Why money reformers are cranks

by Anne Belsey
(Leader of the Money Reform Party)

I write this blog as something of a belated response to a comment posted on guardian.co.uk by Chris Colvin on 29th December 2008. This was brought to my attention by Mark Braund's article of 5th April 2009 via James Robertson.

The theme of Mr Colvin's article is that 'many whacky fixes for our broken financial system are currently floating around cyberspace' and they are not to be considered as serious alternatives to the excellent system that currently prevails.. He mentions the Money Reform Party by name and derides its performance at the Bromley by-election in 2006, trailing in even behind the Official Monster Raving Loony Party. As the leader of the MRP and the candidate in Bromley, I feel it appropriate to respond.

Firstly, I should correct a serious mistake made by Mr Colvin about the policy of the Money Reform Party. He asserts that the policy of the party is to adopt the gold standard. That is not so, and never has been.

Our policy is that bank loans should be backed 100% by holdings of legal tender. We do not advocate gold or other single commodity as the backing of the money supply. Rather we believe that Britain's money supply should be backed by the productivity of the British economy as a whole. This would done by the simple process of maintaining the money supply at a level that gives us a zero inflation rate.

I shall say no more about the other mistakes made by Mr Colvin in his analysis of money reform, they were more than adequately dealt with in Mr Braund's article.

For the record, in the 2006 Bromley & Chislehurst by-election, I received just 33 votes and came in 11th out of 11 candidates. It was an embarrassing result, but not for myself nor the Money Reform Party. No one who is clearly on record of having attempted to alert the British people, their politicians and media commentators to the problems building up within the money supply in the years before the credit crunch storm broke has any cause for embarrassment. That sentiment properly lies elsewhere.

I am pleased to use this opportunity to bring Mr Colvin's article and his views to wider public attention, for it is the purpose of the Money Reform Party to alert people to the nature and origin of our money supply. Were Mr Colvin's views to be more publicly known, discussed not merely on some obscure website column but in the leader columns of our major newspapers and by reporters on our major television and radio stations, there would be no need for the Money Reform Party.

An example of why this is occurred during the night of the count of the Bromley by-election itself. Myself and two or three of my supporters found ourselves in discussion with someone, presumably a supporter of a rival candidate, I know not which, who was curious to know what money reform was all about.

We explained how the present money system works and he frankly denied that it could be so. Put simply, he denied the existence of the present money system which Mr Colvin so assiduously defends. It could not be the case, he asserted, that banks are 'able to issue credit in excess of the government-backed notes and coins deposited in their vaults' (to use Mr Colvin's phrase).

I do not criticise this individual's ignorance. It is all too common. It is quite understandable. Indeed, the great difficulty of the Money Reform Party and of the money reform movement lies not with convincing people of the justice and desirability of the country having a money supply consisting 100% of publicly-created legal tender, with banks limited to lending out deposits. That is what most people assume to be the case! The great difficulty lies in convincing them that it not so. Although, in truth, as the credit crunch and recession rumble on, the difficulty lessens by the month.

Needless to say, when the penny does drop and people do accept the facts of the current money system, their reaction is usually one of outrage. To secure their support for the sort of simple, honest and stable money supply advocated by the Money Reform Party, which coincides with what they had hitherto supposed existed, is then the easiest thing in the world.

To repeat, the great difficulty confronting money reform is getting people to understand and accept that what presently exists is what presently exists. Without that, our message of reform falls on deaf ears. Unfortunately, there are far too few of the likes of Mr Colvin, trumpeting the cause of debt-based money created by commercial banks, for awareness to have spread very far.

Hitherto, money reformers have found themselves regarded as cranks by two quite distinct groups of people for two quite distinct and mutually incompatible reasons. Economists, politicians and commentators like Mr Colvin condemn us as cranks for suggesting abolishing credit creation by commercial banks, whilst many ordinary, less 'financially-literate', members of the public condemn us as cranks for suggesting that such a credit creation process could actually possibly exist in the first place.

Please, Mr Colvin, get out onto the streets of Britain, or at least onto the pages of the Guardian newspaper itself, with your message of how the nation's money supply comes into being, it will save me a fortune in future election expenses.