The new normal – from debt to credit

Affirmation: God has and does adequately provide for the needs of all mankind in and through his creation.
Analysis: The distribution of this provision has become hugely polarised, largely as a result of the debt-based money system espoused by most nations. At all levels from international to individual it has become normal to live in debt.
Action: Transform both the money system, and cultural expectations. Creation and lending of commercial money by banks needs to be largely replaced by the saving and investment of ‘genuine’ money. In consequence the new normal will be living adequately in credit.

Thesis Background
For many years Jubilee Centre personnel have been pointing out the dangers and injustices of the current debt-based economy and money system (e.g. Michael Schluter, Paul Mills, Guy Brandon). But this is not a lone voice. Secular thinkers are beginning to sound the same alarms, and make similar proposals for change. This is perhaps best collated by the Positive Money organisation ( Their book ‘Modernising Money’ by Jackson and Dyson, makes a coherent set of practical proposals for changing the money system. Whilst the money system can be seen as the main culprit, it must also be recognised that there is also a cultural issue. We want stuff, and we want it now! There is a need to (re)introduce the culture of saving up for the things we want/need. Currently the economic and money system discourages this behaviour in a number of ways. Overall there is a need to inject more ‘real’ money into people’s pockets, enabling the paying off of swathes of commercial-money-based debt, and the establishment of savings and investment of real money. The primary proposals are: • Separate the banking payments system from the banking investment system. Banks and investors must bear the risks of their investments. Investment banks must be allowed to fail. The payments system (and current-account money) must be guaranteed. • Commercial banks should no longer have the freedom to create money ‘ex nihil’. Such money creation as is necessary should be the responsibility of an independent, not-for-profit organisation accountable to Government. This should be ‘real’ money, injected into the real economy, creating jobs, improving national ‘commons’, and putting money into people’s pockets. • The availability of personal loans should be phased down to a much reduced level. The need for unsecured loans should virtually disappear (see also my Housing Money thesis). Moreover the ‘loan culture’ needs to be phased out. A good start would be to cancel all student loans (which make large loans culturally normal for many young people), and replace them with grants for living expenses, and adequate central funding for universities. Likewise the need for credit cards should be challenged. Debit cards (issued by payment-system banks) should provide the payment guarantee, and buyer protection services currently afforded by credit cards. • Banks (etc) need to offer savings accounts which guarantee the retention of value over the long term. Savings (in contrast to investment) needs to be risk-free, but it will also offer no gains. For this to work the economy / money-system needs to deliver zero inflation. Managing such a transition to avoid instability in the levels of employment, money value, income, and spending, is clearly a major challenge. It is a challenge that must be addressed as a matter of urgency, for the good of all.


× You need to log in to enter the discussion
  • author
    Hi Graham, Political motivation is indeed vital. Ideally a government would be very concerned about the increasing economic inequality across the nation, and would be motivated out of principle to address that issue. But more likely this will need to be driven by concern expressed strongly at the popular level, thus creating a political imperative. There is already a widely held sense of being the victims of economic injustice, but there is also a widely held sense of disempowerment to do anything about it. The challenge therefore is to communicate effectively on a very wide scale the impact of the current system, and the feasibility and benefit of changing it.
  • Where would the political motivation come for this? It seems that some politicians are dubious of the current system, but don't want the inevitable upheaval on their watch.