Monday, 6 August 2012

PoliticsUK interviews Ben Dyson of Positive Money UK

Politics UK · 4,430 like this.
5 July at 19:55 · 
  • This will be the thread that is for tonight's interview with Ben Dyson of Positive Money UK.

    Please be aware that all questions will initially come from PoliticsUK but, time permitting, you will be able to ask questions directly once PoliticsUK has finished our questions.

    ‎5 July at 20:00 at PoliticsUK
    1 ·  · 

      • Politics UK Good Evening Ben, Can you tell how Positive Money came about?
        5 July at 20:00 · 

      • Ben Dyson Back in 2006 I stumbled across a book – the “Grip of Death” by Michael Rowbotham – which claimed 97% of the money that exists was created by high-street banks, through the accounting process they use when they make loans. It seemed obvious that a system that worked that way, and which was creating tens of billions a year in new money and debt, would eventually collapse. In 2007/2008, it did collapse.
        5 July at 20:01 ·  · 2

      • Ben Dyson For a couple of years I watched the crisis play out and expected journalists to start talking about this issue of banks create money, but they never did. So in 2009 I started blogging at my personal website, and then a year later set up Positive Money to try to raise the awareness of how this system works and why it’s so harmful.
        5 July at 20:01 ·  · 2

      • Politics UK Positive money states:
        “The privatised creation of money by banks is at the root of debt, poverty, inequality, unaffordable housing. It makes our boom-and-bust economy completely unstable, and is also fuelling the environmental and energy crisis”

        If someone had no knowledge of our monetary systems, they may think that this is a wild claim. I would first like to about the present privatised creation of money.

        A lot of people believe that banks need to get money from ‘savers’ before it can loan the money to a ‘borrower.’ Is this assumption true?
        5 July at 20:01 · 

      • Ben Dyson No, but it’s a natural assumption to make because we’re all brought up with the idea that you put your money into the bank, and it gets lent out to other people. In reality, when you put some cash into the bank, that cash becomes the property of the bank. What you get in return is an IOU from the bank – a promise to repay you. And when a bank makes a loan to someone else, it just makes it by creating another IOU to the borrower – in accounting terms, it’s a liability.
        5 July at 20:03 ·  · 1

      • Ben Dyson The borrower also signs a contract promising to repay the money over time, and this contract is recorded as an asset on the other side of the balance sheet, so everything balances.
        5 July at 20:03 ·  · 1

      • Ben Dyson But chances are that the borrower never actually asks for the cash. He just makes electronic payments to other people, and the banks just transfer electronic numbers. They might use the cash that you paid in to give to someone else who needs cash, but they’re not actually using your money to make a loan to anyone else.
        5 July at 20:04 ·  · 2

      • Politics UK So a bank can create money out of nothing? How much of our currency is ‘real’ money?
        5 July at 20:04 · 

      • Ben Dyson It depends what you mean by real.
        5 July at 20:05 · 

      • Ben Dyson Just £3 out of every £100 in the UK economy exists as coins and paper notes. The other £97 is numbers in the computer systems of high-street banks. These numbers are technically the liabilities of the bank – they’re a promise to give you cash when you ask for it, or make an electronic payment on your behalf. But usually there’s very little cash available to make those payments, relative to the total amount of electronic money.
        5 July at 20:05 ·  · 2

      • Politics UK ‎97% of our money is created out of nothing by banks when they make loans.
        How does that affect the normal person on the street, businesses and public services?
        5 July at 20:05 ·  · 1

      • Ben Dyson It means that we are all collectively in a position where we have to be in debt to the banking system. It’s possible for a few of us to be out of debt, but if we all tried to avoid getting into debt there would actually be no money in the economy (because money is created when people go into debt).
        5 July at 20:06 ·  · 1

      • Ben Dyson It means houses are twice as expensive as they should be. It makes it incredibly hard to run a business, because you have artificial booms fuelled by debt and newly-created money, alternating with the bust when banks panic and people try to stop spending to reduce their debts.
        5 July at 20:06 ·  · 1

      • Ben Dyson It also fuelled a lot of inequality; because the money supply is effectively ‘on loan’ from the banking sector, and we have to pay interest on all the corresponding debt. So there’s a redistribution from the bottom 90% of people, through the interest they pay, to the very top 10% of people. There’s also a redistribution from the real economy – ordinary businesses, shops, factories etc – to the banking sector, and from the rest of the UK to the City of London.
        5 July at 20:06 ·  · 1

      • Politics UK ‘Most of the hundreds of billions that banks created over the last decade was created to buy houses’
        In the last decade house prices have risen threefold. The general consensus of the media and politicians is that it’s a supply and demand problem.
        Would you agree with this consensus?
        5 July at 20:07 · 

      • Ben Dyson Not at all.
        5 July at 20:07 ·  · 1

      • Ben Dyson Over the last 20 years the population has grown by about 8%; the number of houses has grown by 16% - twice as fast. Now of course people may be living in smaller average households, but the only figure that really explains the house price bubble is the huge (650%) increase in mortgage lending over that time. And all that mortgage lending created new money, because money is created when banks make loans.
        5 July at 20:07 ·  · 1

      • Politics UK Why do increases in bank lending for house purchase increase the price of housing?
        5 July at 20:08 · 

      • Ben Dyson If the bank lends you 4 times your salary instead of 3 times, you can go and buy a bigger/nice house. But if they lend everyone else more money as well, then everyone is competing for the same limited number of houses. Prices go up.
        5 July at 20:08 ·  · 1

      • Ben Dyson Then everyone else sees the prices going up, and thinks either a) I can make some money by investing in housing, or b) If I don’t buy a house soon, I’ll never be able to afford to. So they jump on the bandwagon too meaning you have even more people buying and prices going up faster.
        5 July at 20:08 ·  · 2

      • Ben Dyson The banks love this; more people want to borrow, so they’re beating their own sales targets and earning more and more interest. This makes them confident and they become willing to lend even more to the next people who want a mortgage. It becomes a vicious circle – the more they lend, the more prices go up, and the more people need to borrow.
        5 July at 20:08 ·  · 3

      • Politics UK “We are redistributing money, very effectively, through the housing system, away from the poor towards the rich, away from the young towards the old, and geographically as well – away from the poorer parts of the country to richer parts of the country.”
        Toby Lloyd, Shelter.

        Could you explain what Mr Lloyd means by this statement?
        5 July at 20:09 · 

      • Ben Dyson If you can’t afford to buy a house or get a mortgage, then you have to rent. When you’re renting, you’re effectively paying off the mortgage of someone who was able to get a mortgage. So that’s a transfer of wealth from the poor to the wealthier (not necessarily ‘rich’).
        5 July at 20:09 ·  · 2

      • Ben Dyson It’s a transfer from the young to the old because it’s the older generations that own most of the property – as in, actually own it rather than still having a huge mortgage on it. The property that they bought at a fairly normal price has now been artificially inflated by all this bank-created money over the last 10 years, so they get to sell it at an unnaturally high price.
        5 July at 20:09 · 

      • Ben Dyson So the older generations do benefit from this, at the expense of younger generations. But before anyone gets angry at baby boomers, the group that has really benefitted from this house price bubble is the banking sector, which has made its money by collecting interest on an ever greater pile of household debt.
        5 July at 20:10 ·  · 1

      • Ben Dyson Someone buying an average house these days will end up paying more than a quarter of a million in interest to the banking sector, just because house prices have been artificially inflated by all this ‘funny money’.
        5 July at 20:10 ·  · 1

      • Politics UK A little known fact is that the UK Treasury receives a profit from each £5 and £10 note that it sells to a private bank.

        Can you explain how this happens?
        5 July at 20:10 · 

      • Ben Dyson It only costs a few pence to print up a £10 note. When banks need money to stock up their ATMs they buy it from the Bank of England at full value, so £10 for £10. (They actually swap the cash for assets like government bonds). So the Bank of England sells something that cost a few pence for £10, and the profit on this process goes to the Treasury and reduces how much tax we have to pay.

        (*This is a slight simplification but the actual process is fairly complex and I don’t want to end up drawing balance sheets and Bank of England accounts here!)
        5 July at 20:11 ·  · 3

      • Politics UK Does the Treasury receive a profit on digital money created by private banks? And if not, do you know how much money the Treasury has ‘lost’ by this process?
        5 July at 20:11 · 

      • Ben Dyson The Treasury doesn’t get any profit from creating digital money because that money is created by the commercial banks, in the form of accounting liabilities
        5 July at 20:11 · 

      • Ben Dyson If the Treasury had created all electronic money instead of the banks, and used this money to reduce taxes or fund government spending, it would have had about an extra £1.2trillion to spend. That’s enough to run the whole of the NHS for about 12 years.
        5 July at 20:12 ·  · 2

      • Politics UK What effect do private banks creating money have on the UK economy, especially since the financial crisis in 2008 and our nations deficit?
        5 July at 20:13 · 

      • Ben Dyson It’s a big cause of the instability we have. The boom – say, up to 2007 – is artificially caused by the creation of money, effectively out of nothing, by the banking sector. Obviously because they’re lending all this money it also leads to a huge buildup in personal and household debt. So it was a debt-fuelled boom.
        5 July at 20:14 ·  · 1

      • Ben Dyson Then, when that debt eventually becomes too much for everyone, people stop spending, shops and businesses start losing customers and the whole economy slows down, possibly into a recession. Then people get laid off and unemployment goes up.
        5 July at 20:14 ·  · 1

      • Ben Dyson The deficit and the national debt has grown so much partly as a cost of bailing out banks, but mainly because the tax revenue fell (because the economy slowed down) and the costs went up (because of higher unemployment etc). But this is really caused by allowing banks to create the nation’s money supply – they will always create too much (causing a boom) before panicking and stopping, causing a credit crunch and then a recession.
        5 July at 20:14 ·  · 1

      • Politics UK Would it be fair to say that our economy, where private banks create money through the creation of debt, was always doomed to fail?
        5 July at 20:15 · 

      • Ben Dyson Sooner or later, yes.
        5 July at 20:15 ·  · 2

      • Ben Dyson We can’t keep fuelling our economy by relying on people to go further into debt so that banks can create more money out of nothing. Eventually you have to find a way of reducing the debt, and that’s not possible in the current system.
        5 July at 20:15 ·  · 1

      • Ben Dyson We think we need to take this power to create money away from the banks, as they evidently can’t be trusted with it.
        5 July at 20:16 ·  · 1

      • Politics UK So, what are the solutions?
        Positive Money proposes that high-street banks can not create new money when they make loans. What are the alternatives to banks creating money?
        5 July at 20:16 · 

      • Ben Dyson We think we need to take this power to create money away from the banks, as they evidently can’t be trusted with it.
        5 July at 20:16 ·  · 1

      • Ben Dyson We wouldn’t want to give that straight to politicians and government ministers, as they’d be just as likely to abuse that power for their own electioneering ends.
        5 July at 20:16 ·  · 1

      • Ben Dyson So we think there needs to be some independent and transparent body who is responsible for creating money. It would look at the state of the economy before deciding how much money needs to be created.
        5 July at 20:16 · 

      • Ben Dyson This body would still need to be accountable – say to a cross-party committee of MPs – but it’s important that people like George Osborne or Gordon Brown wouldn’t be able to influence them.
        5 July at 20:17 · 

      • Politics UK How would banks create loans under Positives Moneys proposals?
        5 July at 20:17 · 

      • Ben Dyson In the way that everyone currently thinks they do; by taking money from savers who want to earn some interest, and lending it to borrowers. They would actually be moving money from one group of people to another, rather than just creating new money through an accounting entry.
        5 July at 20:17 · 

      • Politics UK In the present system, the new money is put into the economy via loans. That would not be possible under your proposal.
        Where should the newly created money be spend under your proposal?
        5 July at 20:18 · 

      • Ben Dyson We need to have a public debate about this – what’s the best way to use this newly-created money?
        5 July at 20:18 · 

      • Ben Dyson 
        But in fact it’s the same decision that applies to all tax revenue – do we want to use it for something that will benefit society in the long term, or waste it? We could rely on the government to spend that money into the economy, or simply
         use it to reduce everyone’s taxes. Alternatively we could simply divide whatever newly-created money is created between everyone over the age of 16, and give everyone a cheque to be used how they want.
        5 July at 20:18 ·  · 1

      • Ben Dyson 
        The important thing is that the new money gets into the real economy – on the high-street – where it can work to create jobs and support real businesses. What happens at the moment is that most newly-created money gets stuck in financial ma
        rkets or housing bubbles, and never actually reaches the real economy. So whatever spreads the newly-created money out widely amongst ordinary people, rather than pumping it into the financial sector, will be better than what we have at the moment.
        5 July at 20:19 ·  · 1

      • Politics UK Our National Debt... Should it be a priority to pay off our national debt as quickly as possible?
        5 July at 20:19 · 

      • Ben Dyson No, not at all. For one thing, the interest people are paying on their household debts is much higher than is being paid on the national debt. So it’s crazy to tax people more and leave them with less money to pay off their own debts – which are building up interest at say, 8% - just in order to pay down the national debt with interest of ~3%.
        5 July at 20:19 ·  · 1

      • Ben Dyson Also, pension funds rely on holding government bonds (debt) as the safest part of their investments. If you paid off the government debt quickly, they’d need to find somewhere else for that money and you’d push a hell of a lot of money into other parts of the financial markets. That would cause a few huge bubbles, and when they pop it would be pretty bad for pensioners.
        5 July at 20:20 ·  · 1

      • Politics UK We have had some questions from our users,:
        “Would something similar to Ecuador's declaration that national debt was toxic and illegal work in the UK to reduce the deficit without having to negatively impact on the poor and vulnerable?”
        5 July at 20:20 · 

      • Ben Dyson In my opinion, it’s not a good idea. Remember that this national debt isn’t generally owed to billionaires; it’s owed to pensioners who’ve been saving up for years. Simply saying we won’t repay it has a huge knock-on consequence.
        5 July at 20:21 · 

      • Ben Dyson I think it’s different in the case of developing countries where banks have lent them money for projects that were obviously not helpful for the country – that’s when the term ‘odious debt’ applies and it’s fair to cancel the debt. But 40% of the national debt is owed to UK pensioners, and another 40% is owed to similar people in other countries.
        5 July at 20:21 ·  · 1

      • Politics UK “Do you feel that the current investigations into 20 banks across the world by the FSA will prove to be effective?”
        5 July at 20:21 · 

      • Ben Dyson Of course it’s important to identify any criminal actions, fraud etc. But none of the FSA, Bank of England, Treasury, IMF etc are asking fundamental questions about how our money is created, and whether banks should really have these privileges. So I would say they’re mostly missing the point. As long as banks have the power to create money, they’ll have real negative impacts on the economy.
        5 July at 20:22 ·  · 2

      • Politics UK “Are you aware that the Co Op bank is going to buy up hundreds of Lloyds branches and do you think that the Co Op bank's ethical stance should be widespread?”
        5 July at 20:23 · 

      • Ben Dyson Yes, I’d heard about that. I think Coop’s much better than any of the big high street banks. We use them for Positive Money’s own account. They screen out the harmful investments such as oil, tobacco, arms etc, so you know you’re not supporting anything toxic or harmful.
        5 July at 20:23 · 

      • Politics UK ‎"Does he feel a move to ethical banking will work and how would he start campaigning to get people to do so"
        5 July at 20:25 · 

      • Ben Dyson It’s definitely important. I recommend checking out the
        Move Your Money UK is a national campaign to spread the message that we can help...See more
        5 July at 20:25 ·  · 2 · 

      • Ben Dyson I’m moving my own savings at the moment. I haven’t banked with the big 4 for years but I’m moving some of my money from Nationwide (who only really lends for mortgages and consumer finance) across to Triodos. Triodos actually tells you every company and organisation that they’ve lent to on the website, and only invest in projects that have positive social benefits.
        5 July at 20:26 ·  · 2

      • Ben Dyson I’d also suggest looking at peer to peer lending and borrowing, such as Zopa, so that any interest you pay goes to ordinary people instead of being creamed off by the big banks
        5 July at 20:26 · 

      • Ben Dyson And new projects like are letting people invest directly in renewable energy and wind turbines, which the big banks have little interest in.

        I’m not a financial advisor so none of this is financial advice, but have a look around and see the alternatives to supporting the big banks.

        5 July at 20:26 ·  · 

      • Politics UK PoliticsUK would like to thank Mr Dyson for his time on this interview. If you are interested in Positive Money UK, please like their Facebook page and visit them at

        We will be taking a 5 minutes break, If you have a question for Mr Dyson, please post them on this thread.

        Money and banking is at the root of most of our social and economic problems. T...See more
        Page: 6,167 like this.
        5 July at 20:27 ·  · 

      • Hex Austen Can you explain the mission of Positive Money and what key changes you'd like to see?
        5 July at 20:30 · 

      • Steffan Hughes You may have answered these questions already but it would be easier if I got a direct answer: Had no bank been bailed out in the financial crisis. How bad do you think would the after effects be?
        How would a government go about removing the ability to stop private banks from creating money out of nothing? And how would money later be created and by whom?
        5 July at 20:31 · 

      • Stephen H O'Hanlon I have a question, which I think is very important. How much political support has Positive Money UK got behind them.

        People are becoming aware that our monetary system is corrupt..but will Politicians change this or is it up to us, the normal people, to demand a change?
        5 July at 20:32 · 

      • Ben Dyson Hex Austen - put simply, we want to see the power to create money removed from banks and transferred to a democratically accountable body that creates money in the interests of the public - rather than in the interests of the big banks.
        5 July at 20:32 ·  · 2

      • Matthew Woodacre This 'independent and transparent body' who is responsible for creating money sounds it would be given a vast amount of centralised power. Rather than being centrally controlled, why can't the banks themselves decide individually in a free, competitive market how much currency to issue & and if they create too much debt they fail?
        5 July at 20:32 · 

      • Ben Dyson The main work that we do at the moment is education - finding ways to help people understanding what can be quite a confusing subject.
        5 July at 20:32 ·  · 1

      • John Connor Hi Ben. First thing may I say I love the work you and your team are doing with Positive Money - I have been following you for a long time now.

        Two quick questions, I have been aware of banks digitally creating money since around 2008 mysel

        f and a lot of the other issue. What did interest me though was that the treasury earns money for selling actual real, physical money. In the wait and hope of real reform would it help if we all used more 'real' money in our transactions rather than digital and online payments? With the intention that the banks would have to buy more real money for ATMs and cash desks?

        Also I heard a podcast on oil reserves and prices from the PM website a few weeks ago. I was really glad you talked about this - how important do you think the issue of peak oil and peak everything is personally and do you think better awareness should be created. Politicians always talk about the cost of fuel but the scope for the conversation seems very limited.
        5 July at 20:33 ·  · 1

      • Ben Dyson Steffan - if we hadn't rescued the banks, they would have been insolvent in an accounting sense. That means they'd be closed down, and all the numbers in people's accounts would no longer be available to be used as money. They'd effectively disappear.
        5 July at 20:34 ·  · 2

      • Ben Dyson If RBS had failed, for example, around 1 in every 6 peopel would have been unable to make payments.
        5 July at 20:34 · 

      • Ben Dyson That's why the govt was so keen to rescue them, but there is another way - you can let them fail but then 'recreate' the money that they had created in the first place, simply by entering the numbers into a computer system. That would have been a possibility but the guys in charge just don't understand money.
        5 July at 20:35 ·  · 2

      • Ben Dyson There's info on the technicalities of stopping banks from creating money
        We've  spent the last couple of years thinking about how to address the biggest ...See more
        5 July at 20:36 ·  · 1 · 

      • Ben Dyson It's not as hard you would expect initially.
        5 July at 20:36 · 

      • Ben Dyson Stephen O'Hanlon - I think it's up to us. Politicians and government will only react when they can see public support for it. It's a big change that we're asking for, so we need that public support.
        5 July at 20:37 ·  · 2

      • Ben Dyson And also support from campaigns, charities, academics, journalists etc.
        5 July at 20:37 ·  · 2

      • Jean Eveleigh Ben this may be a really stupid question but I thought the only entity legally allowed to create money was the Bank of England (or Scotland) so how do the banks get away with this in the first place?
        5 July at 20:37 ·  · 1

      • Adam Smith Hi Ben, good informative interview.

        The system is corrupt and the only winners are profit making banks?

        97% of our currency is digital debt?

        Housing prices are sky high, not through market forces, but by manipulation..

        How the hell did we get into this situation!?! And why is this not on the front page of every newspaper!
        5 July at 20:38 ·  · 1

      • Ben Dyson Matthew Woodacre - I think you're referring to Hayek's idea of denationalising currency. Hypothetically it could work, but the reality is that no government is going to abolish its national currency by choice, so this isn't an idea that could be put forward as a policy.
        5 July at 20:40 · 

      • Jean Eveleigh 
        Ben as a representitilve of a political party I attended one of your meetings last year and asked you to help my party in formulating a financial policy - you said that you would have difficulty working with us as you couldn't be seen to be
         affiliating with a political party - do you think you are shooting yourself in the foot by not activly working with and engaging smaller parties who come to you for advice and co-operation?
        5 July at 20:40 ·  · 1

      • Matthew Woodacre Ben, thanks for your response. Would you agree that all the main political parties benefit massively from the current system and are unlikely to abolish it by choice?
        5 July at 20:43 · Edited ·  · 1

      • Ben Dyson 
        John O'Connor - to be honest trying to use more cash doesn't have any significant impact. It would only make a difference if everyone (I mean, at least 5-10% of the population) withdrew their money as cash and kept it at home or in a safe d
        eposit box. Better to focus on spreading the word and moving your main account to one of the ethical banks in the meantime.

        I'm not an expert on peak oil, but there's definitely issues with impacts from oil prices and commodity prices affecting people's disposable income and cost of living, which feeds back into people being unable to service their debts and the banking system collapsing. There needs to be more work done on this, but like you say it's another area that most economists ignore. (But the IMF has done a couple of working papers on peak oil).
        5 July at 20:43 ·  · 2

      • Ben Dyson 
        Jean Eveleigh - because the money they create isn't legally considered to be money. Strictly, they're just creating liabilities ('expanding their balance sheets' in banking jargon), and we happen to use those liabilities to make payments. A
        s cash has become less used, these electronic liabilities have taken over. A lot of economists think we're just using bank-issued money because it's more convenient; they miss the point that using cash alone isn't really an option these days.
        5 July at 20:46 ·  · 1

      • John Connor Thanks for your response - pity using real cash won't have that much effect? Good luck with spreading the word.
        5 July at 20:48 · 

      • Ben Dyson 
        Adam Smith - I really don't know! On the back of the book Where Does Money Come From? ( ) Prof David Miles from the Bank of England says that "The way money and banking is taught in many - maybe most - un
        iversities is very misleading." And most of the key decision makers and policy wonks got their educating in money and banking at university. So that might be part of the problem.

        The other part of it is that it's just a complex subject - a lot of people get lost in the technicalities.

        But really it's quite simple: should the same private corporations that caused the financial crisis be trusted to do something as important as create the nation's money supply?

        The 'bible' when it comes to money is the book 'Where Does Money Come From?', c...See more
        5 July at 20:48 ·  · 3 · 

      • Ben Dyson 
        Jean Eveleigh - we're very happy to speak at party events and advise on policy, but we can't be affiliated with any party as it's too important an issue for it to be written off as being left/right or whatever. So we're happy to work with a
        ny party but not endorse or affiliate with any party. But as an example, I'm speaking at fringes at the Green Party and UKIP conferences, and an event at the Lib Dem HQ in September. Also speaking at union events etc.
        5 July at 20:52 ·  · 1

      • Ben Dyson Matthew Woodacre - I don't know if they do benefit. The Tories certainly won't benefit from the effect this system is having on the economy right now. I think they (all politicial parties) would benefit more from a reformed system - we just need to help them understand that.
        5 July at 20:53 ·  · 1

      • Politics UK This ends tonights interview.

        May I thank Mr Dyson for his participation in tonight's interview and wish him and Positive Money UK a great future.

        If you are interested in Positive Money UK, please like their Facebook page and visit them at


        Money and banking is at the root of most of our social and economic problems. T...See more
        Page: 6,167 like this.
        5 July at 20:54 ·  · 

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