherwise, the committee will still be under pressure to keep an indefinitely growing economy going through indefinitely incremental money creation, as they showed in the chart in this video.

Because of inequality and the economic pain suffered by so many, public discussion on finance and banking reform naturally focuses on address these two issues. But we must not lose sight of the bigger picture or we will just be advocating for another form of un-sustainable development -- one that is even harder to reform because the 99% are now vested in its continuity.

[jeffeder]

It’s good that at least some debate is opening on this very misunderstood topic. To some of the viewers that don’t agree with Positive Money´s proposals, it would be nice to see an explanation as to why it wouldn´t work, instead of just nay saying or setting oneself up as an authority and passing judgment on an argument that they don´t really understand themselves.

[PositiveMoneyUK]

Banking Reform by Positive Money (Conference 2013)

[MickDickinson]

This is a fascinating video and I am keen to learn more. one thing... at about 2.20 when discussing bank loans, the video says that "for every pound in your bank account, someone else must be in debt." Why? What is the link?

[gent]

Your 3 ideas are really well-thought out. But I see one contradiction in your message: everywhere else on your site, we're taught that banks simply create money out of thin air whenever they decide to issue a loan--that it's not a one-to-one loan from depositor to borrower.  But this video says that for every one pound of loan, there is one pound of debt held by another person.

[taimoor]

If you dont remove (interest) from loan then poor will be poor prices will go up and rich will become more rich because of no risk of lossing money
On banks should be allowed to do investment no loan should be given to generate interest
While installment on product is differnet

[osdias]

Glad we're having this conversation, creating money out of thin air is definitely not sustainable and a con that keeps whole countries under debt slavery. Although an improvement, the suggestion by Positive Money doesn't go far enough. For as long as we have a money supply detached from resources it'll be unsustainable and the planet and us are doomed. Humans have created an abstract money system completely detached from finite natural resources based on an infinite supply of money. This will always inevitably lead to overspending and overusing the carrying capacity of the planet.

Add to this the mass unemployment due to cheap mechanization of production in a not to distant future and it's obvious well have to come up with a different social order, perhaps one not based on work and money, that still provides for everyone.

[jabel]

To the Positive money team,
Why do you not engage with the comments here?

Signed,
A regular contributor to your funding since the launch of the project all those years ago

[hyprolxag]

1.You just try to prove that the government is more trustworthy than those bankers.
2.But a even smaller group controls the whole economy is a good idea?
3.You want to create an economy where people dont have to loan to fund their business, but as far as I know people always want more and more, that is where credits came from.

[ruskitz]

Regardless of how the money enters the economy, if people still have the right to chose what they do with their money then loans/credit will still be provided from another source, housing bubbles will be inevitable because the majority of property is already owned and the financial markets and investments will still remain the driver of the economy.

[-Skywalker-]

at the german spectator´s:
wrong translation in german at 0:08 ; "economic and environmental" must translate into "umwelt und ökologischen"

[mancroft]

I think that you need to make the distinction between money and currency. Most people use the term 'money' when they really mean 'currency'.

[JorgeLausell]

We need visions of what can replace the current system that is tangible. 

One suggestion I have is to inject accountability into the system. We can require all corporations to petition for renewal of the charter we grant them every 7 years to do business. Include criteria such as labor relations and consumer reports and ecological impact. With this small attainable change we get even speculative investors to be more farsighted, more accountable. All investments will be looked at with an eye toward the renewal. Many corporations would have a time of it. 

In addition to that we can define minimum wage as to tie it to a living wage. And that to a 20 hour work week /1000 hour work year. Set the standard deduction to 110‰ of living wage, calculate the margins for income tax as a percentage of living wage and you have the end of the inflation game. 

Meet these changes with a newly defined corporate entity I call Distributed Profitability Corporation which operates within a 18:1 ratio of total compensation while being given preferred access to government contracts and we got a wholly new climate for Commerce.

[antonylehmann]

I have just watched this video
The proposal is that a new committee will decide whether or when to create new money. This committee will be accountable to parliament and the money will be created free of debt. The newly created money would be used to fund public spending and cutting taxes for ordinary people. In this way it could be used to create jobs and support business.
As I understand it this means that the support will never need to be repaid – is that the proposal?
Does the support for business come from the fact that people will pay less tax and therefore have more to spend on business start-ups?
Or, will there be direct support for business projects in the same way as public spending projects?
If the support for business projects is direct, will they be categorised according to their potential for success and viability? Who will assess the viability prior to support being offered?
What happens if the success rate of those supported businesses is poor and few end up providing employment?
Will the new created money total ever be reduced or does it grow indefinitely?
If it grows indefinitely will that not be inflationary and cause suffering? How will the inflation effects be limited?
I would appreciate some answers to increase my understanding.
Thank you

[Earlyturtle]

What happens to the last 10% (grey slice) in that pie chart around 1.30?

[Axys__Rex]

Let's say I'm the only person in the world capable of creating something. Let's say... corn. I am the world's only producer of corn, and I can produce any amount of corn I want, but I only produce corn as long as there is demand. You have to ask me for corn in order for me to make it magically appear for me to give to you.

However, I also want corn for myself. I don't want infinite corn, though. I want a percentage of the corn I produce. So, what I do is, when I give you corn, I want all of that corn back, and a little bit more.

This is the problem with banks and money. Banks are the only sources of legal tender. You can't just create your own disks of metal and pieces of paper and trade with those. You have to use money that's come from a bank. Banks create money, and then charge interest on that money, but they don't actually create the interest. Therefore, as long as you have money, you're in completely unpayable debt. You can't pay it off, because the money being demanded back simply doesn't exist.

[darrenrooke]

The holes in this are too many to mention, Its out of context and therefore not a wide account. It looks at one side of a two side coin ignoring the other side that clearly exists there by even wrongly representing the side of the coin it does looks at.  

[robsmitleiden]

I'm not sure if this proposal is a solution. If I need a mortgage to buy a house, what difference does it make for me whether I borrow the money from a bank, or from a newly established governmental institution responsible for money creation? I still have to pay back the amount I borrowed, and I probably still have to pay interest. And if this institution decides I can't get a mortgage because at that moment there isn't enough money available, then I can't buy a house, even if my salary and trustworthiness would allow it. Yes, free money makes houses expensive, but the problem is not free money, it's a lack of available houses to buy. If there were enough houses available, not even free money would be able to inflate house prices.

[TheRealNOOBuster]

I understand your point about how banks are "draining" earnings from the economy by making people pay for credit interests, but how much exactly is this number? Is it really that substantial compared to the overall output of the economy?