Ann Pettifor on Why the 100% Reserve Solution Is a Bad Idea

Ann Pettifor has written an excellent rebuttal to the full reserve banking solution proposed by Professor Richard Wolf and Positive Money, who are in most ways her allies. Her entree is the Bank of England’s recent acknowledgment that banks create the money they lend. She writes:  

Because I am a vocal critic of the private finance sector, many assume that I would agree with Wolf and Positive Money on nationalising money creation. Not so. I have no objection to the nationalisation of banks. But nationalising banks is a different proposition from nationalising (and centralising) money creation in the hands of a small ‘independent committee’.

The full article is here:

Out of thin air – Why banks must be allowed to create money

Yves Smith has also commented, here:

Why Banks Must Be Allowed to Create Money

 

 

8 Responses

  1. […] By Ellen Brown Ann Pettifor has written an excellent rebuttal to the full reserve banking solution proposed by Professor Richard Wolf and Positive Money, who are in most ways her allies. Her entree is the Bank of England’s recent acknowledgment that banks create the money they lend. She writes: Because I am a vocal critic of the private finance […] …read more […]

  2. Ellen Brown, How does Stephen Zarlenga’s solution to the Money Problem and Dennis Kucinich’s NEED Act address this issue? Thanks.

  3. http://www.primeeconomics.org/?p=2922#comment-19692

    · *DAVID PIDCOCK*

    *Your comment is awaiting moderation.*

    July 1, 2014 at 9:10 am · Reply

    VII – THE DIRECTION OF FUTURE POLICY In the question of what steps should be taken to put matters right, I can only suggest the general direction in which our future policy should point; for I myself do not believe that there exists any perfect cut-and-dried scheme which is likely hereafter to be adopted, lock, stock, and barrel, as our future monetary system. Moreover, there are many other technical and psychological considerations which would be necessary in order to achieve peace and contentment amongst the people. The main objectives however, should include:- 1.) State control and State issue of currency and credit through a central organisation managed and controlled by the State. 2.) Stabilisation of the wholesale price level of commodities. That is to say, a fixed and constant internal purchasing power of money; so that a pound will buy to-morrow what it bought yesterday; an honest pound, not a fluctuating pound. And this can be done by so issuing and regulating the volume of available credit and currency that it shall at all times be adequate to permit of the purchasing power of the consumer being equated with the volume of production; not by limiting the purchasing power, but by firstly increasing purchasing power more in proportion to the productive capacity of industry. 3.) Fixation of foreign exchanges by foreign exchange equalisation funds, and agreement with Empire countries and all other countries willing to fall into line; and, once this was accomplished, the removal or diminution of trade barriers which to-day protect the countries from the results of a bad monetary system. 4.) Any additional supply of money should be issued as a clear asset to the State; so that money will be spent into existence, and not lent into existence. 5.) The fluctuating quantity of gold lying in the vaults of the banking system should never be permitted to govern the volume of credit and currency needed by the country. 6.) The elimination of slumps and booms; and more direct procedure for eliminating unnecessary poverty 7.) The abolition of the Debt System where all credit is created by the banks and hired out at interest to the country. 8.) Absolute State control over all foreign lending; and the adoption of the general principle that our foreign trade should be so conducted as to preserve – (a) the interests of the Home Market, (b) the interests of the Empire countries and the English-speaking nations, (c) the interests of Foreign nations, and that this principle should particularly apply in the case of Home production and foodstuffs.

    ECONOMIC TRIBULATION – SEPTEMBER 1939 BY VINCENT CARTWRIGHT VICKERS DIRECTOR & DEPUTY GOVERNOR OF THE BANK OF ENGLAND 1910-1919

    On Sat, Jun 28, 2014 at 11:12 PM, WEB OF DEBT BLOG wrote:

    > Ellen Brown posted: “Ann Pettifor has written an excellent rebuttal to > the full reserve banking solution proposed by Professor Richard Wolf > and Positive Money, who are in most ways her allies. Her entree is the Bank > of England’s recent acknowledgment that banks create the mon” Respond > to this post by replying above this line > New post on *WEB OF DEBT BLOG* > Ann Pettifor on Why the 100% > Reserve Solution Is a Bad Idea > by > Ellen Brown > > Ann Pettifor has written an excellent rebuttal to the full reserve banking > solution proposed by Professor Richard Wolf and Positive Money, who are in > most ways her allies. Her entree is the Bank of England’s recent > acknowledgment th

  4. Thanx, Ellen, for sharing this blog from Ann Pettifor. And sorry about the way California spurned your efforts to reform their miserable financial condition. Progress is slow, eh? I posted a reply/response on Ann’s article. My views have not changed. The way we distribute or manage deb/credit is not our most pressing issue. Our most pressing issue is how to rid ourselves of the Zionist money cartel that dictates terms to the global economy, and then enforces its dictated terms through the use of the industrial military complex. I don’t expect you to publicly state that position. It is too threatening. However, I do hope that you and your colleagues will somehow start alluding to the idea. When intelligent and professional voices like your own, and your colleagues, begin shining light on the true problem, then maybe the public can begin to start awakening. Again, progress is slow. However, someone that knows the tune must begin to blow the bugle. I thank you for your blogs, and encourage you to continue. Alan Newton, Longs, SC.

    From: WEB OF DEBT BLOG Sent: Saturday, June 28, 2014 6:12 PM To: caveman@sccoast.net Subject: [New post] Ann Pettifor on Why the 100% Reserve Solution Is a Bad Idea

    Ellen Brown posted: “Ann Pettifor has written an excellent rebuttal to the full reserve banking solution proposed by Professor Richard Wolf and Positive Money, who are in most ways her allies. Her entree is the Bank of England’s recent acknowledgment that banks create the mon” Respond to this post by replying above this line

    New post on WEB OF DEBT BLOG

    Ann Pettifor on Why the 100% Reserve Solution Is a Bad Idea by Ellen Brown

    Ann Pettifor has written an excellent rebuttal to the full reserve banking soluti

  5. The problem with bank money (or even mutual credit) is that one party’s savings (or profits) are another party’s debt. If some parties are accumulating savings (or profits), then other parties must be accumulating debt. In order to avoid bankruptcy, the latter must raise prices or demand an increase in wages. In other words, unless parties are somehow constrained to limit their income to equal their consumption, inflation is inevitable.

    If credit were unlimited, the whole system seems rather pointless, because over time, savings are eroded by inflation and the relative position of parties remains reasonably constant. However, since credit is never unlimited, and is usually only granted on surety, then it does seem like a fine system for transferring tangible wealth to bank owners.

    Having said all that, I do think that bank money is a more correct solution than govenment issued tokens, because of the impossibility of regulating the token supply, and because government becomes a feeding ground for special interests at the expense of the public.

    There has to be a way to work this out.

    • “Impossibility of regulating the token supply”? Where’s the problem? You don’t tell us. The REALITY is that central banks ALREADY “regulate the token supply” in that they determine interest rates and QE which in turn determine the amount of “tokens” out there.

  6. Ellen, I kindly advise you to take down this particular article from your blog since it has been wholly refuted by Positive Money itself, here: http://www.positivemoney.org/2014/06/disagree-ann-pettifor/

    Positive Money does not at all advocate monetarism; rather their proposal closely mirror what you advocate. It is clear that Ann Pettifor did not read the details of the Positive Money proposals.

    • Agreed. The claim by Pettifor and others that full reserve equals monetarism is nonsense. See section 2.27 of this book of mine which will be available in hardcopy in the next few days.

      https://pdf.yt/d/J3al4g-8KAPvzA24

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