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John Tomlinson
HONEST MONEY
A Challenge to Banking
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PREFACE
In this book, I wish to examine in detail one of the basic
presuppositions upon which most of us have based our lives.
It is one of the corner stones of Western economic thought.
From Ricardo to Marx, Keynes to Mises, Hayek and Friedman
to Galbraith, none of the economic thinkers who are respected
today have questioned the validity of the money-lending function
of the banking system. It is a "given". We are led
to believe that the purpose of the banking system is to lend
money, that governments and industry need bank lending to
expand and create growth. These ideas should be challenged
and so, too, should the foundations upon which they are built.
Bankers, like most of us, have simply found themselves within
an economic and financial system which includes the practice
of money-lending. Within that system they have set out to
do the best job they can. Most have behaved responsibly. Yet
few, if any, have examined the validity of the very function
which each has so effectively performed.
Responsible bankers are not the only people busily engaged
in a critical reappraisal of both the world banking system
and the Western monetary system. The two systems are under
threat. The former due to the current saturation of the borrowing
market and the potential for massive debt default. The latter
due to the potential for hyper-inflation. These threats draw
the critical scrutiny of all who are responsible for them
and dependent on them. In this sense the most humble saver,
the ordinary working man or woman, the head of a giant corporation,
and the head of a government, each share a common cause: finding
and correcting whatever faults may lie within these two systems
so that the application of valid remedies can strengthen them
and make them more secure.
It simply cannot be right that the solution to current economic
difficulty is to lower interest rates. Interest rates are
lowered to entice people into debt. Nor can it be right for
economists to agree that the money supply is not growing fast
enough. The money supply grows by creating new debts. The
inference of these two statements is that not enough people
are in debt or that those who are in debt are not deep enough
in debt. It is absurd to suggest that these are the means
to create healthier economies.
I will expose the mechanics of the money-lending activities
of the banking system: how they began as a fraud; how the
dishonest money produced by this fraud-based mechanism steals
purchasing power from prudent savers and those on fixed incomes
and transfers it to borrowers; how this fraudulent practice
was legitimised and became the principal mechanism by which
our money is debased: and how inflation, business and economic
cycles and other apparently unrelated market phenomena flow
directly from this debasing mechanism.
I will explain why attempts to control inflation have failed
and why, based on current thinking, they will continue to
fail.
New thinking is essential. New thinking must be based on
clearer understanding. This book is my contribution to the
process of clarification.
The solutions I offer are based on what I see as being possible
to achieve. They are not constrained by the 'probabilities'
by which much current thinking and practice would limit us.
It is possible to change the existing monetary and banking
system so that it no longer debases the paper money upon which
we have all become so dependent. Prices can be stabilised.
The business and economic cycles to which we have become accustomed
are not necessary. The mass unemployment of recessions and
depressions can be avoided. Sustainable economic growth can
be achieved. A continuing flow of investment into sound new
enterprise is within our capability. Prudence and saving can
once more be honoured and rewarded rather than penalised.
All of these are possible. They can and will occur within
an honest monetary and banking system. That must be our goal.
I intend through this book to contribute a perspective which
is not yet widely seen, to raise serious questions about the
banking and monetary systems, and to offer answers to at least
a few of those questions. I have tried to avoid jargon, and
use the simplest of English in the interest of clarity and
communication.
Steeple Barton, Oxfordshire, England - October 1993
John Tomlinson
| NEXT CHAPTER |
Inflation Is Not New
"Money which continually loses value is dishonest.
It acts like a thief." Here we look at how inflation
causes chaos and how to measure money's dishonesty. |
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