Does money grow on trees? | openDemocracy.
The debate about the banks’ power to create money is becoming much more mainstream. After the recent event, Does Money Grow on Trees?, parliament is scheduled to debate the issue for the first time in 170 years.
This was a question posed by Martin Wolf, chief economics commentator of the Financial Times, at the beginning of the event Does Money Grow on Trees?organised by Positive Money and the Institute of Chartered Accountants for England and Wales (ICAEW). Over 100 people turned out to discuss what Wolf described as the ‘fascinating intellectual questions’ associated with permanently taking power to create money away from banks and giving it to the state.
As Ben Dyson, founder of Positive Money has explained in a previous article for Open Democracy, banks currently create 97% of the money in our system when they issue loans. Positive Money, a campaign and research organisation set-up in 2009, argues that leaving the power to create money in the hands of the financial institutions that caused the economic crisis is a mistake – and one that not enough people understand. Results of a recent Dodds Monitoring poll show that only 1 in 10 MPs accurately understand where money comes from. Positive Money highlights the causal relationship between the current monetary system and instability in the economy, high house prices and increasing inequality, arguing that without an understanding of money creation our MPs are ill-equipped to prevent another financial crisis.
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