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  • sensible money
    that we understand the monetary system if we re to resolve the debt crisis In The Fix we propose one solution to the debt crisis which we feel would be the optimum taking into account the many factors involved The video above 14mins produced by Michael Reiss author of What Went Wrong With Economics explains how money is created and destroyed at present very well taxes debts investments positive unique

    Original URL path: http://sensiblemoney.ie/welcome/ (2016-02-11)
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    Original URL path: /the-issues/ (2016-02-11)


  • sensible money
    by President Franklin D Roosevelt during the last great banking crisis in the 1930s when it was quite widely supported by some of the leading economic thinkers of the time He then explains how new money is created and what limits the process of money creation By extending credit bankers create money Few of them admit to this dynamic The only limits on this process of money creation are the banker s instinctive fear of making a bad loan He describes how this has led to credit bubbles and banking crisis and also how money gets destroyed and money supply shrinks when the confidence of banks collapses It is at this stage of the credit cycle that the process of money creation goes violently into reverse As the bank shrinks its balance sheet by calling in loans it destroys deposits with the same vigour it created them on the way up He continues in describing the benefits of 100 reserve banking no risk of a bank run elimination of credit cycle and the too big to fail problem no need for deposit insurance reduction of debt etc Jeremy then expresses his concerns with 100 reserve banking When something looks too good to be true it generally is One of the most obvious drawbacks is that there would plainly be less credit and less leverage in such a system Indeed to the extent that credit existed it would look much more like high risk equity For all the social and economic scarring the credit cycle can inflict it is also a key part of the creative destruction of capitalism The biggest problem of all with 100pc reserve banking is that of transition Getting from here to there would be a truly revolutionary and potentially highly destabilising process so much so that it is hard to think of any advanced economy embarking on it The Case For Helicopter Money The Financial Times This is the most promising article to date on this subject and it comes from Martin Wolf From the piece Some are sure that the troubled western economies suffer from a surfeit of money Meanwhile orthodox policy makers believe that the right way to revive economies is by forcing private spending back up Almost everybody agrees that monetary financing of governments is lethal These beliefs are all false Wolf notes Measures of broad money have stagnated since the crisis began despite ultra low interest rates and rapid growth in the balance sheets of central banks We ve been highlighting that the money supply cannot grow if no one is willing or able to get a bank loan Thus when banks cease to lend deposits stagnate He explains further Expanding banking reserves is an ineffective way to increase lending which is exactly what we ve been arguing He goes on It is impossible to justify the conventional view that fiat money should operate almost exclusively via today s system of private borrowing and lending Why should state created currency be predominently employed to back the money created by banks as a byproduct of often irresponsible lending Finally he alludes to our solution to the debt crisis when he writes Provided the decision on the scale of financing rests in the hands of the central bank and it in turn looks at the impact of the policy on the economy this need not even generate high inflation let alone hyperinflation Hitch hiker s guide to monetary infrastructure The Financial Times Professor Richard Werner of the University of Southampton wrote this letter which was published in the Financial Times It was in response to the Bank of England s suggestion that negative interest rates on the banks reserves would encourage the banks to lend these reserves This is an absolutley ridiculous suggestion because banks don t lend money which comes from reserves but the economists of the Bank of England may have been taught otherwise Werner corrects them as follows But the banks don t lend existing money Instead they newly invent the money that they lend by pretending that the borrowers have deposited it and thus crediting their accounts without transferring any money there by simply inputting the desired number This is how the bulk of the money supply is invented into existence The Case For Truly Bold Monetary Policy The Financial Times Martin Wolf discusses the case for fundamental reform of the monetary system From the piece In normal times however actual supply of money is a byproduct of lending activities of banks It is in brief the product of privately operated printing presses The power given to banks to create money is a privilege Trading without money Why a new system can address the economic spiral The Guardian Jem Bendell discusses the money creation destruction system very well in this thought provoking article In most countries about 3 of our money originates from government owned mints that make notes and coins The rest is digital and created by private banks out of nothing when they issue loans When we go to a bank to take out a loan the bank does not lend its own money or that of its depositors As banks create the amount borrowed but not the interest to be paid on that loan there is now more debt in the world than money That means there must be an increasing amount of lending to pay off debts plus interest while maintaining the amount of money in circulation which means economic activity must continually increase Otherwise as debts are paid off so our money supply shrinks which leads to defaults foreclosures bankruptcies unemployment depression and history shows us then crime and extremism Pre school lessons for the bankers The Financial Times Pauline Skypala demonstrates the confusion over how money is created very well in this thought provoking article Their first lesson must be on what money is and where it comes from There is some disagreement about both Few would venture the opinion that most money in

    Original URL path: http://sensiblemoney.ie/literature/ (2016-02-11)
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  • sensible money
    weeks and job sharing could become a reality The chart below which was published by Social Justice Ireland shows how inadequate the system is at maintaining employment Higher Taxes Poor Public Services The printing of cash is demand driven so in the build up to Christmas for example banks exchange central bank money for newly printed cash Cash is printed at low cost and sold to the banks at face value earning a profit for the central bank in the process The profit from the sale of cash to banks becomes a form of non tax revenue for the Department of Finance known as seigniorage Prior to our use of computers at least 20 of the money supply existed as cash and the central bank s ability to print money was quite significant With the decline in our demand for cash the government has lost this significant source of non tax revenue due to the completely arbitrary use of electronic money That s ultimately why the government is in a position whereby it s under constant pressure to invent new taxes and cut public services Inflation There are many causes of inflation but most economists would have to agree that it would be easier to control under a more permanent money supply monitored directly by the Central Bank Our money is constantly being eroded through loan repayments and so we re constantly in a situation whereby it s better to create higher and higher amounts of money through new loans These higher amounts are often issued towards houses prices which inflate as a result If we could reform the system new money would more likely be channeled towards products such that it would be less inflationary Environmental Damage In order for the current system to run smoothly we need to continuously take on more debt than we repay and this is often accompanied by growth in what we produce Growth of perhaps 2 each year in everything we produce may sound reasonable but in actual fact if something grows at 2 a year it quadruples every 70 years We already have an incredible productive capacity and we cannot expect it to increase as described on our finite planet Continuous growth as a basis of economic stability is an unnecessary policy As well as this it s not feasible for governemnts or the private sector to plan long term renewable energy projects under the debt based system Planned obsolescence whereby products are designed to have a very limited lifespan is a direct result of our debt based system because it s just not feasible to run a business unless you have a constant income stream to service debt repayments Planned obsolescence is detrimental to the planet Every country s attempt to become a net exporter adds pressure to produce more and sell it further away too Extreme Inequality Social Problems Ultimately over 90 of all euros have a corresponding debt to the banking sector Although banks delete the vast majority of

    Original URL path: http://sensiblemoney.ie/the-consequences/ (2016-02-11)
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  • sensible money
    record of how much cash a bank owes and so they are defined as liabilities of the bank However this is no longer a realisitic description of bank accounts because for all intents and purposes your bank balance is the money itself From then on only the central bank would have the power to create or destroy any electronic money Rarely would money be destroyed under this system unlike today and so after a transition period the economy may not need much new money to function well If the central bank felt that new money was needed they d create it by typing it into the government s bank account The government would not have the power to create money because of their poor history in managing the economy anytime they ve been in charge of directly creating the money supply However they would decide how best to spend any newly created money The decisions on how much to create and how best to spend are thus separated How it would affect you No action would be required by the general public To the average person the system would look very similar to the one we have today Entrepreneurs would borrow from banks stock markets would fluctuate governments would borrow occasionally we d have credit cards overdrafts taxes charges rich poor Even the daily workings of most bank employees wouldn t change But we d have a more stable economy The major change you d notice would be that banks would separate your daily transactions and any money you wish to invest with them into two separate accounts namely current and savings accounts If you have money in a current account only you can use it And if you have money in a savings account only the bank can use it Current Chequing Account Only you can use it From your point of view this account would operate exactly the way your current account operates today However money you deposit can only be accessed by you The bank cannot touch it until you instruct them to One disadvantage you d notice would be that banks would most likely charge for this safe keeping payments service since the bank cannot use this money for investments loans they make no profit from this money storage service If your bank went bankrupt your money would be completely safe Your account and money would be transferred to another bank of your choosing Savings Account Only the bank can use it This account is better viewed as an Investment account You would agree a term for your money is to be saved for short term long term etc or a min notice period You could not access your money until the end of the term The bank has full control of this money Since you re forgoing the use of your money you are compensated by earning interest The amount of interest you receive depends on the risk you agree to low risk high risk etc Low risk might be used for mortgage loans credit card etc High risk might be in a new development off shore oil drilling etc Either way you know what your money is being used for the amount of interest you re likely to receive and the total loss if the investment turned bad Note that if you wanted to save money 100 risk free you would keep it in your current account If you want it seperated from your day to day current account banking open a second current account just for savings Of course no interest will be earned in a current account a charge for the service may in fact apply but your money will be absolutely 100 safe and yours alone to access More on Current Accounts There would be no risk to current accounts whatsoever In the unlikely event of a bank failure all current accounts would be transferred to other banks without burden to the taxpayer There would never be a bank run or bank bailout again There would be no need for banks to have deposit insurance either Current account balances would no longer be considered a liability of the bank They would finally be considered legal tender and would be held off the balance sheet More on Savings accounts Savings accounts would be slightly more complicated They would really be investment accounts and could be renamed as such The banks would have to attract the funds that they want to use for lending These funds would be subject to risk and reward like any other investment and there would be no absolute guarantees Upon transferring money to a savings account customers would lose access to their money for a pre agreed period of time or a minimum notice period The savings account would never actually hold any money since any money saved will immediately be transferred to a central investment pool held by the bank At the point of opening a savings account the bank would be required to inform the customer of the intended uses for the money that will be invested along with the expected risk level The risk of the investment now stays between the bank and the investor rather than the taxpayer In some accounts the risk will fall entirely upon the bank while on others a large proportion of the risk will fall on the investor Any investor opening a savings account should be fully aware of the risks at the time of the investment Savings accounts would operate as follows Banks would have the option of offering savings account holders a guarantee that they will be repaid a minimum percentage of their original investment in some cases 100 others 80 60 etc or they may offer a guarantee on the rate of interest that will be paid on the savings account product for example guaranteeing to pay interest at 2 4 or 5 etc For more detail on how savings accounts would function in practise click

    Original URL path: http://sensiblemoney.ie/the-fix/ (2016-02-11)
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  • sensible money
    Varadkar doesn t have a background in economics but he s certainly as knowledgable and vocal about the economy as any TD He also has a genuine desire to help solve the debt crisis His opinion is respected and if he fully understood how our economy operates we re sure he d be influencial in helping to promote discussion on reforming fractional reserve banking Peter Mathews Fine Gael Dublin South Peter Mathews studied commerce in UCD and is an expert on banking He has mentioned fractional reserving in debates and pointing out the consequences of such reserving should be straightforward He is a very knowledgable man and it would be great to have him on board Shane Ross Independent Dublin South Shane Ross has worked as a stockbroker and is the business editor for the Sunday Independent He has written tirelessly about the reckless lending of bankers not least in his book The Bankers How the Banks Brought Ireland to its Knees Of course an economy can t lose money through reckless lending and banks can t but have someone default Stephen Donnelly Independent Wicklow Stephen Donnelly has been very enthuisiastic in analysing the debt crisis and the Troika He has an engineering background which is useful in understanding the money as debt conumdrum of modern economics He is also fully aware of the impossibility of growing exports as a means of significant recovery Alex White Labour Dublin South Alex White has a background in economics and social studies as well as law and is involved in several commitees related to budgetary issues He has been vocal in criticising the housing bubble and the shortsightedness of previous budgets He is also keen to promote a stategic investment bank to get credit moving in the economy Of course every unit of credit would bring a new unit of debt While this would be a short term measure to growing the economy we re sure he d be keen to promote a longer term solution like full reserve banking Olivia Mitchell Fine Gael Dublin South Oliva Mitchell is spokeperson on Competition Consumer Protection and has done some impressive work in this role She has thought economics in the past and is very knowledgable on the importance of competition and the financial benifits of export growth in the short term Joe Costello Labour Dublin Central Joe Costello is the Minister of State for Trade and Development and has been involved in many dail debates regarding the debt crisis He has welcomed efforts by France and Germany to control the crisis and has been an advocator of growth as a means of solving the problem Of course any financial growth will be created in parallel with an even higher debt regardless of how GDP might behave Joe s constituency is also quite affected by the harmful social consequences of the debt based system Correct Our Financial Commentators We believe that if the media were fully aware that banks created new money through every loan

    Original URL path: http://sensiblemoney.ie/get-involved/ (2016-02-11)
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  • sensible money
    the benefit of all political parties 6 We do not oppose the use of complementary currencies Complementary currencies are useful for local economies but they are not part of our campaign as we are focused on the national currency The Team Paul Ferguson has a background in structural engineering and mathematics and graduated from Trinity College Dublin in 2005 Having studied economics informally since 2008 he founded Sensible Money primarily to address the confusion over how money is created He has been a guest lecturer with Dublin Institute of Technology has presented at the Dublin Economics Workshop and is very interested in the consequences of the current system of money creation destruction and believes many of our social problems can be solved through monetary reform To contact directly paul ferguson sensiblemoney ie James McCumiskey James has a background in engineering and accountancy He has also studied economics informally for over three years and shares the same concerns regarding the lack of understanding by politicians the media and even some economists about the modern money creation mechanism James has written a book Real Honest Money currently with the publishers proposing similar reforms to Sensible Money s To contact directly james mccumiskey sensiblemoney ie Kevin Smyth Kevin currently works as a chartered structural engineer in London After the 2008 crisis he became interested in the design flaws of the current debt based money system and in particular the negative effects of the boom to bust cycle on the construction sector He believes that the housing market in Ireland UK and elsewhere is dysfunctional and can be only be rebalanced with a reformed monetary system He would like to see this done in conjucntion with the introduction of a land value tax These reforms would aim to establish a more sustainable built environment for 21st century cities and economic systems To contact directly kevin smyth sensiblemoney ie Colm O Leary Colm is an accountant with a degree in financial and actuarial mathematics He is a member of the Green Party and is very interested in the environmental consequences of the current monetary system Since the financial crisis Colm was searching for an explanation of how it occurred and finding the official explanations unsatisfactory he discovered Sensible Money and Sovereign Money Creation He works in a financial institution in Ireland and so can see first hand the lack of knowledge of how money works and how unsutainable any economic recovery will be until our monetary system is reformed To contact directly colm oleary sensiblemoney ie Our Board of Advisors John Barry holds a doctorate and lectures in economics at Queen s University Belfast As a writer specialising in the transition to sustainability he encourages his students to become independent thinkers and criticial citizens As well as being a full time academic researching and teaching on green politics sustainable development and the political economy of sustainability he is also co chair of the Green Party in Northern Ireland E mail John directly here Tony Weekes

    Original URL path: http://sensiblemoney.ie/about-us/ (2016-02-11)
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  • sensible money
    Conference 2013 Books FAQs Name E mail Please type symbols shown below as protection from automated posting Reload Captcha Fields marked with are required taxes debts investments positive unique growth debt crisis shares tax options eurozone currencies inequality debt crisis SME reserve credit national debt different fractional derivatives boom alternative geld immr sensible euro inflation solution downturn perpetual mortgage stocks austerity sovereign higher taxes monetary reform debt expansion weakened democracy

    Original URL path: http://sensiblemoney.ie/newsletter/ (2016-02-11)
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