How to Fix Banking - Ben Dyson at Positive Money Conference 2013

www.positivemoney.org/
Why our monetary system is broken and how it can be fixed?
"The financial crisis occurred because we failed to constrain the private financial system's creation of private credit and money." Adair Turner, Chairman of the Financial Services Authority
Positive Money Founder, Ben Dyson, presenting at the 3rd annual Positive Money Conference "Modernising Money" on 26th January 2013 in London. He explains the main principles behind the monetary reform proposals which offer one of the few hopes of escaping from our current dysfunctional monetary system.
The books mentioned in the talk can be ordered here:
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More about the 'Modernising Money' conference 2013 here:
www.positivemoney.org/conference/
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Positive Money is a not-for-profit research and campaign group. They work to raise awareness of the connections between our current monetary and banking system and the serious social, economic and ecological problems that face the UK and the world today. In particular they focus on the role of banks in creating the nation's money supply through the accounting process they use when they make loans - an aspect of banking which is poorly understood. Positive Money believe these fundamental flaws are at the root of - or a major contributor to - problems of poverty, excessive debt, growing inequality and environmental degradation. For more information, please visit: www.positivemoney.org/
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[@eeverett2]

The banking system in the USA is very similar, and we've been having similar problems. Soaring food and home prices, stagnant wages, high unemployment. I live in the New York City area and I'm often surrounded by wealthy and successful people who look down on me and other people who don't make much money. Young people and working people seem depressed and low on dignity. Many are still living with their parents at an advanced age and they blame themselves for their predicament. It's helpful to know what's really going on. We aren't living in a meritocracy we are living in a financial plutocracy. I will share this video with the hope that this movement spreads to the USA. Thanks so much for this video.

[@gutzbramah]

Finally someone talking understandably about this.

[@herbertspencer8293]

kzbin.info/www/bejne/n5quo2CfZZdlo7s To control the inflation we need to know the operating mechanism of The Progressive Growth of the Money Supply Principle (year 2013) that tells us the exact quantity of new money the economy needs to works correctly, driving us to the Wicksell interest rate or natural interest (see the link video)

[@Mitjitsu]

I remember doing an economics class as part of my course many years ago. Yet they never touched on any of this. All they seemed to talk about was supply vs demand, and cause and effect.

[@FirstCenturyFilm]

Schools are only interested in churning out more of the same thinking. Naom Chomsky says this all the time. He's not allowed to teach any alternatives to Fractional Reserve Banking.

[@Achrononmaster]

@@FirstCenturyFilm Fractional Reserve Banking has not been the way the money system works for years, you are thinking of the days when there was a gold standard. In modern times banks do not lend out their deposits or reserves, they lend to any customer the think is credit worthy or with assets they can strip if the loan is not repaid. They settle their reserve requirement only later, on the OCR market, and that does not factor in to their loaning desks at all.

[@gpk6458]

That's about as far as most people get with economics, unfortunately. This is why a lot of people think free markets are an absolute good. Economics is roughly 1% simple concepts like free markets, supply and demand, game theory etc., and 99% all the millions of ways it goes wrong in reality.

[@SimonJonathanThorpe]

Inspirational - thanks Ben. Can't wait for the other videos from the conference.

[@hugograjales9206]

Amazing Ben Dyson , thanks for your amazing work 😊

[@ruudbuijsrogge]

“This planet has - or rather had - a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn't the small green pieces of paper that were unhappy.” ― Douglas Adams, The Hitchhiker's Guide to the Galaxy

[@afsdfsdafsdfsf]

very interesting! We need a change

[@askebisgaardvammen5160]

Nice to see an increase knowledge of how the monetary system works and its inherent flaws. I hope we'll see much more of ideas like these, as soon as possible. Most of all, though, I think we need a more educated average person, on what's really going on in society. We need to inspire critical thinking and maintain curiosity, not force them to stay within the means of the system. I hope to see this change before it is too late. Thank you for your contributions!

[@matthicks8017]

What event happened in the late 70s which results in the borrowing / printing of money increasing so dramatically?

[@indigo4208]

Not 100% sure this is why but was likely related to the total abolishing of the gold standard in 1971

[@sonjak8265]

Necessary constraining the private financial system's creation of private credit and money is not only about limiting the quantity, but more importantly constraining how is that money is used, for what purposes.

[@2kavadias]

Great talk! That is why I have spent days re-writing the illegible subtitles for Greek. The thing is, 6 days later, Greek subs are back to their original shabby version! I had them in srt format and uploaded again, but the question is how could subs have reverted back??? Is it going to happen again?

[@Achrononmaster]

Paul Fisher's statement is highly misleading. Issuing Pound Sterling is indeed a Bank of England IOU, but all it gives you is an IOU, it is intrinsically worthless if no one will accept it as a debt/credit. What actually makes currency valuable (unlike bitcoins or other fake money) is the tax liability imposed before the money is issued. You need the currency, and accept it as a wage payment because you know you have to pay taxes. It is an IOU, unlike a gold standard, but it is very special: it is backed by tax fines, tax penalties, and then ultimately by the police/military.

[@TheKvamshi10]

Great work ... keep going. But I have one question. When some one pays interest on a loan, he need to get even that money from the system, meaning it should be created by banks too. Isn't it. ?

[@UniversalPotentate]

These are the identical prescriptions I've come up with here in America given my own analysis of the situation. I cannot find a copy of Moderising Money. It's just out of print. If you have any idea when it will be out, I'd love to get a copy!

[@Achrononmaster]

Money creation does not cause inflation, spending beyond capacity of supply does, asset price inflations cannot occur until people spend the loan. If we restrict bank loaning to only making loans people can repay you will get very little inflation from credit creation. Most people have strong saving desires, so giving them higher wages or more cash will not cause them to go on a spending spree. TWO THINGS cause financial instabilities in the main, (1) credit expansion with euphoric expectations (people forever trying to borrow their way out of debt thinking their assets will continually inflate) and (2) war, pestilence, corruption or famine - all of which if not tamed will cause panic and spending and hyperinflation. But just increasing the money supply will not be itself cause any inflation.

[@nthperson]

The entire argument presented here still boils down to the legal power of the central bank to create new monetary values out of thin air. When loaned to the national government at interest, government is then able to spend this new money into the economy. Much of the added currency balances will end up being deposited into commercial and savings banks and other financial institutions. Where, then, does the individual bank obtain the ability to create money by making loans to individuals and to entities? A bank is formed by individuals who bring their own currency balances to the table to acquire the initial shares of stock. The cash establishes the bank's initial capital with which salaries and other expenses are paid and some funds can be allocated for actual business activity -- the loaning of money to others. The bank then solicits deposits from individuals and businesses, paying interest or offering certain services in compensation. The cash account of the bank is increased, offset by a liability. The bank's capital (i.e., its net worth) will increase IF borrowers pay interest charges and eventually repay the loan principal. A bank can also raise cash by issuing additional shares of stock and selling these shares to investors. As when the bank is started, the cash increases the bank's capital and, therefore, its ability to make loans while adhering to whatever regulatory risk-based capital requirements are imposed. And, finally, banks can raise additional cash by issuing bonds (i.e., debt). Which takes me back to the first observation made, which is that it is the central bank that is the fundamental source of the increase in the money supply. I do agree fully that taking monetary issuance away from the central bank and granting this authority directly to the treasury (subject to stringent controls and auditing) is needed. The issuance of debt free money eliminates the huge cost to government of having to service a public debt.

[@malcolmhenry9949]

"But all the money in the world is not at the banks." Most of it is. Apart from the dollar bills in your pocket (which are a tiny percentage of all money). "I mean how is it created?" Out of thin air, as Ben says. When Bill gets a loan the bank doesn't take money from someone else and give it to Bill. It writes $100 into Bill's bank account which Bill can spend on whatever he likes. So it is real money. Like it or not, that's how our banking/money system works.

[@daniel987878]

Even better would be if the monetary mangement side was separate from the economic management side. So the central bank would just manage monetary issues like adjust the money supply in accordance with inflation. The economic government would manage investment side of things funding itself through taxation.

[@nthperson]

The last time modern civilizations had an honest money system was during the early decades of the 17th century and the operation of the Bank of Amsterdam as a bank of deposit issuing receipt money. In discussions of systemic monetary reform there is no consideration given to a return to a monetary unit redeemable in some specific and tangible good or basket of goods. For global commerce, such a system would eliminate the risk of currency exchange rate differentials. An international treaty establishing gold and silver coinage of a standard weight and measure, held on deposit for governments, entities and individuals would be a good start. Other tangible goods with a global demand (e.g., construction bricks) could also serve, without the need for security to protect gold and silver coinage from theft.

[@PositiveMoneyUK]

You can order Modernising Money on positivemoney[dot]org/shop (or click the link in thedescription of this video)

[@northamericaparty7249]

Every nation should issue its own sovereign currency and loan it all into the economy with interest free loans to every individual. Money paid to any government employee or welfare recipient would show as a debit to that individual's account. Monthly limits on each individual's draw would be set by the local bank owned by the community it serves. A pay scale could be created for this guaranteed income. Any positive income generated by any trade would be taxed 10% and paid to the bank. If we have already been hyperinflated the fix would be to buy back the old currency at a discount.

[@daniel987878]

If the banks power to create money is taken away from them it will definetely change their behaviour as they will only have limited funds to operate with.

[@lukeb8045]

It is interesting, but I wonder why this isn't being looked at more critically and what the impact could be. All I am hearing is a one way conversation.

[@anonletchim]

I think he addressed the possible impacts at the end?

[@BienestarMutuo]

We need first to change this society, to the human values, the ecologycal values and economic values, all in equlibrium. Then just make private the administration of banks and nationalize the profits of banks, that all.

[@meldramabg4364]

I believe PM was discussed in the house by both sides. Strangely the incumbent government rejected it

[@fspiegel]

Still less than 3000 views... We should make sure that at least the politicians know how money is created. Maybe the Cypriot parliament should watch this.

[@PositiveMoneyUK]

@Audrey - bank-created money did cause inflation, but all that inflation took place in the housing market, where most of the money went (300% increase in prices in about 10 years in the UK). But because central banks only worry about inflation in CPI (basically, supermarket prices) they completely missed this.

[@bryanbufton1972]

so this was 1st shown near 3 years ago, and nothing has happend

[@stevesiebold9830]

What about bitcoin?

[@Achrononmaster]

Bitcoin is not a currency, it is a payments system. Unfortunately because there is an unregulated market in trading bitcoin for dollars, you get a ponzi scheme. In this sense bitcoin is just like gold or copper or sheep, or barley, it is just a commodity, but one that is super fast (and anonymous) to make payments with between two parties. But the intrinsic value of a bitcoin is just the electrical energy you need to run a computer to mine it. It is not currency because you cannot pay your taxes with them, you have to convert them to dollars to pay your taxes. State money (what most people call "currency of account") is always what is accepted as payment of tax liability, and nothing else, by definition. So Bitcoin will never replace State money, not unless the government foolishly decides to accept bitcoins for tax payment. No government should ever do that, they'd lose their currency sovereignty, like every current idiotic member country of the eurozone. So, e.g., if I was the Ruler of Independent Scotland I would be happy to join the European Union for trade and labour benefits, but I would never ever join the eurozone currency union, because I would want full control over my government fiscal policy so that I can offer free education and free healthcare and full employment, and still have a vibrant private sector (free public services funded by government fiscal injection gives my people spending power, so that there is no austerity, and businesses thrive on sales, so I do not want to tax back all of my spending, and to avoid inflation I just use two stabilizers: progressive tax structure and a job guarantee employment buffer.)

[@daniel987878]

Exactly. Thats the problem on the monetary side. cmamonetarydotorg

[@MrJakezxz1]

If it really is that simple.... why hasn't it been done? If, from reading your previous videos, this has been the same for the passed 150 years, what else is at play? There must be other reasons for this all occurring. Surely, if we moved to this strategy, the "1%" whom make vast sums of money would move their wealth else where in order to seek out new investments?

[@Achrononmaster]

Positive Money is ridiculous - but correct on one things, which is that far too much money in circulation is bank debt, that's not a healthy balance because of compound interest. But PM is a solution to the wrong problem. The real problem is that governments fail to fully use State money for public purpose, and let banks lend with little regulation. All banks are by law agents of the State, they may be privately owned, but the government has full legal power to close any bank or fire It's managers. Also, PM fails to consider trade and foreign markets, you cannot balance an economy by having government control money supply. We've been trying that under monetarism for years, and it has failed.. There is a good reason for bank credit, it allows entrepreneurs to be less restricted by supply of State issued money from past deficits (the base money supply), and thus is vital for freeing the private sector from the constraints of government budgets. MMT (Modern Money Theory) has the better picture for taming the banksters: you heavily regulate banks so they cannot loan to anyone who would be unable to repay, based on their expected income. And you cancel debt when loans cannot be repaid (because the lender then has made a mistake!!!) If we had only PM then we would be completely dependent on government for fuelling and regulating the economy, and in any country of more than a few thousand people that will end in disaster, you just cannot plan a centralized state this way, you need to give people some freedom to make mistakes and take risks. Positive Money is just far too conservative and restrictive, it would cause just more austerity or instability, since no government could ever get the balance of supply right. And balancing money is not the role of government, a government role is to provide for common public good services, and that is something money should not have any say in, it is a moral issue: government budgets are moral documents. MMT will show you how to then adjust taxation and other stabilizers to float your fiscal injections, but you, as a govenrment, would be issuing as much money as you need, up to full employment, to fit public purpose up to real sustainable resource constraints. There is no way on Earth to calculate how much spending that requires, so you just don't worry, you float the government deficit, and let the private compete with a government funded minimum living dignified wage job guarantee program. It's not rocket science. Positive Money is a solution to a problem that does not exist --- it places too much emphasis on money and not on morality and public purpose. MMT is the correct lens for any spiritual/moral economy. With an MMT lens money becomes the least important thing for government decisions.

[@Zuchtsau]

21:33 isn't a possible option, because you would have to transfer every existing "dollar" of the 3%-real money fast enough to run the same cicles as the 97% electronic money. good luck with that. also growth would just be possible if you transfer money faster. maybe you just described not well.

[@2kavadias]

You missed it:@21':29'' it says, "...the money can be created". The Central Bank can print *all* the money the economy needs. Actually, the public can force private banks to owe the real Central Bank money they have created out of thin air --not sure if this is the process PM proposes. There is no need to allow private banks to create the 97% of bubble money.

[@MarcoRepiso]

this man sounds trollish, a bank or goverment paid troll to undermine the really good explanation in the video, call me paranoid

[@Zuchtsau]

Slave2PaperWithInkOn Stamatis Kavvadias there is money and money tied to debt. if you create money without tying it to to debt you give someone money for free. Most credts and money creation processes are linked to uncertainty. show me how you should justif to gve somone money or free for his risky project. created or transfered from someone on a massive scale. there is no quality mechanism here. Marco Repiso i would love to be paid for thinking for myself about the money system and not repeating slogans like a parrot. "interests" aren't the problem.

[@2kavadias]

"if you create money without tying it to to debt you give someone money for free". I disagree. Tied to debt or not, the one creating money gets it for free (the central bank or private banks). Using the money to buy assets, goods, or services, or to lend it to others, you get a benefit for nothing. The only difference is if this benefit *and its responsibility* is on the public or on the private sector. On the responsibility issue, the private sector has neither proper incentives, nor the overall economy information, as the central bank has (and the public holding it accountable). On the issue of risk, the difference is if the risk is reflected on the public backing private money creation and investment choices (private bank money creation, as it is now) or government choices (public money creation). In both cases, money creation can also result in other risks, on inflation and on the exchange rate. In addition, with private, debt-based money creation, there is a significant, usually increasing, debt burden for all sectors and the economy as a whole.

[@Zuchtsau]

"the one creating money gets it for free (the central bank or private banks). Using the money to buy assets, goods, or services, or to lend it to others, you get a benefit for nothing." I disagree. Central Banks can't use the mone as they wish. They are tied to strict regulations. They have to "sell" it to the highest bidding banks in the banking sector, because the economic department of the state or the central bank or the banking sector or whoever is responsible or allowed to ask, thinks there needs to be more money in the economy. The interest in the european central bank get's used to sponsor research, what i think is genius in it's principle. Banks are also allowed to just create additional 97% & sometimes more money with this 3% central bank money deposit they were bidding. the banks indeed have interests which allow them to accumulate relatively safely a lot of money. Regarding resposibility: the private sector runs it. they don-ät even need to bid for this money. they can use other money to make that deposit they can just bid nothing for it and get almost o interest. (that's the actual case) the private sector decides where the money goes into the economy depending on the ratings of their own analysts and the security their clients already have. There is no way a banks would somehow give money into the economy with a lot of conscience for their job and responsibility. all they need and are urged to need is profits for their shareholders.

[@infinite54]

Everyone is saying that the Central Banks are printing money which will produce massive inflation. If this is accurate then why hasn't the money created by banks created inflation? Bank created money seems to fly in face of inflationist theory. Canwe relax in terms of the possibility of inflation?

[@MrJakezxz1]

You're talking about creating a perfect world where large financial institutions have to sacrifice their vast profits in order to benefit the population as a whole. I personally would love to see this happen, but it's not going to be a reality. I bet a pound for a penny you are not the first to suggest/devise this kind of scheme. In an Ideal world, everyone should look after each other, unfortunately we live in a world where it's every man for himself

[@slamblambacid]

These solution is flawed since the begining. From the first moment that a human being has control over money the corruption will be there. No matter if it is a politician, bankster or whatever. The solution has to rely on technology. With bitcoins you can know exactly who it belongs to, you can log in itself all transactions and former owners AND you can mark them if they are lended and how many times they were lended. That would be the "health" of that bitcoin and because of that less valuable.

[@sylwesterbogusiak2334]

Let's create electronically, free of debt money for everyone. That much as someone need. Central bank could muliplies bank reserves in his main computer. Then commercial banks could add new money on customers account. Hyperinflation of electronic money is not the same phenomenon that occurs in the case of hyper-inflation resulting from the printing of banknotes. First of all, no state in the history of this world has yet experienced it. Does anyone want to be first? Full financed freedom for everyone is possible, since money started travelling with speed of light. (Fibreoptics). Debt money system is a new slavery. Wake Up. Do something for better future of your kids. Free of debt money for everyone, a solution to repay the debt. World debt is massive, let's start to repay this, and destroy this money. Repaying the debt to the bank destroys money. So really we need free of debt money in economy, otherwise debt crisis may happen again.

[@mihailcristescu5537]

what you donne (film) is a long long soup and is very hard to understand what is your proposition for "positve money". Money must not to produce money they are a symbol of the value of a thing. The interest must to be lowest possible.

[@UniversalPotentate]

Link in the description. I have earned the KZbin idiot award of the day .... sigh.